Entitlement pathway election — Tennessee

Zoning is optional in Tennessee, and the QAP's own threshold is built around that fact

Tennessee's zoning-enabling law splits into two parallel parts of the same chapter: Tennessee Code Annotated Title 13, Chapter 7, Part 1 covers County Zoning (§§ 13-7-101 to 13-7-119), and Part 2 covers Municipal Zoning (§§ 13-7-201 to 13-7-212). Both are grants of power, not mandates. Section 13-7-101 provides: "The county legislative body of any county is empowered, in accordance with the conditions and the procedure specified in this part, to regulate, in the portions of such county which lie outside of municipal corporations, the location, height and size of buildings and other structures..." Section 13-7-201 uses the identical permissive structure for municipalities: "...the board of aldermen, board of commissioners or other chief legislative body of any municipality by whatever title designated, and hereinafter designated as 'chief legislative body', is empowered, in accordance with the conditions and the procedure specified in this part and part 3 of this chapter, to regulate the location, height, bulk, number of stories and size of buildings and other structures..."

"Empowered to regulate" is a grant a county or municipality can decline to exercise, and Tennessee's rural counties frequently do. That is exactly why THDA's own zoning-threshold requirement (Section 6.A.3 of the QAP, covered in this guide's due-diligence phase) offers a third letter format alongside the two "zoning already permits this" and "zoning approval is in process" options: a letter from the chief elected official stating plainly that no zoning regulations are in place. A site in an unzoned county is not a red flag under Tennessee's framework -- it is a documented, statutorily anticipated outcome.

THDA allocates the state's bond volume cap; it doesn't issue the bonds itself

THDA's Multifamily Tax-Exempt Bond Authority (MTBA) program description opens with the mechanism stated directly: "The Tennessee Housing Development Agency ('THDA') is making private activity bond authority available to local issuers to finance multifamily housing units in Tennessee under 26 U.S.C. § 142(d) of the Internal Revenue Code." THDA administers the state's private-activity-bond volume cap and reviews applications, but the Program Description defines the party that actually issues the bonds as something else entirely: "Bond Issuer - A municipality, board, or housing authority with the authority to issue bonds using MTBA for a jurisdiction." For 2026, THDA anticipated two funding rounds, with Round 1's Initial Application submission window running February 21 to March 19, 2026, and a determination on whether to hold Round 2 due "by May 31, 2026" -- this research could not confirm from a THDA-published source whether Round 2 was actually opened, since the Program Description itself listed those dates only as "TBD."

Local Health, Educational and Housing Facility Boards are the real issuers

The entities that actually hold the "Bond Issuer" role for most Tennessee multifamily deals are organized under Tennessee Code Annotated Title 48, Chapter 101, Part 3 -- "Health, Educational and Housing Facility Corporations." Tennessee's own General Assembly stated the purpose of this part directly: it authorizes "the incorporation in the several municipalities in this state of public corporations to finance, acquire, own, lease and/or dispose of properties to the end that such corporations may be able to promote the health and higher education of the people of this state" -- housing authority was added to that same statutory scheme, and this research confirmed at least three genuinely active local boards operating under it today. Metro Nashville's board describes itself, on its own city government page, as "authorized to issue revenue bonds and loan the proceeds to finance the acquisition, construction, development, rehabilitation, and improvement of health, educational, and multifamily housing facilities," issuing "special, limited obligations payable solely from the revenues pledged as security for the bonds" with no taxing power and no Metro Government liability for repayment. The City of Memphis's Health, Educational and Housing Facility Board runs its own public TEFRA-hearing notices for named multifamily housing projects directly on its own website. Chattanooga operates a similarly named board with its own posted monthly meeting agendas.

Nashville's board is worth flagging by name specifically: it is officially the "Health and Educational Facilities Board of The Metropolitan Government of Nashville and Davidson County" -- the word "Housing" does not appear in its name at all, even though its own stated authority explicitly reaches multifamily housing facilities. A screening or entitlement-pathway tool that filters local issuers by name pattern (looking only for boards with "Housing" in the title) would incorrectly exclude Nashville's board. Confirm each local jurisdiction's actual board and its stated authority directly rather than relying on naming conventions.

