Housing

Plain English Breakdown

The bill summary does not provide detailed loan criteria beyond requiring applications by March 31, 2027.

Community Workforce Housing Innovation Pilot Program

This bill establishes a pilot program to provide affordable housing for essential service workers through loans and partnerships between government and private sectors.

What This Bill Does

• Establishes the Community Workforce Housing Innovation Pilot Program to offer affordable rental and home ownership options for essential services personnel.
• Authorizes the Tennessee Housing Development Agency to provide loans for construction or rehabilitation of workforce housing projects, with applications due by March 31, 2027.
• Prioritizes loans for innovative projects in areas with high disparity between median income and home prices and rapid population growth.
• Requires at least one project to be funded in each of Tennessee's three grand divisions (western, middle, eastern).
• Sets aside a minimum of 80% of units for workforce housing and 50% specifically for essential services personnel.

Who It Names or Affects

• Essential service workers who need affordable housing.
• Local governments in Tennessee that can use state funds to support the program.
• Private developers involved in public-private partnerships.

Terms To Know

essential services personnel

Workers employed in occupations or professions deemed essential by local authorities, who need affordable housing.

workforce housing

Housing that is affordable to individuals and families earning up to 150% of the area median income.

Limits and Unknowns

• The bill does not specify how much funding will be available beyond the initial $10 million for FY26-27.
• Local government contributions cannot be reasonably estimated due to the permissive nature of the legislation.
• The success and impact of the pilot program will need to be reviewed by 2029.

Official Summary Text

This bill establishes the community workforce housing innovation pilot program ("pilot program") to provide affordable rental and home ownership community workforce housing for essential services personnel, using regulatory incentives and state and local
funds to promote local public-private partnerships and leverage government and private resources. As used in this bill, "essential services personnel" means
persons in need of affordable housing who are employed in occupations or professions in which they
are considered essential services personnel, as determined by each county and municipality within its local housing assistance plan, in consultation with the commissioner of labor and workforce development
. As used in this bill, "workforce housing" means
housing affordable to natural persons or families whose total annual household income does not exceed

150%

of area median income, adjusted for household size.

LOAN PROGRAM

This bill authorizes the Tennessee housing development agency ("agency") to provide pilot program loans to an applicant for construction or rehabilitation of workforce housing in this state. The agency must establish a loan application process that incl
udes selection criteria, an application review process, and a funding process. The agency is required to determine the maximum loan amount for each pilot program participant. Applications must be received by the agency on or before March 31, 2027. Loa
ns
must be provided to at least one eligible project in each of the three grand divisions of this state.

This bill requires that eligible applications for pilot program loan funds meet all of the following criteria:



Demonstrate that the applicant is a public-private partnership in an agreement, contract, partnership agreement, memorandum of understanding, or other written instrument signed by all the project partners
.


Have grants, donations of land, or contributions from the public-private partnership or other sources collectively totaling at 10% of the total development cost or
$2 million
, whichever is less. Such grants, donations of land, or contributions must be evidenced by a letter of commitment, agreement, contract, deed, memorandum of understanding, or other written instrument at the time of application. Grants, donations of land, or contributions in excess of 10%

of the development cost must increase the application score
.


Demonstrate how the applicant will use the regulatory incentives and financial strategies from the local jurisdiction in which the proposed project is to be located
.


Demonstrate that the applicant possesses title to or site control of land and evidences availability of required infrastructure
.


Demonstrate the applicant's affordable housing development and management experience
.


Provide any research or facts available that support the demand and need for rental or home ownership workforce housing for eligible persons in the market in which the project is proposed.

