Local and Statewide Affordable Housing Aid Frequently Asked Questions

Overview

Local Affordable Housing Aid (LAHA) is direct aid, distributed from the Minnesota Department of Revenue (DOR) to each of the seven counties and each city with a population of at least 10,000 in the Twin Cities metropolitan area (Tier I cities and counties). LAHA is funded through a dedicated metro-area sales tax.

Statewide Affordable Housing Aid (SAHA), is funded by state funds appropriated to DOR. All Minnesota counties, Tribal Nations and cities with a population of at least 10,000 are eligible to receive this aid.

Greater Minnesota cities outside the seven-county metro area with fewer than 10,000 residents (Tier II cities) do not receive direct housing aid but are eligible to apply for the Greater Minnesota Small Cities (Tier II Cities) Housing Aid Grant Program.

Funding

How are funding allocations determined?
DOR determines allocations based on distribution formulas defined in statute. For counties and cities, these formulas consider cost-burdened households and total population. For Tribal Nations, funds are distributed to Tribes that apply by the deadline. For more information visit the DOR websites.

Does a city, county or Tribe need to apply to receive the funds?
For cities and counties there is no application process. DOR will distribute aid according to statutory requirements.

Tribal Nations may choose to receive funds annually. Tribes should work with DOR to meet this requirement.

Is SAHA funding from appropriations ongoing?
Yes. SAHA base appropriations now total $10 million annually. Up to $1.25 million of this amount is transferred to Minnesota Housing each year for the Tier II Cities Housing Aid Grant Program subject to certification requirements. The rest is distributed by DOR directly to counties, Tier I cities and Tribal Nations. For more information, refer to DOR’s SAHA webpage.

Are there any limitations on the use of Program Income? (i.e., loan repayments, recaptured funds, etc.)
Yes. Program income must be used only for Qualifying Projects. Qualifying Projects are the activities for which Aid Recipients may commit and expend Aid Funds. They are as defined in Minn. Stat. 477A.36, 477A.35, or both as applicable. Minnesota Housing does not collect reporting onprogram income. Aid recipients should refer to their own procedures and consult with their legal and financial advisors to ensure appropriate recordkeeping and expenditure of program income.

Qualifying Projects

What are the eligible uses of housing aid?
Qualifying Projects for aids payable in 2023 and later are:

Emergency rental assistance for households earning less than 80% of area median income (AMI) as determined by the U.S. Department of Housing and Urban Development (HUD)
Financial support to nonprofit affordable housing providers in their mission to provide safe, dignified, affordable and supportive housing
Development of market rate residential rental properties outside of the metro area if certain conditions are met
Projects designed for the purpose of construction, acquisition, rehabilitation, demolition or removal of existing structures, construction financing, permanent financing, interest rate reduction, refinancing and gap financing of affordable housing

For aids payable in 2024 and later, Qualifying Projects are those listed above plus:

Financing the operations and management of financially distressed residential properties
Funding of supportive services including staffing for supportive housing, which includes financial support to nonprofit services providers and capitalized reserves
Costs of operating emergency shelter facilities, including services
Other projects, subject to the approval of Minnesota Housing, that a) do not fit another Qualifying Project category and b) contribute to the creation and preservation of affordable and/or workforce housing, keep families and individuals from losing housing, or help those experiencing homelessness find housing.
For more information, read the complete lists of LAHA Qualifying Projects and SAHA Qualifying Projects.

What are the affordability requirements of LAHA and SAHA?
The following income requirements apply to both programs:

Funding for Emergency Rental Assistance must serve households earning less than 80% of the greater of state or area median income (AMI);
Homeownership projects must be affordable to households with incomes below 115% AMI; andRental Housing projects must be affordable to households earning less than 80% AMI.

Recipients must prioritize projects that provide affordable housing to households that have incomes below 80% AMI for homeownership projects and below 50% AMI for rental projects.

Some communities in Greater Minnesota may be eligible to spend aid on market rate developments if certain conditions are met. There are no income requirements for market rate housing under this category, but additional documentation and reporting is required. Requirements can be found on the Local and Statewide Affordable Housing Webpage.

What portion of housing aid funds can be used for staffing costs and administrative costs?
Administrative costs and staffing costs are not listed as a Qualifying Project. Therefore, the funds cannot be used for these costs unless the statute explicitly provides otherwise. For example, costs to provide services in the operation of emergency shelter facilities are allowed, as are the costs of supportive services or staff of supportive services providers for supportive housing as defined by Minn. Stat. 462A.37, subd. 1.

When the Qualifying Project is “financial support to nonprofit affordable housing providers,” the nonprofit affordable housing provider may use housing aid funds for its costs of staffing and administration in its mission to provide safe, dignified, affordable and supportive housing.

