With allocations to local developers, landlords, and community organizations, funds will support the construction, rehabilitation, and preservation of hundreds of affordable units

The City of Chattanooga is allocating nearly $3 million in federal funds from the U.S. Department of Housing and Urban Development (HUD) for the creation and preservation of hundreds of affordable homes across Chattanooga, as a part of ongoing efforts to increase housing affordability city-wide.

Approved by City Council this evening, the funding plan provides grants and forgivable loans to developers, landlords, and community organizations for the development of new affordable units, the rapid repair and renovation of vacant units, and services to support residents in need of housing. 

“Affordable housing is one of the most important, complex issues facing our community right now, and we’re tackling it from every side – from supporting the development of new affordable units to making sure residents in need are able to stay in their homes,” said Chattanooga Mayor Tim Kelly. “The projects and programs selected for funding represent a huge step forward in this work, and I’m incredibly grateful for our strong partnership with HUD that made it possible.”

The City is administering a portion of the funds through the Community Development Block Grant program. Officials issued a notice for funding applications in January and selected projects based on eligibility criteria, impact potential, and alignment with Kelly’s housing and community development goals under the One Chattanooga plan. 

Projects selected for funding include:

An additional $1.4 million is being allocated for distribution through the HOME Investment Partnership program, which provides funding for up to 50 percent of the construction costs for an affordable housing unit, at a maximum of $40,000 per unit. Non-profit organizations and for-profit developers with shovel-ready projects may apply for HOME funding year-round. 

With City Council’s approval this evening, officials will submit the funding plan to HUD for final sign off before executing agreements with awardees. The City anticipates funds will become available for awardees to draw down beginning in July.  

Building a catalytic toolbox to create and preserve affordable housing is a key strategy in Kelly’s ongoing work to increase accessibility to housing in every neighborhood. Last year, Kelly launched a $100 million affordable housing initiative, with $33 million in seed funding to help create and preserve hundreds of affordable homes.

Since taking office, his administration has supported the development of more than 600 new affordable units with federal funds from HUD and the American Rescue Plan Act. Kelly’s proposed budget for Fiscal Year 2024 anticipates another $3 million allocation in federal funds to assist in creating 400 additional affordable rental units. 

The City is also conducting a neighborhood-by-neighborhood needs analysis to ensure funding is allocated where it will make the most impact. Together, with a simultaneous top-to-bottom redesign of the city’s land use and zoning codes, these efforts will pave the way for builders to construct housing that residents can afford, in the neighborhoods that need it most.