BHB/6/16
Sponsored by Vivaan Rochlani, Udhi Syal, Yeshmith Peethala of Ravenwood High School
This legislation was filed in the Economic and Community Development category
Presented as part of the YIG Volunteer 2024 conference
| 1 | BE IT ENACTED BY THE TENNESSEE YMCA YOUTH IN GOVERNMENT |
| 2 | |
| 3 | Section 1: Terms in this act will be defined as follows: |
| 4 | a. Redlining- a discriminatory practice in which financial services are withheld from neighborhoods |
| 5 | that have significant numbers of racial and ethnic minorities. |
| 6 | b. Bank- Banks under this act are considered as all banking institutions holding more than |
| 7 | $500,000 in deposits within the state of Tennessee. |
| 8 | c. Audit- an examination or inspection of a financial institution's ethical and financial practices by |
| 9 | the State of Tennessee or an individual or institution that has been commissioned to do so on |
| 10 | behalf of the state. |
| 11 | d. Low-income area- any population census tract that (i) the poverty rate for such tract is at least |
| 12 | 20 percent, or (ii) in the case of a tract not located within a metropolitan area, the median family |
| 13 | income for such tract does not exceed 80 percent of statewide median family income, or (iii) in the |
| 14 | case of a tract located within a metropolitan area, the median family income for such tract does |
| 15 | not exceed 80 percent of the greater of statewide median family income or the metropolitan area |
| 16 | median family income. |
| 17 | e. Poverty Line- The official income thresholds set by the Federal Census Bureau that vary by |
| 18 | family size and composition to determine who is in poverty. |
| 19 | f. Urban Areas- a continuously built-up area with a population of 50,000 or more. |
| 20 | g. Food Desert- a low-income tract with at least 500 people, or 33 percent of the population, living |
| 21 | more than 1 mile (urban areas) from the nearest supermarket, supercenter, or grocery store. |
| 22 | h. Subsidize- to aid or promote someone or something, such as a private enterprise with public |
| 23 | money. |
| 24 | |
| 25 | Section 2: (a) Informal redlining has shown to still be occurring in today’s society. Banks have still |
| 26 | been shown to racially profile and deprive residents or potential residents of certain neighborhoods |
| 27 | of affordable financial services. To prevent further redlining, an annual audit by the state will be |
| 28 | conducted at all banks. (b) The audit will cover all loan, mortgage, and brokerage costs and rates |
| 29 | for low-income individuals, neighborhoods, and individuals who identify as a racial minority, ie. |
| 30 | African-American and Latinx individuals. |
| 31 | |
| 32 | Section 3: (a) Low-interest loans will be provided to eligible buyers, who are purchasing housing |
| 33 | units in a low-income or redlined area. (b) Loans will be only provided to buyers who are below the |
| 34 | poverty line and are living in urban areas. (c) Loans will be of a maximum of $50,000 with a |
| 35 | minimum interest rate of 4% and a maximum rate of 6%. (d) Interest rates will be determined by |
| 36 | the applying individual’s credit history, but will not exceed the maximum interest rate of 6%. (e) |
| 37 | The loan duration is set for 10 years. (f) A total of 1,000 loans will be awarded every year. (g) |
| 38 | |
| 39 | Section 4: (a) Low-interest loans will be provided to qualified construction companies or |
| 40 | individuals to allow for the construction of affordable housing. (b) Loans will only be provided to |
| 41 | builders that submit plans detailing multi-family homes or apartment buildings in low-income or |
| 42 | redlined areas. (c) To qualify, housing units must be sold, not rented. (d) Loans will be of a |
| 43 | maximum of $500,000 with a minimum interest rate of 4% and a maximum interest rate of 6%. |
| 44 | (e) Interest rates will be determined by the applying individual’s or corporation’s credit history, but |
| 45 | will not exceed the maximum interest rate as set in this bill. (f) The loan duration is set for 30 |
| 46 | years. (h) Loan allocation will be determined on an application basis at the start of every fiscal |
| 47 | year. |
| 48 | |
| 49 | Section 5: (a) To combat food deserts, a subsidy will be provided to qualified supermarket and |
| 50 | grocery store chains. (b) Subsidies will cover franchising, opening, and a maximum of 3-months |
| 51 | rent. (c) Subsidies will be up to 20% of the aforementioned costs, up to $25,000. (d) Subsidies |
| 52 | will only be offered to stores opening in areas considered as food deserts. (e) A total of 100 |
| 53 | subsidies will be offered every year. (f) Subsidies will be offered on a need basis. |
| 54 | |
| 55 | Section 6: (a) A public awareness campaign will be established to spread awareness regarding |
| 56 | low-interest loans, low-income housing opportunities, and other support programs already |
| 57 | established by the state. (b) The campaign will extend to news channels, radio stations, |
| 58 | newspapers, billboards, social media, and the internet. (c) The campaign will be run by the |
| 59 | Department of Economic and Community Development, with additional support from the |
| 60 | Tennessee Housing Development Agency. (d) This campaign will run for 10 years. |
| 61 | |
| 62 | Section 7: (a) This bill and its clauses will be overlooked by the Department of Economic and |
| 63 | Community Development. (b) This bill will work in coordination with the Department of |
| 64 | Environment and Conservation, the Housing Development Agency, and the Department of |
| 65 | Financial Institutions. (c) A plan of action for the next 10 years will be developed by the |
| 66 | aforementioned departments and will be reviewed every 2 years. |
| 67 | |
| 68 | Section 8: (a) This bill will require initial funding of $103,200,000 to fund loans, audits and |
| 69 | subsidies. (b) Of this, $100,000,000 will be sourced from the Tennessee Housing Development |
| 70 | Agency. $2,700,000 will be sourced from the Department of Economic and Community |
| 71 | Development. $500,000 will be sourced from the Department of Financial Institutions. (c) Over 10 |
| 72 | years, this bill will pay back itself, including all audits and subsidies, and will make an estimated |
| 73 | return of $24,178,618 every year, after the initial 10-year period. |
| 74 | |
| 75 | Section 9: All laws or parts of laws in conflict with this are hereby repealed. |
| 76 | |
| 77 | Section 10: This act shall take effect January 1, 2025, the public welfare requiring it. |
| 78 |