4D FREQUENTLY ASKED QUESTIONS

Minnesota classifies property for tax purposes according to its use. Those classifications—such as “4a,” “4b,” and “4d”—are established in Minnesota Statute §273.13. Each has a corresponding class rate, which is applied to taxable market value to calculate a property’s net tax capacity. Applicable property-tax rates are then applied in calculating taxes payable.

Typical rental property is commonly classified as 4a (four or more residential rental units) or 4b (certain smaller nonhomestead residential properties), each generally assessed at a 1.25% class rate.

By contrast, class 4d(1) applies to qualifying low-income rental housing and has a class rate of 0.25%—an 80% reduction in property-tax capacity compared with the typical 1.25% rental-property class rate, on the qualifying portion of the property.

Low Income Rental Classification (LIRC) is Minnesota Housing’s statewide program for determining and certifying which rental properties and units qualify for that classification under Minnesota Statute §273.128. Minnesota Housing certifies approved properties and qualifying unit counts to the appropriate county or city assessor, who applies the 4d(1) classification.

In short: LIRC is the State qualification and certification program; 4d(1) is the resulting property-tax classification. A municipal “4d Program” is something different again: it may provide a pathway for a property to establish LIRC qualification.

Under Minnesota Statute §273.128, at least 20% of a rental property’s units must meet one or more of four qualification pathways:

1. Project-based Section 8: units subject to a qualifying Housing Assistance Payments (HAP) contract under Section 8 of the United States Housing Act of 1937.
2. Low-Income Housing Tax Credits (LIHTC): rent- and income-restricted units in a qualified low-income housing project receiving federal tax credits under Internal Revenue Code §42(g), commonly evidenced by a Land Use Restriction Agreement (LURA).
3. USDA Rural Housing: qualifying units financed by the USDA Rural Housing Service and receiving rental assistance under Section 521(a) of the Housing Act of 1949.
4. Government-assisted recorded restrictions: units subject to qualifying rent and income restrictions established through federal, State, or local government financial assistance and evidenced by an instrument recorded against the property.

For the fourth pathway, the recorded restrictions must meet the statutory requirements concerning both rent and tenant household income at initial occupancy, generally based on 60% of the greater of area or State median income, adjusted as required.

These are four distinct qualifying bases, not four interchangeable versions of a single affordability agreement. The underlying assistance or recorded restriction determines what documentation and continuing obligations apply.

4d Compliance does not currently administer LIRC certification through the USDA Section 521 pathway.

No—if your property already meets another statutory LIRC qualification pathway. State LIRC eligibility is available throughout Minnesota and does not depend on living in Saint Paul or Minneapolis.

Municipal 4d programs can help otherwise unsubsidized rental properties establish the government-assisted affordability restrictions required by the fourth pathway. In exchange for municipal assistance, an owner agrees to preserve designated units under a recorded affordability instrument.

Municipal enrollment, State LIRC certification, and the assessor’s class 4d(1) designation remain separate legal and administrative steps. The City’s process may nevertheless include preparing or submitting the initial LIRC application on behalf of accepted participants. Saint Paul and Minneapolis both describe City-managed initial State submissions; owners generally remain responsible for subsequent annual State renewals.

Municipal programs also have their own eligibility criteria, rent limits, minimum unit commitments, agreement terms, and compliance procedures. Do not assume the rules of one city apply in another.

Not necessarily. State law generally requires at least 20% of units to qualify. If only some units qualify, class 4d(1) applies to the corresponding proportion of the building and associated land; the remainder is classified according to its otherwise applicable use.

For example, if five of ten units are certified, the 4d(1) rate applies to 50% of the building and corresponding land value—not automatically to the entire property.

A municipal program may impose additional or different minimum commitments. Saint Paul’s published program rules, for example, distinguish single-family, duplex, and larger multifamily properties and the 50% or 60% AMI commitments available to each. We review the property-specific alternatives before an owner decides which units to commit.

AMI means Area Median Income, a benchmark published through the U.S. Department of Housing and Urban Development (HUD) and used by housing programs to establish income and rent affordability limits. Limits change annually and depend on household size, unit bedroom count, geographic area, and the governing program.

