A capital stack with one credit still stuck in a Senate subcommittee — Tennessee

Two federal formula programs THDA runs through the LIHTC pipeline — on two different calendars

THDA administers two HUD formula programs that can layer onto a competitive 9 percent Tennessee deal, and they do not run on the same clock or the same eligibility rules. The National Housing Trust Fund (NHTF) is requested inside the Competitive LIHTC application itself — there is no separate NHTF application. The 2026 NHTF Program Description states plainly that "NHTF loans are awarded in conjunction with 9% Low-Income Housing Tax Credits (Competitive LIHTC), utilizing the Competitive LIHTC application and scoring process," and that "applications for the 2026 NHTF program will be accepted concurrently with, and as a part of, an application for 2026 Competitive LIHTC under the 2026 Qualified Allocation Plan." NHTF is targeted "towards proposals for permanent Supportive Housing and proposals for multifamily housing in Rural Counties," and any applicant for 2026 Competitive LIHTC is an eligible NHTF applicant — the program description does not limit it to nonprofits or public housing authorities the way some secondary summaries suggest.

THDA's HOME Rental Housing Development Program is a separate application entirely, on a separate calendar that opens after LIHTC awards are already known: the 2026 window opens June 15, 2026 and closes July 30, 2026, with awards expected around September 1, 2026 and a performance period running October 1, 2026 through September 30, 2029. The two programs also disagree on where LIHTC can even be combined with HOME. The 2026 HOME Rental Housing Development Program Description draws the line by geography: in urban areas a HOME-funded rental project "may not consist of more than 11 units of housing total," and "the funding may be combined with other resources, except Low-Income Housing Tax Credits." In rural areas the cap applies only to the HOME-funded units — "projects...must not have more than 11 HOME-Funded units, but the total number of units in the project is not limited," and there "the funding may be combined with other resources, including LIHTC." A for-profit LIHTC ownership entity is an eligible HOME Rental recipient, but only for a rural-area project.

The Tennessee Housing Trust Fund's rental grant is a third, entirely separate competition

THDA also administers the Tennessee Housing Trust Fund (THTF), funded from earnings on THDA's own Great Choice mortgage program rather than from a federal formula allocation. Its rental-relevant arm is the THTF Competitive Grants Program, open to nonprofit organizations and public housing authorities for new construction, acquisition, rehabilitation, or conversion of existing buildings to rental units — THDA describes roughly $3–4 million allocated annually, with individual awards ranging from $100,000 to $600,000. This runs on its own annual application cycle, independent of the QAP and of THOMAS, with its own packet available directly from THDA's multifamily division rather than published as a numbered QAP program description.

The THTF also funds a separate Affordable Housing Development Gap Subsidy program, and this is the one to watch for in a capital-stack checklist that gets copied from a homeownership context into a rental one: THDA describes that program as bridging the gap between construction cost and appraised value specifically "to promote homeownership" in economically distressed communities. It is not a rental-housing or LIHTC gap source, and nothing in THDA's own description of it suggests otherwise.

A state tax credit that is law, but not yet money

Tennessee has a real, codified state housing tax credit — the Tennessee Rural and Workforce Housing Tax Credit, Tenn. Code Ann. § 13-23-134, created by Acts 2024, ch. 971, § 2, and effective for buildings placed in service after January 1, 2026. It works structurally like a partner to the federal credit rather than a duplicate of it: THDA issues an eligibility statement to the owner of a "qualified project" (a Section 42 low-income building located in Tennessee that has itself received a federal Housing Credit allocation from THDA), the owner apportions the credit among its partners in any manner they agree to, and the credit offsets Tennessee premium tax, retaliatory tax, franchise tax, or excise tax liability. Unused credit carries forward for up to twenty-five years, and at least 50 percent of whatever is authorized in a given year must go to "an eligible rural area as designated by the United States department of agriculture," with no more than 50 percent to projects outside one.

