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Bill signed to allow incentives for housing affordability in Tennessee

Learn more about the recently signed bill that will allow local governments to offer no-cost incentives for affordable housing developments.

NOOGAtoday | Chattanooga

See how a new bill will impact Chattanooga’s efforts in providing affordable housing.

Photo provided by Chattanooga Tourism Co.

More affordable housing developments may come to Chattanooga due to the recent legislature signed by Governor Bill Lee.

The new state law will allow local governments to offer no-cost incentives (think: density bonuses or reducing parking requirements) to builders for affordable housing developments.

In Chattanooga, the city will be able to offer local incentives that work with the PILOT reform + an upcoming zoning reform. Here’s a breakdown of a few incentive examples.

Increasing density allowance
A city or county can choose to reduce the land area required per housing unit — allowing more homes to be built on a piece of land. This spreads out fixed costs + reduces home sizes, making it possible to offer lower-priced homes.

Lowering parking requirements
A city or county can choose to reduce construction costs by reducing the regulations that require a minimum number of parking spaces per home — this can create savings of up to $14,000 per home.

Allowing priority permitting
A city or county can choose to give priority during the permitting process to projects “that include attainable homes.” Think: Faster permitting reduces the carrying costs for developers in the pre-development stage.

Chief Housing Officer for the City of Chattanooga Nicole Heyman said the previous Tennessee law was highly restrictive + held the city back when looking for tools to make housing more affordable.

“Using this law, we can work with housing developers and create pathways for them to reduce their rents without forcing them to sacrifice their project’s viability,” said Heyman.

NOOGAtoday | City Hall

The Chattanooga City Council will vote to approve an ordinance for the new framework.

So, now that the bill’s been signed — what’s next?

Each municipality wishing to adopt the new framework will have to pass a local ordinance detailing the local incentives + process. Once adopted, developers and builders can opt in through a written notice of interest, and projects that meet the criteria will go through a review process for approval or denial by the Regional Planning Commission.

Note: The Kelly Administration is currently working on an ordinance to present to City Council.