TAX CREDITS & TAX-EXEMPT BONDS: STATE-BY-STATE PREVIEW

TENNESSEE

BY DANA ENFINGER

AFFORDABLE HOUSING FINANCE • DECEMBER 2007

NASHVILLE—Tennessee Housing Development Agency’s (THDA’s) 2008 qualified allocation plan (QAP) is not yet final, but the most notable changes in the most recent draft include awarding more points for green building. The QAP is expected to be finalized by the end of 2007.

Under the draft QAP, developments using Energy Star appliances in all units would be awarded one point per type of appliance, up to a maximum of five points. Energy Star certification from the architect will be required on developments with 11 units or more, and from the contractor on developments with 10 units or fewer.

THDA is also considering changing the amount of its set-aside for developments located in qualified census tracts. Instead of a qualified census tract setaside of no more than 80 percent of the total amount of tax credits, the limit would be no more than 50 percent. More proposed changes for 2008 include defining small projects as 48 units or fewer (instead of 32 units or fewer) and removing the urban set-aside.

Developers requested $35.8 million in low-income housing tax credits (LIHTCs) in 2007. The amount reserved had not been determined at press time, according to Ed Yandell, director of multifamily development for THDA.

THDA expects to reserve $13 million in federal LIHTC authority in 2008. The agency expects to award $6 million from the state’s housing trust fund, according to Yandell. The application deadline for 2008 reservations is March 19, 2008, with no pre-determined date for reservations.

Of the 17 projects that THDA had closed bond financing for in 2007 (as of Oct. 29), 15 were rehabilitation projects. THDA had $150 million available in taxexempt bond financing in 2007, but only expects to have $75 million available in 2008.

2008 LIHTC PROGRAM: