Chattanooga, TN, September 21, 2025
News Summary
Chattanooga is addressing its affordable housing crisis with a new Affordable Housing PILOT program and Voluntary Attainable Housing Incentives. These initiatives aim to create more affordable housing options as demand increases due to the city’s growth. City officials are also exploring financing strategies and zoning changes to promote development and enhance community support for housing solutions.
Chattanooga has taken significant steps in addressing its affordable housing crisis through the introduction of a new Affordable Housing Payment In Lieu of Taxes (PILOT) program. This initiative, coupled with Voluntary Attainable Housing Incentives, aims to create more affordable housing opportunities for residents in the rapidly growing city.
A group convened at the Avondale Community Center in Chattanooga to discuss affordable housing issues while reporting on the use of federal funds aimed at ensuring that families remain in their homes. Additionally, a statewide summit was organized by the Sycamore Institute in Nashville to address housing challenges across Tennessee.
Tennessee is experiencing a surge in housing demand attributed to an influx of new residents relocating from states with higher costs of living, while many existing residents are moving to more rural areas. Jamie Hollin, a housing expert in Nashville, commented on the ongoing debate about the severity of Tennessee’s housing crisis and the lack of consensus surrounding it. Leaders emphasized that market forces alone cannot resolve the affordable housing shortfall due to rising construction and labor costs exacerbated by high-interest rates.
Chattanooga officials have implemented strategies to facilitate the development of affordable housing, including the establishment of a revolving loan fund and offering incentives to developers. Recently, the city completed its first sale from a land bank aimed at promoting affordable housing construction.
Most federal funding in Chattanooga is allocated for repairs and maintenance on existing homes rather than for new projects. Navigating the financing landscape for affordable housing has become increasingly complicated, requiring tools like bonds, tax credits, and other incentives that differ significantly from those used for market-rate developments. For instance, Amazon provided a low-interest housing equity loan for a project in Nashville that enabled its feasibility.
Restrictions imposed by federal programs limit access to housing assistance for some low- and moderate-income individuals, while federally-defined qualified census tracts play a role in determining funding availability for various developments in the area. Some community leaders have raised concerns that lengthy public feedback processes and stricter regulations could hinder efforts to construct affordable housing efficiently. To counter this, new zoning laws and community engagement strategies are being proposed to streamline the development process.
Building relationships with foundations and nonprofit organizations can be time-intensive, as demonstrated by a recent partnership beneficial to Habitat for Humanity in Chattanooga. The Chattanooga City Council’s approval of the new PILOT program is a pivotal move towards addressing critical housing needs in the city.
As part of the PILOT program, Atlantic Companies submitted the first application to transform a vacant industrial site into a mixed-income apartment complex featuring 278 units, which will include 42 affordable units. These affordable units will be designed for households earning between 60% and 80% of the area median income (AMI), currently set at $76,400 for a two-person household. The projected increase in property tax revenue from the development is expected to bring in $341,931 annually, with $142,161 allocated for local schools.
City Council members highlighted their support for the PILOT proposal as a crucial measure in fulfilling the growing housing demands. While the stigma surrounding affordable housing persists, there is a broader acknowledgment of its pressing necessity in Chattanooga.
The recently introduced Voluntary Attainable Housing Incentives program allows developers to receive zoning relief by designating at least 10% of their units for households earning 80% AMI or below. This initiative, resulting from changes to state law, aims to provide benefits without imposing financial burdens on taxpayers. Chattanooga is the first city in Tennessee to adopt these new voluntary incentives for attainable housing.
FAQ
What major steps is Chattanooga taking toward affordable housing development?
Chattanooga has implemented a new Affordable Housing Payment In Lieu of Taxes (PILOT) program and Voluntary Attainable Housing Incentives to facilitate affordable housing development.
How does the PILOT program work?
The PILOT program allows developers to receive tax incentives in exchange for creating affordable housing units, which helps spur development in designated areas.
What is the Voluntary Attainable Housing Incentives program?
The Voluntary Attainable Housing Incentives program allows developers to receive zoning relief if they designate at least 10% of units for households earning 80% AMI or below.
How much revenue will the new mixed-income apartment complex generate?
The new mixed-income apartment complex is expected to generate approximately $341,931 in annual property tax revenue.
What challenges are there to financing affordable housing?
Financing affordable housing projects often involves complicated structures requiring bonds, tax credits, incentives, and a capital stack, which can complicate development compared to market-rate projects.
Key Features of the Article
| Feature | Description |
|---|---|
| PILOT Program | Provides tax incentives to developers creating affordable housing units. |
| Voluntary Attainable Housing Incentives | Allows zoning relief for developers who reserve 10% of units for low-income households. |
| Projected Revenue | The new mixed-income complex is expected to generate $341,931 annually in property taxes. |
| Affordable Unit Income Criteria | Affordable units cater to households earning between 60% and 80% AMI. |
| Financing Complexity | Financing affordable housing involves complicated structures unlike market-rate developments. |
Deeper Dive: News & Info About This Topic
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Chattanooga Secures Federal Tax Credits for Affordable Housing
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Additional Resources
- Times Free Press: Five Things to Know About the State of Affordable Housing
- Local 3 News: Chattanooga Receives First PILOT Application for Affordable Housing Project
- News Channel 9: Chattanooga OKs First Affordable Housing Project Under New PILOT
- Chattanooga Pulse: City Council Votes to Approve Voluntary Attainable Housing Incentives
- Local 3 News: Chattanooga Land Bank Moving on Affordable Housing Project
- Wikipedia: Affordable Housing
- Google Search: Affordable Housing Tennessee
- Google Scholar: Affordable Housing Financing
- Encyclopedia Britannica: Housing
- Google News: Chattanooga Affordable Housing
Author: STAFF HERE CHATTANOOGA WRITER
The CHATTANOOGA STAFF WRITER represents the experienced team at HEREChattanooga.com, your go-to source for actionable local news and information in Chattanooga, Hamilton County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Riverbend Festival, Chattanooga Oktoberfest, and Moon River Festival. Our coverage extends to key organizations like the Chattanooga Area Chamber of Commerce and United Way of Greater Chattanooga, plus leading businesses in manufacturing, insurance, and utilities that power the local economy such as Volkswagen Chattanooga, BlueCross BlueShield of Tennessee, and EPB. As part of the broader HERE network, including HEREBristol.com, HEREKnoxville.com, HEREMemphis.com, and HERENashville.com, we provide comprehensive, credible insights into Tennessee's dynamic landscape.
