The Chattanooga Housing Authority is looking to secure a $7.7 million loan that would let it build 2,000 more subsidized units over the next five years.
Federal grants from the Department of Housing and Urban Development are allocated to communities each year for use on qualifying public housing projects. A provision allows communities like Chattanooga to receive a guaranteed loan up to five times their annual allocation to fund specific projects, using their current and future grant awards as collateral.
Under law, the city can also designate another entity, like the housing authority, as eligible to apply for the loan instead.
That means the money — and debt — would be given to the housing agency. The debt wouldn’t appear on the city’s books, but its annual grant allocation would still be used as collateral for the authority’s loan, putting future public housing funding at risk if the projects don’t work out and the debt isn’t paid.