Tennessee 2025-2026 Regular Session

Tennessee House Bill HB0753 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1
2	2	SENATE BILL 539
3	3	By Stevens
4	4
5	5	HOUSE BILL 753
6	6	By Faison
7	7
8	8
9	9	HB0753
10	10	001305
11	11	- 1 -
12	12	AN ACT to amend Tennessee Code Annotated, Title 7;
13	13	Title 13; Title 48; Title 49; Title 67 and Title 68,
14	14	relative to low-income housing.
15	15
16	16	BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
17	17	SECTION 1. Tennessee Code Annotated, Title 67, Chapter 5, Part 6, is amended by
18	18	adding the following as a new section:
19	19	67-5-608.
20	20	(a) Notwithstanding another law to the contrary, multi-unit rental housing that is
21	21	subject to government restriction on use must be assessed in a manner that is
22	22	consistent with the following methods:
23	23	(1) Applying an annual net operating income approach to value that uses
24	24	actual income and stabilized operating expenses that are based on the actual
25	25	history of the property, when available, and a capitalization rate;
26	26	(2) Using a methodology to project income, expenses, and a
27	27	capitalization rate that is consistent with the Uniform Standards of Professional
28	28	Appraisal Practice;
29	29	(3) Adjusting the unrestricted market value of the multi-unit rental
30	30	housing, computed without regard to a government restriction on use applicable
31	31	to the multi-unit rental housing, based on the ratio of the average annual rent of
32	32	those units of the property that are subject to government restriction on use to
33	33	the average annual rent of comparable multi-unit rental housing that is not
34	34	subject to government restriction on use; and
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39	39	(4) Excluding the amount of low-income housing tax credits received
40	40	under Section 42 of the Internal Revenue Code of 1986 (26 U.S.C. § 42), or from
41	41	a state or federal program in determining the value attributable to the multi-unit
42	42	rental housing.
43	43	(b) The capitalization rate projected pursuant to subsection (a) must be:
44	44	(1) Based on the risks associated with multi-unit rental housing subject to
45	45	government restriction on use, including diminished ownership control; income
46	46	generating potential; liquidity; the condition of the property; the class of the
47	47	property; and the property's location and size;
48	48	(2) Equal to or greater than the capitalization rate used for valuing multi-
49	49	unit rental housing that is not subject to government restriction on use; and
50	50	(3) In the range of fifty (50) to one hundred fifty (150) basis points above
51	51	the most recent quarterly survey of the national average capitalization rates of
52	52	multifamily properties published by realtyrates.com or a successor organization
53	53	as determined by the division of property assessments in consultation with the
54	54	Tennessee housing development agency.
55	55	(c) Beginning with tax year 2026 and each tax year thereafter, the division of
56	56	property assessments shall publish the capitalization rate range for property assessors
57	57	to use for that tax year on its website as soon as practicable after the rates become
58	58	available.
59	59	(d)
60	60	(1) The owner of multi-unit rental housing shall:
61	61	(A) Promptly notify the property assessor if:
62	62	(i) The property is subject to government restriction on
63	63	use, and if so, whether the owner requests that the property be
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67	67
68	68	classified as multi-unit rental housing subject to government
69	69	restriction on use;
70	70	(ii) The property ceases to be subject to government
71	71	restriction on use, and if so, whether the owner of the property
72	72	requests that the property's classification as multi-unit rental
73	73	housing subject to government restriction on use be withdrawn; or
74	74	(iii) A foreclosure action has been brought upon the
75	75	property; and
76	76	(B) File with the property assessor, on a form prescribed by the
77	77	state board of equalization, the information necessary for the multi-unit
78	78	rental housing to be assessed based on the methods described in
79	79	subsection (a).
80	80	(2) The notification required by subdivision (d)(1)(A) must be in writing
81	81	and submitted to the property assessor on or before December 31 of the
82	82	calendar year in which the applicable circumstance as listed in subdivisions
83	83	(d)(1)(A)(i)-(iii) occurred.
84	84	(3) If the owner fails to submit the notification pursuant to subdivision
85	85	(d)(1)(A), then the owner is liable for any delinquent property taxes, including
86	86	interest and penalty, assessed on the property.
87	87	(e) As used in this section:
88	88	(1) "Government restriction on use" means a limitation on the use of a
89	89	specified amount of the individual dwelling units of multi-unit rental housing that
90	90	receive a federal, state, or local incentive based on low-income renter
91	91	restrictions, including the following government incentives:
92	92
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96	96	(A) A low-income housing tax credit under Section 42 of the
97	97	Internal Revenue Code of 1986 (26 U.S.C. § 42);
98	98	(B) Financing derived from exempt facility bonds for qualified
99	99	residential rental projects under Section 142 of the Internal Revenue
100	100	Code of 1986 (26 U.S.C. § 142);
101	101	(C) A low-interest loan under Section 235 or 236 of the National
102	102	Housing Act (42 U.S.C. § 3538) or Section 515 of the Housing Act of
103	103	1949 (42 U.S.C. § 1485);
104	104	(D) A rent subsidy;
105	105	(E) A guaranteed loan;
106	106	(F) A grant;
107	107	(G) A guarantee; or
108	108	(H) An agreement entered into for payments in lieu of ad valorem
109	109	taxes;
110	110	(2) "Low-income" means earning at or below eighty percent (80%) of the
111	111	area median income as defined by the United States department of housing and
112	112	urban development for the location of the multi-unit rental housing; and
113	113	(3) "Multi-unit rental housing":
114	114	(A) Means residential property or a project consisting of four (4)
115	115	or more individual dwelling units; and
116	116	(B) Does not include:
117	117	(i) Assisted living facilities; or
118	118	(ii) Duplexes or single-family units unless they are
119	119	classified as commercial property or included as part of a larger
120	120	property that is subject to government restriction on use.
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125	125	SECTION 2. For purposes of publishing the capitalization rate range and promulgating
126	126	application forms and rules, this act takes effect upon becoming a law, the public welfare
127	127	requiring it. For all other purposes, this act takes effect January 1, 2026, the public welfare
128	128	requiring it, and applies to residential property and projects developed on or after such date.