►
Description
House Appropriations Subcommittee- March 14, 2022- House Hearing Room 1
A
A
A
A
A
A
A
A
A
A
Thank
you
to
the
clerk
for
coming
here.
Do
the
members
have
any
personal
orders,
seeing
none
we're
gonna
go
ahead
and
get
started
with
today's
hearing.
Today's
hearing
is
centered
around
two
different
subject:
matters,
one
which
is
already
a
part
of
current
state
statute,
as
it
relates
to
community
investment
tax
credits.
The
subject
matter
today
was
brought
to
the
attention
of
the
chair,
lady
vice
chairman,
chairman
of
appropriations
sub,
and
I
over
the
summer
about
questions
regarding
the
utilization
of
community
investment,
tax
credits
and
what
their
original
intent
was
back.
A
I
think
in
2016
implementation
in
2017.,
but
anyways
we've
asked
commissioner
gerard
gaino
to
come
with
his
staff
to
talk
a
little
bit
about
community
investment
tax
credit.
So
if
you'll
come
on
up
you
and
your
staff
that
want
to
be
here
to
testify
in
a
hearing,
and
if
you
would
please,
of
course,
we
all
know
who
you
are
but
go
ahead
for
the
record
and
introduce
yourselves.
A
C
Thank
you,
mr
chairman
and
committee
members.
I'm
david
giargano,
commissioner
of
revenue.
I
have
with
me
today
sean
davis
on
my
immediate
right,
he's
a
tax
auditor
and
randy
hilliard
on
my
far
right
is
a
tax
audit
manager
and
I'm
going
to
cover
at
a
high
level.
The
community
investment
tax
credits,
sean
and
randy
are
the
folks
who
administer
this
on
a
day-to-day
basis
and
know
a
lot
more
of
the
details
we'll
be
here
to
to
help
me
with
with
your
questions,
mr
chairman.
C
This
first
slide
is
just
a
an
overview
of
the
number
of
taxpayers
and
the
amounts
of
community
investment,
tax
credits
or
the
citc,
as
we
call
it
over
the
last
five
years.
I
think
the
the
notable
thing
on
this
slide
is
the
amount
by
which
the
total
credits
claimed
have
increased
over
the
last
five
years,
and
we
I
get
into
that
a
little
bit
more.
In
a
moment.
C
It's
basically
a
credit
to
incentivize,
low-income
housing
loans
and
the
second
one
is
the
community
development
financial
institution
portion
of
it,
the
cdfi,
which
works.
Similarly,
it's
there
to
incentivize
loans,
but
instead
of
for
low-income
housing.
It's
for
community
development
activities
such
as
small
business
loans
and
that
sort
of
thing.
C
The
amount
of
credit
available
to
the
financial
institution
is
based
on
their
low
interest
loans
that
are
made
so
qualified
loans
are
defined
as
loans
that
are
two
percent
below
prime
and
low
rate
and
qualified
loans
are
two
percent
below
prime
qualified
low
rate
loans
are
four
percent
below
prime
and
the
type
of
loan
that's
made
impacts
the
amount
of
the
credit
as
we'll
get
to.
In
just
a
moment.
C
We
work
the
financial
institution,
making
the
low
rate
loan
and
receiving
the
credit
can
choose
whether
to
take
as
a
one-time
credit
or
an
annual
credit,
so
the
amount
if
they
take
it
as
a
one-time
credit,
it's
either
it's
either
five
percent
or
ten
percent
of
the
loan
amount
on
a
one-time
basis.
So
it's
five
percent
of
the
loan
amount.
The
credit
equals
five
percent
of
the
loan
amount.
If
it's
a
qualified
loan
I.e,
two
percent
below
prime
or
ten
percent
of
the
loan
amount.
C
The
choice
of
financial
institutions
on
the
amount
of
the
unpaid
balance
of
the
loan
each
year
for
15
years
and
the
calculation
of
the
credit
is
three
percent
on
or
five
percent
of
a
qualified
low
rate
loan.
