Tennessee Code Title 67. Taxes and Licenses § 67-5-207

Current as of January 02, 2024 | Updated by Findlaw Staff

(a)(1) Property of Tennessee nonprofit corporations that is used for permanent housing of low income persons with disabilities, or low income elderly persons, is exempt in accordance with this section. The property must be financed by a grant under § 211 or § 811 of the National Affordable Housing Act (42 U.S.C. §§ 12741 and 8013, respectively), or the McKinney-Vento Homeless Assistance Act (42 U.S.C. § 11301 et seq.), or be financed or refinanced by a loan made, insured, or guaranteed by a branch, department or agency of the United States government under § 515(b) or § 521 of the Housing Act of 1949 (42 U.S.C. §§ 1485(b) and 1490a, respectively), § 202 of the Housing Act of 1959 (12 U.S.C. § 1701q, § 221, § 223, § 231) or § 236 of the National Housing Act (12 U.S.C. §§ 1715l, 1715n, 1715v and 1715z-1, respectively), or § 8 of the United States Housing Act of 1937, as amended by the Housing and Community Development Act of 1974 (42 U.S.C. § 1437f). For the purposes of this section, a loan is considered to be guaranteed if the federal housing agency has consented to assignment of a housing assistance program contract as security for the loan. In the case of a property financed or refinanced by a loan, eligibility for the exemption under these programs continues so long as there is an unpaid balance on the loan. Following payment of the loan in full, a property shall continue to be exempt from taxation so long as the project is restricted to use for elderly persons or persons with disabilities as defined in the programs. In the case of a property financed by a grant, eligibility for the exemption under these programs continues so long as the project is restricted to use for elderly persons or persons with disabilities as defined in the programs. The property must be used as below-cost housing for elderly persons or persons with disabilities within the program definitions, who have incomes not in excess of limits established for the enumerated program by the department of housing and urban development (HUD). If a property was approved by HUD for participation in the program without specific low income guidelines, the property may nevertheless qualify for exemption on a pro rata basis, if at least fifty percent (50%) of the low income residents have incomes that would qualify under HUD guidelines for any of the enumerated programs. In such cases the property shall be exempt in the same percentage that low income residents represent of the total occupancy of the property at full capacity, determined as of January 1 each year, on the basis of information supplied to the assessor on or before April 20.

(2) The owners of projects exceeding twelve (12) units shall agree to make payments in lieu of taxes to the tax jurisdictions in which they are located, in an amount negotiated to cover the cost of improvements, facilities or services rendered by the tax jurisdiction, but if no amount is agreed the payments shall be not less than twenty-five percent (25%) of the amount of tax that would be due if the project were not exempt. In no event shall such payments be required of public housing authorities operating under the Housing Authorities Law, compiled in title 13, chapter 20.

(b) To qualify for such exemption, any such not-for-profit corporation must first be exempt from federal income taxation by virtue of qualifying as an exempt charitable organization or as an exempt social welfare organization under the Internal Revenue Code (26 U.S.C.), and any amendments thereto. In addition, the not-for-profit corporation shall have charter provisions providing in substance that:

(1) The directors and officers shall serve without compensation;

(2) The corporation is irrevocably dedicated to and operated exclusively for not-for-profit purposes;

(3) No part of the income or assets of the corporation shall be distributed to nor inure to the benefit of any individual;

(4) In the event of dissolution of the corporation or other liquidation of its assets, the corporation's property shall not be conveyed to any individual for less than the fair-market value of such property; and

(5) All assets remaining after payment of the corporation's debts shall be conveyed or distributed only to an organization or organizations created and operated for not-for-profit purposes similar to those of the corporation.

(d) Subject to the general requirements of this section for exemption of federally assisted housing, there shall also be exempted under this section those properties owned by not-for-profit organizations and funded under the HOME Investment Partnerships Program (42 U.S.C. § 12701 et seq.), or a housing trust fund established in accordance with title 7, chapter 8 or title 13, chapter 23, part 5. To qualify, the property must be used for permanent housing for low income or very low income persons who are elderly or have a disability.