For example, the 2026 Twin Cities metropolitan AMI for a four-person household is $131,500. The corresponding 60% AMI income amount is $78,900, while the metropolitan 60% AMI rent limit for a two-bedroom unit is $1,776 per month, including applicable tenant-paid utilities.

Those amounts illustrate two different measurements: tenant-income limits depend on household size; rent limits depend on bedroom count and utility allowances. Municipal participation agreements may impose 50% AMI requirements or other more restrictive limits.

The applicable numbers should always be checked for the current year, property location, and governing program before screening a tenant or setting rent.

The 4d(1) class rate is 0.25%, compared with the 1.25% class rate generally applicable to many rental properties: an 80% reduction in the class rate and resulting tax capacity on the qualifying share of the property.

The resulting dollar savings depend on the property’s value, its otherwise applicable classification, how many units are certified, local levies, and other factors in the property-tax calculation. They are not a fixed dollar amount per unit.

Our Qualification & Enrollment service includes property-specific projections of expected tax savings and return on investment, so you can evaluate the affordability commitment and its financial implications before proceeding.

Important distinction: Minnesota Housing uses a separate, program-specific definition of “Property Tax Savings” for the amount owners must document as spent on eligible uses. That compliance calculation is not simply the 80% class-rate reduction, or the difference between this year’s tax bill and last year’s. See “What must I use the tax savings for?” below.

That depends on how the property qualifies. A Section 8 contract, LIHTC restriction, government-assisted affordability covenant, or municipal 4d participation agreement can establish different terms and continuing obligations.

For example, Saint Paul and Minneapolis municipal 4d programs generally use 10-year affordability commitments. The specific agreement governs how designated units may be changed, released, or transferred.

Annual LIRC certification is not the same thing as the term of the underlying affordability restriction. An owner may have to renew LIRC every year while remaining bound by a recorded commitment for many years.

First, determine which statutory pathway already qualifies—or could qualify—the property. That determines which evidence, agreements, and agencies are involved.

A property already qualifying through Section 8, LIHTC, USDA assistance, or another government-assisted recorded restriction can generally follow Minnesota Housing’s initial LIRC application process directly.

For an unsubsidized property pursuing a municipal 4d pathway, the steps generally include municipal eligibility review, City application and acceptance, execution and recording of the applicable affordability instrument, and the initial State LIRC submission. Saint Paul and Minneapolis currently describe processes in which the City handles the accepted municipal participants’ initial LIRC submissions to Minnesota Housing.

Minnesota Housing then makes the State qualification/certification determination and certifies approved units to the assessor. Some direct initial applications also require a local-government approving resolution, depending on the jurisdiction and application year; that is a separate statutory requirement, not municipal 4d enrollment.

State LIRC: Minnesota Housing currently requires both initial applications and annual reapplications by March 31, for taxes payable in the following calendar year. Minnesota Housing states that it does not accept late applications. The published fee is $10 per qualifying unit, up to $150 per property.

Saint Paul municipal 4d: Participating owners submit a City recertification by January 31 and a State LIRC renewal by March 31.

Minneapolis municipal 4d: Participating owners likewise submit a City annual compliance form by January 31 and a State renewal by March 31.

Initial City enrollment has its own application window, often in the fall, and is not necessarily open every year. Do not assume dates from an earlier program cycle remain in effect.

For current availability, forms, and instructions, use the official agency links at the end of this FAQ. As of October 8, 2026, Saint Paul’s public enrollment page still identifies its 2025 application cycle as closed and directs owners to City updates for future cycles.

Yes. Owners must reapply to Minnesota Housing annually to continue receiving class 4d(1) treatment. The renewal requires confirmation of continuing eligibility and the prescribed fee, along with the required State certifications and supporting information.

Properties qualified through municipal 4d programs must also complete the City’s separate annual compliance process. The City filing and State renewal have different recipients, forms, and deadlines; completing one does not automatically satisfy the other.

Contact the responsible agency immediately, identify the filing and year affected, and review the property’s status. Minnesota Housing’s published instructions state that late LIRC applications are not accepted, and a missed annual reapplication can interrupt the class 4d(1) tax benefit.

Municipal programs have their own compliance, correction, and appeals procedures; any available remedy depends on the program and circumstances. We can help review the administrative record and identify next steps, but cannot promise a filing exception, retroactive certification, or restoration of the tax benefit.

