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Second Street Flats: Affordable Housing Design in Memphis Using LIHTC and PILOT Programs | Shapiro & Company Architects

3 days ago
2 min read

A zoomed in close-up of the front of a brick building with a sign across the front that reads "2ND STREET FLATS" on a dark metal awning above the front doors.

Affordable housing increasingly relies on layered financing, and projects that combine federal and local incentives demand more than conventional planning. At Second Street Flats, early coordination between design, development, and finance ensured that LIHTC and PILOT incentives worked together to support both budget and livability.

Project Overview: Urban Infill with Mixed-Use Components

Second Street Flats is a 64-unit multifamily development on approximately 1.5 acres in downtown Memphis. The project includes a mix of one- and two-bedroom units, along with ground-floor commercial space and a leasing and clubhouse facility.

Developed by Elmington Capital Group and completed in 2015, the project had a total development cost of approximately $9 million. Its downtown location contributes to walkability, increases residential density, and activates underutilized urban sites.

Designing Within LIHTC Constraints

Second Street Flats was developed using the Low-Income Housing Tax Credit (LIHTC) program, administered in Tennessee through the Tennessee Housing Development Agency.

LIHTC guidelines drive key design decisions. Units must meet income-restricted rent thresholds, layouts must balance cost efficiency with long-term durability, and materials must support maintainability. Rather than limiting creativity, these requirements shaped deliberate design solutions: vertical plumbing alignment, repeatable construction modules, and daylight-oriented layouts that enhance usability without increasing cost.

Red brick apartment building with white trim and large windows. Two parked cars in front, blue sky and clouds above. Street sign visible that reads "2ND STREET FLATS"

The Role of PILOT Incentives in Memphis Development

In addition to LIHTC, Second Street Flats utilized a Payment In Lieu Of Taxes (PILOT) incentive through the Health, Education, and Housing Facility Board of the City of Memphis. PILOT programs are a key tool in making urban developments financially viable, particularly where land and construction costs are higher.

For architects and developers, the financial viability required that the project respond to local economic development priorities, integrate seamlessly into the urban context, and demonstrate tangible community benefits. Coordinating design decisions with these objectives early minimized friction between funding and construction.

Implications for Affordable Housing Design in Tennessee

Second Street Flats illustrates a broader shift in affordable housing across Tennessee.

Developers and architects are increasingly focused on urban infill sites that support walkability and connectivity, mixed-use components that activate street frontage, and housing that aligns with broader downtown revitalization efforts.

At the same time, the technical demands of LIHTC and PILOT participation require architects to work closely with developers from feasibility through construction.

Experience with these programs is a key differentiator: understanding how to design within funding constraints while still delivering a competitive, high-quality product directly affects project success.

Designing for Cost Efficiency and Long-Term Performance

Affordable housing design demands a balance between upfront cost and lifecycle performance. At Second Street Flats, unit mix, amenity spaces, and commercial integration demonstrate how efficient planning coexists with high-quality, sustainable design. Early coordination ensures that financial feasibility does not compromise usability or longevity.

A Model for Developers Pursuing LIHTC Projects

Second Street Flats provides a clear framework for developers evaluating affordable housing opportunities in Tennessee:

Combine federal LIHTC funding with local incentives such as PILOT programs
Prioritize early coordination between design, financing, and project objectives
Focus on urban locations where density and mixed-use elements add value
Engage architects experienced in multifamily efficiency and LIHTC development constraints

These practices are increasingly standard in successful affordable housing developments and are central to our approach to designing resilient, high-performing multifamily projects.