If funds are used for “financial support to a nonprofit affordable housing provider,” do aid recipients need to track and report on how the nonprofit uses those funds?
No. An aid recipient may choose to track how the funds are used, but that is not included in the information reported to Minnesota Housing.

Statute requires aid to be spent on Qualifying Projects. What is the definition of spent?
To be considered spent, aid funds must be committed to a Qualifying Project by December 31 in the third year following the year after the aid was received (for aid received in 2023, this would be December 31, 2027) and expended by December 31 the fourth year following the year after the aid was received (for aid received in 2023, this would be December 31, 2028).

What are some examples of expenditures ineligible for housing aid?
Housing aid should be used for projects that create and preserve affordable housing or stabilize the housing of low-income people. This does not include:

Conducting a housing or zoning study
Costs to create a Housing Improvement Area
Staff and services related to general housing quality and licensure, such as code enforcement
Staff and administrative costs for operation of an HRA or county or city housing department
Commercial, industrial or public space development projects
Projects located outside of Minnesota

What are the Aid Commitment and Expenditure Deadlines?
All Aid Recipients must commit Aid Funds to Qualifying Projects by December 31 in the third year following the year after the aid was received. This date is also referred to as the Commitment Deadline. This is a statutory requirement.

All Aid Recipients must also expend Aid Funds on Qualifying Projects by December 31 in the fourth year following the year after the aid was received. This date is also referred to as the Expenditure Deadline. This, too, is a statutory requirement.

Deadlines for the 2023 through 2027 Aid Years are shown in the table below.

Table: Fund Commitment and Expenditure Deadlines

Aid Year	Commitment Deadline	Expenditure Deadline
All	December 31, four years after receipt of the Aid Funds	December 31, five years after receipt of the Aid Funds
2023	December 31, 2027	December 31, 2028
2024	December 31, 2028	December 31, 2029
2025	December 31, 2029	December 31, 2030
2026	December 31, 2030	December 31, 2031
2027	December 31, 2031	December 31, 2032

If an Aid Recipient cannot spend the aid funds by the expenditure deadline due to factors outside its control, does it still need to meet the commitment deadline, and how does it demonstrate this?
The Aid Recipient must still meet the commitment deadline by committing the funds to a qualifying project or projects. If the funds are committed on time but cannot be spent by the expenditure deadline due to factors outside the Aid Recipient’s control, the funds are only considered spent and are not subject to recapture if they are transferred to a local housing trust fund.

Minnesota Housing will provide instructions for cities and counties on how to document situations where expenditure deadlines cannot be met due to factors outside their control, beginning with annual reports due December 1, 2027, or December 1, 2028, for funds distributed in 2023.

Is Aid considered spent if all funds have been used, but the entire project isn’t complete?
Yes. The expenditure deadline is based on the dollar amount spent and reported, not on completing the entire project. If funds are spent before the deadline, those dollars meet the requirement even if other phases aren’t finished yet. For example, if an aid recipient spends $40,000 of housing aid on the acquisition phase of an affordable housing project before the expenditure deadline, it has met the expenditure deadline for that $40,000, even if no units are completed before the expenditure deadline.

Can committed aid funds be recommitted to a different Qualifying Project?
Yes. The Aid Recipient can re-commit funds to a different Qualifying Project. Funds must be actively committed to or expended on a Qualifying Project on the day of the commitment deadline.

Can Tier I cities or counties transfer funds to a county or regional HRA?
Yes. Funds may be transferred to an HRA for Qualifying Projects. However, the original aid recipient remains responsible for all requirements, including reporting.

Can a county use its funds within cities that have also received housing aid?
Yes. Counties can spend the funds on qualifying projects anywhere in the county, including cities that directly receive aid. A county receiving aid should consult with the cities where projects are planned (see subd. 7).

How can a local housing trust fund be used with LAHA or SAHA funds?
Funds can be held in a local housing trust fund established by the Aid Recipient while aid recipients determine a Qualifying Project.

Funds must be committed and spent on a Qualifying Project by the deadlines in statute. Funds remaining in a local housing trust fund past the Expenditure Deadline will only be considered “spent” on a Qualifying Project if the Tier I city or county meets the Commitment Deadline for those funds and demonstrates that it cannot spend funds by the Expenditure Deadline due to factors outside their control.

If Aid funds are placed in a Local Housing Trust fund, are they considered spent?
Funds are only considered spent on a Qualifying Project if the Tier l city or county meets the Commitment Deadline for those funds and demonstrates it cannot spend funds by the Expenditure Deadline due to factors outside their control.

What is the definition of a local housing trust fund?
As defined in Minn. Stat. 462C.16, subd. 1(e), a local housing trust fund is “a fund established by a local government with one or more dedicated sources of public revenue for housing.” This excludes both regional housing trust funds and funds established by Tribal governments.

