Tennessee 2025-2026 Regular Session

Tennessee Senate Bill SB0539 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1	1
2		-	HOUSE BILL 753
3		-	By Faison
	2	+	<BillNo> <Sponsor>
4	3
5	4		SENATE BILL 539
6	5		By Stevens
7	6
8	7
9	8		SB0539
10	9		001305
11	10		- 1 -
12	11		AN ACT to amend Tennessee Code Annotated, Title 7;
13	12		Title 13; Title 48; Title 49; Title 67 and Title 68,
14	13		relative to low-income housing.
15	14
16	15		BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
17	16		SECTION 1. Tennessee Code Annotated, Title 67, Chapter 5, Part 6, is amended by
18	17		adding the following as a new section:
19	18		67-5-608.
20	19		(a) Notwithstanding another law to the contrary, multi-unit rental housing that is
21	20		subject to government restriction on use must be assessed in a manner that is
22	21		consistent with the following methods:
23	22		(1) Applying an annual net operating income approach to value that uses
24	23		actual income and stabilized operating expenses that are based on the actual
25	24		history of the property, when available, and a capitalization rate;
26	25		(2) Using a methodology to project income, expenses, and a
27	26		capitalization rate that is consistent with the Uniform Standards of Professional
28	27		Appraisal Practice;
29	28		(3) Adjusting the unrestricted market value of the multi-unit rental
30	29		housing, computed without regard to a government restriction on use applicable
31	30		to the multi-unit rental housing, based on the ratio of the average annual rent of
32	31		those units of the property that are subject to government restriction on use to
33	32		the average annual rent of comparable multi-unit rental housing that is not
34	33		subject to government restriction on use; and
	34	+	(4) Excluding the amount of low-income housing tax credits received
	35	+	under Section 42 of the Internal Revenue Code of 1986 (26 U.S.C. § 42), or from
35	36
36	37
37	38		- 2 - 001305
38	39
39		-	(4) Excluding the amount of low-income housing tax credits received
40		-	under Section 42 of the Internal Revenue Code of 1986 (26 U.S.C. § 42), or from
41	40		a state or federal program in determining the value attributable to the multi-unit
42	41		rental housing.
43	42		(b) The capitalization rate projected pursuant to subsection (a) must be:
44	43		(1) Based on the risks associated with multi-unit rental housing subject to
45	44		government restriction on use, including diminished ownership control; income
46	45		generating potential; liquidity; the condition of the property; the class of the
47	46		property; and the property's location and size;
48	47		(2) Equal to or greater than the capitalization rate used for valuing multi-
49	48		unit rental housing that is not subject to government restriction on use; and
50	49		(3) In the range of fifty (50) to one hundred fifty (150) basis points above
51	50		the most recent quarterly survey of the national average capitalization rates of
52	51		multifamily properties published by realtyrates.com or a successor organization
53	52		as determined by the division of property assessments in consultation with the
54	53		Tennessee housing development agency.
55	54		(c) Beginning with tax year 2026 and each tax year thereafter, the division of
56	55		property assessments shall publish the capitalization rate range for property assessors
57	56		to use for that tax year on its website as soon as practicable after the rates become
58	57		available.
59	58		(d)
60	59		(1) The owner of multi-unit rental housing shall:
61	60		(A) Promptly notify the property assessor if:
62	61		(i) The property is subject to government restriction on
63	62		use, and if so, whether the owner requests that the property be
	63	+	classified as multi-unit rental housing subject to government
	64	+	restriction on use;
64	65
65	66
66	67		- 3 - 001305
67	68
68		-	classified as multi-unit rental housing subject to government
69		-	restriction on use;
70	69		(ii) The property ceases to be subject to government
71	70		restriction on use, and if so, whether the owner of the property
72	71		requests that the property's classification as multi-unit rental
73	72		housing subject to government restriction on use be withdrawn; or
74	73		(iii) A foreclosure action has been brought upon the
75	74		property; and
76	75		(B) File with the property assessor, on a form prescribed by the
77	76		state board of equalization, the information necessary for the multi-unit
78	77		rental housing to be assessed based on the methods described in
79	78		subsection (a).
80	79		(2) The notification required by subdivision (d)(1)(A) must be in writing
81	80		and submitted to the property assessor on or before December 31 of the
82	81		calendar year in which the applicable circumstance as listed in subdivisions
83	82		(d)(1)(A)(i)-(iii) occurred.
84	83		(3) If the owner fails to submit the notification pursuant to subdivision
85	84		(d)(1)(A), then the owner is liable for any delinquent property taxes, including
86	85		interest and penalty, assessed on the property.
87	86		(e) As used in this section:
88	87		(1) "Government restriction on use" means a limitation on the use of a
89	88		specified amount of the individual dwelling units of multi-unit rental housing that
90	89		receive a federal, state, or local incentive based on low-income renter
91	90		restrictions, including the following government incentives:
	91	+	(A) A low-income housing tax credit under Section 42 of the
	92	+	Internal Revenue Code of 1986 (26 U.S.C. § 42);
92	93
93	94
94	95		- 4 - 001305
95	96
96		-	(A) A low-income housing tax credit under Section 42 of the
97		-	Internal Revenue Code of 1986 (26 U.S.C. § 42);
98	97		(B) Financing derived from exempt facility bonds for qualified
99	98		residential rental projects under Section 142 of the Internal Revenue
100	99		Code of 1986 (26 U.S.C. § 142);
101	100		(C) A low-interest loan under Section 235 or 236 of the National
102	101		Housing Act (42 U.S.C. § 3538) or Section 515 of the Housing Act of
103	102		1949 (42 U.S.C. § 1485);
104	103		(D) A rent subsidy;
105	104		(E) A guaranteed loan;
106	105		(F) A grant;
107	106		(G) A guarantee; or
108	107		(H) An agreement entered into for payments in lieu of ad valorem
109	108		taxes;
110	109		(2) "Low-income" means earning at or below eighty percent (80%) of the
111	110		area median income as defined by the United States department of housing and
112	111		urban development for the location of the multi-unit rental housing; and
113	112		(3) "Multi-unit rental housing":
114	113		(A) Means residential property or a project consisting of four (4)
115	114		or more individual dwelling units; and
116	115		(B) Does not include:
117	116		(i) Assisted living facilities; or
118	117		(ii) Duplexes or single-family units unless they are
119	118		classified as commercial property or included as part of a larger
120	119		property that is subject to government restriction on use.
	120	+	SECTION 2. For purposes of publishing the capitalization rate range and promulgating
	121	+	application forms and rules, this act takes effect upon becoming a law, the public welfare
121	122
122	123
123	124		- 5 - 001305
124	125
125		-	SECTION 2. For purposes of publishing the capitalization rate range and promulgating
126		-	application forms and rules, this act takes effect upon becoming a law, the public welfare
127	126		requiring it. For all other purposes, this act takes effect January 1, 2026, the public welfare
128	127		requiring it, and applies to residential property and projects developed on or after such date.