Q: How does Chattanooga’s land bank work?

By William Newlin

Chattanooga’s land bank is a collection of vacant properties — mostly small lots that have sat empty for years — which the city acquired due to unpaid taxes. Chattanooga’s land bank authority aims to get them back on the tax rolls by turning unused parcels into affordable housing.

Directed by a citizen-led board, the land bank authority receives ownership of city-owned property and then passes the title to building developers free-of-charge. By removing the cost of buying land, the land bank provides a subsidy for construction. 

In exchange, developers have to keep rental homes affordable for 10 years and for-sale homes affordable for 15 years. 

See the affordability terms here.

Land bank challenges

Although created in 2015, the land bank didn’t take ownership of any city property until October 2024. Megan Miles, the city’s director of housing policy, said Mayor Tim Kelly’s administration activated the land bank as a “powerful tool for building and affordability.”

However, only one of the seven properties conveyed to the land bank last year is slated for development. Part of the delay has been finding qualified developers. The vast majority of city-owned properties are too small to fit multi-family complexes, and given the high cost of construction, Miles said the application process attracted few construction-ready developers willing to build just one or two homes. Other city, state, and federal subsidies for affordable housing are limited to big projects as well.

So far, city staff has identified about 60 parcels, mostly in downtown-adjacent neighborhoods, to hold for land bank use. They expect to transfer about 30 of those properties to the land bank this fall. In the meantime, city staff are working to form more developer partnerships and make sure the property titles clear any legal barriers to transferring ownership.

“We don’t have a lot of tools for the smaller-scale development,” Miles said. “It’s something that we are really excited to be able to just make some progress towards.”

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Contact William at william@chattamatters.com