The mechanism that keeps this from being usable capital-stack money today is written directly into the statute: subsection (c) caps the total credits THDA may allocate in a fiscal year at "the amounts of such authorization," and subsection (f) states flatly that "tax credits must be authorized by joint resolution of the general assembly." No annual dollar figure is self-executing — the General Assembly has to separately vote a number into existence every year. Senate Joint Resolution 27 (114th General Assembly) was the vehicle that would have done exactly that: it would have authorized $10,000,000 per year for calendar years 2026, 2027, and 2028, tracking the statute's 50-percent-rural split. SJR0027 did not pass. Bill-tracking records show it was introduced in January 2025, worked through Senate committee referrals into 2026, and was last assigned to the General Subcommittee of the Senate Finance, Ways and Means Committee on April 20, 2026, without ever reaching a floor vote in either chamber; Enterprise Community Partners' own 2026 Tennessee legislative session summary lists it among the session's unsuccessful bills, describing what it "would have authorized" rather than what it did. As of this writing, no dollar amount of Tennessee Rural and Workforce Housing Tax Credit has been authorized for 2026, and the 2026 QAP itself contains no scoring, application, or process language referencing the credit at all — consistent with there being nothing yet to administer.

Treat this credit the way the statute itself treats it: real, on the books, and worth tracking into the next legislative session — but not a line item to underwrite into a 2026 sources-and-uses schedule unless and until a joint resolution actually passes.

PILOT through a Health, Educational and Housing Facility Board or Industrial Development Board — a real, statute-based property-tax lever

Tennessee has no LIHTC-specific property tax exemption statute. What it has instead is a payment-in-lieu-of-taxes (PILOT) mechanism built into two overlapping local-government corporation statutes, and both were amended specifically to reach LIHTC deals. Tenn. Code Ann. § 48-101-312 governs Health, Educational and Housing Facility Corporations (the boards commonly called HEHFBs, formed by cities and counties); Tenn. Code Ann. § 7-53-305 governs Industrial Development Corporations (IDBs). Both declare the corporation a public instrumentality whose owned property is exempt from Tennessee taxation, and both contain a subsection written to reach a "tax-credit housing project" — defined in each statute, in nearly identical language, as "a project that has received an allocation of low-income housing tax credits under Section 42 of the Internal Revenue Code of 1986...from the Tennessee housing development agency or is otherwise eligible for the tax credits as the result of the issuance of bonds, the interest on which is not subject to federal income taxation."

For a tax-credit housing project specifically, both statutes let the corporation negotiate and receive PILOT payments from a lessee without a full delegation of authority from the municipality — the general rule for other kinds of projects — provided two conditions are met: the PILOT payments "are payable to all applicable taxing jurisdictions in which the project is located and are not less than the taxes that would have been paid to each such taxing jurisdiction for the tax year prior to the year the project became a tax-credit housing project," and "the chief executive officer of the municipality has executed a letter supporting the project that is filed with the corporation." Where a municipality has no HEHFB, or its HEHFB has been administratively dissolved, § 48-101-312(b)(4)(C) lets a local housing authority formed under the Housing Authorities Law step into the corporation's role for this specific purpose.

Both statutes separately cap the term and floor of a PILOT negotiated under full municipal delegation — up to 20 years plus a 3-year construction period without state sign-off — but that cap sits in a different subsection than the tax-credit-housing carve-out described above. Neither statute states a maximum term for a PILOT negotiated specifically under the tax-credit-housing provision itself. Treat the actual term of any given tax-credit PILOT as a matter of what the corporation and the municipality's letter of support actually agree to, not as a number fixed by state law — this is worth confirming directly against the specific HEHFB's or IDB's own PILOT policy before pricing it into a deal.

The 2026 QAP connects a PILOT to more than tax savings. Under Section 17.A.14, an Initial Application can earn 9 points by waiving the ability to participate in the Qualified Contract Process (QCP); if that waiver is elected, the QAP fixes the Compliance Period written into the Land Use Restrictive Covenant at 30 years — "unless there is an approved PILOT. If there is an approved PILOT, the Compliance Period will be defined as fifteen (15) years." A PILOT decision and a 9-point scoring election are the same decision in Tennessee's QAP, not two separate ones.