TEFRA hearings are mandatory and get documented straight into THDA's own application

The MTBA Program Description defines the requirement plainly: "TEFRA Hearing - The public hearing required by the Tax Equity and Fiscal Responsibility Act of 1982 ('TEFRA')." Evidence of that hearing, together with the Issuer Certification and Inducement Resolution described above, is a required Firm Commitment Eligibility Document -- meaning THDA never issues a firm bond-authority commitment without confirmation that the local hearing already happened. The hearing itself is conducted at the local level, by or for the issuing board's jurisdiction, not by THDA. This research could not confirm from a THDA-published source the specific identity of "the applicable elected representative" required under federal law (26 U.S.C. § 147(f)) to approve a given local issuer's bonds following that hearing, or the exact notice period each named local board uses in practice -- that detail should be confirmed directly with the specific board handling a given deal (Nashville's, Memphis's, Chattanooga's, or another jurisdiction's) rather than assumed to be uniform statewide.

THDA can penalize a jurisdiction that fights a project after the fact

The Program Description gives THDA a tool most states' bond programs don't publish: "Whenever a local jurisdiction takes action that THDA determines to be for the primary purpose of preventing proposed MTBA developments from satisfying applicable program requirements, THDA may lower the amount of MTBA available to that jurisdiction in future MTBA Program Descriptions. Examples include, without limitation, 'downzoning', action restricting utilities or utility connections, action regarding required public roads, or action to preventing issuance of Certificates of Occupancy." This is prospective and discretionary -- it can reduce a jurisdiction's future bond-authority allocation, but it does not undo obstruction already directed at the current application, and THDA's exercise of it is entirely at THDA's own discretion.

The Rural and Workforce Housing Tax Credit: a real statute, currently zero live dollars

Tennessee Code Annotated § 13-23-134, created by Acts 2024, ch. 971, § 2, effective July 1, 2025, creates the "Tennessee rural and workforce housing tax credit" against premium tax, retaliatory tax, franchise tax, and excise tax liability. A "qualified project" is defined as a qualified low-income building under IRC § 42 "located in this state and placed in service after January 1, 2026, that receives a federal housing tax credit allocation from the agency." THDA issues an eligibility statement to a qualified project's owner, who then applies to the Department of Revenue or Department of Commerce and Insurance to actually claim the credit; unused credit carries forward up to 25 years, and a federal recapture event triggers a proportional state recapture. Subsection (d) requires THDA to allocate the credit through its own QAP process, with a hard geographic floor: "no less than fifty percent (50%) of the Tennessee rural and workforce housing tax credits must be allocated to qualified projects in an eligible rural area as designated by the United States department of agriculture" -- a USDA rural-area test, which is a different definition of "rural" than the QAP's own "Rural/Balance of State" competitive-pool geography covered in this guide's site-sourcing phase.

Two provisions of the same statute control whether any of this is real money in a given year. Subsection (c): "The total amount of all new Tennessee rural and workforce housing tax credits that may be allocated by the agency in any fiscal year is subject to authorization and must not exceed the amounts of such authorization..." Subsection (f), in full: "Tax credits must be authorized by joint resolution of the general assembly." No dollar amount exists until a joint resolution passes -- the statute itself creates the mechanism, not the money.

As of this research, no such joint resolution has ever passed. Senate Joint Resolution 27 (114th General Assembly, sponsored by Senator Johnson) would have directed THDA to "utilize the following authorizations of Tennessee rural and workforce housing tax credits pursuant to the qualified allocation plan developed by the agency: There is authorized in calendar year 2026, $10,000,000 per year for ten years; There is authorized in calendar year 2027, $10,000,000 per year for ten years; and... in calendar year 2028, $10,000,000 per year for ten years." SJR0027 was introduced January 15, 2025, worked through Senate committee referrals over more than a year, was assigned to the General Subcommittee of the Senate Finance, Ways and Means Committee on April 20, 2026, and was confirmed dead as of April 24, 2026. The 114th General Assembly's second regular session adjourned sine die on April 23, 2026 without passing SJR0027 or the related HB1327/SB1323 (which would have removed the joint-resolution funding gate from the statute altogether). The credit remains enacted and structurally real, but functionally unfunded -- it should not be modeled as an available financing source in a Tennessee proforma until an actual joint resolution passes and a specific dollar amount is authorized.

Choosing a pathway against an unfinished rulebook

As covered in this guide's earlier phases, the 2027 QAP that will govern the next competitive and bond cycles was still an unadopted draft as of this research (redline dated February 4, 2026; public hearing notice dated March 11, 2026). Any specific number cited in this phase that comes from the 2026 QAP or the 2026 MTBA Program Description -- development caps, the $3,600,000 category limits, application windows -- should be re-checked against the adopted 2027 versions before being relied on for a deal targeting the next cycle. The underlying statutes discussed in this phase are a different kind of fact: Title 13's zoning-enabling structure, Title 48's Health, Educational and Housing Facility Corporation framework, the federal TEFRA requirement, and § 13-23-134's joint-resolution gate are all state or federal law, not QAP provisions, and none of them reset on THDA's annual cycle.