There's
no
carry
forward.
You
simply
calculate
the
credit
for
a
given
tax
year,
but
you
can
do
that
annually
for
15
years.
C
The
the
thda,
the
low
or
the
affordable
housing
portion
of
the
citc
as
far
as
the
process
thda
verifies
the
eligible
housing
entity
status,
the
the
5013
c3
status
as
a
eligible
entity,
and
also
the
eligible
activity
and
the
amount.
So
they
initially
received
the
application
and
are
really
analyzing
it
from
a
substantive
point
of
view.
C
So
if
a
bank
makes
a
low
interest
loan
to
a
cdfi,
we
basically
piggyback
on
the
the
federal
government's
regulation
of
the
cdfi
and
the
use
of
the
funds
and
that
sort
of
thing.
In
essence,
what
we're
looking
for
is
that
the
bank
has
made
the
loan
to
a
properly
certified
by
the
federal
government
cdfi
and
if
that's
the
case,
and
it
meets
the
the
low
the
below
prime
rate,
then
the
credit
is
approved
and
administered
and
they
take
it
on
their
return
and
we
track
it
from
there.
C
C
C
C
And
streaming
just
sort
of
a
concluding
slide
again
over.
We
just
put
together
over
the
last
five
years
about
180
million
dollars
in
community
investment.
Tax
credits
have
been
claimed.
That's
about
16
of
all,
f
e
credits.
If
you
look
at
our
sort
of
suite
of
f
e
credits,
including
job
tax,
credit
and
industrial
machinery,
credit
and
these
and
some
others,
these
amount
to
about
16
and
a
half
percent
over
over
a
five-year
period.
C
With
that,
mr
chairman
we'd
be
happy
to
to
answer
any
questions.
You
know
what
what
we
do
of
course
is
more
on
the
administrative
side.
I
think
there
are
others,
probably
better
suited
to
to
talk
about
the
benefits
and
the
use
of
those
funds
that
are
generated
and
that
sort
of
thing
but
we'll
be
happy
to
try
to
answer
any
questions.
We
can.
A
Thank
you,
commissioner,
I
think,
probably
in
an
effort
to
save
time,
because
we
do
have
another
presentation,
I
think
we're
going
to
hear
from
thda.
First,
they
have
a
short
presentation
just
to
update
from
their
perspective
about
these
investment
tax
credits,
and
so,
if
you
guys
just
want
to
hang
out
for
a
minute,
we'll
grab
questions
after
that
from
the
members
as
they
have
them.
A
But
thank
you
guys
for
coming
today.
This
is
thda
ralph
perry,
the
director
good
friend
of
ours
at
habitat,
but
also
a
good
friend
of
mine
as
well.
He
couldn't
be
here
because
he
had
to
go
deal
with
potomac
fever
in
washington
dc,
so
he
sent
these
two
individuals.
So
if
you
all
would
introduce
yourselves
again
to
welcome
to
the
committee,
of
course,
I
know
who
you
are
and
for
the
record
and
then
go
ahead
and
start
with
your
presentation
today.
D
D
So
the
citc
is
an
important
tool
to
further
private
investment
in
affordable
housing
across
the
state.
Over
the
last
five
years,
the
program
has
encouraged
the
private
investment
of
slightly
over
1
billion
dollars
to
create
or
preserve
nearly
11
000,
affordable
housing
units
across
the
state.
It's
an
average
annual
investment
of
219
million
dollars.
So
we're
very
pleased
by
that.
D
Both
the
affordable
housing
development
community,
as
well
as
financial
institutions,
are
increasingly
aware
of
this
resource.
Thda
regularly
promotes
the
resource
at
our
grant
program,
application
workshops
with
non-profit
housing
developers
and
at
other
venues
and
one-on-one
conversations
with
financial
institutions.
D
Additionally,
we're
seeing
developments
that
benefited
from
the
citc
are
increasingly
larger.
