Kentucky housing reform bill collapses in final hours

Republican lawmakers in Kentucky sought to put the state on the housing reform map with sweeping legislation to boost construction and curb rising costs. But the package collapsed in the final hours of the state’s legislative session this week, and housing advocates warn the state’s housing shortage will deepen without swift action.

Kentucky’s failure shows how difficult housing politics remain even as other states manage to pass modest reforms.

“The Kentucky Senate has chosen politics over the people and passivity over good policy,” Heather LeMire, director of conservative advocacy group Americans for Prosperity-Kentucky, said in a statement. “The people of Kentucky deserve a better shot at the American Dream through homeownership.”

The omnibus measure, built around Senate Bill 9, bundled more than eight proposals to expand housing supply, streamline permitting and create new tools for local governments to support development. A conference committee could not bridge divisions between the House and Senate before adjournment, dooming the proposal for the year.

Sen. Robby Mills, who sponsored SB 9, told local reporters that negotiators ran out of time as they struggled over a controversial short-term rental provision that would have blocked cities and counties from heavily restricting short-term rental properties listed on platforms such as Airbnb.

“The Senate and House simply could not agree at the end of the day,” Mills said, calling the short-term rental language “one of the stickier points.”

Some Republicans joined Democrats in opposing that section, reflecting unease over state preemption of local rules.

Fixing a housing crisis falls short

Advocates and lawmakers spent months pushing for a major housing package to address the state’s housing shortage, which a 2024 legislative task force put at 206,000 units, split evenly between rental and owner-occupied homes.

Last year, state lawmakers made a less aggressive attempt with two bills. One would have allowed faith-based organizations to build housing by right on the property they own.

That change has gained favor elsewhere in the country. But the bill did not pass in Kentucky last year because lawmakers worried about preempting local zoning control.

The other bill passed and became law. It allows cities and counties to issue industrial revenue bonds for multifamily projects with at least 48 units by redefining a “building” to include large condominiums, townhouses and apartments. The law also restricts zoning and planning appeals to owners of property that directly borders a site affected by a final decision.

Added language became too much

This year, Kentucky lawmakers chose an omnibus approach. The original SB 9 would have allowed local governments to designate special building zones, lower regulatory barriers and tap new financing tools to kickstart construction in targeted areas.

In the final days of the session, lawmakers added provisions. These included language requiring automatic expungement of dismissed eviction filings, along with protections to keep children from being named in eviction cases that can follow tenants for years. Those measures drew support from tenant advocates, who argued they would prevent minor court actions from becoming long-term barriers to stable housing.

But other parts of the bill raised alarms among some Democratic lawmakers and local officials, who said the package moved too far and too fast in rolling back safeguards and local discretion.

Under one section, local regulators would have had to inspect properties within five days and review building plans within 10 days. If they missed these deadlines, they would have had to issue temporary permits allowing work to begin immediately and refund all application fees.

Critics said that approach could allow projects to move ahead without adequate review and further strain already thin inspection staffs.