This week Chattanooga will hold a lottery for more than 20 developers with experience in building affordable rental housing using federal dollars to advance Mayor Andy Berke's housing program.

From the lottery draw, those developers will pick from 21 city-owned lots that are either vacant or have dilapidated homes on them.

The developers will then each have about six months to build a home to rent to residents who fall within the guidelines for low-income housing. For example, a family of three with a household income of $31,320 would qualify.

Midway through the year, city officials had to shift gears.

The city's original goal was to have 30 homes move-in ready by June 30 available to residents who qualify as very low income. The calculation of what is very low income was based on household income at 50 percent of the city's median family income.

However, the city raised the calculation to 60 percent, about a $4,000 difference.

Donna Williams, the city's economic and community director, blamed the delay on a stringent vetting process of the properties to receive federal dollars, and said she still hopes that some of the developers will be ready by the end of the fiscal year, which is two months away.

The city also has to spark interest from the developers to take the property. The project has to be attractive to developers to turn a profit, she said, and at the same time offer quality, low-income houses to residents.

If the set rental price is too high that could scare off builders, she said.

"If it doesn't make [financial] sense, developers won't do it," she said. "And we're requiring them to be high quality, so that will cost more."

The set rental rate is based on federal guidelines. For example, the rate for a two-bedroom home rental is $727 a month.

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When the developers agree to take the land, the city will match 30 percent of the building cost through a federal grant, the HOME investment partnerships grant. The builder will be responsible for the rest.

Today the City Council is expected to decide whether to give Williams approval to offer 57 city lots, mainly acquired through back taxes, to developers. But only 21 of the lots are ready -- about half are empty; the other half have abandoned houses.

Martina Guilfoil, executive director for Chattanooga Neighborhood Enterprise, said the nonprofit organization has its eye on the properties in Alton Park. CNE wants to develop the neighborhood area that will connect to St. Elmo, which is part of the neighborhood's vision for improvement, she said.

But if those properties aren't available during the lottery Thursday, Guilfoil said, they don't plan to take any other lots. Instead of randomly drawing for the property, Guilfoil said the city should try to be strategic to improve specific neighborhoods.

"Our problem isn't available land," she said. "We're trying to target our specific areas to make neighborhood impact."

Contact staff writer Joy Lukachick at jlukachick@timesfreepress.com or 423-757-6659.