Locally Funded Housing Expenditures (LFHE)

What are Locally Funded Housing Expenditures?
Locally Funded Housing Expenditures are expenditures of the aid recipient, including expenditures by a public corporation or legal entity created by the aid recipient, that are:
(1) funded from the aid recipient's general fund, a property tax levy of the aid recipient or its housing and redevelopment authority, or unrestricted money available to the aid recipient, but not including tax increments; and 
(2) expended on certain activities during the aid recipient's two prior fiscal years.

Those activities are:

Financial assistance to residents in arrears on rent, mortgage, utilities or property tax payments
Support services, case management services, and legal services for residents in arrears on rent, mortgage, utilities or property tax payments
Down payment assistance or homeownership education, counseling and training
Acquisition, construction, rehabilitation, adaptive reuse, improvement, financing and infrastructure of residential dwellings
Costs of operating emergency shelter, transitional housing, supportive housing or publicly owned housing, including costs of providing case management services and support services
Rental assistance

What needs to be reported to Minnesota Housing regarding Locally Funded Housing Expenditures?
The LFHE report collects information about Locally Funded Housing Expenditures in the prior two fiscal years. The report asks for total amounts expended each year and will ask for an explanation if the amount decreased from the first year. This explanation is required because statute specifies that the housing aid funds are meant to supplement, not supplant or replace, existing locally funded housing expenditures.

Roles

What role does the Department of Revenue play in distributing and tracking housing aid?
The Department of Revenue calculates and distributes the amount of aid available to each government. DOR also works with eligible Tribal Nations who wish to receive Aid Funds. DOR also collects reporting from Minnesota Housing and uses the information to make determinations regarding future payments to Aid Recipients.

What role does Minnesota Housing play in distributing and tracking housing aid?
Minnesota Housing collects annual reporting for housing aid. Minnesota Housing will provide forms and instructions necessary to fulfill reporting requirements each year by early October.

Each aid recipient must submit a report to Minnesota Housing each year by December 1. Minnesota Housing must notify the Department of Revenue if an aid recipient fails to submit a report, does not spend funds during the required timeframe, or spends funds on an ineligible project.

What is the role of the Aid Recipient?
The role of the Aid Recipient is to spend Aid Funds in accordance with Statute. The Aid Recipient does not need approval from Minnesota Housing or Department of Revenue before spending funds. Funds must be used on Qualifying Projects and expenditures should be documented to avoid repayment or recapture. Aid Recipients should work with their own legal counsel to determine eligible projects according to statute. Finally, recipients are responsible for submitting accurate and timely reports to Minnesota Housing.

General Reporting Requirements

What are the reporting requirements?
Housing aid recipients must submit a report to Minnesota Housing every year by December 1. The reports will request information about the dollar amount the aid recipient has committed or expended on Qualifying Projects as well as activity regarding Locally Funded Housing Expenditures. Minnesota Housing will provide reporting forms and instructions on the Local and Statewide Affordable Housing Aid website each year by early October.

Do the seven Twin Cities metro counties need to submit separate reports for LAHA and SAHA?
In 2025, metropolitan counties submitted one combined report for LAHA and SAHA. Although this could change, Minnesota Housing expects to continue with a combined format.

How are LAHA and SAHA reports submitted to Minnesota Housing?
Minnesota Housing uses Box.com for submitting reports. Box.com is an approved, secure file-sharing system. Aid recipients do not need a paid Box.com account. To get set up in Box, aid recipients will receive an invite to Box.com from Minnesota Housing to access their shared reporting folder. Aid recipients may authorize an HRA or another third party to submit reports on their behalf and are responsible for the accuracy and timeliness of all submitted information. To request additional user access or revoke access, email localhousingaid.mhfa@state.mn.us.

Will Minnesota Housing be collecting any supporting documentation with annual reports?
Except in the case of market rate residential rental development projects funded by SAHA, Minnesota Housing will not collect supporting documents.

Will Minnesota Housing be monitoring the use of housing aid prior to the reporting deadline for cities and counties?
Minnesota Housing will not require reporting prior to December 1, 2025, when the first report is due from cities and counties. Minnesota Housing will be checking in with local governments to offer support and track spending progress.

What happens if a city, county or Tribal Nation does not submit a report or does not spend the funds?
Reports are due by December 1 every year.

If the aid recipient fails to submit a report, does not spend funds during the required timeframe, or spends funds on an ineligible project, DOR may suspend future payments and require the aid recipient to pay back the housing aid it received to Minnesota Housing.

Detailed information can be found in 477A.35, Subd 6 and 477A.36, Subd. 6.