In
2017,
the
average
size
of
the
project
was
about
27
units,
but
in
2021
the
average
size
of
the
units
rose
back
up
to
50..
We
had
a
slight
decline
as
a
result
of
the
pandemic,
and
then
it
increased
in
2021
again
in
correlation
with
increases
in
the
average
size
of
the
developments.
D
D
However,
between
2018
and
2021,
an
average
of
11
developments
received
both
resources
and
in
fact
that
actually
increases
to
13.
If
you
exclude
the
year
2020
when
at
the
application
pool
was,
was
very
low,
so
we
do
suspect
that
the
increase
in
housing
credit
developments
in
the
citc
program
may
be
due
to
the
increase
per
unit
cost
of
development.
D
D
The
program
is
also
essential
to
making
the
units
affordable
and
particularly
in
rural
areas
of
the
state,
where
required,
program,
rents
for
the
low
income,
housing,
tax,
credit
or
other
federal
financing
programs
are
much
too
low
to
allow
those
projects
to
cash
flow
by
adding
this
resource
that
doesn't
have
has
a
lower
interest
rate
associated
with
it.
We're
able
to
keep
the
rents
lower
and
make
those
projects
cash
flow.
D
D
So,
just
in
closing,
I'd
just
like
to
share
a
couple
comments
from
our
partners
from
chris
osborne
who's,
the
chief
operating
officer
of
home
source
east
tennessee.
You
know
he
stated
that
the
citc
programs
helps
cash
flow
on
the
property,
which
also
helps
keep
the
rents
low
nancy
huddleston
executive,
director
of
the
manchester
housing
authority.
D
They
created
a
development
called
oakdale
apartments,
which
has
four
duplexes
in
that
include
eight
one
bedroom
units
for
the
elderly
and
disabled,
and
she
indicated
that
without
the
property
would
not
have
been
built
because
the
cash
flow
for
oakdale
could
not
have
been
reached
and
amy
schaffline
who's.
The
executive
director
of
united
housing
down
in
memphis
indicated
that
the
cost
of
construction
continues
to
outpace.
D
The
appraised
values
in
many
neighborhoods
and
citc
is
essential
incentive
for
banks
to
grant
or
loan
at
low
rates
in
order
to
increase
home
ownership
rates,
provide
more
affordable,
renters
and
increase
the
tax
base.
She
also
indicated
that
it
was
important
for
the
banks,
then,
to
it
was
important
in
the
development
of
the
relationship
between
the
nonprofit
entity
and
the
local
banks,
and
the
banks
now
are
more
involved
in
funding
and
therefore
becoming
invested
in
under-resourced
communities
and,
finally,
betty
kirkland
who's.
A
Thank
you.
Thank
you
very
much
members
having
questions
more
than
happy
to
notify
the
chair.
I
did
have
a
couple
of
questions
for
you,
mr
jared
gaino.
Do
you
think
that,
from
this
community
tax
investment
tax
credit
that
it
was
originally
started
because
we
were
trying
to
hold
the
cost
of
housing
down
or
do
you
think
it
was
more
along
the
lines
of
the
partnership
with
banks
to
be
able
to
deliver
the
loans,
because
it
seems
like
that
over
time
those
kind,
those
two
things
have
kind
of
diverted
would?
C
A
I
guess
the
question
is,
is
when
you
look
at
that
duration
of
time
is,
is
the
reason
why
we're
having
an
increase
in
the
utilization
of
this?
The
total
number,
because
it
looks
like
the
total
number
of
projects,
is
the
same.
It's
the
same
people
doing
bigger
projects
is.
Is
that
what
you
think
it
is,
and
those
banks
are
taking
advantage
of,
that
f
e
tax
credit.
C
I
think
they
are
larger,
but
I
think
there's
also
a
bit
of
a
compounding
impact
when
you
think
about
the
the
annual
credit
that's
taken
over
a
number
of
years,
so
all
the
loans
in
year,
one
that
are
made
play
out
over
15
years.
