Construction monitoring, cost certification, and the path to Form 8609 — Tennessee

A preconstruction meeting, then monthly inspections and quarterly reports -- not a lender-driven draw regime

Once equity syndication and construction financing close, THDA's QAP shifts from application-stage rules into its own Construction Review Process (Section 8). THDA holds a preconstruction meeting with the ownership entity, developer, architect, and general contractor, and the QAP is explicit that scheduling this meeting cannot begin until architectural drawings and specifications -- as approved by the syndicator and lender -- are uploaded into THOMAS, which must happen "within five (5) days after closing." A rehabilitation or adaptive-reuse deal has to submit its scope of work on the same five-day clock. THDA also draws a firm disclaimer around its own role in that review: the QAP states plainly that "THDA does not approve or provide any representations or warranties in connection with architectural drawings, specifications or other documents submitted in connection with the construction review process."

The preconstruction meeting itself has two tracks. A developer with no prior Housing Credit program experience must attend a full preconstruction meeting; a developer with prior experience may request a limited one, but the QAP reserves the final call to THDA -- "THDA shall determine, in its sole discretion, whether the preconstruction meeting will be full or limited." After that meeting, THDA's own staff -- not a contracted third-party inspector, and not solely the construction lender's inspecting architect -- "will inspect the work progress monthly, or as otherwise determined by THDA to be necessary, and conduct periodic site inspections for compliance with THDA requirements based on the Percentage of Construction Complete as reported in THOMAS." Monthly executed draw packages and quarterly construction progress reports are both required submissions in THOMAS throughout the build, independent of whatever draw-inspection regime a private construction lender separately runs.

Design standards, Fair Housing Act and ADA compliance -- and where Section 504 genuinely does not appear

Section 7 of the QAP requires all new construction and rehabilitation to follow THDA's own "Minimum Design Standards for the Rehabilitation and New Construction of Single Family and Multifamily Housing Units," with case-by-case waivers available if discussed with multifamily staff before application. This research pass could not independently verify the substantive content of that design-standards document: the copy linked from the current QAP is hosted on THDA's CloudFront content-delivery domain and returned a genuine Access Denied response to a direct download, a WebFetch request, and a browser-based fetch alike (confirmed as a real AccessDenied XML response, not a disguised block page), and an older, differently-named version of the document returned a 404 at THDA's own thda.org/pdf path. Anything about specific accessible-unit percentages, ICC/ANSI A117.1 references, or other technical content of THDA's design standard should be confirmed directly against THDA's current published document before being relied on -- it is not restated here because it could not be read.

What the QAP text itself does specify, in its Mandatory and Threshold Requirements (Section 6-B), is narrower and federal in origin: every Initial Application must "comply with the Fair Housing Act, as applicable," separately "comply with the Fair Housing Act design and construction requirements for units that are considered 'covered multifamily dwellings' designed and constructed 'for first occupancy' after March 13, 1991, using one of HUD's recognized safe harbors," "comply with the Americans with Disabilities Act (ADA), as applicable," and comply with local building codes or the state-adopted code where no local code exists. Section 504 of the Rehabilitation Act is not named anywhere in the 2026 QAP's text. That is consistent with how Section 504 actually attaches under federal law -- it reaches a development only when the project separately receives federal financial assistance from a HUD (or other federal) grantee, such as HOME funds, Section 8 project-based assistance, or a RAD conversion, not from a Housing Credit allocation standing alone -- but a Tennessee developer layering HUD-sourced funds on top of Housing Credit should confirm Section 504/UFAS obligations independently rather than assuming the QAP's silence on the topic means no such obligation exists on that specific deal.

Before the final construction inspection can even be scheduled, the QAP requires the architect to certify, in writing, compliance with applicable building codes, "all federal accessibility requirements including without limitation, ADA and Fair Housing Act requirement," NSPIRE, and all state requirements (Section 8-D). THDA adopted NSPIRE -- HUD's National Standards for the Physical Inspection of Real Estate, which replaced the older UPCS protocol and which the IRS separately adopted for Housing Credit purposes at Treasury Regulation Section 1.42-5(d)(2)(ii) -- effective January 1, 2025, "unless otherwise directed by Treasury," and NSPIRE now governs both the final construction inspection and every recurring compliance inspection described in Phase 11.

Completing construction and the Final Application package

Once construction is complete, a defined document set has to be uploaded to THOMAS before THDA will even schedule the final construction inspection: the architect's certification described above, the architect's certificate of substantial completion, a certificate of occupancy for each building (or a local official's letter confirming one is not required), and the final draw package. "Once construction is 100% complete, all documents have been submitted in THOMAS, all threshold requirements in the QAP and items selected for points in the Initial Application are complete, a final construction inspection will be conducted to determine compliance with THDA requirements and NSPIRE" (Section 8-E).

A satisfactory final construction inspection is the trigger, not merely a formality: THDA "maintains an open cycle for the submission of Final Applications in THOMAS," and a Final Application may be submitted only "following notice from THDA regarding a satisfactory final construction inspection" (Section 9-A/B). The Final Application itself is a substantial package -- an executed Final THDA Statement and Application, Accountant Certification, Eligibility Certificate, Syndication Letter Certification, Eligibility Opinion Certification, and (where applicable) Acquisition Certification, Nonprofit certification, Ownership and Developer Organizational Breakdowns, and Disclosure forms, plus the most recent partnership or operating agreement, a 30-year pro forma for the development, an executed recorded copy of the THDA Land Use Restrictive Covenant, executed permanent financing documentation, and a certification of any outstanding Multifamily Tax-Exempt Bond Authority.

