To encourage St. Paul landlords to keep rents affordable, the city is offering them a property tax break of 40 percent.
The program requires that landlords agree to keep at least a fifth of a building’s units affordable to lower-income tenants for 10 years.
Rich Holst, who owns nine rental units at several properties in St. Paul, expects to save at least $3,300 a year by signing up.
“I am literally filling out the paperwork as we speak,” said Holst, who said his units fall into what the government considers existing affordable housing. A decadelong commitment doesn’t bother him. “Really, it’s worth it. The downside of this thing seems really minimal.”
Minneapolis launched its tax break program for landlords last year, and wants to enroll 700 units in 2019.
Like its counterpart across the river, the St. Paul 4(d) Affordable Housing Incentive Program seeks to entice rental property owners to hold down rents in at least a portion of their buildings. The 40 percent discount would be applied to the number of affordable units in a building.
Officials hope to get at least 200 qualifying units this year. The deadline to enroll is March 8.
“Safe, secure, affordable housing is vital to building a city that works for all of us,” St. Paul Mayor Melvin Carter said in a statement released Wednesday. “This new program prioritizes accessibility and affordability for current residents, and for new families who want to call St. Paul home.”
For households making 60 percent or less of the area median income, landlords can charge no more than $991 for a studio apartment, $1,062 for a one-bedroom and $1,273 for a two-bedroom. For households earning 50 percent of AMI, rents are capped at $826 for a studio, $885 for a one-bedroom and $1,061 for two bedrooms. Landlords would see the savings with their 2020 property tax payments.
The owner of a 120-unit building — reserving 24 affordable units — could see annual property tax savings of nearly $10,000, according to city officials.
“This program is another way that we are addressing the affordable housing crisis in our community,” City Council Member Chris Tolbert, who is chairman of the city’s Housing and Redevelopment Authority, said in a statement. “It will help preserve quality naturally-occurring-affordable housing, and most importantly, it will allow more people and families to be able to stay in their homes.”
To learn more about the program, go to stpaul.gov/4D or contact Jules Atangana at email@example.com.