Jackson and Madison County offers friendly zoning for multi-family housing

Courtesy of the Beacon Center

If you spend any amount of time in Tennessee, you’ll undoubtedly come across the “Tri-Star” logo. From the state flag to state bridges, socks, and T-shirts, along with the Tennessee Titans’ logo, there’s no doubt Tennesseans love their Tri-Star. What few outside of Tennessee know is that the three stars are not merely decorative, but symbolize the three Grand Divisions of the state: East, Middle, and West. With such distinct histories, cultures, and geographies, the three regions are often thought of as three different states. But it isn’t solely about geography and culture. In recent years, another growing difference has emerged around economic growth. First consider East Tennessee, with the ever-growing attraction of the Great Smoky Mountains and Gatlinburg area, the University of Tennessee at Knoxville, and Chattanooga, with its growing arts and natural recreation scene. Then, think about Middle Tennessee, with the “It City” of Nashville. Both regions have experienced incredible growth in recent years. Meanwhile, most West Tennessee counties have experienced population declines and nearly flat income growth for roughly a decade. However, West Tennessee’s economic outlook changed in September 2021 with the announcement that Ford plans to invest over $5 billion to build “BlueOval City,” an automotive assembly campus. It constitutes the largest single investment in the state’s history and is expected to bring 5,800 new jobs to the area.

With that growth comes infrastructure challenges and the need for increased housing. In fact, the state’s Department of Economic and Community Development estimates that by 2045, West Tennessee’s population will grow by over 176,000, and the region will need more than 70,000 new housing units. Another study commissioned by the Greater Jackson Chamber of Commerce found that Madison County would need approximately 3,500 new single-family homes and over 1,600 multi-family units by 2035, based on projected population growth due to Blue Oval City.

With this unprecedented level of expected growth, policymakers need to review and address any and all barriers that may impede the construction of new housing, especially zoning restrictions. Some may think zoning is the same as city planning, but zoning is merely a tool city planners use to regulate density and the use of private land — nothing more, nothing less. First implemented in California in the early 20th century, zoning determines whether or not a property owner can build apartments in a given neighborhood, the minimum required size of a house, how large a lot must be, or whether a property owner can build an in-law suite (i.e., an accessory dwelling unit, or ADU) in the backyard for an elderly family member. These restrictions arbitrarily limit the supply of housing and artificially increase costs.

In our new expansion of the Tennessee Zoning Atlas, we focus on local government zoning policies across West Tennessee. We calculate how local governments in the Memphis, Jackson, and Brownsville area treat different types of housing. We chose these counties because they comprise the vast majority of West Tennessee’s population and include the area expected to grow most as a result of Blue Oval City. The Tennessee Zoning Atlas uses standardized methodology created by the National Zoning Atlas. It highlights the need to reform overly strict government zoning regulations with common sense pro-housing reforms that make it easier for would-be homeowners to afford a home at various price points and for property owners and builders to respond to the growing needs of our communities. Note the following key findings:

Comparisons of Zoning In West Tennessee

Duplexes and multi-family housing are largely prohibited in the counties expected to grow because of Blue Oval City, which will limit the supply and drive up the price of housing, especially for lower-income families. For example, as shown in the tables titled, “Percentage of Land that Allows Housing Type by County” and “Most and Least Welcoming Governments for Non-Single Family Housing,” several counties in West Tennessee allow duplexes on less than one percent of land.

Dollars and Cents: The Real World Costs

Overly restrictive zoning laws make it harder to build and buy homes, especially for younger generations and lower-income families. Land use regulations drive up the building costs of single-family homes by 24 percent and multi-family housing by 40 percent. This makes it harder for these demographics to live the American dream of homeownership. That’s why Millennials and Gen Xers own less in real estate than Baby Boomers at similar ages. This delay in homeownership also impacts their ability to build wealth. The number one asset for most Americans is the equity in their home, and every year a family cannot afford to buy a home represents a loss of opportunity to build $9,500 in wealth according to a study by Harvard University.8 However, these zoning restrictions not only impact individual families looking for affordable places to live in West Tennessee but inflict massive costs on society as a whole. Studies show that restrictive zoning requirements often force cities to develop farther into the countryside — creating longer commutes, increased traffic, lower productivity, and job relocations not based on opportunities, but on housing costs. One study found that after adjusting for inflation, the downstream consequences of zoning have robbed Americans of about $1.6 trillion in estimated wages per year. In fact, one study found that if only three cities (New York, San Francisco, and San Jose) reformed their zoning codes, US real per capita income would rise eight percent — a nice pay raise during this time of high inflation.

Since the number one source of wealth for the average American is the equity in their home, housing is largely an investment. Therefore, Americans need their investment to constantly go up. It is practically impossible for the same house to be a good investment and be “affordable.” So what’s the answer? By reforming overly restrictive zoning regulations in particular areas to allow for more types of housing, we can preserve the value of existing homes, while allowing for more accessible options like ADUs and starter homes to be built, which are broadly illegal in most cities. This would increase the prosperity and wealth of everyday Tennesseans, preserving both the investment of those who currently own homes and opening the door for those seeking to do so.