Nashville’s Development
Nashville’s unique culture and charm have helped propel it to national prominence and prosperity. But its fame has come with some costs along the way. One of those costs is the diminishing availability of affordable housing. Before Nashville became the “it” city that it is today, housing was affordable, especially in comparison to large cities in other parts of the country. However, after more than a decade of intense real estate development, the cost of housing has skyrocketed. Nashville’s economy is booming, and many of its formerly affordable neighborhoods have become quite expensive. As a result, many people are struggling just to pay the rent.
The (Un)affordable Housing Law
Historically, many city governments zoned certain percentages of their land specifically for the development of affordable housing. Cities that do not use zoning to protect the interests of their lower-income residents often provide financial incentives to real estate developers to build affordable housing projects. Practices like these help ensure a city’s socioeconomic diversity. Without these zoning and incentive policies, real estate developers will rarely choose to move forward with affordable housing projects, and the scarcity of low-income housing becomes all the more prevalent.
In 1996, state-wide legislation was passed to prohibit cities in Tennessee from adopting mandatory inclusionary zoning policies, otherwise known as rent control. This law preceded Nashville’s storied rise to prominence, so the full effect of this legislation this was not immediately realized. However, since then Nashville’s housing market has changed dramatically. As costs rise, the lack of any sort of affordable housing is quickly pricing people out of the neighborhoods that they have called home in the past.
Nashville could ensure the continued affordability of its real estate by providing financial incentives for real estate developers to include affordable housing in their plans, but so far no such incentives have been offered. This means that, presently, there is no ceiling on Nashville’s housing costs, and no telling how much higher prices may climb.
Pending: The Reinstatement of Affordable Housing
In 2015, after years of effort from non-profits and community organizations around the city, metro planners received a directive to implement new policies, aimed at working around the state’s rent control prohibition to provide affordable housing in Nashville. These policies will likely come in the form of incentives for developers. In the meantime, Nashville’s state representatives will do what they can to amend the state’s legislation with respect to affordable housing.
This should come as encouragement for cost-burdened households in Nashville. Help is on the way! However, until these laws and incentives are actually implemented, Nashville will continue to become less and less affordable, and long-time residents will continue to be “priced-out” of transitional neighborhoods.
What This Means For Developers
Far-sighted developers will see an opportunity in Nashville’s new directive. Strong tax incentives and rent subsidies will open the doors to new types of development that provide greater certainty for a developer’s return on investment. What’s more, because the directive is so new, there is a historic opportunity for developers to work with city planners to address both the form and substance of these incentives. This kind of partnership can open a dialogue to ensure not only that the city chooses incentives that really work, but to foster lasting relationships as projects move forward. In short, visionary developers have a rare ground-floor opportunity to work with the city to fashion effective incentives.
What This Means For Renters
Help, and hope, may be on the way for renters whose income falls within the city’s definition of “low income.” The threshold for the “low income” cut-off has yet to be defined, but we can gain some clues by looking at cities with similar situations. Nashville often draws comparisons to Austin, Texas—another Middle-American city that has been experiencing a similar economic boom. On average, Austin’s housing prices have grown to be even higher than Nashville’s, but government provided tax incentives have created good affordable housing options for the city’s economically challenged residents. In Austin, “low income” is defined as an annual income of $41,000 or less.
In the meantime, Section 8 housing is here to help fill the void created by the lack of affordable housing provided at the state level in Tennessee. Section 8 is a federal program that provides struggling families with monthly subsidies so that they can afford rent in apartments that they otherwise couldn’t. The exact income requirements to qualify for section 8 housing vary depending on the size of the family, but in general they correspond to most state and city level affordable housing projects. Unfortunately, section 8 subsidies are limited. Nonetheless, until Nashville is able to implement its new directive, Section 8 remains one of the best options for struggling families.
