4d Frequently Asked Questions (FAQ)

4d, also known as LIRC or Low-Income Rental Classification, is the property tax classification for low-income rental properties established in Minnesota Statute 273.128. Traditionally utilized for subsidized affordable housing properties, the City of Saint Paul offers owners of unsubsidized, naturally occurring affordable housing the opportunity to receive the 4d class tax rate for qualifying units that commit to certain affordability restrictions for a 10-year period.

Visit Minnesota Housing’s Low-Income Rental Classification (LIRC) webpage for further information on Minnesota Housing’s role in certifying properties’ 4d reclassification, including the MHFA LIRC Program Guide.  

Review the relevant Minnesota Statutes for the legal basis of the 4d/LIRC classification, including:

• Minnesota Statute 273.13 for how the 4d “low-income rental classification—as well as other property tax classifications—are defined in State statute.
• Minnesota Statute 273.128 for the statutory language specific to 4d certification and eligibility, including as provided through the Saint Paul 4d program.

Smaller rental properties (with up to 7 units) with low DSI inspection grades may apply to the City of Saint Paul’s Rental Rehabilitation Program to be considered for a no-interest loan.

The calculation is based on the proportion of units.

No. Only unsubsidized, naturally occurring affordable housing properties can apply and enroll in the City of Saint Paul 4d Program.

No. Applications must be submitted through the online form. For support in accessing the online materials, you can go to a Saint Paul Public Library (SPPL). Review their Computer and Technology Services for a full picture of their support services.

Only applications received by the deadline will be reviewed by 4d staff.

If you begin an application but don’t complete it, you can apply for the 4d program in a future year’s application cycle.

Visit the interactive Certificate of Occupancy Map on the City of Saint Paul Department of Safety and Inspection (DSI) webpage to confirm the status of your property’s Certificate of Occupancy and Fire Safety Inspection.

Visit the Ramsey County Beacon website to verify your property’s associated addresses, parcel identification number (PIN) and ownership information to list on the 4d application.

• Single-family homes, parcels with 1 unit: Must be preserved for households with up to 50% AMI
• Duplexes/2-unit buildings: At least 1 unit must be preserved for households with up to 50% AMI. Owners may elect to preserve the 2nd unit for households with up to either 50% or 60% of AMI for the required 10-year period of enrollment
• Multifamily buildings (3 or more units):
  • Either 20% of multifamily units preserved for households with up to 50% of AMI OR 
  • 50% of multifamily units preserved for households with up to 60% of AMI.

• Exclude any units with short-term (<30 day) rental activity from its set of 4d-designated units.
• Exclude any owner-occupied units from its portion of 4d-designated units, which must be rental units by statute.  

Short-term rentals fall under a separate tax classification and are individually ineligible for 4d/LIRC classification. 

4d staff will review these units on a case-by-case basis. Generally, it is possible if 1) most of the units are already under the rent limits, and 2) the appropriate, lower rent is in place when enrollment contracts are signed.

Yes. However, the Contract for Deed/sales agreement must be registered and recorded with Ramsey County. It cannot be an informal agreement.

Yes, with caveats. If the property owner submits an application for a property before construction is finished, 4d staff will require the legal title for the parcel and a finalized unit list, detailing bedroom sizes and square footage. The unit list may not be modified under any circumstances between when the application is submitted (and accepted) and when construction is complete.

You must provide an unsigned, draft copy of the Certificate of Trust and an unsigned, draft copy of the Affidavit of Trustee. These documents must be drafted with the full and accurate information pertaining to the Trust and its title to the property.

Staff will use this information to prepare 4d enrollment closing documents. Once executed, both the closing documents and the trust documents will then be signed by the relevant signatory or signatories. Trustees should obtain the services of an attorney to prepare these documents.

You must provide a copy of the fully executed and recorded contract document setting forth the contractual relationship of the parties with a secured interest in the property. All Contract for Deed sellers and purchasers must be listed on the 4d application and must each follow the general application requirements depending on their entity type (individual, married individual, business, or trustee).

• $75 per unit preserved for households earning up to 60% of AMI
• $200 per unit preserved for households earning up to 50% of AMI
• Maximum grant is capped at $1,200 per property

Utility allowances are added to the base rent for utilities paid by the tenant in order to capture a tenant’s full financial responsibility related to housing costs. Altogether, base rents and utility allowances together cannot exceed 4d maximum rent limits.

The City of Saint Paul 4d program utilizes a standard naturally occurring affordable housing (NOAH) utility allowance for all 4d properties to facilitate a straightforward annual compliance process—current rates are available online at the City’s 4d Program webpage. Please note that these rates were calculated using figures available in 2023 and may change in the future. Please refer to the 4d webpage for current figures.

For properties where actual cost of utilities is lower than the utility allowance amounts provided, owners should contact 4d staff at 4d@stpaul.gov.

Once your application has been reviewed, you will receive a decision letter from the City outlining the determination and reasons for denial, if applicable. You should review this section to confirm the reasons are accurate based on your knowledge of the property.

