The City Council voted 5-3-1 on Tuesday night to approve a new housing PILOT program that raises the requirement to 50 percent of affordable units.
In favor were Chris Anderson, Carol Berz, Russell Gilbert, Yusuf Hakeem and Moses Freeman.
Opposed were Larry Grohn, Chip Henderson and Ken Smith.
Jerry Mitchell abstained.
The prior housing PILOT program focused on downtown, the North Shore and Southside, but the new one is expected to bring affordable housing to other areas of the city.
Donna Williams, city economic development director, said the downtown market is too hot to entice developers to stray from the ever-rising market rate there.
She said, "I would be floored if any downtown developer would be interested in 50 percent affordable units. That would be contrary to their business plan."
She said her office has been contacted by several developers who are interested in taking advantage of the new program granting tax breaks to those who meet the requirements.
Ms. Williams said it has become increasingly hard for lower and middle-income residents to afford apartment costs. She said, "We have been astounded at the current rents" going up to $2,000 a month for a 1,200-square-foot unit.
The vote followed several weeks of discussion, prompted by questions and suggested changes from the citizens
.
The resolution that passed:
- Added stronger clawback language to address what happens if a developer does not meet the commitments made to get the PILOT
- Added a developer fee at closing for staff time to enforce all PILOT commitments
- Increased the application fee from $500 to $3,500 to reimburse city for staff time
- Strengthened language on assignability if a PILOT developer sells the project while the agreement is in effect
- Required an annual review and report to the City Council on all PILOTs, and
- Added a provision that a PILOT agreement shall terminate if ground is not broken within two years of PILOT approval.
Helen Burns Sharp of the citizen group Accountability for Taxpayer Money, said, "ATM's one disappointment relates to how housing affordability is addressed. Housing PILOT projects per state law must set aside at least 20 percent of the units for low and moderate income persons. The approach proposed by the Berke Administration and adopted in the Resolution requires 50 percent of the units to be set aside for 'low-mod' persons, defined as making 80 percent or less of the Area Median Income (AMI). This means a person can make up to $16.24 per hour and qualify for a PILOT unit.
"ATM recommended setting the percentage of set-aside units between 20 and 30 percent, believing that would be a good mix of incomes in an apartment complex. We proposed addressing affordability by lowering the income threshold to 70% AMI (up to $14.22 per hour). This change would result in a maximum rent of $751 rather than $857 per month. We also suggested that the program define rent as including at least water, sewer, and basic internet.
"Thanks to Mayor Berke for proposing changes to the 'old' Downtown Housing PILOT program. Thanks to the Council for all the time they spent in making the program better."
Councilman Grohn said he was concerned that the program is geared to one-bedroom units and would not serve families.
Ms. Williams said the income limits it would help open up affordable space in Chattanooga. She said she knows of one "Ivy Leaguer who lives in a $850 apartment, though he could afford a $2,000 one."
On the small size of some units, she said she knows of several city employees choosing to live in tiny spaces.