CHATTANOOGA, Tenn. (Sept. 16, 2025) – The first development applying for
the city’s new affordable housing Payment in Lieu of Taxes (PILOT) Program
<https://chattanooga.gov/stay-informed/latest-news/city-chattanooga-launches-new-affordable-housing-payment-lieu-taxes-pilot>
would create 42 units of affordable housing.
The city modernized the program last year so that it would incentivize the
creation of dedicated affordable units in developments that are otherwise
planned to rent all units at market rate. The updated affordable housing
PILOT program directly ties the amount of the tax incentive to the cost of
offering each affordable rental unit. The program requires that committed
affordable units are kept at an affordable rate for at least 15 years.
Chattanooga City Council will have to vote on the PILOT application from
Atlantic Companies, an Atlanta-based firm, which plans to build 278 rental
units at 702 Manufacturers Road. They are proposing more than 40 units
dedicated as affordable to a Chattanoogan making 60% and 80% of area median
income, respectively. Area median income is currently $76,400 for a
two-person household.
Based on the PILOT formula, this project qualifies for a 69% tax abatement
on the improved value. This means the vacant property that was contributing
$9,055 in annual taxes will now contribute $341,931 each year, including
$142,161 in tax revenue for schools.
“The affordable housing crisis is the biggest issue facing Chattanoogans,”
said Mayor Tim Kelly. “My administration worked diligently to revamp this
incentive program to bring more developers to the table and create more
dedicated affordable housing units. This Northshore project will not only
give people a roof over their heads, it will provide tangible economic
benefits, including more customers going to local businesses and
restaurants.”