SF1652

Purpose

To limit rent increases for certain affordable rental units. Specifically, the bill sets a cap on how much rent can rise in 12 months for rent-restricted units in senior-only projects that receive low-income housing tax credits.

Main Provisions

• Adds a new subdivision (Subd. 5) to Minnesota Statutes 462A.222 to establish a Limitation on rental increases.
• Applies to any project that
  • is restricted to seniors (as defined in section 462A.37, subdivision 1, paragraph h), and
  • receives low-income housing tax credits (LIHTC) under section 42 of the Internal Revenue Code.
• For each rent-restricted unit in such a project, the rent increase in any 12-month period may not exceed the greater of:
  • the percentage increase in Social Security or Supplemental Security Income (SSI) benefits in the preceding 12 months, minus one percentage point, or
  • 0 percent.
• In other words, the annual rent increase cap is max(0, COLAincreaselast12months − 1%).

How it Works (Rent Increase cap)

• If Social Security/SSI benefits rose by, for example, 3% in the last year, the cap would be 2%.
• If benefits rose by 0% in the last year, the cap would be 0% (no increase allowed).
• If benefits rose by 1%, the cap would be 0% (since 1% − 1% = 0%, and the floor is 0%).

Scope and Applicability

• Targets only senior-restricted rental projects that receive LIHTC.
• Does not apply to non-senior housing or to LIHTC projects without senior restrictions.

Effect on Income and Law

• Creates a new binding limit on rent increases for the specified units.
• Represents a change to existing law by adding a dedicated rent increase cap tied to federal COLA-related adjustments for Social Security and SSI.

Significance

• Aligns rent increases for certain affordable senior units with changes in federal benefit programs, providing predictable housing costs for seniors in LIHTC properties.

Relevant Terms - Subd. 5, Limitation on rental increases - Minnesota Statutes 462A.222 - low-income housing tax credits (LIHTC) - section 42 of the Internal Revenue Code - senior-restricted housing / projects restricted to seniors - rent-restricted unit - Social Security (COLA) increases - Supplemental Security Income (SSI) - cost-of-living adjustment (COLA) - 12-month period - rent increase cap - zero percent (0%) floor