With the price to live in gentrifying Nashville continuing to climb, Metro planners have begun drafting a new policy to try to increase and retain Nashville’s affordable housing stock. The Tennessean, Oct. 31, 2015 -
As they do, some of Tennessee's Republican lawmakers are keeping a close eye — and could decide to intervene legislatively if they believe Metro, or some other local government, goes too far to restrict private enterprise.
One top Republican House member predicts state legislation next session that would effectively seek to prevent local municipalities from adopting a mandatory inclusionary zoning policy or nullify that policy if action is taken. Such an ordinance — supported by many affordable housing advocates but opposed by developers, real estate groups and the Nashville Area Chamber of Commerce — would mandate that a certain percentage of units of new development in Nashville be priced affordable.
“The legislature is very sensitive to the needs and the concerns of the business community, and I think there will be (a state bill) based on the concerns that I’m hearing,” said House Republican caucus chairman Rep. Glen Casada, R-Franklin. “I’m looking at it, but I know others are as well." (link)
My Comment. This is great news and I hope members of the Tennessee legislature continue to watch this issue and vote to protect private property rights and protect us from the socialist tendencies of our Mayor, the Metro Council and many Nashville "do-gooders."
So called "inclusionary zoning" is a form of price-fixing in which the government takes away a property owner's right to establish the rent or sale price of his property. It often mandates that a certain percentage new rental units or units of property for sale be priced so as to be "affordable" for people with different incomes. The two most often income levels are for people making 80% to 100% of the area median income or people making between 100% to 120% of the area median income. Affordable has a specific meaning and generally means housing cost should not exceed 31% of ones gross monthly income.
What happens if a developer is told that 14% of his properties in a development must be priced to be affordable, is that he raises the price on all other property in the development to subsidize the reduced price of the set-aside affordable units. While this helps those who get the set-aside units, it has the effect of increasing overall prices and pricing other people out of the market.
Another way that inclusionary zoning causes property sale prices and rents to increase is that it suppresses supply. If a developer has a choice of places to develop and can earn more developing in Austin, Texas or Charlotte, North Carolina rather than Nashville, he will do so.
Tennessee already bans rental price control imposed by a city, so most likely inclusionary zoning as it relates to rental property would fall into that category. It would probably take an opinion from the Attorney General or maybe a lawsuit however to clarify that issue. There is no state prohibition on price control of homes for sale. The state legislature should ban this interference in the marketplace and remove the uncertainty by banning mandatory inclusionary zoning.
Some forms of inclusionary zoning are not quite as bad as mandatory inculsionary zoning and rely on incentives instead of mandates. That sounds good, but incentives can have the effect of being punitive, depending on how they are designed. Denial of a benefit or bonus can be a form of punishment for not doing what the government wants you to do. If everyone else gets the benefit and you do not, that is the same as a penalty. While the city should have a certain leeway to incentivize developers of affordable housing, it should not be punitive for those who do not.
I am doing my part to encourage the state legislature to stop inclusionary zoning. When I went to Columbus Ohio for the Americans for Prosperity event a couple months ago, I got to socialize with several state legislators and used the opportunity to discuss Nashville's inclusionary zoning. At various fund raisers and other social gatherings whenever I have had a chance to chat with a legislator, I have urged him to stop Nashville's inclusionary zoning. I have spoken to my State Senator about the issue. Last week at a joint meeting of Latinos for Tennessee, The Republican Minority Coalition, and Conservative Groups, the guest speaker was Lieutenant Governor Ron Ramsey. During Q & A I asked Governor Ramsey if he would watch Nashville's inclusionary zoning and step in and stop it if Nashville passes a inclusionary zoning ordinance. He said in the past the State had acted to stop Nashville from passing other anti-competitive and price-fixing policies and said inclusionary zoning was something the legislature was aware of and was watching.
Please, if you have an opportunity to speak to a state legislator ask him to pass legislation to stop Nashville's proposed inclusionary zoning. With our liberal mayor and city council, I would not be surprised to see the most extreme liberal policies become law. It is a proper role of the State to limit what damage cities and counties may do and to protect private property rights and individual liberties. We need to urge the State to stop Nashville from becoming the San Francisco of the South.