Payment in Lieu of Taxes Program
MDHA’s Payment In Lieu of Taxes (PILOT) program is a financial incentive designed to encourage new construction and substantial rehabilitation of affordable multi-family housing in Metropolitan Nashville-Davidson County. Projects that have applied for federally sponsored Low-Income Housing Tax Credit (LIHTC) program through Tennessee Housing Development Agency (THDA) are eligible to apply. The PILOT program provides significant property tax relief for a period of up to 10 years and encourages developers to expand the supply of affordable housing within Nashville-Davidson County.
MDHA has the annual authority to negotiate up to $2,500,000 per program year in additional (over and above the pre-development assessed value of the property) PILOT tax abatement. MDHA does not have final approval authority for PILOT tax abatement on individual properties as each deal has to be approved by Metro Council. Once MDHA staff determines there is a financial need for the PILOT, staff will request the MDHA Board of Commissioners to approve submitting a request for PILOT tax abatement for the property to Metro Council to obtain final approval.
- Property Location: Metropolitan Nashville-Davidson County.
- LIHTC Properties: PILOT tax abatement will only be awarded to projects for new or existing properties that have received a LIHTC.
- Site Control: The applicant must have site control equivalent to fee simple title, 99-year lease, or option to purchase with no contingencies except financing.
- Financial Commitments: Applicant must have evidence of financial commitments for the total project costs with no contingencies except receipt of the PILOT.
- Financial Need: The applicant must show a need for the tax abatement and demonstrate proof that the financial viability of the project is at stake without the PILOT relief. Financial need will be demonstrated by the pro forma for new LIHTC properties and financial statements for existing LIHTC properties.