Despite housing shortages, hundreds of thousands of homes sit vacant in Tennessee. Homes are often abandoned due to upkeep costs, foreclosures or deceased owners. A proposed Tennessee law would allow local governments to put money into private investment funds to rehabilitate abandoned homes — or build new ones. It’s something other states have done successfully for years.
Minnesota started the Community Homeownership Impact Fund for affordable single and multi-family housing in 2004. It’s a partnership between government and the private sector to keep housing affordable. Instead of flipping houses for profit, private investors get government money to create funds that invest in affordable housing over the long term - 20 or 30 years.
“No matter where I travel in my state, there’s not a single part of the state that I go to where the legislators in that part of the state don’t say ‘we need more of what you do'," said Jennifer Ho, commissioner of Minnesota Housing since 2019.
"In that regard I think there is a bipartisan understanding that we have to get housing right if we want to have a better economy, we have to get housing right for kids to do better in school,” she said. “We’ve got to get housing right if we want aging parents to age well in communities of their choice. There’s really not much that we want to get right that we can do without getting the housing system to work right.”
In 2023, more than 200 households were assisted by the fund and about 5,500 people have been helped since its creation in 2004.
“It might be workforce in one community and it might be senior housing in another community and it might be homelessness acutely in other communities, but every community can see they have an array of housing needs and so investing in Minnesota housing is an important way for us to solve those,” Ho said.
Charlotte, North Carolina, has a similar fund, the Housing Impact Fund, which has supported more than 1,500 units. Homes built with the Housing Impact Fund must remain affordable for 20 to 30 years.
Lawmakers in Tennessee introduced a bill that would allow local governments to provide credit support to bonds and use those proceeds to support the private sector in creating and preserving affordable workforce housing. So, Knoxville, for example, would create a planned project with its Industrial Development Board to create affordable housing or rehabilitate abandoned homes. Private investors would be able to petition the city for that work and be repaid for it.
Currently, local governments can already do this for economic development projects. The proposed bill would increase those parameters to include affordable housing.
“Tennessee is one of the states that is growing and we haven’t kept up with affordable housing or just the housing supply. There’s a huge huge need for that and it isn’t just a local problem, it is a state problem,” said Rep. Caleb Hemmer from Nashville, who sponsored the bill. “That’s one of the great things about my bill is it allows local governments the ability to create specific solutions. The needs of Nashville are much different than the needs of Sevier County. Each area has the same problem but different solutions and that’s why we’re looking to create something from the state to allow for local solutions and give them more tools in their toolbox to solve for the attainable, affordable housing crisis we have in this state.”
With this legislation, vacant units could be rehabilitated through grants and loans from local governments. Currently, 11%, or over 360,000 homes, sit vacant in Tennessee according to data from the 2020 Census. Knox County has about 15,000 vacant units, and Sevier County has 16,000.
Tennessee has various bills under consideration this year for infrastructure and housing. One bill that remains frozen in congressional committees would require a county to remit 20% of collected mortgage taxes for the purpose of low-interest or zero-interest loans for construction of affordable housing.
“We’re just kind of dipping our toe in the water at this point and trying to get something done at this point in hopes of building momentum to do other projects and other initiatives next year,” Hemmer said.
Two housing bills failed in the House during March: one that would establish a grant for first-time home buyers; and another that would allow local governments to require affordable housing to be built.
