Chattanooga Neighborhood Enterprise (CNE) is planning a 30-unit townhouse project in Highland Park.
Officials said it is part of the group's mission to provide affordable housing.
The location will be on .62 acres at 2003-2009 Bailey Ave.
The Planning Commission recommended approval for UGC zoning for the project. It next goes to the City Council.
CNE earlier purchased a number of vacant parcels in Highland Park and built the Mai Bell Apartments. The three-story apartment building is at 1728 Bailey Ave.
The apartments are income restricted.