Opinion: Proposed Tennessee legislation could give local government flexibility on affordable housing. How would they use it?

Staff file photo by Robin Rudd / State Sen. Todd Gardenhire speaks to local policymakers on Monday, Nov. 6, 2023.  Listening at left is Ralph Perrey, executive director, Tennessee Housing Development Agency. Gardenhire called the meeting at Chattanooga City Hall to discuss affordable housing.
Staff file photo by Robin Rudd / State Sen. Todd Gardenhire speaks to local policymakers on Monday, Nov. 6, 2023. Listening at left is Ralph Perrey, executive director, Tennessee Housing Development Agency. Gardenhire called the meeting at Chattanooga City Hall to discuss affordable housing.

Solving affordable housing is no easy task. Just look around the country. Look around the state.

Substantial sums of money have been allocated nationwide to alleviating the shortage of affordable housing.

In 2021, in response to the need for affordable housing exacerbated by the COVID-19 pandemic, the federal government provided $90 billion to boost housing assistance across the country, an increase of almost 70% from the previous year.

But even with big money thrown at the problem, creating an adequate supply of affordable housing stock is out of reach for many cities.

Nicole Heyman, Chattanooga's chief housing officer, said the city currently has a deficit of 1,700 housing units that are affordable to working families making $35,000 or less. So where do we start?

To begin, relationships — or the lack of relationships — between states and cities can be a factor. It became illegal for cities such as Chattanooga to offer zoning incentives when the Tennessee General Assembly passed legislation in 2016 and 2018 after Metro Nashville passed an ordinance granting additional development rights to developers who committed to build a certain percentage of affordable housing units. That state legislation kept other cities from pursuing creative options to address housing needs.

But new legislation under consideration could give cities some flexibility in how they encourage affordable housing development.

A legislative remedy

State Sen. Todd Gardenhire, R-Chattanooga, was intrigued by the affordable housing problem. After hearing some of the challenges facing Chattanooga, he said he was specifically interested in helping residents live closer to where they work.

"I represent probably one of the most diverse districts of the state of Tennessee. Southside and all the downtown areas where all these apartments are going up, people working as a waiter or waitress" are priced out of apartments or single-family homes, he said in an interview Monday.

"Somewhere we need to find them a place to live where the demand is. Right now we're not meeting the demand people have to be able to afford to do it," he said.

Gardenhire organized a summit with stakeholders across the state and crafted legislation that he hopes will alleviate the affordable housing crunch. The November 2023 meeting at City Hall, including Heyman and members of the Tennessee Municipal League and the Tennessee Housing Development Agency, featured discussions about the need to have more ways to develop housing.

The bill "authorizes the chief legislative body of a municipality to create a voluntary attainable housing incentive program by ordinance for the purpose of authorizing certain incentives to be provided to property owners who seek to build attainable housing."

According to Heyman, who gave input into the legislative proposal, if the bill passes, local governments would be able specify how they want to proceed.

"The city of Chattanooga will then have to pass an ordinance that outlines what the parameters are," Heyman said on Monday.

One of Gardenhire's first priorities was to make sure the legislation gives developers a say in negotiations.

"We wanted to leave as much decision-making of what kind of variances to give to a builder to build these units," he said.

"Some people say 'I can't afford to build (parking spaces) because the city has an ordinance that says I gotta have two parking spaces, but there's not enough room and I can't make it work financially," he said. "So if the city wants to give a variance on that particular thing, I left it open so the city governing body can make that decision."

To be clear, this is a voluntary effort, meaning developers will have to initiate negotiations about certain incentives. Heyman believes that developers will be eager to come to the table.

"Volume is money for housing developers," she said. "The more units a developer produces, the more rents they collect. Even if they have to give us a percentage of those units at affordable levels, they are still getting more. So it is in their benefit to provide more units even if some of them are affordable because it impacts their bottom line."

Governments need tools

Finding solutions to affordable housing shortages has slowly become a bipartisan issue. Republican lawmakers are listening to constituents and their concerns. Republican U.S. Sen. Marsha Blackburn of Tennessee is co-sponsoring a bill that will improve the Low-Income Housing Tax Credit, LIHTC. That proposal would increase the number of these credits available to states by 50% and will make a temporary 12.5% tax credit increase permanent.

Affordable housing is a problem that requires a collective and concerted effort to resolve. And it seems that our leaders, both local and national, understand the need.

The workforce in Chattanooga and Hamilton County needs housing that is affordable: the teacher, police officer or mechanic who teach our children, keep our streets safe or maintain city buses. They help make our community what it is.

It's all connected. And to recognize that connection, we need an intentional affordable housing approach. This legislative proposal is a good start and deserves a full hearing.

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