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Kentucky bill seeks to cut regulations, expand ‘middle housing’ to improve affordability

A sunset view of homes near downtown Louisville
Ryan Van Velzer
/
LPM
Homes in a neighborhood on the outskirts of downtown Louisville on Thursday, Jan. 11, 2024.

A Frankfort lawmaker wants Kentucky to join states across the country that have recently passed laws to expand “middle housing” — eliminating regulatory barriers to address shortages and soaring costs.

State Rep. Steven Doan, a Republican from Erlanger, filed House Bill 102 on the second day of the Kentucky General Assembly’s 2024 session, drawing inspiration from states like California that have freed up more housing units in lots previously zoned exclusively for single-family structures.

Whereas a large majority of land in cities is zoned exclusively for single-family homes, Doan’s bill would override certain local planning and zoning rules across Kentucky to allow more units on individual lots.

If passed, local authorities would have less power to block homeowners from building small secondary dwelling units on their lots, or even building duplexes, triplexes or quadplexes. These forms of housing are referred to nationally as the “missing middle,” as most are either focused on single-family housing or larger apartment complexes.

Doan said an affordable house in his northern Kentucky district is roughly $170,000, but those are hard to find these days with the price of housing rising along with interest rates and the cost of building housing.

“My wife and I, we just had our second kid and we're looking for a new home,” Doan said. “And in the housing market, the stock just isn't there and the prices are through the roof.”

Doan touts his bill as a way to improve housing affordability — especially for millennials like himself — through “free market reforms,” easing local regulations so that property owners have the right to build more smaller units.

“I tell you, every millennial that has the dream of getting out of their parents' basement and wants to own a home should be down here storming the capitol for this thing, so to speak,” Doan says. “This could really move the needle for those folks and for even the younger generation.”

While Doan is considered a small government conservative on economic issues, this is not necessarily a partisan or ideological issue as five state legislatures dominated by both Democrats and Republicans have passed similar laws in recent years.

There has also been bipartisan opposition in some states to kill such middle housing reforms. Those have been typically led by city governments that don’t want their autonomy undermined and suburban homeowners who don’t want the character of their neighborhoods changed.

The Kentucky League of Cities has already expressed firm opposition to Doan’s effort. J.D. Chaney, the CEO of the local government advocacy group, said their board voted unanimously last week to oppose the bill, as “local decisions are best made at the local level.”

Party lines often blur on middle housing reform

David Garcia is the policy director of the Terner Center for Housing Innovation at the University of California, Berkeley, where he’s had a front row seat to study the state’s major middle housing reform over the past decade.

With the majority of land restricted for single-family homes in nearly every community across the country, Garcia said “you’re naturally going to get a shortage of housing.”

“So one of the keys to affordability is increasing the number of homes that are available in the community,” Garcia said. “And by leveraging all of this land that had been previously off limits to new growth, we can create significant amounts of new supply to help mitigate cost increases and provide more homes for everyone.”

Garcia said Doan’s bill is in the spirit of legislation passed by California in recent years, as well as Oregon, Washington, Maine and Montana.

“It seems to be pretty comprehensive,” Garcia said. “It looks like they've learned a bit from what other places have done and incorporated those lessons into this bill that’s for Kentucky.”

Garcia added that this issue is a rare one that blurs partisan and ideological lines, noting California’s Democratic governor and legislative supermajority passed major middle housing reforms in 2016 and 2021, while Montana’s Republican governor and legislative supermajority did the same last year.

“What I find fascinating about these conversations around housing supply and affordability is that there's a lot of across the aisle work that is done,” he said.

While it was only filed two weeks ago, Doan said he’s received a similar response to his bill.

“You've got a lot of people from different areas in different spectrums of the political classes out there that are coming on board for this bill because they recognize that the housing crisis is more than just red versus blue or R versus D,” Doan said. “It's something that we're going to have to unify, we're going to have to link arms, we're going to have to work to push to get this thing done.”

Garcia also noted that opposition has blurred party lines in several states where middle housing reform has failed in recent years. The Democratic governor of Colorado pushed for such a bill in 2023, only to have the Democratic legislature block it, while Arizona’s GOP-led legislature failed to pass similar legislation last year.

