HB 2509

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."