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NASHVILLE – Tennessee has a critical shortage of housing, but voluntary zoning incentives could help lower construction costs and encourage developers to build more diverse housing, finds a new policy brief released today from nonpartisan think tank ThinkTennessee. With the passage of a new bill by the 113th Tennessee General Assembly, Tennessee communities will now be able to provide incentives for housing investments that meet the needs of its workforce and families after July 1, 2024.

“Compared to other states, Tennessee localities have been extremely limited when it comes to promoting housing development that is affordable,” said Adriane Harris, Senior Advisor on Housing Policy at ThinkTennessee. “Voluntary incentives will give communities new tools to increase housing supply across a variety of price points and create balanced and thriving communities where everyone can find a place to call home.”

According to the brief, only six homes have been built for every 10 new jobs created in the state over the past decade, contributing to a significant housing gap. Previously, local governments in Tennessee were prohibited by state law from offering zoning incentives or conditions on developments to be sold or rented at below market rates. As a result, localities had to use existing tools (like public funding allocations or land) to try to incentivize developers to build housing that is affordable for their communities—a challenge made more difficult by increased costs of land and building materials.

With the recent approval of HB 2623/SB 2496, local jurisdictions will have the ability to provide voluntary zoning incentives to promote housing development that is affordable, relieve the pressure of the current housing market by increasing housing supply, and encourage a higher rate of housing construction in line with job growth. Incentives may include increases in density, reduced parking minimums, and reduced building setbacks in exchange for more affordable rents or housing prices within developments.

To read the full report, Tennessee Cities Have a New Housing Tool: Voluntary Zoning Incentives Will Help to Increase Housing Opportunities for Tennesseans, visit

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