Mayor Megan Barry is pleased to introduce a program that will incentivize developers to create more affordable and workforce housing within existing and new construction. The incentive pilot program has been developed after months of research and conversations with the stakeholders in the community by the Mayor’s Office.
“This will serve as another tool in the toolbox for the community and developers to help us achieve our shared goal of creating more high-quality affordable and workforce housing for Nashvillians,” said Mayor Barry. “We want to target this growth in urban core which has seen the greatest impact of soaring housing prices in recent years, as well as along our pikes and corridors which are targeted for mass transit options now and in the future.”
The announcement of the pilot incentive program comes on the heels of other efforts by Mayor Barry to increase Metro’s focus on affordable housing. In June, the Mayor signed into law a budget which includes an increase of $10,000,000 for the Barnes Housing Trust Fund, bringing the total to $16M for FY16-17. Additionally, the Metro Council approved on second reading a private-public partnership with Elmington Capital Group to create 138 units of affordable and workforce housing on a Metro-owned lot at 12th and Wedgewood. Metro has also worked with the Barnes Commission and local non-profit developers to re-use other city-owned infill lots around Nashville and Davidson County to build affordable housing properties.
Affordable housing, as defined in the proposed ordinance, is affordable for households making 60% of Median Household Income (MHI) or less, and workforce housing is designated at 61-120% of MHI. According to the latest U.S. Census figures from 2014, the MHI for Davidson County for a family of four is $60,074.
Under the proposal, developers wishing to take advantage of the incentive program would need to provide affordable or workforce housing at a rate that is equal to or less than 30% of household income. For example, utilizing the 2014 figures, the maximum monthly rental for a family of four making 60% of MHI would be $901, or $1,802 at the 120% workforce level.
Developers who meet these terms would then be able to seek a grant, subject to staff review by the Mayor’s Office of Economic Opportunity and Empowerment (OEOE) and Metro Council approval, capped at 50% of the increase in value of property taxes from the new development. The grant would cover the difference between the price of market-rate housing and the price of the affordable or workforce housing units. For example, a developer who has market-rate apartments at $1,500 a month and offers comparable workforce-level affordable units for $1,200 would get a grant for the difference of $300 per unit, total not to exceed the cap of 50% of the increase in property tax value.
“There is no silver bullet to the affordable housing crisis we face in Nashville and across America,” said Mayor Barry. “But this proposal is a great step forward in creating more affordable and workforce housing options so that teachers, construction workers, service employees, artists and hundreds of thousands of other Nashvillians can afford to live, work and play right here in Davidson County.”
The program will be launched with a 24 months sunset provision and FY17-18 cap of $2,000,000 in order to collect data and give developers and rental managers time to become acclimated with the new program.
In addition to incentives for new construction of rental properties, the pilot program also has options for owner-occupied units and existing rental. The incentive grants for owner-occupied units outside of the UZO will be capped at $10,000, and they will be capped at $20,000 for properties within the UZO or along a multimodal corridor. Owners of existing rental properties can also apply for grants in the event that increases in the market will displace current residents, subject to rules and limitations.
Representatives of the Mayor’s Office of Economic and Community Development and OEOE will be on hand at the Metro Council Ad Hoc Affordable Housing Committee meeting tomorrow, Wednesday July 13 at 5:00PM in the Jury Assembly Room of the Historic Metro Courthouse to discuss the details of the proposal and get feedback from members of the Council and the public. Full details of the proposal are attached in the draft ordinance.