Though many of the reforms passed by states are too new to see any measurable impacts on housing affordability, Garcia said there are some solid examples.

California passed a law in 2016 freeing up homeowners to build "accessory dwelling units" on their single-family zoned lots. Known as ADUs, Garcia says there were 1,000 permits per year for such units before the law, but that has now grown to roughly 23,000 annually. California also passed legislation in 2021 to let single family homeowners split their lots and allow up to 10 units if cities opted in, but Garcia said those were slow to show significant results.

Garcia also cited positive effects from local governments such as Minneapolis and Portland that have struck down most single-family zoning restrictions. The Minneapolis reforms that started in 2018 actually bucked national trends and inflation with rent costs remaining flat.

However, Garcia added that zoning reform on its own is probably not enough to make a significant change to housing affordability in the short term for Kentucky, noting Minneapolis also paired them with traditional investments and tax credits to promote the expansion of affordable housing.

“The bill that you've sent to me really focuses on the market rate supply at a small scale, which is a big key to the problem, but it probably won't solve any affordability of supply challenges overnight,” Garcia said.

NIMBY vs. YIMBY

As was the case with Colorado and Arizona, local governments appear to be taking the lead with opposition to Doan’s bill in Kentucky.

Chaney of the Kentucky League of Cities said HB 102 was one of the most extreme bills he’s seen in his two decades of working in Frankfort, “in terms of completely stripping any kind of local decision making, land use law.”

“Kentucky's communities are so diverse,” Chaney said. “Having a statewide one-size-fits-all approach or otherwise taking that away and giving it with the state legislature is just the antithesis of everything that we stand for in city governments throughout Kentucky.”

The mayoral administration of the state’s largest city is not yet expressing outright opposition to the bill, though it has expressed the need for more middle housing.

Scottie Ellis, the spokeswoman for Louisville Mayor Craig Greenberg, told Kentucky Public Radio in a statement the administration supports the overarching goal of HB 102 to build more housing, but is “still reviewing the full potential impacts of this legislation and have identified needed amendments to protect public safety and preserve the uniqueness of historic districts.”

“Mayor Greenberg strongly supports easing zoning restrictions to prioritize the building of affordable housing and hopes to work with leaders in the General Assembly on targeted reforms this session,” Ellis stated.

At a public forum last week, Greenberg’s deputy mayor Pat Mulloy specifically praised Minneapolis lowering the cost of housing “because they rethought the development code.”

“We’ve got antiquated zoning laws,” Mulloy said. “We need to have more of what they call middle housing — duplexes, triplexes. We need affordable housing. We need to talk to our friends at council.”

Louisville Metro Council passed through Phase I of modest reforms to the Land Development Code in 2021, allowing more homeowners in single-family zones to build small ADUs. In the first two years, 53 of those permits were approved, with 10 built by the end of 2023. Lexington expanded similar reforms late last year.

The language of the Greenberg administration’s Phase II reforms is expected to be finalized early this year and focus in part on building middle housing.

Doan said he is now in the process of building support among stakeholders for HB 102 including homebuilders, realtors and local governments. He added that his bill would not completely gut local zoning rules. It would prevent multi-family high-rises in residential neighborhoods and avoid overriding historical districts and homeowners associations.

“When you're going from Paducah to Pikeville and you make broad sweeping changes like this, you really have to be careful and make sure you've got buy-in,” Doan said.

He added that it’s a positive sign that his bill was one of the few ones to already receive a committee assignment in the House, where he has picked up two co-sponsors — one Democrat and one Republican.

“You hear the term NIMBY, not in my backyard? This is YIMBY, yes in my backyard,” Doan said. “So we want those folks coming into every community around the state and the more housing that you have, the lower those rent costs are going to be. It's a simple supply and demand issue.”

Joe is the enterprise statehouse reporter for Kentucky Public Radio, a collaboration including Louisville Public Media, WEKU-Richmond, WKU Public Radio and WKMS-Murray. Email Joe at jsonka@lpm.org.