SF4394

Purpose

• Clarify and modify housing-related programs and funding rules in Minnesota.
• Change how certain housing aid funds can be used, who can receive them, and how those funds are reported.
• Update wage provisions related to housing programs by adding a lived-experience engagement exemption.
• Repeal a prior requirement about projecting emergency rental assistance needs.

Key Provisions and What the Bill Seeks to Accomplish

• Eligibility and disqualification for housing grants/loans:
  • The Minnesota Housing Finance Agency may award grants or loans to eligible recipients (cities, tribes, tribal housing entities, private developers, nonprofits, housing authorities, housing owners, etc.).
  • Disqualified individuals and disqualified businesses are defined by connections to contributions to certain accounts and ownership/control of housing entities, particularly where credits or certificates were involved in the current or prior tax years.
  • Before applying, recipients must sign a disclosure stating these disqualifications do not apply; the agency may rely on this to determine eligibility.
• Eligible recipients and use of funds:
  • Grants/loans can go to cities, federally recognized tribes or subdivisions in Minnesota, tribal housing corporations, private developers, nonprofits, housing and redevelopment authorities, public housing authorities, or housing owners.
  • Funds must be used to serve households that meet income limits set by law.
• Project funding rules:
  • Specific sections set rules on how proceeds must be used for qualifying housing projects.
  • If a recipient cannot spend funds by a deadline due to factors outside its control, funds may be transferred to a local housing trust fund (or tribal housing fund in Tribal cases) and still count toward meeting affordability requirements.
  • Funds transferred to local housing trust funds or tribal housing funds must be spent on projects or households that meet affordability standards and within defined timelines (generally by December 31 of the third year after aid is received, with expenditures by December 31 of the fourth year).
  • Program income from these funds must also be used on qualifying projects.
  • Reimbursing prior expenditures with aid funds is not allowed.
• Lived-experience engagement exemption:
  • Wages earned from lived-experience engagement are not considered income, assets, or personal property for purposes of eligibility or recertification for state public assistance programs (including child care assistance, general assistance, Minnesota supplemental aid, SNAP, housing support, MFIP, and related programs).
  • Lived-experience engagement is defined as agency involvement with people with relevant experience for community review of proposals or feedback on housing program impact.
• Conditions for receipt and reporting:
  • For aid under subsection 5a, recipients must commit to using funds to supplement, not supplant, locally funded housing expenditures.
  • Tier I city or county recipients must annually certify compliance, including publicly posting details of locally funded housing expenditures. The first such report must cover the two prior fiscal years; reductions must be explained.
• Repeal and reporting changes:
  • Repeals a prior statute (462A.2096) related to annual projections of emergency rental assistance needs.
  • The bill Appendix previously required annual projections of emergency rental assistance needs and annual reporting to legislative chairs.

Significant Changes to Existing Law

• Adds explicit disqualification criteria for individuals and businesses based on funding credits and ownership ties to housing programs.
• Broadens the pool of eligible recipients to include more entities and structures (e.g., tribal housing corporations, housing authorities, nonprofit organizations) with clarified use restrictions.
• Introduces and codifies a lived-experience engagement wage exemption from income/assets calculations for major state need-based assistance programs.
• Creates flexible funding paths (local housing trust funds or tribal housing funds) when deadlines for expenditure are not met due to factors outside the recipient’s control, while maintaining affordability requirements.
• Tightens reporting and accountability for Tier I cities/counties regarding locally funded housing expenditures and public disclosure.
• Removes the formal requirement to annually project emergency rental assistance needs (but may still influence budgeting indirectly through other provisions).

Administrative Changes and Affected Agencies

• Minnesota Housing Finance Agency administers eligibility, disbursement, and the use of funds, including required disclosures and public reporting.
• Departments responsible for public assistance programs (e.g., human services, welfare programs) are affected by the lived-experience engagement wage exemption.

Potential Impacts

• Recipients may have clearer rules on who can receive funds and under what conditions, and must publicly disclose certain expenditures.
• Programs funded under these sections may experience more flexible timelines if projects face delays, via transfers to local housing funds.
• Individuals and families benefiting from housing programs could see changes in eligibility rules or reporting requirements, and some wages earned through lived-experience roles will not count against eligibility for public assistance.

Notable Definitions and Terms from the Bill

• Disqualified individual
• Disqualified business
• Credit certificate
• Immediate family
• Lived-experience engagement
• Local housing trust fund
• Tribal housing fund
• Tier I city or county
• Qualified project
• Affordability requirements
• Minnesota Housing Finance Agency

Implications for Stakeholders

• Local governments, tribes, developers, nonprofits, and housing authorities should review disqualification criteria and disclosure requirements.
• Organizations employing or engaging people for lived-experience roles may benefit from wage-exemption provisions.
• Recipients must plan for potential fund transfers to local or tribal housing funds if project deadlines are tight.

Relevant Terms - Minnesota Housing Finance Agency - Eligible recipients - Disqualified individual - Disqualified business - Credit certificate - Immediate family - Lived-experience engagement - Wages not counted (income/assets) - Public assistance programs - Child care assistance - General assistance - Minnesota supplemental aid - SNAP - Housing support - MFIP and Diversionary Work Program - Local housing trust fund - Tribal housing fund - Tribal Nation - Tier I city or county - Qualifying project - Affordability requirements - Emergency rental assistance - Appendix (annual projection of needs)