We know firsthand that there is one: the administrative and reporting burdens required by the same State statutes and City policies intended to reduce the financial burden on affordable rental property owners.

Retaining 4d/LIRC requires continuing qualification, required rent and tenant-income restrictions, documentation of eligible tax-savings uses, and annual State reapplication—plus any separate municipal program obligations.

Our role is to help you understand those requirements and untangle the red tape involved in meeting them.

The precise requirements come from your qualification pathway, recorded agreements, applicable State LIRC rules, and any municipal program. Typically, they include:

• Tenant qualification: verifying and retaining evidence of income eligibility at the required point in a new tenant’s occupancy.
• Rent compliance: following the applicable rent ceilings, utility allowances, restrictions on increases, and any approval requirements.
• Annual filings: State LIRC renewal and, where applicable, separate City 4d compliance reporting and rent rolls.
• Tax-savings use: applying the program-defined savings to eligible purposes, maintaining evidence, and providing required annual certifications or narratives.
• Records and privacy: preserving compliance documentation and obtaining required authorizations before disclosing protected tenant information.

Municipal participants may also have duties concerning affirmative vacancy advertising, fair housing and housing-assistance nondiscrimination, certificates of occupancy, rental licensing, inspections, building-code compliance, and other local terms. Not all municipal requirements are universal statewide LIRC requirements.

Under Saint Paul’s municipal 4d program, tenants already living in a unit at the time of the property’s initial enrollment generally do not have to undergo a new income qualification for that enrollment. When a participating unit turns over, the incoming tenant’s household income must be verified in accordance with the applicable limits.

That treatment should not be assumed for every LIRC qualification pathway. Existing Section 8, LIHTC, or other assistance programs may have their own tenant eligibility and certification rules. The recorded agreement and applicable program determine what you must verify and when.

Yes, if the proposed rent and the increase comply with every applicable restriction. A unit can have an annually published maximum affordable rent and a separate cap on how much an existing tenant’s rent may increase within a given period.

For instance, Saint Paul’s municipal 4d participation requirements have included a 3% limit on annual rent increases, subject to the governing agreement and any permitted approval process for exceptions. A rent below the published AMI ceiling is therefore not necessarily an allowable increase.

The rent must also be evaluated with the required utility allowance for tenant-paid utilities. We offer a 4d Unit Rent Increase Review before owners implement proposed changes.

A vacancy ordinarily does not erase the unit’s recorded affordability commitment. Before leasing it again, confirm the required tenant-income test, applicable rent ceiling, utility allowance, and any City marketing or reporting requirements.

For example, Saint Paul and Minneapolis municipal programs require affirmative advertising of vacant participating units, including HousingLink listings. The requirements of an existing Section 8 or LIHTC property may differ.

Minnesota Statute §273.128 requires the LIRC-defined Property Tax Savings to be used for one or more eligible purposes:

1. Property maintenance
2. Property security
3. Improvements to the property
4. Rent stabilization
5. Increases to the property’s replacement reserve account

For this compliance requirement, Minnesota Housing defines “Property Tax Savings” using a special comparison between property taxes calculated under the former 4d class-rate structure and the taxes due under the current 4d(1) classification. This is not simply the entire difference between the usual 1.25% rental rate and the 0.25% 4d rate, nor the change between two annual tax statements.

Beginning with renewal applications submitted in 2026, owners must certify the prior period’s eligible uses and provide a written narrative describing how those program-defined savings were used. Minnesota Housing may request supporting records. Our Tax-Savings Expenditure Accounting service addresses this specific reporting obligation.

Retain the records that establish both initial qualification and continued compliance, including the applicable recorded restrictions and agreements, State and City approvals, participating-unit rent rolls and leases, tenant eligibility documentation, utility allowances, expense receipts and records, annual filings, and agency correspondence.

Minnesota Housing requires supporting expenditure records to be retained for at least six years. Saint Paul’s municipal 4d rules additionally require specified program records to be kept throughout the 10-year enrollment period and for six years afterward. Other agreements may impose different or longer retention requirements.

We organize a digital property file for each engagement and provide the completed records associated with our work. Owners remain responsible for retaining their original legal and compliance records.

The consequences depend on the violated requirement, affected units, agreement terms, and whether correction is permitted. They can include a required corrective action, loss of eligibility for one or more units, loss of certification for an applicable year, rent refunds, or other remedies under the municipal agreement.

