Mayor Kelly Praises Gardenhire Voluntary Housing Incentive Legislation

  • Thursday, February 15, 2024
Mayor Tim Kelly on Thursday praised a new bill introduced by Senator Todd Gardenhire and co-sponsored by Representative Dale Carr that would leverage no-cost voluntary incentives to reduce the price of housing.

“It’s time to unleash the potential of the private sector to build attainable housing for hardworking Tennessee families, and I’m proud to stand behind Senator Gardenhire’s efforts to establish a framework for that to happen,” Mayor Kelly said.
“Under this bill, participating cities would essentially provide a menu outlining how these incentives work, allowing builders to make an educated choice about how and when to participate, spurring the creation of badly needed homes in our communities.”

Mayor Kelly has supported the drafting of the bill, which provides a voluntary mechanism allowing builders to receive density bonuses in exchange for providing housing that is attainable by ordinary families with modest incomes. Some specifics, such as the level of affordability and precise incentives, will be determined at the local level based on community economics and geography. 

“The reality is that no builder or developer can afford to build new homes in a comfortable price range for Tennesseans with modest incomes, given the rising cost of labor, materials and red tape,” Mayor Kelly said. “Without voluntary incentives to either decrease construction costs or increase the project’s overall revenue, new homes will remain out of reach for too many, including many paramedics, teachers and bus drivers.”

From 2013 to 2022, for every 10 new jobs created only six new homes were built, according to an analysis by ThinkTennessee. And as rents and home prices rose 20 percent since 2020, thousands of residents have been priced out of their communities. 

Senate Bill 2496 and House Bill 2623 provide vital tools to close a widening gap in Chattanooga and across the state. If approved, these two bills will give towns and cities the option to offer no-cost incentives to builders who want to create or preserve housing at price points that Tennessee families and seniors can afford, helping to defray the high cost of construction by:

• More Density — A city or county can choose to let builders construct more units than would ordinarily be allowed on a piece of land. This spreads their fixed costs across more homes and allows them to make up their revenue shortfall from lower-priced units.
• Lower Parking Requirements — A city or county can reduce a developer’s costs by choosing to require fewer parking spaces for every attainable home or apartment, creating savings up to $14,000 per unit according to a 2023 Rutgers University study.
• Reduced Setbacks — a city or county can choose to reduce required setbacks for workforce housing. By allowing builders to leave less empty space around a building, it allows them to fit more homes on the same piece of land or construct housing on irregularly shaped pieces of land.

As currently written, the bill would require developers and builders who wish to participate to opt-in by providing written notice of interest. Projects that meet the criteria would go through a well-documented process culminating in approval or denial by the Regional Planning Commission. They would then be deed-restricted to ensure that the attainable housing continues to be offered in perpetuity.

Under the bill, each city or county can decide whether it wants to even offer these incentives, ensuring that each locality retains the ability to calibrate to its local economy and landscape. 

“These steps, which are further detailed in SB2496/HB2623, are designed to ensure a free and fair process for property owners and taxpayers alike, requiring that both parties enter into this process voluntarily, and that the incentives fulfill their intended purpose to create housing that is attainable for bus drivers, paramedics and teachers,” said Nicole Heyman, chief housing officer for the City of Chattanooga.
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