This bill requires loans to be targeted to innovative projects in areas where the disparity between the area median income and the median sales price for a single-family home is greatest, and where the rate of increase in population growth is the highest
. The agency may also fund projects focused in areas where innovative regulatory and financial incentives are available. Priority consideration for loans must be made for projects that meet all of the following criteria:



The
local jurisdiction has adopted, or is committed to adopting, appropriate

regulatory incentives, or the local jurisdiction or public-private partnership has adopted or is committed to adopting local contributions or financial strategies, or other funding sources to promote the development and ongoing financial viability of such projects. Local incentives include such actions as expediting review of development orders and permits, supporting development near transportation hubs and major employment centers, and adopting land development regulations designed to allow flexibility in densities, use of accessory units, mixed-use developments, and flexible lot configurations. Financial strategies include such actions as promoting employer-assisted housing programs, providing tax increment financing, and providing lan
d.


The project is
innovative and include
s
new construction or rehabilitation; mixed-income housing, commercial and housing mixed-use elements, innovative design, storm-resistant construction, or other elements that reduce long-term costs relating to maintenance, utilities, or insurance and promote homeownership. The program funding may not exceed the costs attributable to the portion of the project that is set aside to provide housing for the targeted population
.


The project sets aside at least 80% of units for workforce housing and at least 50% for essential services personnel and for projects that require the least amount of program funding compared to the overall housing costs for the project.

This bill authorizes the agency to
forgive the payment of interest on loans when long-term affordability is provided and when at least
80%
of the units are set aside for workforce housing and at least
50%
of the units are set aside for essential services
personnel.

This bill requires the agency to provide incentives for local governments in eligible areas to
use local affordable housing funds to assist in meeting the affordable housing needs of persons eligible under th
e pilot program.
Local governments
may
use any available state affordable housing funds for persons or families whose total annual household income does not exceed

150% of the area median income, adjusted for household size.

REPORTING REQUIREMENT

This bill requires the agency to review the success of the pilot program on or before January 1, 2029. The review must
ascertain whether the projects financed by the program are useful in meeting the housing needs of eligible areas
. The agency must submit a report with its findings and recommendations to
the state and local government committee of the senate and the committee of the house of representatives having jurisdiction over housing matters.

RULEMAKING

This bill authorizes the agency to promulgate rules to effectuate this bill.

Current Bill Text

HOUSE BILL 2509
By Sexton

SENATE BILL 2410
By Powers
SB2410
012316
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 7,
Chapter 53; Title 13; Title 48, Chapter 101, Part 3;
Title 56 and Title 67, relative to housing.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 13, Chapter 23, Part 1, is amended by
adding the following as a new section:
(a) As used in this section:
(1) "Essential services personnel" means persons in need of affordable
housing who are employed in occupations or professions in which they are
considered essential services personnel, as determined by each county and
municipality within its local housing assistance plan, in consultation with the
commissioner of labor and workforce development;
(2) "Public-private partnership" means any form of business entity that
includes substantial involvement of at least one (1) county, one (1) municipality,
or one (1) public entity, such as a school district or other unit of local government
in which the project is to be located, and at least one (1) private sector for-profit
or not-for-profit business or charitable entity, and may be any form of business
entity, including a joint venture or contractual agreement; and
(3) "Workforce housing" means housing affordable to natural persons or
families whose total annual household income does not exceed one hundred fifty
percent (150%) of area median income, adjusted for household size.

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(b) There is established the community workforce housing innovation pilot
program, referred to in this section as the "pilot program," to be administered by the
agency.
(c) The purpose of the pilot program is to provide affordable rental and home
ownership community workforce housing for essential services personnel affected by the
high cost of housing, using regulatory incentives and state and local funds to promote
local public-private partnerships and leverage government and private resources.
(d) The agency may provide community workforce housing innovation pilot
program loans to an applicant for construction or rehabilitation of workforce housing in
this state. This funding is intended to be used with other public and private resources.
(e) The agency shall establish a loan application process that includes selection
criteria, an application review process, and a funding process. The agency shall
determine which approved applicants will become program participants and determine
the maximum loan amount for each program participant. Applications must be received
on or before March 31, 2027.
(f) The agency shall provide incentives for local governments in eligible areas to
use local affordable housing funds to assist in meeting the affordable housing needs of
persons eligible under this program. Local governments are authorized to use any
available state affordable housing funds for persons or families whose total annual
household income does not exceed one hundred fifty percent (150%) of the area median
income, adjusted for household size.
(g) Loans must be targeted to innovative projects in areas where the disparity
between the area median income and the median sales price for a single-family home is
greatest, and where population growth as a percentage rate of increase is greatest. The
agency may also fund projects in areas where innovative regulatory and financial

