THDA Reports on Past and Future of Tennessee’s LIHTC
Faced with a shortage of affordable rental housing in Tennessee, the Tennessee Housing Development Agency (THDA) recently issued a new study on the state’s LIHTC program. THDA manages the program in Tennessee and allocates federal tax credits to qualifying projects according to state and federal priorities. The study looked at the 28-year history of the LIHTC program in Tennessee, its effectiveness, as well as areas of greatest opportunity in the near future.
The report highlighted that from 1987 through 2013, investors and developers have been allotted $2,480,072,525 for LIHTC construction projects in Tennessee. In addition, the statewide average vacancy rate in LIHTC rental units was 7.9 percent for the three-year period 2011 to 2013, compared to 8.8 percent nationwide for all rental properties for all income levels, indicating these properties are desirable to tenants.
Looking ahead, THDA sees opportunities to prioritize projects in areas that are both in a Qualified Census Tract (QCT) and part of a Community Revitalization Plan (CRP). Cities use CRPs to generate new job opportunities and economic revitalization in low-income neighborhoods. In addition, with Congress increasing the nationwide cap on Rental Assistance Demonstration (RAD) projects from 60,000 units to 180,000 units, THDA anticipates a surge in LIHTC applications once additional RAD funding becomes available in Tennessee.
To date, 940 properties have qualified for the LIHTC program in Tennessee, representing just over 46,000 rental units. The total tax credits available for projects in Tennessee is determined by the IRS on an annual basis, and applications in Tennessee always vastly exceed demand.