What’s in Chattanooga’s 5-year plan to spend HUD funds?

The stability of Chattanooga’s yearly grants from the federal Department of Housing and Urban Development is uncertain. But city officials still had to submit a five-year plan on how to spend millions of dollars earmarked for housing affordability and community development.

HUD requires cities and counties to prepare a “consolidated plan” on a regular cycle as a condition to receive funds from its two main entitlement programs — HOME Investment Partnerships and Community Development Block Grant (CDBG).

City Council approved Chattanooga’s consolidated plan on May 6. You can browse the 192-page document here.

Declining funds

Through 2029, officials expect around $11.7 million in federal grant dollars, the smallest five-year allocation since 2001-2005. One reason for the funding decline is that more communities have become eligible for HUD grants based on population requirements.

HUD determines funding awards using data on population size, housing supply and density, poverty, other factors. Chattanooga’s full grant award isn’t guaranteed.

Sandra Gober, the city’s HUD grant manager, told Council members on April 29 that the federal dollars are contingent on funding decisions made by the U.S. president and Congress. The $11.7 million is an estimate based off the 2025 grant award, multiplied by five.

Where does the money go?

HUD funds have to support residents who meet the federal definition of earning a low income, per the department’s rules. As of June this year, that will be $76,400 per year for a Chattanooga family of four. Here are the city’s goals, and the funds tied to each, planned through 2029:

• Increase affordable housing ($7.9M)
• Efficiently administer grant funds ($1.9M)
• Decrease poverty through supportive services ($1.2M)
• Improve infrastructure and public facilities ($500K)

Because of the rising costs of construction and renovation, the city often uses the meager federal housing dollars as “gap financing,” or supplemental funds for new construction with affordable units, Gober said in an interview with Chattamatters.

 “Our focus here lately has been to try to partner with the larger developers and encourage incentives, you know, for them to really want to partner with us,” she said.

About half of this year’s HOME and CDBG funds will go to building and maintaining affordable housing, including to the city’s developer incentive programs and Chattanooga Neighborhood Enterprise. Other organizations, including the Chattanooga Housing Authority, Metropolitan Ministries, and the AIM Center will receive about a third of the allocation, and grant administration costs will take up the rest.

See the full City Council-approved distribution of federal funds for 2025 here.

Stretching subsidies

Council Chair Jenny Hill, District 2, said every dollar for affordable housing is needed, even on a small scale, such as subsidizing a home repair loan.

“It might not be a huge amount of money, but in terms of preserving a home for three children, that can go a really long way,” Hill said.

In general, she said the city should avoid setting up programs and bureaucracies that do the same work as local housing groups and eat into limited funds, federal or local. Hill also suggested exploring more ambitious initiatives, like community land trusts, to maintain long-term affordability and stretch subsidies.

Chattanooga’s housing crisis

Accompanying the consolidated plan is a mountain of data, from median local income to rent and home prices to the most recent point-in-time count of Chattanoogans experiencing homelessness.

While the data, from multiple sources and time periods, isn’t an exact snapshot of the city’s current population and housing market, Gober said the figures are the baseline for officials to “be as objective as possible” in directing funds.

Here are some takeaways from the data:

The affordability gap

Highlighting Chattanooga’s housing crisis, the plan describes how rent and home prices have outpaced income growth to produce a “rapidly expanding affordability gap.” A 2023 assessment estimated that by 2030, the city would face a gap of 7,300 affordable homes for renters making $35,000 per year.

Cost burdens

Nearly half of Chattanooga’s households met HUD’s 2024 definition of earning a low income. Over a third of those households experience a housing cost burden, spending more than 30% of their income on housing costs.

Black residents are more affected by housing cost burdens in Chattanooga, according to the document’s data. Of Chattanoogans spending more than half of their income on housing, 42% were Black. The figure declined from 46% in 2020.

In the past 5 years

Since 2020, HUD funding has produced the following in Chattanooga:

• 59 new homes
• 393 new rental units
• 845 renovated rental units
• 905 renovated owner-occupied units