Senate Proposal Aims to Help Expand Kentucky’s Housing Supply

UPDATE: A proposal in the Kentucky Senate aiming to make it easier and more affordable for communities to build new housing passed out of the Senate State and Local Government Committee on Wednesday. The measure now heads to the full Senate for consideration.

As Kentucky seeks to grow its economy and attract new employers and residents, many communities are working to address a critical challenge: a lack of housing to meet demand.

Sponsored by Senate Majority Caucus Chair Robby Mills, co-chair of the Kentucky Housing Task Force, Senate Bill 9 would allow local governments to finance roads, utilities, and other infrastructure tied to residential projects over time rather than requiring those costs upfront—an approach intended to lower overall development costs and help more projects move forward.

During testimony, Sen. Mills cited Kentucky Chamber Center for Policy and Research data that showed the depth of Kentucky’s housing gap.

“Kentucky is short 206,000 housing units, and if we continue at the current development rate, in the next five years we will be almost 300,000 housing units short. We must do everything we can to encourage housing development in the Commonwealth,” Sen. Mills said.

The bill would allow local governments to create residential infrastructure development districts to fund those improvements, with only properties inside a district responsible for the costs.

The legislation also would allow communities to establish housing development districts, enabling local governments to partner directly with developers on eligible projects. Cities and counties could approve developments locally and offer time-limited incentives tied to new property tax revenue to support both new construction and redevelopment, with participation from taxing authorities remaining optional.

Both programs would be locally driven, with communities determining whether and how to use them based on local housing needs.

“Kentucky is growing, and that’s a good problem to have,” Mills said. “But growth only works if we’re building enough homes to keep up.”

The bill follows recommendations from the Kentucky Housing Task Force, which spent more than two years studying housing shortages and affordability challenges across the state. Its final report called for lowering development expenses and investing in infrastructure to increase supply.

During the 2025 interim, the Kentucky Chamber testified on how housing shortages are limiting growth across the state. A statewide survey found that 90% of local leaders said their region could not support a 1,000-job project due to a lack of housing, and research shows Kentucky may need between 360,000 and 500,000 new homes by 2050 to meet projected demand.

“Housing is one of the most consistent challenges we hear from employers and communities across Kentucky,” said Kentucky Chamber President and CEO Ashli Watts. “If we want to attract talent and keep up the economic momentum we’re seeing across the state, we have to make sure families can afford to live where the jobs are. We appreciate Sen. Mills’ leadership on this critical issue. Senate Bill 9 is an important step toward expanding the housing supply our workforce depends on.”

The Chamber’s Building a Foundation for Growth report identified infrastructure costs, regulatory barriers, and local land-use constraints as key drivers of higher home prices—challenges the Senate proposal is designed to address.

Stay tuned to The Bottom Line for updates as Senate Bill 9 moves through the legislative process.