One of Nashville's affordable housing initiatives nears nullification in Tennessee Senate

A bill that would nullify one of Nashville's affordable housing programs is set for a deciding vote in the Tennessee state legislature Monday.

The Senate is scheduled to vote on a measure that would stop Metro Nashville from requiring developers to build low-cost housing in exchange for greater development rights.

Nashville’s policy, a form of “inclusionary zoning,” is meant to spur the development of apartments for Nashvillians who can’t can’t afford to live in the city. As the current real estate boom led to skyrocketing rents and home prices, the Metro Nashville Council passed a range of measures in the past few years, including this ordinance, to help alleviate the shortage of affordable homes.

The Republican-led state legislature moved to block Nashville and other cities in 2016 from advancing policies that would outright require developers to build affordable units. After Gov. Bill Haslam signed that bill, the Metro Council passed the incentive-based ordinance, along with a cash grant program for developers who agree to build affordable units.

Then last year Rep. Glen Casada, R-Franklin, introduced the bill to block Nashville’s incentive-based policy. He argued that the government was still mandating a price control on private developers. His bill passed the house, but the companion legislation stalled in the Senate. Co-sponsor Sen. Ferrell Haile, R-Gallatin, pushed it through the Senate State and Local Government Committee on Tuesday.

“Apparently we left a loophole” in the 2016 legislation that prohibited mandatory inclusionary zoning, Haile said at the committee hearing. With this new legislation, he said, cities will still be able to “incentivize” affordable housing, but won’t be able to “devalue” property with price requirements.

Haile said that legislators developed the bill in "collaboration" with the Tennessee Apartment Association, the National Federation of Independent Business, the Beacon Center of Tennessee, the Tennessee Chamber of Commerce, and Associated Builders and Contractors, a trade organization.

Affordable housing advocates objected to the state legislature’s move to block Nashville.

“You’d think they would leave local government to address local government affairs,” said Paulette Coleman, the chair of the affordable housing task force for Nashville Organized for Action and Hope. “The challenges and demands of the urban counties are very different than the rural areas. If the state came up with something and the federal government said they can’t do it, (Republican legislators) would be up in arms. It’s a double standard.”

Sen. Jeff Yarbro, D-Nashville, the lone dissenter out of nine members on the committee, pointed out that under Metro’s ordinance apartment developers aren’t being forced to build affordable housing. They have an option to request a zoning variance for greater development rights, such as density or greater height. In exchange, they would have to include a percentage of new affordable or workforce units.

“Why is that not an incentive?” Yarbro said at the hearing.

Metro Councilman Bob Mendes, who sponsored the inclusionary zoning ordinance, said he thought it responded to the legislators’ concerns.

“It’s disappointing because we have tried so hard to have a balanced, market-driven approach, and we feel like we accomplished that,” Mendes said. “Under our law, owners would get the full value of what they purchased, so we are protecting property rights.”

The Beacon Center, a conservative activist group, also sued Metro to defeat the zoning ordinance. Its lawyers argued the city was essentially taking property by limiting the price of rentals. That suit was dismissed in recent weeks at Davidson County Chancery Court because Metro had not yet used the ordinance on a development project, according to Braden Boucek, the group’s director of litigation.

“There’s nothing market-based about a price control,” he said. “The government is misusing its land-use authorities to the abuse of people’s constitutional rights.”

A year and a half after the Metro Council approved two ordinances — the inclusionary zoning and the grant program — no affordable or workforce units have been produced under either piece of legislation. Mendes, the councilman, said there’s a long lead time for development, and that it wasn’t surprising developers hadn’t yet built anything.

Now, the Housing Incentives Pilot Program, the product of one of the bills, could be scaled back. Mayor Megan Barry has proposed cutting $1.55 million from its $2 million budget to free up dollars for cash-strapped Nashville General Hospital.

Joey Garrison contributed to this report.

Reach Mike Reicher at 615-259-8228 and on Twitter @mreicher.