NASHVILLE, Tenn. (WTVF) — Affordable housing in Nashville has often been made possible by tax breaks.
In many cases, developers received tax breaks to set units aside as affordable for a certain amount of time.
NewsChannel 5 Investigates reviewed how Metro has used tax breaks to generate affordable housing and found some units were required to remain affordable for only five years.
That was the case in the early 2000s when Metro was trying to get people to move back into downtown.
Someone could qualify to buy an income-restricted, "affordable" unit and sell it five years later at the market rate.
Prices for "affordable units" are connected to the area's median income and are below market rates.
Back in 2006, when high-rise condos were first opening downtown, Metro used Tax Increment Financing (TIF) to encourage developers to set aside 20% of their units as affordable.
The Viridian condo tower downtown received $6 million in tax breaks and agreed to set 60 units aside as affordable.
We found a small, 648-square-foot unit that sold for $137,100 in 2006.
Ten years later, after the affordability requirement ended, it sold for $259,900.
Today, it's valued at $425,000, according to Zillow.
The ICON condo tower in the Gulch received $7 million in tax breaks.
We found a small, 614-square-foot condo set aside as affordable that had income restrictions in 2009.
It sold for $149,900.
Today — long after the affordability requirement ended — it's valued at more than $402,000.
And the Kress downtown received $650,000 in tax breaks in 2005.
In 2006, a small, 695-square-foot unit sold for $130,000 dollars.
Today, it's valued at $356,000, according to Zillow.
Tennessee State University Professor Ken Chilton has followed affordable housing in Nashville. He said the goal is to allow teachers, firefighters and others to buy or rent a home downtown. But when the affordability requirement expires, those opportunities go away.
"Five years is way too short of a time period to build in long-term affordability across your housing stock in a city," Chilton said.
It was not just condo units.
A three-story apartment building at 942 Jefferson Street received Metro Tax breaks in 2008. It also received federal money to set apartments aside as affordable.
The affordability requirement ended in January of this year — allowing rents to increase hundreds of dollars a month. The building is now for sale with no affordability requirement.
Former Mayor Bill Purcell was elected in 1999, at a time when he said Nashville was focused on getting people to move back into downtown.
"It was an entirely different place. After 5 o'clock the streets were empty," Purcell said.
Purcell defended the short-term affordability requirement and said that was all developers would agree to back then. He said in 1999 only about 900 people lived downtown. Broadway was not a booming business district. It was full of adult businesses.
"The city had worked aggressively for decades to move people out of the core of the city and as a result of it, frankly, it was a downtown that was failing," Purcell said.
"We had to do what we had to do to get people into housing, and we did just that," Purcell said.
He said those who first moved downtown were taking a risk and deserve to benefit — like any homeowner — from Nashville's growth.
He said it gave those early affordable home buyers a shot at the American Dream of home ownership.
"And I don't know where they are now, but wherever they are, they've moved on up, and I'm happy for them," Purcell said.
Now Metro is making affordable housing a centerpiece of the East Bank development.
The neighborhood will have 1,550 residential units around the new Titans stadium and 695 of them will be set aside as affordable based on a percentage of the area's median income.
But what is unusual, is the affordable units will stay affordable for 99 years — which Nashville's chief development officer called remarkable.
"The 99 years on the East Bank, we may never achieve that in another deal ever again," Mendes said.
The question becomes how to enforce an affordability requirement 40 or 60 years from now.
"That's a high-class problem to have. And we know there's tools out there where we'll be able to do that. But we don't have to worry about that until we are a couple of decades in," Mendes said.
Former Mayor Purcell said the 99-year agreement is great for the city, but it was not possible when he was mayor.
"If the market will sustain a 99-year lock on affordable housing that's great. Twenty-five years ago that could never have happened," Purcell said.