If you find that the City did not accurately review your property and that resulted in a denial from the 4d program, you can respond to the letter explaining your understanding of the property’s current status. While the City aims to implement a holistic and robust review, sometimes context is lost in applications and it is helpful to hear the property owner/manager’s perspective.

Every year, the owner or property manager must submit an annual LIRC Reapplication form and related fee to Minnesota Housing (MHFA), by mail.

Property owners also must submit an annual Saint Paul Recertification Form to the City, preferably by email to 4d@stpaul.gov. The recertification form asks for information about any changes in rent during the previous year and whether there was any unit turnover with the relevant information about the new tenant(s) (i.e. household size and total household income).

If a property is sold, the seller must notify the City of Saint Paul to begin the assumption process, transferring the covenant/declaration to the new owner.

After five years, an owner can choose to reduce their 4d unit commitment in their property, based on their original declaration and program guidelines at the time of the reduction of unit commitment.

The annual compliance deadline for each year is in late January. Information should be provided for the prior year. For example, when annual compliance forms are submitted in January 2024, information on those forms should relate to the 12 months of 2023.

After five years, an owner can choose to reduce their 4d unit commitment in their property as long as minimum affordability requirements are met. Refer to your property’s declaration for general guidance and contact 4d staff for next steps.

A property owner or their family may move into a 4d unit as an owner occupant. A modification or release of the declaration must be executed in collaboration with City staff. Property owners should consult staff prior to owner occupying a rent and income restricted 4d program unit.

Tenant income verification is only required for new tenants who move into an existing 4d-designated unit. Tenant incomes are only verified once at the time of move-in. New applicants to the program do not have to provide income information for existing tenants during the application period. All tenants residing in the property at the time of enrollment in the 4d program are exempt from income verification. Whenever a unit becomes vacant, property owners must verify the incomes of prospective tenants before those new tenants move in.

If at any point a 4d unit is leased to a new household, proof of their income must be retained by the property owner or property manager. The owner or manager must report the income of the new household on the property’s next annual 4d recertification by the following January 31. Full income documentation does not need to be provided to the HRA, although staff may ask to see these records at any time. The 4d Declaration requires property owners or property managers to retain records for the duration of the 10-year enrollment period, plus six (6) years upon completion or termination of the enrollment period.

When a new household moves into a 4d unit, the property owner/manager must collect copies of any one (1) of the following forms for each income-earning adult (18+) in the household:

• IRS 1040 Tax Return Form, filed for the most recent year
• Tax Form 1099-MISC, filed for the most recent tax year
• W2 Tax Form, filed for the most recent tax year
• Prior 60 Days’ Employment Paystubs; or Employer’s Statement of Wages/Salary (i.e. via letter)
• Social Security Administration (SSA) Income Statement or other documentation from publicly supported welfare or income assistance
• If none of the other documentation is available as determined by HRA staff, the following may be accepted: a signed statement from the tenant stating that the tenant’s earned income in the past year was lower than the applicable income limits.

Tenants must also sign a Government Data Practices Disclosure and Release consenting to the use of income information, including the household members’ names and ages.

4d units are exempt from the RSO. The 4d program guidelines state that rent for 4d units may not be raised by more than 3% annually unless the unit is turning over to a new tenant and the previous lease ended with a voluntary move out or a "just cause" lease termination. For guidance on what constitutes a “just cause” lease termination, please see the most recent program guidelines.

You must notify the City of the property sale 30 days before the closing date via the Property Sale submission form. The buyer will sign a New Owner Acknowledgement Form indicating they take over the responsibilities as outlined in the original 4d Declaration of Covenants and Participation Agreement. 

4d properties cannot be unenrolled from the program during the 10-year term of the Declaration of Covenants and Participation Agreement. After 5 years in the program, the owner may opt to reduce the number of units so long as the minimum requirements of the Declaration of Covenants and program guidelines are met, which in all cases require at least 20% of units to remain in the 4d program. Please refer to your Declaration and consult with City staff if you would like to request the removal of units from the program.

Single family homes can be sold to an eligible homebuyer at 80% AMI or less. Larger properties with some 4d units can be sold to a current tenant of a 4d unit at the property or to an owner-occupant earning 80% AMI or less. All other 4d unit(s) besides the owner’s unit(s) must remain committed to the 4d program and preserved for low-income households as stated on the declaration for that property.

The unit that is non-compliant will lose its 4d tax status. In other words, there will no longer be any tax reduction on that unit. If all units are out of compliance, Minnesota Housing removes the property from the LIRC database. Property owners will need to submit a LIRC New Application form (rather than Reapplication form) along with a copy of their 4d recorded declaration to Minnesota Housing by the following year’s LIRC deadline.

We ask for all new enrollees to submit the originals with wet signatures. In all circumstances notarized wet signatures are required on the Declaration of Covenants, as it will be recorded with the County, which requires notarized wet signatures. The participation agreement and errors and omissions could be accepted if signed and scanned, though the originals are always preferred.

In general, the new owner could not demolish the building unless the declaration was removed. They would need to ask the City to take action to release the declaration, and the City and/or HRA Board would have to decide that there were sufficient public benefits to warrant the release of the declaration.