To create housing for more Nashville residents, Metro Council is dangling carrots in front of developers

Most Nashville residents pay too much for housing. And it’s expensive for developers to build new apartments that have lower rents. 

So, the Metro Council is taking another swing at inclusionary zoning — a program that is one piece of solving both problems. It basically means giving developers who opt-in incentives for setting aside new units for low- and middle-income renters.

This matters since prices continue to soar and most renters pay too much. This creates a domino effect because it snatches up the supply meant for people who can afford higher rents. Nashville has already tried this, but the state undermined the effort in 2018.

This time, the council is trying to get around that by working with developers to create the legislation and letting developers volunteer to participate.

The bill is in the early stages and will have to go through several rounds to become law. Here’s what’s currently in it:

A developer says ‘Hey, I want to create some affordable housing.’

• They would get a discounted height through the bonus height program. A developer can still get a bonus height without participating in the program.
• The city would use the tax revenue created by the bonus height to offset the cost of the inclusionary housing units within the development so the rent would be market rate. The revenue amount will be decided by the Metro Department of Finance and the county’s Property Assessor’s office.
•  Plus the developer gets to keep some money in their pocket through a subsidy. 

So what’s required from the developer?

• Development has to have more than five units to qualify for the program.
• Developer has to submit a plan that includes if the development uses public resources or property, number of inclusionary units, income levels of families eligible for units, proposed market rates for units, details about the apartments like size, bedroom number and the market rate for comparable units within the census tract area.
• Also the developer has to submit a proposed master lease with an agency like MDHA and has to be approved by the mayor’s office director of housing programs or another metro official who oversees affordable housing programs. This provides accountability to make sure it’s inclusionary for a minimum of 15 years, reassess the market rate for each unit every five years during lease term and ensure eligibility by households.
• The inside and outside of Inclusionary Housing units cannot differ materially from other units in the development.