Chattanooga Housing Authority Executive Director Betsy McCright said the city has agreed to provide $6 million for an unexpected funding gap for projects that are already underway on the Westside.
A part of that amount would be $1.5 million from the city Industrial Development Board.
Ms. McCright said the city had counted on two federal grants, but learned it is not likely to receive a $5 million grant and another for $2.9 million.
The IDB money would come from funds it has available in the bank and has not yet designated. Officials said even with the $1.5 million outlay there will be a substantial amount still remaining and more will be coming in.
IDB member Jimmy Rodgers questioned whether housing would be a legitimate use of IDB funds, or it if was even legal to do so.
City Attorney Phil Noblitt said a state law was passed last year that allows it.
The board will vote on the issue next month.
Ms. McCright said there is sufficient money available to complete phase 1 of the Westside makeover. It will focus on rehabbing the 1937 James A. Henry School, which will be known as The Hub and include Head Start, the Boys and Girls Club and other programs.
A wing will be added for a medical clinic operated by Erlanger.