A public enterprise in Chattanooga deploying $20 million in city funds to build permanently affordable rental units.
City: Chattanooga, TN
Purpose: To leverage local resources and public-private partnerships to catalyze mixed-income development and create permanently affordable rental units.
Lead Stakeholders: City, Philanthropy
Process: Recognizing that federal programs alone would not meet affordable housing needs, the City of Chattanooga allocated $20 million in general fund dollars to seed a revolving Housing Production Fund.
The City also launched Invest Chattanooga, a nonprofit subsidiary of the Housing Authority, to partner with developers and investors to catalyze mixed-income development at the speed of the market.
Invest Chattanooga serves as the limited partner in its developments, providing low-cost construction loans covering up to 25% of project costs. As a public enterprise, Invest Chattanooga brings other cost savings to its partnerships, like access to favorable senior loans, property tax abatement, and publicly-owned land. This allows a portion of units to be rented at below-market rates.
Outcomes:
- Targeting 20% of units to be affordable at 50% AMI and 10% of units to be 50-100% AMI.
- Because Invest Chattanooga will own the property longterm, units will be affordable in perpetuity.
- Invest Chattanooga was funded in January 2025 and is looking for its first investments.
View or download PDF of the Invest Chattanooga case study.
