Exemption From Taxation — Payments in Lieu of Taxes — Reporting
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The corporation is hereby declared to be performing a public function in behalf of the municipality with respect to which the corporation is organized and to be a public instrumentality of such municipality. Accordingly, the corporation and all properties at any time owned by it and the income and revenues therefrom and all bonds issued by it and the income therefrom shall be exempt from all taxation in the state of Tennessee. Also, for purposes of the Securities Act of 1980, compiled in chapter 1, part 1 of this title, and any amendment thereto or substitution therefor, bonds issued by the corporation shall be deemed to be securities issued by a public instrumentality or a political subdivision of the state of Tennessee.
The municipality may delegate to a corporation the authority to negotiate and enter into with a corporation's lessees, payments in lieu of ad valorem taxes; provided, that such authorization shall be granted only upon a finding that such payments are deemed to be in furtherance of the corporation's public purposes as defined in this subsection (b). The legislative body of the municipality making such delegation may, in its sole discretion, require the corporation to submit any such agreement to the legislative body for its approval.
If the project is located within the corporate limits of a municipality, the payments shall be apportioned between the municipality and the county in the same manner as ad valorem taxes are apportioned on the date of execution of the agreement for payments in lieu of taxes.
The trustee shall bill and collect all in lieu of tax payments based on the agreement and the apportioned taxes.
Notwithstanding this section to the contrary, and unless the municipality adopts an ordinance or resolution requiring that any agreement with respect to the payments in lieu of taxes entered into pursuant to this subdivision (b)(4) be approved by the municipality, a corporation may negotiate and receive from any lessee of the corporation, without any delegation from the municipality, payments in lieu of taxes with respect to a tax-credit housing project; provided, that:
The payments in lieu of taxes are payable to all applicable taxing jurisdictions in which the project is located and are not less than the taxes that would have been paid to each such taxing jurisdiction for the tax year prior to the year the project became a tax-credit housing project; and
The chief executive officer of the municipality has executed a letter supporting the project that is filed with the corporation.
As used in this subdivision (b)(4), “tax-credit housing project” or “project” means a project that has received an allocation of low-income housing tax credits under Section 42 of the Internal Revenue Code of 1986 (26 U.S.C. § 42), or any successor provision, from the Tennessee housing development agency or is otherwise eligible for the tax credits as the result of the issuance of bonds, the interest on which is not subject to federal income taxation.
In any municipality in which a corporation does not exist or has been administratively dissolved, a housing authority formed by the municipality pursuant to the Housing Authorities Law, compiled in title 13, chapter 20, may negotiate and receive from any lessee payments in lieu of taxes with respect to a tax-credit housing project in accordance with this subdivision (b)(4), and in that case, the housing authority shall have all rights and powers granted to the corporation pursuant to this chapter necessary to acquire and lease a tax-credit housing project in order to effectuate this subdivision (b)(4).
Nothing in this subdivision (b)(4) shall limit the authority of a corporation to negotiate and receive from a lessee of the corporation payments in lieu of taxes with respect to a tax-credit housing project when that authority has been delegated to the corporation by a municipality.
An agreement for payment in lieu of taxes shall contain such terms and conditions as the corporation may determine, which may include, but shall not be limited to, provisions to:
Defer and/or subordinate payment of all or a portion of the payment in lieu of taxes to such future time as the corporation may determine;
Require interest to accrue on such deferred amount;
Require that payments in lieu of taxes, including any interest, expenses or costs of collection of same, shall be secured by a deed of trust upon the project; or
Provide that such deed of trust may be subordinate to other liens or indebtedness of the project.
On or before October 1 each year, the corporation lessee or sublessee shall file with the comptroller of the treasury a report listing leased properties and details of the lease and payment in lieu of tax (PILOT) agreements in the format provided in § 7-53-305. A copy of the report shall be filed with the assessor of property on or before October 15. The assessor may audit or review the report and conduct comparative analysis to ensure that all agreements and reports are filed. Failure to timely complete and file the report with the comptroller of the treasury shall subject the lessee or sublessee to a late filing fee of fifty dollars ($50.00) payable to the comptroller of the treasury. In addition, failure to file the report with the comptroller of the treasury or assessor within thirty (30) days after written demand for the report shall subject the lessee or sublessee to an additional payment in lieu of tax in the amount of five hundred dollars ($500).
For purposes of this part, the corporation or municipality shall at all times be immune from suit, and any legal and financial obligations whatsoever pertaining to the subject of real property, while the corporation is performing its public function by holding legal title to real property pursuant to a lease and payment in lieu of tax (PILOT) agreement; provided, that the person who transferred title to the corporation or municipality pursuant to such PILOT agreement shall remain liable for suits, and any legal and financial obligations whatsoever, pertaining to the real property.