Knox County officials are trying to figure out how much a brand-new Tennessee law is about to cost taxpayers, after state legislators changed the rules on who pays for the roads, sewers, and other infrastructure that new housing developments require. For years, private developers in Knox County generally covered the entire bill for offsite infrastructure improvements tied to their projects. That is no longer guaranteed.
House Bill 2386, signed into law as Public Chapter 1028 in May, created a statutory framework requiring local governments and private developers to share those infrastructure costs, according to WBIR. Under the previous county growth policy, developers were generally held responsible for paying 100% of the cost for offsite improvements their projects required, the station reported. Now, county leaders have to work out exactly how the financial burden gets split.
How the Cost-Sharing Formula Works
Knox County Chief Engineer Jim Snowden told the station that local governments must determine cost-sharing allocations by calculating traffic count ratios, comparing how much traffic a new development is expected to generate against the existing background traffic already using a road. That ratio effectively decides what percentage of an infrastructure upgrade falls to the developer and what percentage falls to the county. County officials have warned that Knox County simply does not have the spare financial resources to absorb a larger share of those infrastructure expenses, per the station's report.
The new cost-sharing mandate arrives at an awkward moment for county leadership. Knox County Mayor Glenn Jacobs announced a pause in mid-August on the county's proposed Unified Development Ordinance, opting to defer further action until incoming Mayor Betsy Henderson and newly elected county commissioners take office on September 1. That timing means the officials who will ultimately have to reconcile local zoning rules with the new state cost-sharing requirement are not yet in charge.
A Zoning Fight Already Underway
The paused ordinance is the regulatory enforcement arm of Advance Knox, a 20-year comprehensive land-use and transportation plan that county leaders adopted in April 2024. One of the most contentious pieces of that draft ordinance was a proposal to replace existing agricultural zoning with a “Rural Residential” classification, which would allow up to two housing units per acre on parcels of five acres or more with sewer access, according to a separate WBIR report. Local agricultural landowners have raised concerns that the reclassification would accelerate farmland loss across the county.
That concern is grounded in real numbers. Knox County approved a record high of more than 5,000 residential building permits in 2023 as suburban growth accelerated across unincorporated parts of the county, according to WVLT. University of Tennessee Institute of Agriculture research cited by the station found that Tennessee lost an average of more than 200 acres of farmland per day to commercial and residential development between 2017 and 2022, with researchers noting that development pressures are expanding heavily from Middle into East Tennessee.
More State Rules on the Way
The infrastructure cost-sharing law is not the only new state mandate landing on local planning departments. Tennessee Public Chapter 140, enacted in 2025, imposed a statewide deadline of July 1, 2026, requiring local governments to maintain documented cost justifications available for public inspection for any development-related fee exceeding $250, according to the UT County Technical Assistance Service. Taken together, the two laws represent a broader legislative push from Nashville to tighten oversight of how local governments charge for and fund growth.
The financial squeeze comes as Knox County homeowners are already absorbing sharp increases in property values. The county's spring 2026 state-mandated property reassessment increased average appraised real estate values by approximately 60% across the county, while countywide median home listing prices stood near $440,000, Hoodline previously reported. With incoming Mayor Henderson and a new slate of commissioners set to take office in just over a week, the task of reconciling paused local zoning plans with the state's new cost-sharing formula will fall to a county government still finding its footing.
