A group of well-known community philanthropists is working to help the city of Knoxville alleviate a part of the housing crisis, putting their own dollars toward public programs that lead to construction of affordable homes.
Why would wealthy donors give to a city that levies taxes? And what are they trying to accomplish?
The new initiative is part of an ongoing effort by community agencies, business groups and government to work together to solve a problem for residents and newcomers: Rents are high, which forces people to move and increases homelessness, and the supply of homes is low, which drives up prices and delays home ownership.
The city needs 6,000 to 8,000 more housing units by 2029 to meet demand and undo years of underbuilding.
The first donors are Randy and Jenny Boyd, Clayton Homes, the Haslam family, and Phil Lawson and the Lawson Family Foundation. Together they've pledged $2 million to the new public-private partnership to supplement the $8 million Mayor Indya Kincannon is proposing the city spend on affordable housing projects in the 2024-25 budget.
Most affordable homes are built with low income tax credits for developers, which offset federal income tax for 10 years. The number of credits is based on costs of development determined by the Tennessee Housing Development agency and the number of qualified low-income units.
But in Knoxville, what the state provides often isn't enough to make the numbers work for developers. The city and United Way will give developers the donated funds to supplement housing in addition to tax credits.
"Necessity is the mother of invention," Kincannon told Knox News. "The needs are great. Guess who realizes that? Our community business owners."
Donors' funds are going to United Way to support housing broadly, and they won't have a say in specific city projects.
Donations will go through United Way
City officials want taxpayers to know they're not just taking handouts from the city's wealthiest businesspeople. The gifts will be vetted through the United Way of Greater Knoxville, which already works with the Boyds, the Haslams and Lawson, according to David Brace, Kincannon's chief of staff.
"They all expressed desire for affordable housing, specifically for that gap financing for rental development," Brace said. He's developing a memorandum of understanding between Knoxville and United Way that would guide the collaboration.
It will work like this: Donors pledge funds to the United Way, then the city and United Way representatives together will determine whether a specific project meets Knoxville's needs. Then Knoxville City Council will authorize the acceptance of the funds through a resolution and ordinance. Brace told Knox News they haven't ironed out exactly how funds will get in the hands of approved developers, but he thinks they will simply be transferred electronically.
Where will donations go?
The city in 2021 committed $50 million over 10 years Knoxville's Affordable Housing Fund to support new developments. It's resulted in hundreds of affordable housing and permanent supportive housing units, according to the city.
The $2 million from donors will help to produce hundreds more additional units.
The fund has supported 18 developments across the city's six council districts, including the Flats at Pond Gap, Young High Flats, Middlebrook Gardens, Dogwood Springs Apartments, Inskip Flats and Village at Holston Court.
Allie Feinberg reports on politics for Knox News. Email her: allie.feinberg@knoxnewsws.com and follow her on X, formerly known as Twitter, @alliefeinberg.
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This article originally appeared on Knoxville News Sentinel: How big-name philanthropists are pitching in $2 million to help fix Knoxville housing crunch
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