(e) Nothing in this section shall be construed to preclude the application of § 67-5-212 to transitional or temporary housing that qualifies as a charitable use of property under that section.

(f)(1) Notwithstanding subsections (a) and (b) or another law to the contrary, if the legislative body of a county or municipality, as applicable, adopts by resolution or ordinance the affordable housing program provided in this subsection (f), then:

(A) There is also exempted property owned directly or indirectly by a joint venture in which at least one (1) party of the joint venture is a qualified general partner; provided, that such property is used solely to provide permanent affordable housing to low-income households, of which at least thirty percent (30%) of the units at such property are dedicated to provide permanent, qualified affordable housing for veterans experiencing homelessness;

(B) An owner or owners of a project that exceeds twelve (12) units must agree to make payments in lieu of taxes to the tax jurisdictions in which they are located, in an amount negotiated to cover the cost of improvements, facilities, or services rendered by the tax jurisdiction, but if an amount is not agreed upon, then the payments must be not less than twenty-five percent (25%) of the amount of tax that would be due if the project were not exempt; and

(C) A joint venture will be deemed to provide permanent affordable housing to low-income households if one hundred percent (100%) of the units available at the property are leased at rents that are affordable to households that are low-income, according to the income limits computed and published by the department of housing and urban development under the United States Housing Act of 1937 (42 U.S.C. § 1437 et seq.).

(2) For purposes of this subsection (f):

(A) “Joint venture” includes limited partnerships and any wholly owned limited liability companies of the limited partnership that are disregarded for tax purposes in this state;

(B) “Low income” means eighty percent (80%) or less of the applicable area's median income;

(C) “Qualified general partner” means a not-for-profit organization exempt from federal income taxation as a charitable or social welfare organization under Section 501 of the Internal Revenue Code (26 U.S.C. § 501), as amended, that:

(i) Has a purpose and mission of addressing homelessness or providing housing for veterans experiencing homelessness; and

(ii) Has charter provisions that provide that:

(a) Directors and officers of the organization serve without compensation;

(b) The organization is irrevocably dedicated to and operated exclusively for not-for-profit purposes;

(c) No part of the income or assets of the organization are distributed to nor inure to the benefit of any individual;

(d) In the event of dissolution of the organization or other liquidation of its assets, the organization's property shall not be conveyed to any individual for less than the fair-market value of such property; and

(e) All assets remaining after payment of the organization's debts must be conveyed or distributed only to an organization or organizations created and operated for not-for-profit purposes similar to those of the organization; and

(D) “Veteran experiencing homelessness” means a former member of the United States armed forces who is in receipt of a Veterans Affairs Supportive Housing voucher or other form of rental subsidy designated for veterans experiencing or at risk of homelessness, or who is referred to the subject property through a coordinated entry system by a local housing placement organization created to assist veterans in need of housing.

Previous Part of Code Next Part of Code

Back to Chapter List

Cite this article: FindLaw.com - Tennessee Code Title 67. Taxes and Licenses § 67-5-207 - last updated January 02, 2024 | https://codes.findlaw.com/tn/title-67-taxes-and-licenses/tn-code-sect-67-5-207/

FindLaw Codes may not reflect the most recent version of the law in your jurisdiction. Please verify the status of the code you are researching with the state legislature before relying on it for your legal needs.

Was this helpful?

Welcome to FindLaw's Cases & Codes

A free source of state and federal court opinions, state laws, and the United States Code. For more information about the legal concepts addressed by these cases and statutes, visit FindLaw’s Learn About the Law.

Go to Learn About the Law

Did FindLaw Help You Understand This Legal Issue?

Make It a Preferred Google Search Source

Add to Google

Latest Blog Posts

Learn About The Law

Get help with your legal needs

FindLaw’s Learn About the Law features thousands of informational articles to help you understand your options. And if you’re ready to hire an attorney, find one in your area who can help.

Go to Learn About the Law

Need to Find an Attorney?

Search our directory by legal issue

Enter information in one or both fields (Required)