Eligible uses of increment from tax increment financing districts expanded to include transfers to local housing trust funds, and requirements on use of transferred increment imposed.

HF 1159 expands Minnesota tax increment financing (TIF) district uses to allow transfers of tax increment revenue to local housing trust funds. It requires that transferred funds be used exclusively for qualified low-income housing projects meeting IRS Section 42 standards, including site acquisition, construction, rehabilitation, or public improvements directly related to such housing. The bill sets limits, such as ensuring housing costs do not exceed 150% of local single-family home averages (or $200,000 in metro areas/$125,000 elsewhere) and restricting transfers to housing trust funds established under Minnesota Statutes 462C.16. This policy change directly affects TIF districts and local housing trust funds by creating a new, regulated funding stream for affordable housing development.