The Return for These Investors Isn’t Money, It’s More Affordable Housing

1. 1. Invest Chattanooga, a city-backed fund, directly invests in local apartment projects, prioritizing housing delivery and affordable units over solely financial returns.
2. 2. A new class of government-backed funds is emerging across the United States, designed to directly invest in new housing construction to ensure permanent affordability and local control.
3. 3. The new government-backed investment models seek to overcome the shortcomings of traditional affordable housing programs, like federal tax credits, which often result in affordability expiring and cities effectively paying for buildings multiple times.
4. 4. Chattanooga's Mayor Tim Kelly established Invest Chattanooga as a direct investor after discovering that overhauling zoning laws and relying on federal programs were insufficient to meet the city's urgent need for affordable housing.
5. 5. Invest Chattanooga functions like a business by providing initial equity and debt financing to developers, accepting a lower financial return than private equity firms in exchange for mandatory affordable units and long-term ownership benefits for the city.
6. 6. Invest Chattanooga explicitly aims to disrupt the housing finance landscape by competing directly with private equity firms, rather than developers, to determine what types of housing projects get built.
7. 7. The innovative model for these government-backed housing funds, including Chattanooga's, draws inspiration from Montgomery County, Maryland's Housing Opportunity Commission, which has served as a long-standing laboratory for affordable housing solutions.