How the Nashville Affordable Housing Task Force wants to solve the crisis
Strong growth in Nashville strengthens its economy but deepens its affordable housing crisis, says Metro Nashville report Affordable Housing Task Force.
Nashville needs to quadruple its current annual production of affordable housing by 2030 to meet projected needs and close the city’s current affordable housing deficit, the task force believes.
The shortage cannot be solved by any particular program or funding source; Local, state and federal programs will need to cooperate, the report says.
For Nashville, the task force suggested creating a dedicated affordable housing department to track affordable units in the city; make better use of public land and seek new sources of income such as increased sales tax in the tourist area, increased hotel tax and higher short-term rental fees.
Recommendations of the working group and their costs
Each recommendation also involves staff time:
- Increase the Barnes Housing Trust Fund to produce at least 1,500 units each year. Cost: $ 30 million per year.
- Create and staff an affordable housing department responsible for maintaining an inventory dashboard that will include all subsidized units and provide alerts for properties with subsidies approaching expiration. Currently, there is no central agency to track the many separate programs that provide affordable housing support. The working group created the first such inventory in its report. Cost: Salary of at least two full-time employees, financing of a housing study.
- Seek new sources of revenue, potentially including a 0.125% sales tax inside the tourism development zone, increase hotel tax by $ 2 per night, increase short-term rental fees and charges per night. night / per room, create 0.001% charge for properties built or sold for $ 500,000 or more that does not preserve affordable housing, and more.
- Create a catalytic fund that can more easily pursue “opportunistic investments” with a focus on preserving properties with expiring grants. Cost: $ 10 million initial investment (with a target of $ 40 million from matching funds from partners and investors).
- Make better use of public land to create housing, either by building on public land, buying land, or selling non-building land to finance affordable housing elsewhere. Cost: Depends on the price of the land purchased.
- Work with the state legislature to strengthen support for community-led affordable housing solutions.
- Develop payment in lieu of tax programs to support long-term housing options in partnership with nonprofits and private developers (including developments of low-income housing tax credits and others ). Cost: $ 3 million annually in lost tax revenue.
- Reduce barriers to creating an appropriate housing density by changing zoning and improving planning, zoning and land use policies. Cost: Financing of studies by third parties.
- Invest in MDHA’s Envision Development to create mixed-use and mixed-income communities and work to maximize the impact of good HUDs, especially for very low-income households and homeless Nashvillians. Cost: $ 100 million per year for about 500 units.
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Who pays ?
Affordable housing is created, maintained and subsidized by a variety of government and non-government organizations and funding sources, so there is no one-size-fits-all solution with one sticker price. Costs can also change based on market fluctuations.
Creating more affordable housing isn’t just about new units built from scratch, and not all of those units can or will be financed with local dollars, according to the report. It is common for affordable housing to use funding from a mix of programs at the local, state, and federal levels.
In addition to using state and federal dollars and programs, the task force recommended creating a variety of small, local revenue streams that would provide dedicated funding for long-term affordable housing (these suggestions require further review for legality and enforcement).
- A 0.125% sales tax increase inside the tourism development zone (approximately $ 3.5 million in annual revenue)
- Increase short-term rental fees and charges per night / per room. Short-term rentals reduce the number of long-term accommodations available, and these charges would discourage short-term rentals. (The short-term rental tax currently contributes around $ 1 million to the Barnes Fund each year)
- Increase the hotel tax per night to $ 4 per night (instead of the current tax of $ 2 per night). (This would generate around $ 18 million per year, estimated based on 2019 occupancy levels)
- Create an affordable housing fee of 0.001% for any property built or sold for $ 500,000 or more that does not preserve affordable housing
- Establish a link fee or residential and commercial development impact fee (this would require a change in state law)
- Create a special contribution for building permits to tax the creation of new housing and commercial developments: 0.21% of the value of a building permit instead of a transfer or mortgage tax
- Issue or increase document registration fees
- Issue general bond bonds to finance affordable housing projects
- Introduce an issuer commission of five basis points on bond issues
- Redirect property transfer rights at state level
Cassandra Stephenson covers affairs at The Tennessean, which is part of the USA Today Network – Tennessee. Contact Cassandra at [email protected] or (731) 694-7261. Follow Cassandra on Twitter at @ CStephenson731.
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