$400K Tax Bill On Two Nashville Affordable House Properties Being Appealed

Nance Place, a subsidized workforce apartment complex, is one of two projects overseen by MDHA that have incurred unexpected taxes. Credit: MDHA

The Metropolitan Development and Housing Agency is appealing its nearly $400,000 tax bill on two of its signature affordable housing properties, an expense that flat-footed the agency’s top official.

MDHA recently received an annual tax bill of $376,364 for the Ryman Lofts and Nance Place because of the way in which the ownership structure was put together. Both are public-private projects, but – according to the county assessor – the existence of the private partner makes them subject to taxation.

Typically, MDHA properties contribute a payment in lieu of taxes – a nominal cost – instead of paying market-rate property taxes.

The issue arose because of a type of federal tax credit program MDHA applied to both properties, a tool to encourage private developers to build housing for low-income residents.

An administrative judge will decide whether the taxes owed by MDHA are fair, or should be recalculated. Jim Harbison, who leads MDHA, did not say whether the agency plans on appealing the matter further if the first appeal fails to satisfy the agency.

Although Harbison said last week that the tax bill could spell bankruptcy for the properties, he’s since walked back from those comments, without providing specifics on how the agency will pay the bill.

“Shouldn’t they have known that this tax bill was coming? And I guess maybe they should have,” Davidson County Assessor George Rooker said. “But because they’ve never done these type of projects before, it’s understandable. Under the old model, there were no tax bills.”

Asked about the degree to which the mayor’s office is involved, or if tapping into Metro’s reserve fund is an option, spokeswoman Bonna Johnson said: “As to your inquiry: We convened a meeting of all the parties, and we are working together on a solution. That work is still in progress .”

Rooker, meanwhile, said his department and MDHA are having closed-door meetings trying to figure out a way to re-organize the contracts so they can receive tax-exempt status in the future – and for future projects that apply the federal credits.

Harbison said tenants of Ryman and Nance will not be affected by the tax bill dispute, regardless of the outcome.