If you want the root user uses a public/private key, but you want the secondary user to use a password.

Here is what you do:

useradd test
passwd test
usermod -G www-data test
usermod -d /usr/share/nginx/html test
chown test:www-data /usr/share/nginx/html

As for additions to my sshd_config:

AllowUsers test

Match User test
        ChrootDirectory /usr/share/nginx/html
        PasswordAuthentication yes
        X11Forwarding no
        AllowTcpForwarding no
        ForceCommand internal-sftp

All I have left todo is to get the test user to be able access the CLI in their home directory to run composer and artisan commands.