Chattanooga, September 15, 2025
News Summary
Chattanooga has been awarded a new round of federal tax credits to support affordable housing at the Westside development, marking significant progress in replacing aging public housing. The awarded tax credits will finance the construction of 144 new apartment units, with construction set to begin early next year. A substantial $50 million HUD grant will help ensure affordability for low-income residents, continuing the city’s commitment to enhancing living conditions and fostering a mixed-income community.
Chattanooga Secures Federal Tax Credits for Affordable Housing Development
This week, Chattanooga has been awarded a second round of federal tax credits designated for affordable housing at the Westside development. These tax credits, which are essential in financing the construction of new buildings, will work in conjunction with bonds issued by the Tennessee Housing Development Agency (THDA).
The tax credits are part of a larger initiative to replace aging public housing at College Hill Courts, where significant advancements are underway. Director of the Housing Development Agency, Ralph Perrey, had previously committed to securing eight years of low-income housing tax credits upon receiving a federal grant from the Choice Neighborhoods Initiative. In July 2024, the project successfully secured a substantial $50 million grant from the U.S. Department of Housing and Urban Development (HUD).
Although other federal funding for the Westside project has been withdrawn, the $50 million from HUD remains firmly in place. Betsy McCright, the executive director of the Chattanooga Housing Authority, noted that HUD officials responded positively during the project’s application process.
Project Details
The newly awarded low-income housing tax credits will specifically fund the second phase of the Westside Evolves project. This phase includes the construction of an apartment building comprising 144 units. Construction is slated to commence early next year, with plans prioritizing affordable housing accessibility.
Forty-six percent of the one- and two-bedroom apartments are designated for current College Hill Courts residents who earn 40 percent or less of the area’s median income, which is approximately $28,000 per household. Residents living in these new units will pay no more than 30 percent of their adjusted gross income, benefiting from continued support via project-based vouchers.
Nineteen percent of the new units will cater to individuals earning between 60 percent and 80 percent of the median income, translating to an annual income range of roughly $42,000 to $56,000 for two-person households. The remaining 35 percent of units will be offered at market rates without subsidies.
Mixed-Income Community Model
The Westside project aims to embrace a mixed-income community model. However, financing for market-rate units poses a challenge due to the absence of subsidies. This initiative is closely linked to The Bend, a mixed-use development project that mandates that at least 10 percent of housing within the project be rented at affordable rates.
The first phase of the Westside project is currently in progress, with an estimated cost of $89 million and a projected opening by the end of 2026. The second phase is estimated to cost approximately $61 million, adding further momentum to the affordable housing landscape.
Community Engagement
A survey conducted in 2023 indicated that 82 percent of residents from College Hill Courts expressed a keen interest in relocating to the new units being constructed. The objective of the Westside project is to ensure that new units are ready for occupancy prior to any demolition of existing housing. This strategic approach aims to prevent the displacement of current residents during the transition to the new development.
Conclusion
The ongoing developments at the Westside project mark a significant step forward in addressing affordable housing needs in Chattanooga. With the combination of federal tax credits and the HUD grant, the Westside is poised to create improved living conditions for many families while fostering a diverse community.
FAQ
What are the federal tax credits for the Westside project?
The federal tax credits aim to finance the construction of affordable housing in Chattanooga, allowing for the building of new apartments to replace aging public housing at College Hill Courts.
When will construction begin for the second phase?
Construction for the second phase of the Westside project is expected to begin early next year.
How will the apartments be allocated?
Forty-six percent of the apartments will be for residents earning 40% or less of the median income, 19% for those making between 60% and 80% of the median income, and 35% at market rate.
What has been the community response to the project?
A survey in 2023 indicated that 82% of College Hill Courts residents are interested in moving into the new units, showing strong community support for the project.
Key Features of the Westside Project
| Feature | Details |
|---|---|
| Federal Tax Credits | Secured to finance the construction of affordable housing. |
| HUD Grant | $50 million secured from the U.S. Department of Housing and Urban Development. |
| Construction Timeline | Second phase construction starts early next year. |
| Apartments Details | 144 units in total; 46% for low-income residents, 19% for median earners, 35% at market rate. |
| Community Interest | 82% of residents from College Hill Courts expressed interest in moving into new units. |
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