Chattanooga Mayor Andy Berke announced on Tuesday that the city and county will only consider payment in lieu of tax (PILOT) agreements for housing developments with a much higher affordability requirement than ever before.
In 2014 the existing housing PILOT was revised to require 20 percent of all units in a development in receipt of a PILOT to be rented at a rate that is affordable by anyone whose income does not exceed 80% of the Area Median Income (AMI), as provided by HUD.
With Tuesday’s announcement, Mayor Berke ensures the city will only focus on housing PILOTS that create the largest impact on increasing affordable housing stock in Chattanooga.
“When we revised the PILOT in 2014, the goal was to jump start downtown housing investment and at the same time encourage affordability,” said Mayor Berke. “If you take a walk downtown, there is no doubt. We’ve accomplished that goal. Now it’s time to set a new goal.”
Since 2014, five PILOTs have been awarded with the last PILOT award occurring last year. Those PILOTs have created or will create over 585 housing units in Chattanooga’s downtown, with 193 of those affordable by HUD standards. Those five PILOTs generated almost $72 million of investment and will double the number of people living downtown by 2017.
“The downtown real estate market is strong. Without incentives from government, we think our city will continue to grow,” said Mayor Berke. “So now is the time to focus on affordability. Our downtown needs to be open to everyone, but as market strength grows, it becomes more difficult for affordable units to be realized. That’s why the city will focus on incentivizing only those complexes that make a substantial impact on affordability.”
At Tuesday’s press conference, Mayor Berke said that the city would no longer recommend that council approval any PILOT that does not significantly exceed 20 percent units.