New Tennessee Law Allows No-Cost Incentives for Affordable Housing

Local governments in the Volunteer State can now offer developers incentives like increased density, lower parking requirements, and priority permitting for affordable housing projects.

2 minute read

June 10, 2024, 5:00 AM PDT

By Mary Hammon @marykhammon

Multistory apartment building under construction.

eunikas / Adobe Stock

Tennessee Gov. Bill Lee has signed into law a bill aimed at stimulating construction of affordable housing. According to an Nooga Today article by Kristen Templeton, local governments in the state are now able to offer no-cost incentives to builders of affordable housing developments:

  • Increased density allowance to allow more units to be built on a piece of land, which makes it possible to build lower-cost homes.
  • Lowered parking requirements, which can create savings up to $14,000 per home.
  • Priority permitting, which can reduce carrying costs for developers in the pre-development process. 

The incentive programs are voluntary and must align with PILOT reform and upcoming zoning reform. “Each municipality wishing to adopt the new framework will have to pass a local ordinance detailing the local incentives + [sic] process. Once adopted, developers and builders can opt in through a written notice of interest, and projects that meet the criteria will go through a review process for approval or denial by the Regional Planning Commission,” reports Templeton.

These types of no-cost incentives can be an easier pill for community stakeholders to swallow versus tax incentives and fees waivers, as they don’t directly cost local or state government revenue. But, according to, “Even planning incentives such as density bonuses, which appear free, result in increased infrastructure and other public costs.” They add, “communities have to carefully weigh the costs and benefits of each incentive and evaluate them relative to the cost of meeting specific affordable housing requirements.”

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