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incentives are made available. The agency shall provide a loan for at least one (1)
eligible project in the western grand division, one (1) eligible project in the middle grand
division, and one (1) eligible project in the eastern grand division.
(h) Projects must receive priority consideration for loans where:
(1) The local jurisdiction has adopted, or is committed to adopting,
appropriate regulatory incentives, or the local jurisdiction or public-private
partnership has adopted or is committed to adopting local contributions or
financial strategies, or other funding sources to promote the development and
ongoing financial viability of such projects. Local incentives include such actions
as expediting review of development orders and permits, supporting
development near transportation hubs and major employment centers, and
adopting land development regulations designed to allow flexibility in densities,
use of accessory units, mixed-use developments, and flexible lot configurations.
Financial strategies include such actions as promoting employer-assisted
housing programs, providing tax increment financing, and providing land;
(2) Projects are innovative and include new construction or rehabilitation;
mixed-income housing, commercial and housing mixed-use elements, innovative
design, storm-resistant construction, or other elements that reduce long-term
costs relating to maintenance, utilities, or insurance and promote
homeownership. The program funding may not exceed the costs attributable to
the portion of the project that is set aside to provide housing for the targeted
population; and
(3) Projects that set aside at least eighty percent (80%) of units for
workforce housing and at least fifty percent (50%) for essential services

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personnel and for projects that require the least amount of program funding
compared to the overall housing costs for the project.
(i) The agency may forgive the payment of interest on loans when long-term
affordability is provided and when at least eighty percent (80%) of the units are set aside
for workforce housing and at least fifty percent (50%) of the units are set aside for
essential services personnel.
(j) All eligible applications shall:
(1) Demonstrate that the applicant is a public-private partnership in an
agreement, contract, partnership agreement, memorandum of understanding, or
other written instrument signed by all the project partners;
(2) Have grants, donations of land, or contributions from the public-
private partnership or other sources collectively totaling at least ten percent
(10%) of the total development cost or two million dollars ($2,000,000),
whichever is less. Such grants, donations of land, or contributions must be
evidenced by a letter of commitment, agreement, contract, deed, memorandum
of understanding, or other written instrument at the time of application. Grants,
donations of land, or contributions in excess of ten percent (10%) of the
development cost must increase the application score;
(3) Demonstrate how the applicant will use the regulatory incentives and
financial strategies outlined in subsection (h) from the local jurisdiction in which
the proposed project is to be located;
(4) Demonstrate that the applicant possesses title to or site control of
land and evidences availability of required infrastructure;
(5) Demonstrate the applicant's affordable housing development and
management experience; and

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(6) Provide any research or facts available that support the demand and
need for rental or home ownership workforce housing for eligible persons in the
market in which the project is proposed.
(k) The agency may promulgate rules to effectuate this section. The rules must
be promulgated in accordance with the Uniform Administrative Procedures Act, compiled
in title 4, chapter 5.
(l) On or before January 1, 2029, the agency shall review the success of the pilot
program to ascertain whether the projects financed by the program are useful in meeting
the housing needs of eligible areas and submit a report with its finding and
recommendations to the state and local government committee of the senate and the
committee of the house of representatives having jurisdiction over housing matters.
SECTION 2. For the purpose of promulgating rules, this act takes effect upon becoming
a law, the public welfare requiring it. For all other purposes, this act takes effect July 1, 2026,
the public welfare requiring it.