Then
you
have
the
additional
loans
in
year,
two
that
that
play
out
over
15
years
and
and
are
in
in
addition
to
the
the
ones
in
year,
one
that
are
right,
so
I
think
they
do
sort
of
accumulate.
C
You
know
over
time.
So
I
think
that's
a
part
of
the
reason.
We've
seen
the
increase
and
and
probably
now
that
will
that
will
level
off
over
over
a
certain
amount
of
time.
Then
that'll
that'll
balance
out
right
because
you
have
them
falling
off
at
the
same
rate
they're
adding
being
added
on
to,
but
I
think
it's,
this
increase
in
the
cdfi
loans,
that
is,
that
is
causing
some
of
that
increase.
That
will
probably
level
off
once
you
know
we
get
to
a
new
baseline.
C
A
A
C
A
C
C
F
Thank
you,
mr
chairman,
and
mr
gargano.
It's
good
to
see
you
twice
in
one
day,
just
a
question
the
chairman
mentioned,
and
you
verified
that
the
numbers
of
projects
are
basically
staying
the
same.
It's
just
the
size
of
the
projects
have
increased.
Are
those
projects
are
they
spread?
You
know
fairly
evenly
across
the
state
or
are
they
concentrated
in
particular
areas?
G
G
I
don't
have
any
statistics
or
any
factual
information,
that's
just
based
on
anecdotal
evidence
only,
but
it
certainly
seems
to
be
more
broad,
more
broad
and
maybe
thda
may
may
actually
have
some
information
on
that
too
from
there
and
therein,
but
from
revenue
we
don't.
We
haven't
really
tracked
that
that
type
of
information
that
I'm
aware
of.
A
F
And
I
guess
I
wasn't
around,
as
the
commissioner
mentioned,
that
he
wasn't
when
the
these
plans
were
put
into
legislative
statute,
but
I'm
assuming
that
the
goal
was
to
have
more
low-cost
housing
on
the
market,
more
availability
for
low-cost
housing-
and
I
guess
my
question
is:
has
that
been
successful?
Has
that
achieved
that
and
if
there's
a
way
to
quantify
it,
is
there
should
we
be
doing
more?
Should
we
be
doing
less
or
you
know
just
legislatively
this
has
been
a
good
tool
and
or
do
we
need
to
tweak
it?
Your
suggestions.
D
Yeah,
I
think
it's
been
an
excellent
tool.
I
mean
we
had
11
000
units,
nearly
11
000
units
that
were
created
over
a
five-year
period,
which
is
which
is
really
outstanding,
and
I
think,
as
you
see
from
some
of
the
comments
from
our
partners
across
the
state,
I
mean
they
see
it
as
a
critical
resource
to
be
able
to
make
their
projects
happen.
D
F
F
A
Thank
you
and
as
a
follow-on,
I
think,
the
the
the
original
intent,
I
think,
was
to
provide
affordable
housing.
But
you
know
you,
you
shared
some
data
that
was
shocking
to
me
and
I'm
in
the
construction
business,
but
you
were,
you
talked
about
housing
credits
in
14
were
50
000
each,
and
then
you
shared
that
they
were
somewhere
between
131
000
for
citc.
A
Now
I
guess
the
question
is
the
goal
of
this
original
program
was
to
try
to
make
affordable
housing
more
affordable.
I
guess
are
you
able
to
are
we?
Are
we
able
to
say
that,
even
though
we
have
these
discounted
rates,
the
cost
has
driven
it
kind
of
out
of
the
market
anyways,
because
I
don't
think
it's
whether
you're
in
chattanooga,
hamilton,
county
signal
mountain
or
whether
you're
in
putnam
county
or
even
more
rural
jackson
county,
it's
going
to
be
really
difficult
to
find
affordable
housing
for
anyone.
I
guess
yeah.
