The most new housing South Chattanooga has seen in about a decade is starting to come out of the ground as work has begun on an affordable housing apartment complex slated to open in winter 2023.
"It can't happen soon enough," said Chattanooga Mayor Tim Kelly at a ceremony officially breaking ground at the 4905 Central Ave. site. "It's music to my ears."
The $60 million, 240-unit facility called the Reserve at Mountain Pass will hold two- and three-bedroom apartments, said Joshua Haston, development manager for LDG Development.
If leased today, rents would range from $878 to $1,381 monthly, he said. Plans are to rent to families earning up to 80% of the area median income, Haston said. For a family of four, that would equal $57,000, he said.
The now-vacant parcel will hold eight buildings, each three stories high when complete, Haston said in an interview.
City Councilwoman Raquetta Dotley said at the ceremony that efforts to bring about the affordable housing began in 2017.
"This is the type of density and economic development we need to spur growth in this area," she said.
Erskine Oglesby, the city's deputy administrator for community development, said in an interview the apartment complex will serve as a catalyst in the Alton Park and Piney Woods area.
He said he expects to see more interest by commercial developers, including building added retail space.
Haston said work to bring about the project was "a long time coming."
"We spent a lot of time piecing together the financing," he said.
Haston cited the help of the Chattanooga Housing Authority and the Tennessee Housing Development Agency. He also mentioned the city's Health, Education and Housing Facility Board, along with the city and Hamilton County. The project earlier won a payment-in-lieu-of-taxes, or PILOT, agreement.
The LDG official said half the units will hold three bedrooms, which often isn't seen in such complexes. The apartments will serve "a large portion of Chattanoogans" within a broad-income base, Haston said.
Kelly added the city has "a lot of plans in the hopper" when it comes to affordable housing efforts.
Last month, the mayor unveiled plans for a $100 million affordable housing initiative over five years.
He said the city aims to put up $33 million in "seed" money in the upcoming budget without raising taxes. The remaining two-thirds funding is to be raised working with nonprofit groups, banks, foundations and other entities.
Kelly expects thousands of affordable homes will be created and rehabilitated in what the city is calling the largest such effort in its history. The first projects will see funding by the end of this year, the mayor said.
He said the effort will involve apartments, single-family homes, duplexes and other housing types across the city.
In the hot housing market, a new study shows Chattanooga area buyers are overpaying by about 35% for homes versus historical trends. That's up from a 24.8% premium just six months ago, according to the Florida Atlantic University and Florida International University study.
The average rent for a two-bedroom apartment between 2016 and 2021 grew from $775 to $1,150, according to a recent report by the Eviction Prevention Initiative.
The 13.4-acre tract on Central Avenue originally was rezoned residential four years ago by Chattanooga planners. The parcel formerly held the Frank H. Trotter School and is across the road from a longtime Velsicol Chemical Co. site that is now vacant.
Oglesby, a former city councilman, said earlier that all the due diligence is done on the apartment site and on the old Velsicol property.
"I know of no major concerns on the old Velsicol site," he said.