All Hands on Deck for Nashville Housing

By Dale Mitchell, Community Development Coordinator at Pinnacle Financial Partners

The time is now for Nashville and Nashvillians to invest in affordable and accessible home ownership and rentals. With average rents topping $1,700 and 63 percent of rentals priced at more than $1,500 (RentCafe as of Sept. 13, 2024), many renters could own a home for the same monthly cost or less. The problem they face is a lack of properties available within their buying power. For those who remain in the rental market, we need more options that take less of their monthly budgets.

We’re seeing Nashville respond to this challenge in meaningful ways that need to be supported so they can continue. Everyone has a part to play, and they’re working hard to help more of our neighbors find homes, build wealth and break the cycle of poverty.

Nonprofit Developers
Habitat for Humanity is synonymous with affordable housing. Everyone knows their work giving people the chance at home ownership, and many have been part of their builds.

Many others who aren’t household names are incredibly active at building housing of all kinds. Pathway Lending, Urban Housing Solutions, Be a Helping Hand, Woodbine Community Organization and Affordable Housing Resources are doing the work and making change. They put together the complex capital stacks needed for single-family and multifamily developments that—because construction costs are fixed even if the final prices are affordable— are by definition not going to turn much profit, if any.

The Housing Fund does similar work but also uses a specialized approach designed to help their housing remain affordable in perpetuity. Their shared equity model helps spread the wealth created by a property’s appreciation so the homeowner, future buyer and community at large can benefit.

In 2023, many of these organizations came together with others to test their collective power by forming the Alliance for an Affordable Nashville. Their coordinated efforts have formed a shared understanding of the issue, its causes and strategies to fix it. It’s an inspiring use of pooled influence that’s already paying dividends.

Emerging and Specialized Programs
Given the complexity of these deals and the varied causes of housing instability, a parallel group of nonprofits are working to meet targeted needs across Nashville. Mending Hearts helps find permanent, supportive housing for women who are formerly unhoused, suffering from addition and in need of mental health support. Welcome Home Ministries, Aphesis House and Project Return provide the same needed support services for men. Park Center does similar work for men and women. All focus on treatment, increased safety and bringing stability to people’s lives.

Rebuilding Together Nashville addresses another need that’s too easily overlooked: Homeowners should be able to stay in their homes even when repairs are too costly. They’ve improved more than 500 Nashville houses, giving their owners a renewed future.

And Urban League’s R.E.D. (Real Estate Developers) Academy opens the door to more aspiring developers of color. Participants get the training and mentorship they need to join the developer community, and graduate by pitching their affordable projects to financiers.

State and Local Government
The city and state play essential roles in bringing projects to reality. The Barnes Fund can fill gaps in a deal or serve as a backstop for financing. The newly launched Catalyst fund is making loans to developers of affordable projects through a combination of city funds, philanthropy and bank investment.

Beyond contributing dollars, Metro Nashville is also an enormous property owner, and the process for surplusing and selling properties has enormous potential that we haven’t yet fully realized.

The Tennessee Housing Development Agency has been an important ally to homebuyers, renters and developers alike since its formation in 1973. Whether through the issuance of Low-Income Housing Tax Credits, down payment assistance or mortgages, their continued partnership is invaluable to Tennesseans.

For Profit Developers
The Clear Blue Company, Elmington Capital and LDG Development and others have become integral to the creation of housing. They bring balance sheet strength needed to scale and create more units on available land within the city. This reduces urban sprawl while ensuring residents have access to transportation and other essential services available within Nashville, but not prevalent in outlying counties.

Faith-based Community
Similarly, many churches own property in neighborhoods that need affordable and accessible options the most. This is especially true in gentrified neighborhoods where churches have followed their congregations to new communities. Selling that land to a developer with an affordable project can be a ministry for those who pursue it.

Some do direct work, like at New Level Community Development Corporation, which is an outreach of Mt. Zion Baptist Church. They build brand new homes for low- to moderate-income buyers as a way of giving back to their community.

Banks
We cannot leave out one of the most important sources of capital for affordable and accessible housing: Banks. My former colleagues at First Horizon were the first to join the Catalyst Fund with a $50 million credit facility, a significant investment in building more homes for more people. Here at Pinnacle, we had $403.7 million in funding on the books for the Community Investment Tax Credit program as of Dec. 31, 2023. We also made $213 million work of affordable home loans in 2023 and invested another $361 million in multifamily projects to create 4,653 units.

None of these work without the partnership of the other. We are more coordinated and more strategic than ever before. And it’s just in the nick of time. Nashville needs 55,000 new units by 2030, according to the Nashville Affordable Housing Task Force. Thanks to this coalition and our many other partners, we are working toward that goal and building a better future for all of us.