Affordable Rental Housing in Knoxville: Addressing the Need

1. Addressing the Need for Affordable Rental Housing Becky Wade, Director Knoxville Community Development

2. Knoxville, Tennessee • The largest city in East Tennessee and third largest in the state. • Located in a broad valley between the Cumberland Mountains and the Great Smoky Mountains. • Where the Holston and French Broad Rivers meet to form the Tennessee River. • About a 4 hour drive from Atlanta, 3 hours from Nashville, 2 hours from Chattanooga and • At the crossroads of I-40, I-75 and I-81

3. City of Knoxville Source: PolicyMap.com (2013-2017 ACS)

4. Of Knoxville city households: • More than half (57%) are Low- and Moderate-Income (0-80% AMI) • One out of five (20%) are Extremely Low Income (0-30% AMI) • More than one-third (35%) are paying more than they can afford for housing • 17% are paying more than half their income in housing costs • More than half (53%) are renters • Almost three-quarters (73% or 31,825) of renter households are Low- and Moderate-Income (0-80% AMI) • Almost a third (32%) are Extremely Low Income (0-30% AMI) • Source: ACS 2011-2015 • Most who commute daily to work (average of 20 minutes) • do so in a privately owned vehicle - 92.8% • drive alone to work - 84.9% • Source: MPC - 2015 American Community Survey 1-Year Estimates

5. In all areas across the MSA, renter households pay a much higher proportion of their incomes in housing costs.

6. Last 5 years: increased $106 (13%) Last 8 years: increased $170 (23%) • Source: Rentjungle.com 2-bedroom rental unit in Knoxville is $920/month (average for 2018) $17.83/hour wage required or working 98 hours/week at minimum wage.

7. Almost half (47% or 20,195)of renter households are paying more than they can afford in housing costs Source: CHAS Data for Knoxville city (2011-2015 ACS) One-quarter(25%or 10,770) of renter households are paying more than half their incomein housing costs

8. The City of Knoxville is responding by:

9. Maximizing Resources by Partnering with: Public Housing Authority – Knoxville’s Community Development Corporation (KCDC) U.S. Department of HUD State of Tennessee East Tennessee Foundation Non-Profit and Faith-Based Organizations Non-Profit Developers/ CHDOs For-Profit Developers

10. Utilizing HUD Funds CDBG • $1,694,012 HUD allocation for PY2019-2020 • Housing rehabilitation (rental and owner-occupied) • Energy efficiency improvements • Accessibility improvements • Emergency and minor home repairs (owner-occupied) • $1.5 Mbudgeted for affordable housing HOME Investment Partnerships Grant • $1,043,957 HUD allocation for PY2019-2020 • New construction (rental and owner-occupied) • Housing rehabilitation (rental and owner-occupied) • Down payment assistance • $2.3 M budgeted for affordable housing Lead Based Paint Hazard Reduction/Healthy Homes • $3.6 M grant awarded this year

11. While HUD funding has leveled off in the past nine years, it has decreased significantly from the 1990s (CDBG) and 2000s (HOME).

12. Investing City Funds Knoxville has the oldest affordable housing trust fund in the state. Since 1993, the City of Knoxville has provided over $9M to the East Tennessee Foundation. Beginning in July 2017, the City has allocated $8M in general funds to its Affordable Rental Development Fund (ARDF) to bridge the gap and help both non-profit and for-profit developers develop new affordable rental housing.

13. and utilizing whatever tools are available to support the development of affordable housing. Tennessee Housing Development Agency (THDA): • Rent Control • Inclusionary Zoning • Low Income Housing Tax Credit (LIHTC) Funding Local Government: • Property Tax Abatement • Property Tax Freeze / PILOT • Flexible Zoning Codes (allowing higher density) • Housing Subsidies • Section 8 Housing Vouchers (federal $) • CDBG and HOME funds (federal $) • Local funds

14. Payment In Lieu Of Taxes (PILOT) for Affordable Housing • An incentive the City may offer to affordable housing developers to reduce what the developer has to borrow • Saves the developer operating expenses • Any Tax Credit (LIHTC) rehabilitation or new construction activity may be eligible • Most are not competitive (third-party review not always necessary) • Time period typically is the same as the Affordability Period • Eleven affordable housing developments have received approval since 2014, totaling 1,788 units: • 896affordable rental units were rehabilitated (continuing their affordability) and • 892 affordable rental units will be newly constructed

15. Knoxville’s Affordable Rental Development Fund • Incentivizes development of new affordable rental housing • Priority is given to: • Developing affordable units for LMI households (< 80% AMI) Higher funding may be given to developers serving very low-income households (<50% AMI) and those that agree to lower-than Fair Market Rent • Projects located close to public transportation • Projects close to jobs, schools, and amenities (shopping, medical facilities and services) • Projects that develop existing, vacant and/or blighted property. • 10-20 Year Affordability Period

16. Knoxville’s Affordable Rental Development Fund • Eligible developers include individuals, non-profit, for-profit and public agencies that: • Have development capacity, financial capacity and documentable successful experience in the type of project proposed • Are current on all property taxes, have a good maintenance and management history with existing rental propertiesand • Have no record of Fair Housing Act violations • Developers are required to: • Meet with active neighborhood organizations in the area it is proposed and consider community input • Provide construction drawings for review and • Meet Energy Star* Certification or energy efficiency guidelines established by the City

17. 123 Holston Village Way 24 two-bedroom units, plus * for elderly and special needs households HomeSourceEast Tennessee ‘Village at Holston Court’ • CHDO/non-profit • Targeting households • at 60% AMI

18. Completed: Funding Sources Phase I. Acquisition CDBG ($100K) Phase II. * Construction of a State of Tennessee three-bedroom group home TennCare (Medicaid) Under construction now: Phase III. Construction of 24 HOME ($425K), ARDF ($400K) two-bedroom apartments plus private loan(s) HomeSource East Tennessee ‘Village at Holston Court’ Leveraged $3.6M in private funding. * TennCare group home

19. East Martin Mill Pike 172 one, two and three-bedroom units Elmington Capital Group ‘Southside Flats’ • Private, for-profit housing developer • Targeting households at 50% AMI • 20 year Affordability Period

20. Completed: Funding Sources Phase I. Acquisition LIHTC, plus private loan(s) Under construction now: Phase II. Construction of HOME ($540K), ARDF ($360K) 172 one, two, and three- PILOT, LIHTC, plus private loan(s) Bedroom apartments Elmington Capital Group ‘Southside Flats’ Leveraged $29M in private funding!

21. $8 M allocated since July 2017 • $3.9 M committed and $89.8 M leveraged in first 2 years • $1 : $19.047 • $2.5 M in contracts are pending 34 units completed in first 13 months 249 units under construction currently 258 units / construction is pending 136 units / contracts are pending • 677 total • rental units • ($6.49 M ARDF)

22. Thank you. www.knoxvilletn.gov/development Becky Wade, Director Knoxville Community Development bwade@knoxvilletn.gov (865) 215-2865