A
D
D
D
A
Yeah,
I
I
hear
what
you're
saying
I
guess
you
know
the
the
higher
the
construction
cost,
the
bigger
the
f
and
e
credit,
but
it's
had
no
it's.
No,
it's
had
no
impact
on
housing.
Housing
has
kind
of
gotten
lost
in
in
the
equation.
I
guess
is
what
I'm
saying
is
it's
a
good
way
to
defer
expenses
in
the
long
term?
I
know
it
doesn't
matter
if
you
have
one
of
these
specialty
loans
or
whether
you
have
a
regular
mortgage.
A
B
B
Is
there
I
see
our
ask
this
question:
is
there
a
requirement
on
the
lender's
part
to
talk
about
you
all
and
what
y'all
do
that?
Just
just
talk
about
that
a
minute,
because
I
have
so
many
constituents
who
will
come
to
me
about
affordable
housing
and
haven't
heard
very
much
at
all
so,
and
I
think
I've
asked
this
question
before
to
the
director:
how
do
you
best
get
that
information
out
or
how
do
me?
B
D
Yes,
I
can
try.
Okay,
I
mean
our
primary
mechanism
for
the
programs
that
we
operate,
for
the
most
part
are
going
through
the
nonprofit
organizations
or
the
public
housing
authorities,
the
and
other
grant
administrators
that
we
work
with,
and
then
they
turn
around
and
they
market
the
program
that
they're
operating
to
to
the
constituency
in
their
locality.
E
E
B
Thank
you
I
I
I
just
would
like
for
us
to.
I
guess,
to
get
something
that
is
really.
That
seems
to
be
workable,
because
I
mean
it's
a
wonderful
program
and
you
know,
and
and
I've
got
a
lot
of
people
that
I
represent,
that
qualify
for
it.
While
I
have
a
lot
don't,
but
I'd
certainly
like
for
them
to
know
about
it
that
that
do
because
it's
a
great
advantage,
but
thank
you
for
being
here.
Thank
you.
A
H
Thank
you,
mr
chairman.
This
may
be
somewhat
of
a,
I
guess,
a
question.
In
reference
to
the
fourth
plan
in
west
tennessee,
I
mean
this
thing
is
going
in
all
kinds
of
directions
and
especially
when
you
read
at
some
point
we're
going
to
have
thousands
upon
thousands
of
people
converging
on
that
community.
E
We
do,
and
we
have
you
know
we're-
we
have
lots
of
new
federal
programs
right
now
that
are
helping
folks
with
rental
assistance
home.
You
know,
mortgage
mortgages
that
are
behind
due
to
coveted
related
activities,
the
increase
in
the
citc
program.
You
know
we
we
are.
We
have
lots
of
programs
that
are
trying
to
do
our
best
to
get
as
many
units
available
and
all
across
tennessee
to
to
be.
E
A
Thank
you
seeing
no
other,
thank
you
guys
for
coming
today
and
your
testimony
really
appreciate
it.
David
giaragano
gets
a
a
blue
ribbon
since
he's,
as
the
cheerleader
said
it
hasn't
been
here
every
day.
I
think
he's
been
this
committed
this
third
time.
I
promise
you,
I
won't
ask
you
next
week,
but
anyways.
Thank
you
guys
for
coming
and
appreciate
your
your
participation
today.
Thank
you,
mr
chairman
yup.
Thank
you.
Thank
you.
Members,
as
they
begin
to
exit
we
have
today
is
the
tax
credit
calendar
as
we
call
it.
A
We
have.
This
was
a
discussion
about
a
new
and
existing
program.
We
also
have
a
few
minutes
yet
to
to
discuss
a
new
group.
That's
coming
in
about
new
market
tax
credits,
which
are
a
little
bit
different
and
mr
dressler
with
principal
at
advantage
capital.
I
think
he's
on
his
way.
Yeah
he's
on
his
way
down,
so
we'll
give
him
a
few
minutes
to
get
settled
and
then
we'll
be
back
in
just
a
second.