Community Stabilization: Distressed Multifamily Rental Building Program

To be eligible for funding, the property must meet all the following threshold requirements:

• Be owned or controlled by an eligible recipient*
• Have all units restricted to households with incomes at or below 60% of the area median income (AMI) as determined by the United States Department of Housing and Urban Development (HUD), adjusted for household size, and this household income limit requirement must be documented in a recorded declaration, covenant, land use restrictive agreement, or other similar recorded document deemed acceptable at Minnesota Housing’s sole discretion
• Have eight or more units
• Have been placed in service on or before December 31, 2023

Additionally, the property must meet at least one of the following qualifying requirements:

• Be at imminent risk of foreclosure, closure, or sale that would result in permanent loss of affordability
• Have two or more years of negative net operating income (NOI), exclusive of financial or in-kind operating support from the owner of the property
• Have two or more years with a debt service coverage ratio less than one
• Have necessary costs of repair, replacement, or maintenance that exceed revenues and the project reserves available for those purposes

*Reference the Community Stabilization: Distressed Multifamily Rental Building Program Guide for more details

An Eligible Recipient is one of the following:

• Local unit of government (subject to limitations as outlined in Section 2.01 of the Program Guide)
• Federally recognized American Indian Tribe located in Minnesota or its Tribally
• Designated Housing Entity
• Private developer
• Nonprofit organization

The eligible recipient must own or control the property, which is demonstrated by meeting one of the following criteria:

• Properties are directly owned by the eligible recipient.
• Properties are owned by a Limited Liability Company (LLC), Limited Partnership (LP), or other similar ownership entity with approval from Minnesota Housing at its sole discretion, and the eligible recipient is the managing general partner or member of the LLC, LP, or other similar ownership entity. If there is more than one general partner or member, the eligible recipient must control at least 50% of the combined ownership of all general partners or members in the ownership entity.
• The eligible recipient has site control of the property as defined in Community Stabilization: Distressed Multifamily Rental Building RFP Application Instructions.
• Other properties where the eligible recipient can demonstrate ownership or control at Minnesota Housing’s sole discretion.

Program funds may be used for financing the physical and financial needs that are necessary to stabilize an eligible property, which includes:

• Debt Restructure that stabilizes or improves property cash flow
• Deferred maintenance and rehabilitation, including costs related to the purpose of rehabilitation, such as:
  • Architecture and design costs, general contractor costs, and permits
    Environmental reviews and remediation, including lead-based paint, asbestos, and radon mitigation
  • Closing costs, including legal, title, survey, and loan fees
  • Temporary relocation expenses incurred as a result of the rehabilitation
  • Project management fees that are the lesser of 5% of the total project costs or $100,000
• Property operating costs including, but not limited to, property insurance, front desk,  security/safety, tenant service coordination, supportive services, case management, program staff, and one-time or short-term staff retention incentives.  Reporting, compliance and monitoring costs detailed below are considered operating costs.
• Capitalized replacement, operating, and/or supportive service reserves
• Financing to sell or transfer ownership of a property to a qualified owner that will commit to long-term affordability, as determined by Minnesota Housing at its sole discretion
• Costs associated with required reporting, compliance, and monitoring, including third-party auditors and accountants

Minnesota Housing may approve, at its sole discretion, other uses that support the physical and financial needs of the property.