Minneapolis reports success with 4d tax incentive.

Byline: William Morris

One year in, Minneapolis leaders are enthusiastic about a new program to preserve the city's dwindling stock of unsubsidized affordable housing.

The 4d Affordable Housing Incentive Program, launched in April 2018, enables owners of so-called naturally occurring affordable housing, or NOAH, to apply for 4d tax status on those units, granting a property tax discount of up to 40%. Although 4d is primarily used for subsidized affordable housing built with low-income housing tax credits or similar programs, Minneapolis' program extends it to all landlords so long as they commit to keeping the units affordable for 10 years.

At a Wednesday meeting of the city's Housing Policy and Development Committee, Housing Stability Specialist Dean Porter-Nelson presented the results of the first two application cycles. After accepting 209 units in the 2018 pilot, the program added 561 more in 2019 for a total of 770 units, 1,062 bedrooms, in 129 buildings, and Porter-Nelson expects more to join in the coming years.

"Some [owners] said they weren't ready quite yet to enroll their units, but they enjoyed learning more about the program," he said. "Some of them thought they might consider applying next year, so this highlights the pipeline we might have for future years."

The apartments are scattered across 38 neighborhoods, primarily in north and central Minneapolis. Marcy-Holmes, Whittier and Elliot Park each had more than 60 units enrolled.

The program requires that rents be affordable to renters making 60% or less of area median income, and initial numbers show that units enrolled are easily hitting that threshold. For two-bedroom units, which must rent for $1,273 or less, the median rent reported was $950, more than 25% below the cutoff.

Minneapolis has roughly 15,000 NOAH units but has seen that number dwindling as housing costs and property values rise, Director of Housing Policy and Development Andrea Brennan told the committee. The 4d program is part of an array of strategies she referred to as "silver buckshot" to preserve as many of those units as possible.

"We hope to impact about 1,000 of those units by the end of the year," she said. "That is not an insignificant percentage of having an impact on NOAH, and it's certainly a higher percentage than any of our peer cities are having around the country."

In an interview, Brennan said some cities, such as Portland and Seattle, have essentially lost all of their NOAH stock to...