KY Task Force proposes solutions to “worsening” housing crisis

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HENDERSON, Ky (WEHT) – The Kentucky Housing Task Force proposed some possible solutions to the ongoing housing crisis across the commonwealth.

Officials say the task force has engaged with industry leaders, housing experts and community organizations to develop a plan for overcoming barriers to affordable and accessible housing.

Some findings the task force has revealed are as follows:

Housing gap – Officials state Kentucky is facing a housing shortage of about 206,000 units with the shortfall coming with renters earning less than 30% of the area median income. Some obstacles include rising construction costs, regulations and limited infrastructure. Officials say without intervention, the gap is projected to grow to 287,000 units within five years and could affect workforce stability, economic growth and community development
Workforce shortage – Officials say the financial crisis of 2008 caused widespread layoffs and closures within the construction industry, prompting fewer workers to enter the trade. This led to a lengthy shortage of experienced labor, delaying projects, increasing costs and making it challenging to meet growing housing demand
Construction barriers – Officials say the crisis introduced stricter lending regulations, making it harder for developers to secure funding for new projects. This led to 100,000 fewer permits between 2008 and 2022. Officials also say restrictive zoning laws limit development of cost-effective solutions like manufactured housing, townhomes and duplexes, leading to delay construction, rising costs and hindering efforts to address housing needs.

Some solutions the task force has recommended include:

Encourage development with policy reforms – Officials propose streamlining zoning and permitting processes to reduce delays and other burdens plus expand the range of housing types allowed in more zones to increase housing diversity. Officials also say to reduce restrictive design requirements that raise construction costs and promote more affordable options.
Tax incentives and credits – Officials propose introducing state-level programs similar to the Low-Income Housing Tax Credit to attract private investment in affordable housing projects and provide additional tax incentives to for development of middle-income and workforce housing.
Infrastructure investment – Officials propose offering low-interest loans or grants to local governments for infrastructure projects that support residential development.
Direct state investment – Officials propose creating revolving loan funds to provide ongoing financial support for affordable housing initiatives and invest in land banks to repurpose vacant or abandoned properties into housing and revitalize underused spaces.
Adopt successful policies from other states – Officials propose allow by-right development of accessory dwelling units and conversion of commercial spaces into residential units implemented by other states including Indiana and Ohio.

“Kentucky is facing a housing crisis that demands immediate action,” Sen. Robby Mills (R-Henderson) stated. “By removing barriers to affordable and middle-income housing, including outdated regulations that hinder investment in this market, we can create more opportunities for Kentuckians to find stable, secure homes. This will not only strengthen our communities but also position the commonwealth as a leader in economic growth and innovation.”

The Kentucky Housing Task Force is co-chaired by State Senator Mills.

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