What happens to aid funds if they are returned or recaptured?
If returned, aid funds would be deposited to one or more Minnesota Housing programs. This includes Family Homeless Prevention and Assistance Program (FHPAP), the Economic Development and Housing Challenge Program (Challenge), and the Workforce and Affordable Homeownership Development Program, as specified in law.

Definitions and Resources

Term	Definition
City Distribution Factor	The number of households in a Tier I city that are cost-burdened divided by the total number of cost-burdened households in Tier I cities. Cost-burdened households are determined using the most recent American Community Survey estimates or experimental estimates available as of May 1 of the aid calculation year.
Cost-burdened household	A household in which gross rent is 30 percent or more of household income, or in which homeownership costs are 30 percent or more of household income.
County distribution factor	The number of households in a county that are cost-burdened divided by the total number of cost-burdened households in metropolitan counties. Counts are determined using the most recent American Community Survey estimates or experimental estimates available as of May 1 of the aid calculation year.
Gap Financing	The difference between the property costs and the market value of the property upon sale or the amount the target household can afford for housing (based on industry standards and practices).
Locally Funded Housing Expenditures	Expenditures of an aid recipient (including a public corporation or legal entity created by the recipient) that are funded from the general fund, a property tax levy of the recipient or its housing and redevelopment authority, or unrestricted money available to the recipient (excluding tax increments), and used for qualifying activities including: financial assistance for rent, mortgage, utilities, or property tax arrears support, case management, and legal services for households in arrears down payment assistance or homeownership education, counseling, and training acquisition, construction, rehabilitation, adaptive reuse, improvement, financing, or infrastructure of residential dwellings operating costs for emergency shelter, transitional housing, supportive housing, or publicly owned housing, including case management and support services rental assistance
Metropolitan area	The area over which the Metropolitan Council has jurisdiction, including only the counties of Anoka; Carver; Dakota excluding the cities of Northfield and Cannon Falls; Hennepin excluding the cities of Hanover and Rockford; Ramsey; Scott excluding the city of New Prague; and Washington.
Metropolitan County	Any one of the following counties: Anoka, Carver, Dakota, Hennepin, Ramsey, Scott or Washington.
Population	The population estimated or established as of July 15 in an aid calculation year by the most recent federal census, by a special census conducted under contract with the United States Bureau of the Census, by a population estimate made by the Metropolitan Council pursuant to section 473.24, or by a population estimate of the state demographer made pursuant to section 4A.02, whichever is the most recent as to the stated date of the count or estimate for the preceding calendar year, and which has been certified to the commissioner of revenue on or before July 15 of the aid calculation year.
Tier I City	A statutory or home rule charter city that is a city of the first, second, or third class and is not located in a metropolitan county, as defined by section 473.121, subdivision 4.
Tier II	A statutory or home rule charter city that is a city of the fourth class and is not located in a metropolitan county, as defined by section 473.121, subdivision 4.
Distribution Formulas	County Aid Distribution: 3 percent of the total amount available to counties, plus 79 percent of the total amount available to counties multiplied by the county distribution factor. Tier I City Aid Distribution: the Tier I city's city distribution factor multiplied by the total amount available to cities.

The following organizations may be a resource with Technical Assistance when planning for housing projects:
Minnesota Housing Partnership https://mhponline.org/
Greater Minnesota Housing Fund https://gmhf.com/
Met Council https://metrocouncil.org/
League of Minnesota Cities https://www.lmc.org/

Minnesota Housing does not define terms that are not defined in statute.
Please use the links below to review the statute and visit the Local and Statewide Housing Aid page on Minnesota Housing’s website for more information.

Statewide Local Housing Aid Statute: https://www.revisor.mn.gov/statutes/cite/477A.36
Local Affordable Housing Aid Statute: https://www.revisor.mn.gov/statutes/cite/477A.35

What should I do if I suspect fraud, theft or misuse of aid funds?
Aid Recipients and the general public are strongly encouraged to report instances of fraud, misuse of funds, conflicts of interest or other concerns without fear of retaliation using these communication channels.

Minnesota Housing’s Chief Risk Officer at 651.296.7608 or 800.657.3769 or by email at MHFA.ReportWrongdoing@state.mn.us;
Any member Minnesota Housing’s Servant Leadership Team, as denoted on Minnesota Housing’s current organizational chart (Go to mnhousing.gov, scroll to the bottom of the screen and select About Us, select Servant Leadership Team); or
Report Wrongdoing or Concerns (mnhousing.gov) (Go to mnhousing.gov, scroll to the bottom of the screen and select Report Wrongdoing).

Contact

Have questions? Reach out to us at localhousingaid.mhfa@state.mn.us, and we’ll get back to you as soon as possible.