Chattanooga mayor unveils plan to tackle affordable housing shortage

Staff photo by Matt Hamilton/  Chattanooga Mayor Tim Kelly speaks to the media after a meeting unveiling the administration's new affordable housing action plan to the Chattanooga City Council on Tuesday.
Staff photo by Matt Hamilton/ Chattanooga Mayor Tim Kelly speaks to the media after a meeting unveiling the administration's new affordable housing action plan to the Chattanooga City Council on Tuesday.

Without additional action, Chattanooga could see a shortfall of 7,000 affordable housing units by 2030.

"That means 7,000 working families, teachers, police officers, firefighters — our folks in the hospitality industry, too — who will simply not be able to live in the city of Chattanooga," Mayor Tim Kelly said in a presentation to the Chattanooga City Council, citing a recent market analysis. "And that is flatly unacceptable."

Kelly and his team unveiled a 100-page affordable housing plan Tuesday the administration hopes will act as a North Star for the city as it attempts to increase the number of affordable rental homes, expand access to homeownership, preserve existing units and boost public-private partnerships.

The plan, developed over the past six months, is the city's first-ever housing action plan, Kelly's office said. It's designed to guide policies and investments over the next five years.

"Housing development in Chattanooga has not kept pace with its population and economic growth, leading to a new and growing housing affordability problem," Chief Housing Officer Nicole Heyman told the panel. "Rents are rising much faster than incomes."

In 2021, there were 90 affordable homes for every 100 households earning less than $35,000. By 2030, that number could hit 50, city officials said. Homeownership has also become more difficult for households earning at most $100,000, with 6,000 fewer families in that income range owning a house in 2021 compared to 2011.

The city is struggling with racial disparities in the housing market as well. Black households earning between $100,000 and $150,000 per year are denied a mortgage 12% of the time versus 4% of white households, officials said.

"For the first time in our history, we have a playbook that we can (use to) help to become the city we all want Chattanooga to be," Kelly said. "A place where anyone who wants to call Chattanooga home can do so regardless of who they are and how much money they make."

The plan has five goals: Building a housing ecosystem by fostering public-private partnerships, increasing the number of affordable rental homes, expanding access to homeownership while protecting existing homeowners, working to address homelessness and moving towards equitable housing for all Chattanooga residents.

Officials said they're already making progress on several of the plan's recommendations. In partnership with the nonprofit Chattanooga Neighborhood Enterprise, the city has launched a downpayment assistance program for first-time homebuyers, which Heyman said has allowed several families to close on loans and settle into new homes.

Chattanooga officials are negotiating a contract for a manager of a new revolving loan fund, which Heyman said would enable the city to preserve existing affordable rental homes. Additionally, officials are hoping to provide options for homeowners to repair their properties by making grants and no-interest loans available to seniors and vulnerable communities. This would allow them to hold onto their homes and pass that wealth on to their families.

Looking ahead, the city wants to make it easier for developers to use public funding for housing projects.

"We have to have the private market not only participating in but leading this project," Kelly told reporters after the meeting. "This is about the use of thoughtful tax incentives ... to bring more private market developers in to meet our goals."

Through a tool called tax increment financing, state law allows local governments to fund low- and moderate- income housing projects using new tax revenue generated inside a designated district. It's a mechanism often designed to reinvigorate blighted areas.

However, the city's existing rules prohibit these types of incentive arrangements for housing developments. Changing that policy so it aligns with state law could increase the number of available homes for working families, Heyman said.

The city also wants to streamline and adjust how it structures residential payment-in-lieu-of-taxes agreements, or PILOTs, which are tax breaks the city provides to housing developers in exchange for building a certain number of affordable units.

Kelly's administration is proposing that the City Council adopt a new residential PILOT option designed specifically for the creation of mixed-income housing. It would encourage market-rate housing developers to increase the number of affordable units in their projects.

(READ MORE: Chattanooga mayor proposes $100 million affordable housing initiative)

Janice Gooden, a member of the community group Chattanoogans in Action for Love, Equality and Benevolence, said in an interview she's pleased the city has developed a plan. She and other members of the local advocacy group attended the administration's presentation on Tuesday. CALEB is hosting a community meeting from 6-8 p.m. Sept. 7 at 2901 Taylor St. to discuss the report.

"I believe things have been dropped previously," Gooden said. "I can see that we're moving toward a plan. My concern is how sustainable it's going to be."

Gooden, who co-chairs CALEB's economic mobility task force, grew up in Chattanooga and moved away for about 40 years, spending time in Birmingham, Alabama, and Chicago, before returning in 2014. Over the past several years, Gooden said, it's become more difficult for Chattanoogans to find housing, especially over the past four years.

"I'd say it's deteriorated," she said. "I didn't know to what extent until I really got involved and started engaging with people."

Contact David Floyd at or 423-757-6249.

Upcoming Events