How can I access Invest Chattanooga’s financing tools?​

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In early 2025, Invest Chattanooga intends to release a Request for Information (RFI) to gauge interest from private development partners and be made aware of investment opportunities. By adding your contact information to our mailing list, you will be kept up to date on any new information that is made available. 

 

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What kind of partner is Invest Chattanooga looking for?

 

Invest Chattanooga is looking for private sector development partners with shovel-ready projects that are stalled due to high financing costs. By partnering with Invest Chattanooga, developers can get shovels in the ground while including some affordable units in their project. Partnerships are structured as joint ventures, with Invest Chattanooga holding a majority stake both during construction and after stabilization.

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Why should I partner with Invest Chattanooga?

 

Invest Chattanooga offers low-cost loans via the Housing Production Fund that replace the need for private equity, saving projects money and reducing financial risks. As a public enterprise, Invest Chattanooga brings other cost savings to the partnership, like access to more favorable senior loans and property tax abatement. In return, Invest Chattanooga is seeking to create a share of permanently affordable rental and homeownership units in mixed-income developments without relying on federal subsidies. 

 

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How will the public-private partnership work?

 

In line with Chattanooga’s tradition of partnerships between the public and private sectors, this approach leverages the development capacity of the private sector while ensuring long-term public benefits through majority ownership by Invest Chattanooga.

 

Private development partners will receive fees and compensation similar to fully-private deals, but the public agency will have the authority to guide policy, management, and maintenance decisions post-construction. Should the development partner wish to exit the deal upon completion, a guaranteed exit can be negotiated. Invest Chattanooga intends to hold its ownership interest long-term. 

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How much does Invest Chattanooga loan? 

 

Invest Chattanooga provides low-interest, subordinate loans covering up to 25% of a project’s cost. These construction loans will act as an equity investment in the deal, replacing the need for a third-party investor. 

 

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How does the Housing Production Fund revolve? 

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Once the project is completed and risks like delays are resolved, developers refinance their debt. Invest Chattanooga’s loan is repaid during this refinancing phase. Invest Chattanooga is cultivating relationships with impact investors who are interested in making mezzanine loans to its projects to take out the Housing Production Fund during the project refinancing. 

 

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What is the role of Impact Investors?

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A key component of this approach is partnership with impact investors, including lenders, institutional investors, private individuals, philanthropic organizations, and any other parties with a vested interest in seeing more mixed-income affordable housing be built in the city of Chattanooga. The mezzanine loan is an impact investment opportunity that is asset-backed, will earn a meaningful return, and has a predictable takeout, while delivering quantifiable social impact.

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Does Invest Chattanooga do more than loans?

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Yes, Invest Chattanooga will: 

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• Actively help developers access affordable housing incentives like the City's tax abatement program and forthcoming voluntary zoning incentives program​

• Identify opportunities to leverage publicly-owned land for mixed-income housing development, selecting a private development partner through a competitive RFQ process. ​

• Cultivate relationships with Impact Investors who are interested in providing financing to completed Invest Chattanooga developments. 

 

Invest Chattanooga will also remain a partner in its investments long-term to ensure permanent affordability.

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What are the affordability requirements and how do we define ‘affordable?’ 

 

In exchange for becoming a partner in the development, Invest Chattanooga will require that a housing development make:

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• 20% of units affordable to Chattanoogans earning less than 50% of Area Median Income (AMI); which would currently be someone making $35,000 or less per year.

• 10% of units affordable to households making between 50 and 100% AMI; which would currently be someone making $70,000 or less per year. The affordability level of these units will be negotiated in response to market conditions.

 

30% of the total units will be dedicated as affordable, while the remaining 70% will rent or be sold at market rate, expanding workforce housing opportunities.

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Are there other public enterprises like this?

 

This approach to mixed-income housing development is gaining momentum nationwide. It was originally piloted in Montgomery County, Maryland in 2021 by the Housing Opportunities Commission, which has been doing mixed-income development since 1989 and expects to create 6,000 new units (1,800 permanently affordable) in a 20 year period with its $100 million Housing Production Fund. The program has been successfully implemented in Atlanta though Atlanta Urban Development (AUD), which has a $38 million fund and has released its first two RFQs for publicly-owned sites. There are ongoing initiatives to establish public enterprises in Raleigh, Syracuse, Kingston, Chicago, Boston, and the state of Michigan. The model has been recognized and elevated by the U.S. Department of Housing and Urban Development and the White House.

 

For Chattanooga, this approach reflects the city’s strong tradition of public-private partnerships, leveraging the development capacity of the private sector while creating long-term community benefits.

 

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What is the governance structure and accountability? 

 

To enable permanent affordability, Invest Chattanooga is structured as a 501(c)(3) non-profit subsidiary of the Chattanooga Housing Authority (CHA). It is financially and operationally independent from CHA with its own board to allow Invest Chattanooga to operate flexibly and meet the opportunities in the market. But as a public enterprise, its appointed board will hold public meetings and Invest Chattanooga will be audited and issue reports to the Chattanooga City Council annually. 

 

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I have further questions, who do I contact?

 

If you have further questions, you can reach out to info@investchattanooga.org. 

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