Council hears housing production update: tax credits, gap financing and voucher backlogs

City housing officials and KCDC described the city’s housing production strategy to the council and highlighted recent financing wins and ongoing constraints.

Kevin Deose, who leads Housing and Neighborhood Development, traced the origins of the local market imbalance to post‑2008 underbuilding and faster population growth. “Nearly 20,000 individuals moved to Knoxville between 2010 and 2024,” he said, and noted rising rents have left many households cost‑burdened. Deose gave the area median income (AMI) figure used in program calculations — $101,700 for a family of four — and said the city’s affordable‑housing work is calibrated around 60% and 80% AMI thresholds.

Ben Bentley, representing KCDC, outlined portfolio scale and program tools: about 4,300 housing‑choice vouchers and roughly 3,600 KCDC‑owned units, for about 8,000 subsidized homes total under the agency’s oversight. He described project‑based vouchers and special‑purpose vouchers (VASH for veterans, Family Unification vouchers for youth aging out of foster care) and said KCDC’s project‑based approach helps underwrite new affordable developments.

Officials credited a package of local soft funds, project‑based vouchers and flexibility in underwriting for recent success securing state bond/4% low‑income housing tax credit allocations. Deose said Knox County captured about $222 million of statewide bond resources and city staff estimate those awards will support approximately 1,277 new affordable homes in the next two years. "We brought in 222 million of that a little bit over 800," he summarized, adding that local gap financing and assigned vouchers made applications more competitive.

The council also heard production and investment metrics: the city’s Affordable Housing Fund is a 10‑year, $50 million commitment ($5 million a year) with $46 million already invested. Officials said they have leveraged those local dollars to attract federal, state and private capital, with staff reporting roughly a 15‑to‑1 leverage effect on outside resources and about 3,400 homes produced or preserved to date.

Council members probed program details and constraints: Ben Bentley described a combined waiting‑list scale of roughly 5,000 unique applicants across KCDC‑owned properties and the voucher program, noting that someone added to a general voucher waiting list could wait about a year without a preference. Deose and Bentley warned the biggest near‑term financing headwinds are construction costs and higher interest rates, which can make it harder to 'pencil' new affordable deals even as local soft funds remain available to fill gaps.

The council discussed homeownership and smaller‑scale building models. Bentley noted the HUD homeownership voucher track has helped more than 200 low‑income families buy homes, and officials highlighted pilot micro‑unit and tiny‑home projects (Heroes Hill/Liberty Place) with development costs cited at roughly $120,000–$150,000 per unit. City staff said they will bring a 22‑unit homeownership proposal to council soon and continue exploring infill and cottage‑style models.

Council members and staff agreed that the city’s financing package and partnerships have accelerated production, but they also signaled further work is needed to sustain production against market headwinds and to improve equitable geographic distribution of housing and shelter resources.