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Andy Berke

Chattanooga is one of three Tennessee cities chosen as pilot sites for a new approach to creating more affordable housing and bringing rundown neighborhoods back to life.

Along with Memphis and Oak Ridge, Chattanooga will test a plan to help nonprofit organizations that work to build the stock of affordable housing for low- and moderate-income families.

Nonprofits such as Chattanooga Neighborhood Enterprise and Habitat for Humanity focus on infill development, rehabbing or rebuilding in established neighborhoods. The problem is, low property values may mean that the projects cost more than the finished homes are worth.

If you go

What: Housing Connections Conference, where citizens, advocates and stakeholders will talk about the city’s housing agenda

When: 8 a.m. to noon, Oct. 20. Seating is limited to 100, registration required.

Where: Family Justice Center, 5705 Uptain Road

Registration: https://www.eventbrite.com/e/chattanooga-housing-connections-conference-tickets-50795323179

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Ralph Perrey

Ralph Perrey, executive director of the Tennessee Housing Development Agency, calls it the "appraisal gap." The THDA proposes to fill it with money.

Perrey said Friday the state has set aside $500,000 to pay nonprofit developers the difference between the appraisal and their actual costs for building or renovating housing.

"What we hope here is to create an incentive to build and invest in some neighborhoods that need it, and that over time, that investment will help raise all the property values on that block or on that street, so that in a few years' time there isn't any appraisal gap," Perrey said as he announced the pilot program with Mayor Andy Berke at City Hall.

Berke has made affordable housing a top priority, working with partners such as CNE and Habitat and leveraging state and federal dollars. He dedicated $1 million in this year's city budget to affordable housing, and the city is studying whether some of its buildings could be made over into residential units in the heart of the city's Innovation District.

The city also is hosting its first Housing Connections Conference on Oct. 20. Community members, advocates and experts will discuss a variety of issues related to availability, affordability, housing trends and moving the city's housing strategy forward.

Introducing Perrey on Friday, and fresh from a celebration marking Volkswagen's production of its 100th Atlas SUV, Berke touted the city's humming economy and rising wages but noted that not everyone is sharing in that prosperity.

"That is a big problem for us because if you are one of the Chattanoogans whose income is staying stagnant, then things are costing you more and more and more," including housing, Berke said.

He thanked Habitat and CNE for their work in developing affordable housing.

"Your work makes a difference every day, but your voices also are critical to help us build a constituency for this important issue," Berke said.

Perrey said the $500,000 will be available over two years, first come, first served, with a maximum grant of $20,000 per house. The local partners will decide what projects and areas to spend it on, he said.

The THDA's mission is to use state and federal money to increase the stock of safe, affordable housing. It operates a large number of programs to help people become homeowners, keep their properties up and avoid foreclosure. It also offers funding for multifamily developments and rental assistance.

In February 2017, Perrey visited Chattanooga to tout the agency's down payment assistance program to help people buy homes in neighborhoods such as Orchard Knob, Murray Hills, Highland Park and Woodmore.

The program will give qualified people up to $15,000 to put toward the down payment on a home. If the buyers stay in the home 10 years, they don't have to repay the grants.

The new initiative "complements a lot of other things the mayor's been talking about for years, a lot of the same neighborhoods he's most interested in seeing investment in, and it complements a couple of other things THDA has going as well," Perrey said.

Contact staff writer Judy Walton at jwalton@timesfreepress.com or 423-757-6416.

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