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Affordable Housing Programs

There are a range of resources available to help preserve and create affordable housing in the City of Chattanooga. Recently, we have created new tools to incentivize mixed-income and affordable housing development. Our goal is for any project to benefit from including a share of affordable units, and we would love to talk with you about how you may be able to take advantage of these programs. Explore the affordable housing funds, programs, and initiatives below.

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Affordable Housing Payment-in-Lieu-of-Taxes (PILOT)

The Affordable Housing Payment-in-Lieu-of-Taxes (PILOT) offers developers a property tax discount in exchange for providing affordable rental units. Chattanooga’s Affordable Housing PILOT program is unique because it’s tailored for market-rate developments and directly ties the tax abatement to the cost of offering affordable units. Those with 10+ unit multifamily rental developments are encouraged to apply.

Voluntary Incentives Program (VIP)

The Voluntary Incentives Program (VIP) offers zoning relief for housing developments that provide at least ten percent of units at an attainable rent. In exchange for developing housing units priced for Chattanoogans making 80% of the Area Median Income or below, the incentives include: 

  • 30% Density Bonus: Allows developers to have more units within the same building.
  • Reduced Parking Minimums: Lowers the minimum number of parking spots the developer must include in a project.
  • 30% Height Bonus: Allows buildings in designated high opportunity neighborhoods near public transit to be 30% taller than in the base zoning code.

The VIP will take effect in spring 2025. See this presentation for more details. 

Contact: Megan Miles, mmiles@chattanooga.gov

New Zoning Code

The Chattanooga City Council has adopted the first comprehensive update to the City’s zoning code since the 1960s. This reform streamlines regulations and supports housing development by:

  • Expanding “by-right” development 
  • Allowing more residential density and taller buildings
  • Reducing lot size requirements, building setbacks, and parking requirements
  • Introducing “missing middle” residential zones for small multifamily

For example, under the old zoning code, a 20-unit apartment building along a commercial corridor required 45,500 square feet of land. The new code reduces this to just 19,000 square feet—a 58% decrease. Additionally, hotels can now be converted to residential units by-right, and Accessory Dwelling Units are allowed by-right in all zones that permit single-family homes. 

To explore how this zoning reform impacts specific parcels, check out the New Zoning Map and review the updated Zoning Ordinance.

Land Bank Property Donation

The Chattanooga Land Bank is working with the City of Chattanooga to transform vacant properties owned by the City into affordable housing. The Chattanooga Land Bank Authority releases periodic Requests for Proposals (RFPs) to donate city-owned properties for affordable housing development. These properties present an opportunity for infill housing developments, single family with ADUs or small-scale multifamily. Proposals must meet the following affordability criteria: Rental units: 80% AMI rents for a 10-year affordability period For-sale homes: Home prices are capped at $200,000 and must remain affordable for 15 years

Restore Rebuild Project-Based Rental Assistance

The Chattanooga Housing Authority (CHA) has project-based rental assistance available for over 1,200 new housing units through HUD’s new Restore Rebuild program. The Section 8 rental assistance contract will pay up to 110% of SAFMR. CHA is accepting applications for this funding through an open RFP, awarded on a first-come, first-served basis. This program is ideal for affordable housing developers with experience in federal funding programs. The gap financing is particularly attractive for 4% LIHTC deals.

HOME Funds

Using federal, HOME Investment Partnership Program (HOME) funds, this program is designed to promote the development and or preservation of affordable rental and homeowner housing through partnerships with for-profit and non-profit entities. The City funds are provided as gap financing that is not otherwise available from other sources.

Rapid Rental Repair Program

The Rapid Rental Repair Program is designed to support the City of Chattanooga’s response to rental housing availability issues related to the COVID-19 pandemic.

Landlord Renovation Program

This program is designed for landlords who have vacant substandard rental units that they want to renovate. Landlords may be eligible to receive a grant that covers 50% of renovation expenses, up to $25,000. The specific grant amount is based on the actual cost of the renovation.

Community Development Block Grant

The Community Development Block Grant (CDBG) is the largest, annual entitlement grant the City of Chattanooga receives from the U.S. Department of Housing and Urban Development (HUD). The City receives approximately $2.2 million in CDBG funding, annually.

Resources

Reimbursement Request and Report Submission Links

Use the following links to submit your items. Please send all documents related to your request or report in one submission.

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