City

Proposed changes to Chattanooga’s PILOT program

The City of Chattanooga will consider reforming parts of the Payment In Lieu Of Taxes (PILOT) program as it pertains to affordable housing. Let’s discuss what the changes are and what it can mean for residents.

March 13, 2024 • 
Haley Bartlett
market city center

Let’s talk about ways affordable housing opportunities might change in the city.

Photo provided by Market City Center

With a package of reforms, Chief Housing Officer Nicole Heyman has proposed changes to Chattanooga’s Payment In Lieu Of Taxes (PILOT) program in relation to affordable housing. Let’s break it down.

Quick facts

  • PILOT | Renting from a government-owned property + paying an alternative amount.
  • Current structure in Chattanooga | Only one option: 50% of units in a development have to rent at or below 80% of the area median income (AMI) — which is $83,800 for the state of Tennessee, find out why AMI matters.
  • Issues | Incentives (full tax abatement) for developers don’t match up across the city with varying rent levels, making it hard to add affordable units.

Proposal highlights

  • Per-unit tax incentive | Based on the difference between market rent and affordable rent (AMI), plus a 2% participation incentive.
  • Accountability | Inspections to ensure compliance + penalties for non-compliance.
  • Project size | Opens the option to smaller developers with a minimum of 10 units.

For a full breakdown, see Heyman’s presentation. While city council won’t vote on these changes for a few more weeks, folks are always encouraged to speak at weekly meetings on recent proposals.