Nashville sued over new affordable housing law
Metro Nashville was hit with a highly anticipated lawsuit on Monday by the free market think-tank Beacon Center of Tennessee over a new Metro policy that is aimed at jump-starting more affordable housing.
The center's lawsuit contends Metro violated state law when it passed the new policy, which will require residential apartment developers in Nashville building five or more units include a percentage of new affordable or workforce units when they request a zoning variance for greater development rights. This could include greater density or height on projects.
The ordinance, approved by the Metro Council in September, goes into effect in June. Metro is to offer grants to offset the costs of developers in order to make the housing cheaper than market value.
"We are filing this lawsuit not just because we disagree with this 'affordable housing' plan, but because Nashville is acting unconstitutionally and in defiance of state law," Braden Boucek, director of litigation for the Beacon Center, said.
"Tennessee has expressly told cities they cannot pass these sorts of laws, which makes Nashville's mandate on 'affordable housing' both illegal and unconstitutional. Cities are not independent and cannot pick and choose what laws they want to follow."
Metro Department of Law Director Jon Cooper said Metro does not comment on pending litigation when asked for a response.
The Beacon Center, which filed the lawsuit with Southeastern Legal Foundation in Davidson County Chancery Court, had warned of the lawsuit prior to the council's passage of the ordinance.
In their lawsuit, the center calls the policy a "mandate." The center argues that the local ordinance violates a new state law that prohibits municipalities from mandating the inclusion of affordable housing in new residential development. Such policies are known as inclusionary zoning.
But supporters of the ordinance, including bill sponsor Councilwoman Burkley Allen, have argued that the policy is a voluntary inclusionary zoning policy based on development incentives and not a mandate because the requirement is only triggered when a developer chooses to apply for new development rights.
Tennessee House Majority Leader Glen Casada, R-Franklin, filed legislation this year to clarify that Metro's policy isn't allowed under the new state law. His bill passed by an overwhelming 72-21 vote in the House, but it has failed to advance in the Senate.
In a statement, the center's CEO Justin Owen called Nashville's affordable housing policy "the Obamacare of housing."
"It is unfair and illegal to make private parties do the government’s job of addressing a public problem," Owen said. "We don’t tell grocers to take care of hunger by losing money on the food they sell.
"This is just another example of a liberal city pushing for unpopular and irresponsible policies in an otherwise fiscally responsible state."
Affordable housing has gained traction as a top issue in Nashville amid rampant gentrification and soaring property values in Davidson County.
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In addition to the partial inclusionary zoning ordinance, the council last year also approved a new three-year pilot program that will lets residential developers, who agree to build affordably priced units, compete for financial incentives and grants totaling $2 million.
The Beacon Center, which helped derail Gov. Bill Haslam's Insure Tennessee program two years ago, has taken regular aim at Metro of late. The center last year sued Metro over the city's short-term rental regulations. A judge ruled that some of the law's definitions were vague, but Metro was allowed to continue regulating short-term rental properties.
Reach Joey Garrison at 615-259-8236 and on Twitter @joeygarrison.