Community group proposes reforms to keep Chattanooga housing affordable

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The price of living in Chattanooga has been rising, with no sign of stopping.

Community organizers Tuesday identified policy reforms to address the city’s housing crisis — namely, the gap between the number of homes being built and the amount that most residents can actually afford.

“State legislators have created a very intricate straitjacket for cities and municipalities that keep them, in many ways, from involving themselves in things like rental regulation or other ways to get involved in this situation,” said Michael Gilliland, organizing director for the advocacy group Chattanoogans in Action for Love, Equality and Benevolence, or CALEB.

The reforms include proposals for increasing transparency, adding rights for rental tenants and serving disincentives for large investors from buying up housing stock, according to a package of ordinance drafts from CALEB.

Organizers with CALEB’s economic mobility task force also called for establishing a community land trust that would facilitate lower-price home sales.

The median price for homes sold in Chattanooga in 2024 was $330,000, a record high and more than double what it was eight years ago.

(READ MORE: Chattanooga home sales, prices rise last year despite national slowdown)

“This is, in mathematics, what is called an exponential growth,” Manuel Cruz, co-chair of the task force, said while pointing at a graph of home prices during Tuesday’s presentation. “Which is a really, really back thing, because exponential growth quickly trends toward infinity.

“And I do not know about you, but I cannot afford a house that costs infinity dollars,” Cruz said to laughs.

Median rents have also increased by 57% in Hamilton County over the past decade, census data shows. Historically, Cruz said, citing economist Adam Smith, rents have been based not on costs or revenue but on the maximum price tenants are willing to pay.

(READ MORE: Rents in Chattanooga area have jumped in the past decade. So have evictions)

“While this is a trend in the increase of house prices, what we’re also seeing in here is the increase of human suffering,” Cruz said. “This is increases of homelessness and evictions and families having to choose between feeding their children and making rent.”

Hamilton County saw a record number of eviction filings last year, with 404 filed in July.

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Around 1 in 5 single-family homes in Chattanooga are owned by “institutional investors,” or anyone who owns four or more properties, according to a CALEB analysis.

Private equity buyers, often operating under multiple LLCs or entities, started entering the market in the ’80s, Cruz said. But their presence has ramped up since the pandemic. For example, one Pennsylvania company bought 84 homes in Hamilton County in 2021 and now hold a total of 136 properties, Cruz said.

Those kinds of buyers tend to target markets made up of low- and middle-income homeowners, Cruz said.

“This is where you want somebody to be able to get a starter home,” he said, “but from an institutional investor perspective, this is where you get a good deal.”

REFORMS

The biggest reforms needed are for tenants’ rights, task force member Nikki Lake said after the presentation.

CALEB proposes an ordinance that would require owners to give notice to tenants if they intend to sell their property, notifying them of a right to purchase the home they live in. Another proposal would give tenants the opportunity to buy their home if the property is undergoing foreclosure.

Other proposals aimed at institutional investors would require businesses to disclose the names of the entities they operate under.

“Out-of-town hedge funds treat Chattanooga buildings like a series of stocks,” a summary from CALEB said. “They buy low and sell high without improving the building or making the space available to live in. This depletes the housing stock and raises rents, pushing people into the streets while a firm leagues away lines their pockets.”

One proposal would give the city 25% of the net profit from home sales that happen within six months of an investor acquiring a residential property, to encourage long-term residency. Another would bar a buyer from renting out their property for at least three months after purchase, with some exceptions.

The organization also proposes an anti-solicitation ordinance, meant to deter out-of-town investors from targeting desperate homeowners, often disabled, low-income or elderly, with cash offers below market rate.

“They’ll go to what they think is a poor family, and they’ll say, ‘We’ll offer you $270,000 in straight cash,’ right?” Cruz said in a previous interview. “What that family doesn’t know — what they’re relying on them not to know — is that the house is actually gonna be sold at $400,000.”

Drafts for proposed ordinances are still templates, and CALEB is working with legal experts to be sure its proposals align with local and state law, Cruz said.

LAND TRUST

CALEB has been advocating for the creation of a community land trust since at least 2020.

Then, the group won a grant to fund a study on the feasibility of the model, which found that those trusts can help close racial wealth gaps and expand the number of residents who can afford to buy a home. The study, released in 2021, also advocated for swift adoption as home prices were rising quickly — a trend that’s only accelerated in the years since.

A community land trust would be able to buy properties and sell the homes on them at reduced or subsidized prices to lower-income buyers. The trust retains ownership of the land underneath the homes, which keeps it reserved and affordable.

“It serves as a long-term shield against speculative investment by keeping land under the stewardship of residents and other community members,” CALEB’s Janice Gooden said Tuesday. “By keeping land under the stewardship of residents and other community members, there is greater assurance that land will be used for the benefit of the community.”

The city has twice applied for federal money to invest in a community land trust, Gooden said.

A spokesperson for Chattanooga Mayor Tim Kelly said the city has made progress in affordable housing by creating a land bank and Invest Chattanooga, a housing fund that will provide low-interest loans in exchange for guaranteed affordable units.

“Combating the national housing crisis requires collaboration on all levels, and we, of course, welcome opportunities to work with partners like CALEB as we continue to work to expand affordable housing options for all Chattanooga,” spokesperson Paris Vinnett said in an email.

City officials did not respond to specific questions about community land trusts.

Contact Ellen Gerst at egerst@timesfreepress.com or 423-757-6319.