TACIR panel hears rural and municipal leaders blame land, fees and financing for Tennessee housing crunch

A Tennessee advisory commission on state and local intergovernmental issues on Aug. 1 convened a panel of six housing experts and local officials who described a housing shortage across the state driven by high land costs, infrastructure limits and development fees.

"Housing is a workforce recruitment and workforce retention issue," said Ryan Egley, president and CEO of the Lawrence County Chamber of Commerce, testifying for rural communities. Egley said Lawrence County’s median existing-home price rose from about $158,000 in August 2019 to about $300,000 in August 2023 and that the county built roughly 800 housing units in the past decade, none in the entry‑level category.

Hunter McDonald, a commercial and residential broker and first vice president of the Middle Tennessee Association of Realtors, told commissioners that governmental fees "make up approximately 25% of new homes in Tennessee," pointing to local school facility taxes and impact fees in municipalities such as Smyrna and Murfreesboro. McDonald also gave county price data: he said new‑construction averages in Rutherford County recently have been near $465,000.

Mayor Ken Moore of Franklin said his city’s principal shortfall is workforce housing and described local efforts including a housing commission and deed‑restricted nonprofit partnerships. Moore noted the state’s removal of local inclusionary‑zoning authority limited one tool municipalities previously used to encourage workforce units.

Ralph Perry, executive director of the Tennessee Housing Development Agency, framed the problem as supply‑driven and urged more production across price ranges. He said THDA administers tax‑credit and bond authority and down‑payment assistance but that more resources and a supportive local regulatory environment are needed.

A representative of the Federation of Appalachian Housing Enterprises (FAHE) urged state support for land‑banking and targeted funding. "The cost of land is probably one of the most significant barriers our members are facing," the FAHE witness said, recommending incentives for statewide or regional land banks and more flexible funding for nonprofit developers.

Julie Kiel of Mountaintop, a nonprofit that repairs and rehabs owner‑occupied homes, said rural capacity limits and grant application feedback show smaller local partners struggle to compete for traditional financing and recommended multi‑year, flexible funding and capacity building.

During an extended question-and-answer period, commissioners pressed witnesses on the components of the 25% fee estimate, the effectiveness of revolving loan programs, and whether impact fees, zoning and state incentives could be retooled. Panelists described options observed elsewhere, including state‑backed revolving construction loans that limit finished product size to preserve affordability, pilot tax‑incentive programs and increased use of tax credits.

Several speakers also raised concerns about large out‑of‑state investors buying single‑family homes or building rent‑only subdivisions, saying that pattern removes potential owner‑occupied inventory. Panelists recommended better local data collection on development, technical assistance for smaller counties and tailored solutions by market type.

The commission did not take formal action on the testimony. The housing panel closed after members thanked witnesses and moved on to the next agenda items.