Cost certification is a full independent audit -- verified directly against THDA's own current template

The QAP itself only says the Final Application must include "an executed Final THDA Accountant Certification in the form shown on the Template ... provided in THOMAS" (Section 9-B.2) -- it does not spell out the level of assurance in the QAP's own prose. This research pass downloaded THDA's actual current Accountant Certification template (last updated July 9, 2026, per the document's own footer) rather than assuming a level from the QAP text alone, and it is unambiguous: the template is captioned "Independent Auditor's Report" and states, verbatim, "We have audited the costs included in the Final Cost Certification provided by the above named Owner ... In our opinion, the Final Cost Certification fairly presents, in all material respects, the actual costs ... in accordance with accounting practices prescribed by the Internal Revenue Service ('IRS'), under the accrual method of accounting." The template walks through a full audit's Basis for Opinion, Basis of Accounting, and Auditor's Responsibilities sections in the same language a GAAS financial-statement audit opinion would use, including the standard language that "reasonable assurance is a high level of assurance, but is not absolute assurance," and requires the signing firm to state it has "no financial interest in the Development other than in the practice of our profession." A compiled or reviewed cost certification does not meet this standard -- THDA's own template calls for a full audit opinion, not a lighter-touch engagement.

One template covers every Housing Credit deal type. The Schedule of Actual Costs and Eligible Basis attached to the same Accountant Certification form includes a dedicated "Bond-Related" cost category (bond application fee, issuer fee and counsel, bond counsel, trustee fee and counsel, cost of issuance, and more) alongside the standard land, construction, financing, developer-fee, and reserve categories used on every deal -- so a tax-exempt-bond-financed 4 percent development completes the identical accountant's-report template as a competitive 9 percent development, just with the bond-cost lines populated. THDA does not maintain a separate, lighter cost-certification form for noncompetitive bond deals the way some states do.

The Certificate of Actual Cost that accompanies the audit opinion is signed by the owner/managing general partner, not the accountant, and requires the owner to certify costs "after deduction of all kick-backs, rebates, adjustments, or discounts," and to confirm that the owner and the auditing CPA "have discussed all relevant Internal Revenue Service guidance including, but not limited to, relevant Technical Advice Memoranda and Private Letter Rulings" in preparing the certification. Rural Housing Service Section 515 developments have an additional layer: they must also submit the RHS Estimate and Certificate of Actual Cost, Form No. 1924-13, alongside the THDA certificate.

The Evaluation Notice clock, Final Allocation, and returning executed 8609s on time

During Final Application review, THDA issues Evaluation Notices on the same tight, escalating schedule used during construction -- 5 business days for the first notice, 2 for the second, 1 business day for the final one (Table 9-1) -- and the consequence of missing that final deadline is not merely delay: "THDA will not issue IRS Form(s) 8609 if all conditions contained in Evaluation Notices are not fully satisfied. The deadline specified in the final Evaluation Notice is the date upon which Housing Credit may be recaptured by THDA if the conditions related to the deadline are not met," after which the credit "referred to in the Carryover Allocation Agreement or Section 42(m) Letter are not available for the development and will be made available to other qualified developments" (Section 9-C).

THDA's Final Allocation is a ceiling, not necessarily a match to the earlier reservation: "the amount of Housing Credit allocated to a development at placed in service may be less than, but will not be more than, the amount reserved in the Reservation Notice, or the amount referenced in the Section 42(m) Letter, or the amount allocated in the Carryover Allocation Agreement" (Section 9-D), and THDA reserves the right to make downward adjustments based on the Final Application's own numbers, the QAP, and Section 42 itself. Two hard deadlines follow issuance: the Owner must return executed 8609s to THDA "within 30 calendar days after its first-year tax returns are due to the IRS" (Section 9-E), and must submit the promissory note and recorded deed of trust for permanent financing within 60 days of that deed's recording, with failure "deemed an event of noncompliance" (Section 9-F) -- and if the permanent financing terms vary from what the Final Application described, THDA can issue a revised 8609 after the fact.

Tennessee has no state prevailing-wage law reaching multifamily housing -- confirmed against the U.S. Department of Labor's own table

This is worth confirming directly rather than assuming from general reputation, because the history is easy to get wrong by half. Tennessee did once have a broader Prevailing Wage Act, but the General Assembly repealed the general state-building-projects mandate in 2013 (HB 850/its companion legislation), and a companion 2013 measure (HB 501) separately barred local governments from imposing their own prevailing-wage mandates on private employers that deviate from state law. What survived, and still survives today, is a narrower Prevailing Wage Act for State Highway Construction Projects, codified at Tenn. Code Ann. Section 12-4-401 et seq., which reaches only state-funded highway, road, and bridge contracts over $50,000 and is administered by the Tennessee Prevailing Wage Commission -- legislation enacted in 2026 expanded that highway-specific coverage to certain non-state highway contracts using federal or state highway funds, but did not touch non-highway construction.

The U.S. Department of Labor's own state-by-state prevailing-wage table (dol.gov/agencies/whd/state/prevailing-wages) confirms this directly for Tennessee, describing the state's threshold and scope in its own words: "$50,000, but only for highway construction. No prevailing wage on non-highway construction." A Housing Credit apartment building is non-highway construction, so no Tennessee state prevailing-wage mandate reaches it. That does not mean a Tennessee Housing Credit deal is automatically free of every wage mandate, though: federal Davis-Bacon and Related Acts prevailing wages attach independently of anything THDA or the state requires whenever the deal draws certain other federal financial assistance -- HOME Investment Partnerships funds on 12 or more assisted units, USDA Rural Development Section 515/514 financing, a HUD-insured (FHA) mortgage, or Section 8 project-based assistance are the layers most likely to trigger it. A Housing Credit allocation by itself, with no other federal financing layered in, does not trigger Davis-Bacon -- Section 42 of the Internal Revenue Code contains no prevailing-wage requirement of its own.