Subd. 1. Qualifying rules.

The market value of a rental housing unit qualifies for assessment under class 4d if:

1. (1) it is occupied by individuals meeting the income limits under subdivision 2;
2. (2) a rent restriction agreement under subdivision 3 applies;
3. (3) the unit meets the minimum housing quality standards under subdivision 4; and
4. (4) the Minnesota housing finance agency certifies to the local assessor that the unit qualifies.

Subd. 2. Income limits.

1. (a) In order to qualify under class 4d, a unit must be occupied by an individual or individuals whose income is at or below 60 percent of the median area gross income. If the resident's income met the requirement when the resident first occupied the unit, the income of the resident continues to qualify. If an individual first occupied a unit before January 1, 1998, the individual's income for purposes of the preceding sentence is the income for calendar year 1996.
2. (b) For purposes of this section, "median area gross income" means the median gross income for the area determined under section 42 of the Internal Revenue Code of 1986, as amended through December 31, 1996.
3. (c) The median gross income must be adjusted for family size.
4. (d) Vacant units qualify as meeting the requirements of this subdivision in the same proportion that total units in the building are subject to rent restriction agreements under subdivision 3 and meet minimum housing standards under subdivision 4. This paragraph applies only to the extent that units subject to a rent restriction agreement and meeting the minimum housing quality standards are vacant.
5. (e) The owner or manager of the property may comply with this subdivision by obtaining written statements from the residents that their incomes are at or below the limit.

Subd. 3. Rent restrictions.

1. (a) In order to qualify under class 4d, a unit must be subject to a rent restriction agreement with the housing finance agency for a period of at least five years. The agreement must be in effect and apply to the rents to be charged for the year in which the property taxes are payable. The agreement must provide that the restrictions apply to each year of the period, regardless of whether the unit is occupied by an individual with qualifying income or whether class 4d applies. The rent restriction agreement must provide for rents for the unit to be no higher than 30 percent of 60 percent of the median gross income. The definition of median gross income specified in this section applies. "Rent" means "gross rent" as defined in section 42(g)(2)(B) of the Internal Revenue Code of 1986, as amended through December 31, 1996.
2. (b) Notwithstanding the maximum rent levels permitted, 20 percent of the units in the metropolitan area and ten percent of the units in greater Minnesota qualifying under class 4d must be made available to a family with a section 8 certificate.
3. (c) The rent restriction agreement runs with the land and binds any successor to title to the property, without regard to whether the successor had actual notice or knowledge of the agreement. The owner must promptly record the agreement in the office of the county recorder or must file it in the office of the registrar of titles, in the county where the property is located. If the agreement is not recorded, class 4d does not apply to the property.

Subd. 4. Minimum housing standards.

In order to qualify under class 4d, a unit must be certified by the housing finance agency to meet the minimum housing standards established under section 462A.071.

Subd. 5. Monitoring rent levels.

The housing finance agency is directed to monitor changes in rent levels and the use of section 8 certificates in units qualifying under class 4d.

Subd. 6. Penalties.

Notwithstanding the provisions of section 273.01, 274.01, or any other law, if the Minnesota housing finance agency notifies the assessor that the provisions of this section have not been met for any period during which a unit was classified under class 4d, a penalty is imposed as provided in section 462A.071, subdivision 8.

* NOTE: This section, as added by Laws 1997, chapter 231, *article 1, section 4, is effective for taxes payable in 1999 and *subsequent years. Laws 1997, chapter 231, article 1, section 22.