Local Housing Incentives Account (LHIA)

Focus on affordable housing

LHIA grants support the production and preservation of affordable rental and ownership housing to help municipalities meet their negotiated LCA housing goals.

Grant funds cover gap financing costs such as land/property/structure acquisition, demolition, site preparation (such as water, sewer, roads), general construction/structural additions, alterations and rehabilitation, interior and exterior finishing, roofing, electrical, plumbing, heating and ventilation. Soft costs, such as architects fees and travel expenses, are ineligible.

Informational webinar

Watch the Minnesota Housing Consolidated RFP Technical Assistance Kickoff Webinar 
Learn new information about the 2021 RFP/2022 HTC Round 1, including updates on funding and resource requirements, scoring requirements, and guidance on how to submit a competitive application. Whether you are new to the Consolidated RFP or have applied previously, the webinar will be informative.

Scoring: In 2021 large units for families will be prioritized when they have 3 or more bedrooms, rather than 2 or more bedrooms as in previous years; projects will be reviewed in alignment with the community’s affordable housing needs and goals, including within levels of affordability. 

Eligible activities: No changes

The Metropolitan Council partners with Minnesota Housing, the Greater Minnesota Housing Fund and others to award affordable housing funding that includes the LHIA program. Communities participating in the Metropolitan Livable Communities Local Housing Incentives Program may apply for LHIA funding through the Minnesota Housing Consolidated RFP. See what was funded in 2020

When submitting an application, municipalities must include an Acknowledgment of Receptivity form from the local unit of government and agree to match grant funding on a dollar-for-dollar basis.

$8 million available

LHIA Timeline

April 14
The Consolidated Request for Proposals that includes LHIA funding will be published and Intent to Apply and application materials will become available
May 20
Intent to Apply deadline at noon - required for all eligible Multifamily applications (date may change based on state legislative actions
July 15
Multifamily application noon deadline including site control, qualification forms, and financials.
December
Minnesota Housing Board funding awards
January
Metropolitan Council LHIA funding awards

Local Housing Incentives Account (LHIA) grants support primarily hard costs related to the construction and rehabilitation of affordable housing. Land acquisition costs may be an eligible use of grant funds. LHIA grants do not pay for work done before the grant is awarded with the exception of reimbursement of qualifying land acquisition costs incurred no more than 12 months prior to the date of award.

Eligible Uses for LHIA grants

  • Gap financing costs, including land acquisition
  • Property (structure) acquisition
  • Demolition
  • Site preparation (e.g., water, sewer, roads)
  • General construction/structural additions
  • Alterations and rehabilitation
  • Interior and exterior finishing
  • Roofing
  • Electrical, plumbing, and/or heating and ventilation

Ineligible Uses for LHIA grants

  • Soft costs, or administrative overhead
  • Bonds and insurance
  • Legal fees
  • Permits
  • Travel
  • Grant/bid preparation costs
  • Cleanup/abatement costs
  • Resident services and/or operations

LHIA applications are scored as a part of a funders collaborative facilitated by Minnesota Housing as a part of their annual Consolidated Request for Proposals. Generally, Council staff evaluate projects for LHIA priorities after Minnesota Housing has used their process to evaluate them. While the Council prefers to award LHIA funds to projects that will be made whole with a combination of state resources and LHIA, occasionally projects that are a high priority for the Council will be awarded LHIA even if they do not receive funding requested from Minnesota Housing.

In some cases projects that meet LHIA goals are not funded with LHIA because there are state resources better designed to fully fund the project.  Council staff work with Minnesota Housing staff to apply resources in a way that allows for the highest amount of competitive projects to be funded.

There are two types of criteria for LHIA: threshold, or required criteria, and competitive criteria which is used to evaluate projects that are most likely to also be funded by Minnesota Housing. 

LHIA Threshold Criteria

  • A significant component of the project must serve households with incomes at or below 60% of Area Median Income (AMI) with a minimum affordability term of 15 years, for rental projects.

  • Grantees must have an adopted Fair Housing Policy in order to receive Livable Communities Act funding.  

  • Projects must have affirmative fair housing marketing plans.  

LHIA Competitive Criteria

  • Rental proposals creating or preserving affordability for persons at or below 30% of AMI; 

  • New affordable housing that furthers the City’s ability to meet their share of the region’s need for affordable housing, considering what the need is across affordability bands; OR Preserved/rehabilitated affordable housing, prioritizing communities at highest risk of losing Naturally Occurring Affordable Housing (NOAH) and/or communities with higher rates of housing cost burdened households.

  • Proposals that serve large families by providing three or more-bedroom units;

  • Proposals meeting the needs of individuals and households experiencing long-term homelessness;

  • Proposals that provide a housing type not currently available or serve a population not currently served in or near the project area.

LHIA funds are requested through Minnesota Housing’s Consolidated Request for Proposals. In Minnesota Housing’s application portal, applicants may select LHIA as a source of requested funding.

It is important for applicants to know that LHIA funds require that the project is located in a Livable Communities Act (LCA) participating city and that the local government (city or county) in which the project is located must serve as the applicant for the LHIA portion of the funding. This is achieved by the local government completing a Receptivity Form within the Minnesota Housing application indicating they will serve as the grant recipient.

Local Match: 100% dollar for dollar match from grantee

Grant Terms: 3 years from date of award

Term extensions: None

Award Limits: None

Application Limit: None

Is there a match required for LHIA awards?
Yes, the applicant (government organization) needs to match the award dollar for dollar.

If a developer can apply directly to LHIA, does the developer receive the grant award directly?
No. The funds will still be awarded to the government organization that is part of the project team. To make sure that the government organization supports a developer applying, the organization has to submit an Acknowledgement of Receptivity form. A sub-recipient agreement between the government partners and the development partner is highly recommended.

Who receives the grant if the project is in multiple cities or counties?
Multiple government organizations can and are encouraged to partner on applications. The team will need to decided on a single organization to receive the award. All organizations on the team should be included in the grant application.

How does LHIA work with Minnesota Housing and the Greater Minnesota Housing Fund?
LHIA funding is pooled with various sources of affordable housing funding through Minnesota Housing and additional investment from the Greater Minnesota Housing Fund (which primarily supports projects outside the metropolitan area). Since LHIA is a much smaller source of funding and often cannot make projects “whole” without additional state resources, LHIA applications are generally evaluated after Minnesota Housing has begun prioritizing their investments. This also allows the most possible projects to be funded, since some sources of funding can only be used for certain types of projects. However, occasionally a project that does not receive an award from Minnesota Housing will still be awarded LHIA funds. This is only considered if the government partner is open to partial funding.
Multi-use building funded by LHIA.

LHIA funding helps preserve and expand lifecycle and affordable rental and ownership housing in the metropolitan area. Grants assist in preserving existing affordable housing stock, providing workforce housing choices, increasing homeownership opportunities for underserved populations, and exhibiting strong implementation partnerships.

Prefer a PDF document of the key program pieces?
The Program Essentials document has key dates, funding amounts, eligible activities and the scoring criteria.
LHIA 2021 Program Essentials (PDF)

Contact

Email is the best way to reach us because staff are working from home.

Ashleigh Johnson
ashleigh.johnson@metc.state.mn.us