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Louisville needs more affordable housing for low-income residents. Here are some potential solutions

Row houses on a block with some white cars parked on the road
Kate Howard
One housing leader said Louisville needs more affordable units across the city.

A recent report found that the gap of missing affordable housing for Louisville’s lowest-income residents is widening.

Local housing leaders say that Louisville has more work to do to help its lowest-income residents secure affordable housing. Some see increasing the supply of housing as a key need.

The Louisville Metro Government released the city’s latest housing needs assessment last month. The third-party report examines the local housing market and is updated every five years.

It found that the city’s lowest-income households, who make no more than 30% of the area median income, needed around 36,000 more affordable housing units in 2021. That’s up to $26,900 for a family of four in Louisville in 2023. There were about 81,000 households in that group, according to the report.

A home is considered “affordable” if its residents don’t spend more than 30% of their income on it.

That gap increased by nearly 5,000 units compared to five years earlier, which the report attributed to a rise in the local population. It also found the median household income for that 30% AMI group decreased.

However, the report also found some positives: the gap of missing affordable housing for residents making up to 50% of AMI decreased by 8,000 units since the last assessment. And “workforce housing,” affordable to households making up to 80% of AMI, reached a surplus after being in a shortage.

Marilyn Harris is the director of the Office of Housing and Community Development, which co-commissioned the report. She said she doesn’t view the 36,000 figure as units that need to be built, but as households that need help paying less for their homes.

“We have to figure out how to get those units, even if it's a unit they're already living in… affordable to them,” Harris said. “So maybe that's a voucher, maybe that's providing a subsidy to the developer for the next unit that they build, that the rent is [affordable].”

Harris also said she’s concerned about homes that are federally subsidized through tax credits but nearing the end of their affordability requirements. The report estimated there were more than 20,000 of those units in Louisville, and that requirements for about a fifth of them could expire if the city doesn’t take action to preserve them.

She referenced the city’s goal of creating and preserving 15,000 affordable housing units by 2027, one of Mayor Craig Greenberg’s main campaign promises, and said government needs to spend money on existing affordable housing.

“What we don't want is to lose units from the market. And then we end up with a bigger hole than we started with,” Harris said.

Ideas for solutions

Tony Curtis, the executive director of the Metropolitan Housing Coalition, said he wasn’t surprised that the gap in affordable housing for Louisville’s lowest-income residents had grown.

“Every affordable housing development that's going up out there right now is something that we need in this community. And it needs to be geographically diverse in where it's being built,” Curtis said.

He said more recent city investments haven’t been fully realized yet.

In 2022, a year after the cutoff for the latest housing report, the city allocated $40 million for affordable housing developments. The Louisville Affordable Housing Trust Fund was tasked with distributing those dollars. The fund has to use half of its funds on loans and grants for affordable housing at or below 50% AMI.

Harris said that she hopes the Louisville Metro Council will allocate $20 million annually for the fund in the city’s budget, which would be more than the $15 million set aside for the fund this fiscal year. That increase is part of Greenberg’s My Louisville Home housing strategy. She is also the current board chair of the fund.

“It would not surprise me if that 20 million [does] have some strings or guardrails around it to say that it's going to go to 0 to 30 [% AMI] or 30 to 50 [% AMI],” Harris said.

Josh Poe, an organizer with the Louisville Tenants Union, said that the trust fund has historically not provided enough support for units that help the city’s lowest-income residents. Last year, the Courier Journal reported that only around 15% of units funded by the tool were affordable for residents making up to 30% AMI.

He added that he doesn’t believe that incentives for developers do enough to fill the gap of affordable housing, and said his group advocates for solutions that aren’t market-based.

“We’re really interested in the idea that instead of giving developers millions of dollars and free land to build housing that no one can afford, tenants can own these buildings themselves collectively and cooperatively,” Poe said.

Both Harris and Curtis said that building a range of affordable housing for people across income levels is necessary. Harris said having more supply would bring down overall housing costs and would address potential population boosts, such as through the planned BlueOval SK battery park an hour south of Louisville.

Poe said the trust fund’s money should not go toward workforce housing. He’s concerned that adding those units to low-income neighborhoods could cause residents to eventually be displaced.

Curtis said building enough affordable housing requires changing the city’s land development code. He suggested ideas like adding inclusionary zoning, which mandates that affordable housing is built along with market-rate units, and expanding middle housing, which includes structures like townhouses and duplexes.

While city planners are already proposing changes that would introduce more middle housing across Louisville, a bill passed by Kentucky’s legislature would prevent much zoning reform from happening in the city for about a year, among other changes.

Some lawmakers said Greenberg was involved with crafting the bill. Scottie Ellis, a spokesperson for Greenberg, said in an emailed statement that the mayor opposes the zoning moratorium.

“[House Bill 388] does not impact many of the actions laid out in My Louisville Home that will help us move the needle toward our 15,000 goal, including continuing to invest in the Louisville Affordable Housing Trust Fund, expediting the permitting process for affordable housing developments, and creating supportive housing for our unhoused residents,” Ellis said.

If Gov. Andy Beshear vetoes HB 388, the Republican-led General Assembly will have the opportunity to override that action when it returns later this month.

Jacob is LPM's Business and Development Reporter. Email Jacob at jmunoz@lpm.org.

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