Richfield City Council — Agenda
Monday, February 16, 2026
4d(1) Tax Classification Impacts and Policy Development
Votes (1)
Discuss 4d(1) tax classification impacts and possible policy.
The session explored the 4d(1) Low-Income Rental Classification, which reduces property tax rates for affordable housing, from 1.25% to 0.25%. Initiated by a January 2025 request from Hempel Companies for three apartment complexes, the discussion centered on the program's benefits (preserving affordability, rehabbing buildings) versus costs (shifting tax burden to other taxpayers). Staff detailed current 4d properties in Richfield, the total tax savings ($343,376 in Pay 2025, potentially $477,000 for currently approved properties), and aligned the policy with the city's Strategic Plan goals (affordability, diversified tax base, racial equity). Legal aspects highlighted the automatic nature of 4d with state/federal funding versus city discretion when providing local financial assistance. The discussion also contrasted 4d with TIF districts for new development and posed questions to policymakers regarding preservation priorities, desired affordability outcomes, and best methods for creating various types of affordable units. No decisions were made, with feedback requested for a follow-up work session on April 20.
Notable Quotes (4)
While the classification offers a cost savings to owners of affordable housing, the savings require the City to either collect fewer taxes or shift the tax burden to other property taxpayers in the community.
The 4d(1) tax classification is automatic for properties that receive State and/or Federal funding that requires affordability. Owners may also qualify for the classification if a city provides financial assistance in exchange for a commitment to affordability...
There are two desired outcomes in the Strategic Plan that are impacted by the 4d(1) tax classification including maintaining Richfield as an affordable place to live and creating a diversified tax base.
Staff is asking that you take time to consider the information and the questions posed and be prepared for further discussion and to offer feedback on April 20.
Ordinances & Resolutions (7)
Low-Income Rental Classification program offering reduced property tax rates for affordable housing
Official name for the 4d(1) program
State statute providing the legal basis for the 4d program
City's strategic plan, impacted by the 4d(1) classification regarding affordability and tax base
City policy outlining priorities for affordable housing, including preservation of NOAH properties
Supporting document detailing the 4d tax classification and its use
Presentation materials for the joint City Council – Housing & Redevelopment Authority work session