Act promptly. A problem identified during the year may be easier to correct than one discovered after a filing or appeal deadline. We can help review the applicable requirements and supporting record, but government agencies retain compliance and certification authority.

An ownership transfer does not necessarily terminate recorded affordability restrictions. Governing instruments or municipal programs may require advance notice, acknowledgment by the new owner, approval, amended records, or other steps before closing.

Buyers and sellers should review the property’s recorded restrictions and contact the responsible agency early. 4d Compliance does not currently offer a separate Property Transfer & Assumption service.

1. We hear from you. Submit an inquiry describing your property and what you need help with.
2. We review the basics with you. We examine available property records, program history, and likely eligibility or compliance needs.
3. We identify how to support you. We agree on the specific scope, responsibilities, and price before paid work begins.
4. We get to work for you. We perform the agreed review, coordinate documents, filings and follow-up, and organize the records generated by the service.

For multiple properties, we can coordinate a combined discussion or engagement while identifying the requirements and fees for each property.

We currently offer three service categories:

• Qualification & Enrollment: initial qualification, property and ownership review, tax-savings projections, and application/enrollment documentation and coordination.
• Annual Recertification: continuing-compliance review and preparation or coordination of State renewal and applicable municipal recertification materials.
• Ongoing Compliance: as-needed unit rent increase review, tenant eligibility review, and tax-savings expenditure accounting.

Visit Services & Pricing for deliverables, exclusions, and the current fee schedule. We do not offer a standalone property-transfer/assumption package.

The standard Qualification & Enrollment and Annual Recertification fees are fixed by property, owner, and/or participating-unit counts—rather than billed according to the actual time the work takes. Our fee structure uses a $50/hour pricing basis, but you pay for the agreed service, not however long it takes us.

Ongoing Compliance services use stated per-unit, per-tenant, per-property, and per-document rates. See the current Services & Pricing page for the figures that apply to your property.

We confirm scope and price in advance; unexpected work outside the agreed scope is separately identified and priced before proceeding. Government fees, recording charges, notary charges, record/title expenses, and other third-party costs are separate unless expressly included in the agreement.

We provide a service agreement and invoice identifying the property, agreed work, price, and payment terms. Standard fixed-fee work is priced up front. You will not receive an additional fee merely because completing the agreed work took more hours than expected.

Additional services or unusual conditions outside the agreed scope are addressed separately and require agreement before the extra work proceeds. The available payment methods will be identified on the invoice.

Yes. We can coordinate related needs across a portfolio, but eligibility, unit commitments, recorded documents, and compliance history must still be reviewed property by property. We define the corresponding fee and deliverables for each property in the service agreement.

Our normal policy is not to accept new initial-enrollment or annual-recertification engagements for the current cycle with fewer than five business days remaining before the relevant filing deadline. Complex property or ownership records may require substantially more lead time.

Please contact us earlier whenever possible. We’ll assess timing before committing to the work; we cannot guarantee an agency deadline or approval.

For an initial inquiry, we generally need only your contact information, property address, ownership or management role, number of rental units, current 4d/LIRC participation status (if any), and the help requested. Parcel identification or existing program information is useful if available.

After we confirm the scope, we may request additional ownership, rent, compliance, or document records specific to the service. Do not send protected tenant documents through the public inquiry form.

Yes, through our Tenant Eligibility Review service, when we have agreed on the engagement and appropriate document handling.

Never send us sensitive tenant financial or personal information without the tenant’s required signed authorization permitting its release. We will identify the documents and secure transfer process needed before protected information is provided.

Yes. We organize a digital file of the correspondence, documents, and data associated with our work on your property. We provide shared access during the engagement and deliver the completed property file when the service is finished.

This complements—but does not replace—your obligation to retain original property, tenant, tax, and legal records required by the governing agencies and agreements.

No. 4d Compliance LLC is an independent consultancy. Our expertise comes from direct experience building and administering Saint Paul’s 4d Program, but we do not act for Minnesota Housing, Saint Paul, Minneapolis, or another government agency.

We provide administrative, program-specific, and advisory support. We do not make government eligibility or certification decisions or provide legal opinions, tax-return preparation, general accounting, appraisal, brokerage, or property-management services.