Lawmakers broach pro-growth housing policies
Rep. Joshua Watkins, D-Louisville, speaks Monday during a meeting of the Kentucky Housing Task Force 2025. Lawmakers heard from business leaders and others about ways to possibly implement pro-growth housing policies. A high-resolution photo can be found here.
FRANKFORT — According to a leading statewide business advocacy group, Kentucky would need more than 361,000 new housing units by 2050 to maintain a healthy housing market under a moderate rate of household growth.
That was part of the testimony John Hughes, director of government affairs for the Kentucky Chamber of Commerce, offered Monday to lawmakers on the Kentucky Housing Task Force 2025.
“The good news is, we are starting to go in the right direction. Last year, the general assembly showed tremendous leadership by launching this housing task force, which brought together voices from every corner of the state, builders, thinkers, city leaders, workforce advocates and more,” he said.
Hughes pointed to key legislation – House Bill 321, which addresses regulatory barriers to new development, and Senate Bill 25, which deals with zoning, flexibility and innovative financing.
“These actions show that this general assembly understands the state and is willing to act,” he said.
Hughes suggested additional policy solutions to the legislators, such as exploring and encouraging local land-use and zoning reforms, considering how government regulations impact housing, and supporting regional approaches to solving challenges.
Hughes and others who testified spoke about the Indiana Residential Housing Infrastructure Assistance Program, which provides low-interest loans for communities to finance infrastructure projects for residential housing development.
“This program approach prioritizes jurisdictions that have taken steps to support housing and reduce regulation. Just last year alone, a $51 million investment supported 2,400 new housing units across Indiana, and the beauty of this fund is the money already being repaid and reused,” Hughes said.
Senate Majority Caucus Chair Robby Mills, R-Henderson, who is also co-chair of the task force, asked Hughes if he considers the housing issue in Kentucky to be a challenge or a crisis.
“I would probably say it’s a crisis,” Hughes said.
Tim Schenk, general counsel of the Kentucky Bankers Association, and John Cooper, governmental affairs consultant for KBA, also offered testimony.
Schenk said several challenges surround housing in Kentucky, including low-income and workforce housing needs, interest rates, limited federal tax credit availability, proposed elimination of federal funds, and U.S. Department of Housing and Urban Development cuts. He said inflation has recently eased some of the challenges, however.
“Again, banks can address the interest rate challenge. And what we have is a $20 million commitment from banks to go towards a revolving fund, which would essentially address a lot of this housing crisis,” he said.
He said HOPE of the Midwest has administered more than $784 million in tax credit construction at a zero percent default rate. The group, which is a KBA subsidiary, has worked in various types of housing, including historical, manufactured, and new. The new funding could be used where it’s needed throughout the state, he said.
Rep. Joshua Watkins, D-Louisville, said when there are partnerships using public-private funds, it’s responsible to talk about parameters.
“You talked about state average income, but I know state average income and area median income to be vastly different, particularly where state average income can be skewed by a very wealthy person,” he said. “I am concerned about eligibility requirements when we’re talking about the poorest of the poor Kentuckians.”
Rep. Jennifer Decker, R-Waddy, said she has concerns that Kentucky lacks enough skilled construction workers to spur development.
Billie Wade, executive director of HOPE of the Midwest, testified that this is certainly the case.
Rep. Shawn McPherson, R-Scottsville, asked testifier Charles Gardner, research fellow with Mercatus Center at George Mason University, if he has seen interest in auxiliary buildings being placed in large developments with larger, upscale homes and homeowners’ associations.
“I’ll tell you most of these laws that I reference, particularly ones that are enacted, contain explicit carveouts for any sort of private covenant, including HOAs. So it doesn’t override the private covenant. I think, politically speaking, that would tend to be a bit more controversial. I’m not saying it couldn’t be done,” he said.
Gardner said another idea that’s been broached is putting some type of time limit on HOAs so they must be renewed and won’t be perpetual.
Lawmakers can’t act on legislation until the general assembly meets in January 2026 or they are called into special session.
