Tennessee Housing Development Agency (THDA) Executive Director Ted Fellman recently issued a memo that provides a set of guiding principles that THDA will use to implement the housing tax credit relief provisions contained within the American Recovery and Reinvestment Act (ARRA) as expected guidance is made available by the Treasury and HUD. THDA’s proposed guiding principles include:

As a general model, all housing deals will include:

  • Reasonable costs;
  • Private financing based on achievable rental income within Section 42 rent limits;
  • Sale of housing credits (equity / syndication);
  • Gap financing funded by ARRA resources.

Priority will be given to projects that demonstrate an ability to close the sale of their tax credits at or above $.70, and to projects that are able to begin construction within 120 days.

The more ARRA resources required by a project for gap funding, the more concessions required.

ARRA assistance will also be targeted to: 

  • Competitive 2006 and 2007 deals that have submitted exchange applications;
  • The rest of the 2007 deals that did not exchange their credits;
  • All 2008 deals;
  • Any new 2009 deals;
  • Any bond deals receiving non-competitive credits in 2007, 08, and 09;
  • Non-tax credit deals (special needs, rural deals, etc.)

TCAP funding will be targeted to: 

  • Non-Profits / Public Housing Authorities (PHAs);
  • Bond deals (non-competitive credits);
  • New 2009 deals;
  • Existing deals that have yet to start.