Chattanooga’s Unit-Level PILOT: A Dramatic Pivot Toward Mixed-Income Living
In the shadow of the Tennessee River, a city that once chased market-rate towers with tax breaks now stages a more intimate revolution: unit-level PILOTs designed to blend affordable and market-rate housing. The drama isn’t merely architectural; it’s a reckoning with rent burdens that gnaw at the backbone of working families, including veterans who have shouldered service and sacrifice while searching for steady shelter near jobs, clinics, and community networks.
For more than two decades, Chattanooga used payment-in-lieu-of-taxes agreements to reshape its downtown. But the tax-break tool that once filled the skyline with glass and opportunity has been retooled for a different purpose: mixing affordable and market-rate units, with a piercing focus on the people who keep our cities fed and defended—our veterans.
City officials say seven of every 10 renters are either rent-burdened or severely rent-burdened. Those numbers quietly map the lives of veteran households: veterans transitioning to civilian life, veterans pursuing education, and veterans who have weathered medical or service-related challenges. The new approach ties abatements not to broad downtown investment alone, but to the cost of lowering rent from modeled market levels to affordable ones—unit by unit, block by block.
The program does not appear to copy any other affordable housing incentive in the country. Hanneke van Deursen, Chattanooga's housing finance director, told The Builder's Daily that incentives in Chattanooga and nationwide tend to be blunt instruments that do not prove to work well, especially over time. The veteran lens becomes clear here: precision matters when your tenants have military schedules, benefits, and healthcare needs that require stability. A 15-year abatement pegged to each unit’s affordability creates a direct, measurable bridge between service and home.
“I saw the limitations of the structure that most cities use, and we needed something different,” van Deursen said. “That’s what really drove us to come up with a creative solution, to be more precise about how we use this incentive.”
The goal was to expand the pool of potential developers beyond those focused specifically on affordable housing. By inviting more players into the mix, Chattanooga increases the likelihood that veteran-serving organizations can partner with developers to create housing that respects the needs of veterans—ranging from accessibility features to proximity to VA clinics and employment hubs.
Chattanooga’s approach has earned national recognition for innovation in housing. It was named a co-winner of the 2026 Ivory Prize for Housing Affordability in the policy and regulatory reform category, a nod to the city’s willingness to reimagine incentives so they serve real human outcomes—outcomes veterans can feel in their daily lives.
An early adopter emerges: The Atlantic Companies is the first to use the new PILOT for a 278-unit apartment community, with 42 units affordable for residents earning 60% to 80% of the area median income. The project sits along the river near the Moon Pie plant in the North Shore neighborhood, a symbolic juxtaposition of industry and resilience. For veterans, this signals potential access to stable housing near jobs, public transit, and veteran-focused services—elements that can make transition smoother and then onward toward long-term stability.
Mixed-income appeal centers on cross-subsidies that can finance quality housing without sacrificing affordability. For veterans, the promise is clear: living among neighbors with diverse incomes can normalize seeking support, while still preserving the dignity of a secure home. The aim is not just better neighborhoods, but better outcomes for tenants—tenants who have served the country and deserve neighborhoods that honor that service.
Having to get creative is more than a policy choice; it is a societal commitment. Since 1996, Tennessee law restricted mandatory affordable-set-aside requirements, and the 2018 amendment tightened those constraints. Yet in a moment of crisis—pandemic-era affordability spikes and a nationwide reckoning with housing costs—the city’s recalibration toward unit-level, attainable housing offers veterans a tangible pathway to stable, dignified living.
As Chattanooga opened the program to applications in June 2024 and approved its first project under the new framework by September 2025, veterans may finally witness a housing strategy that treats shelter as a strategic resource—one that honors service, supports reintegration, and knits veterans more securely into the fabric of a city that values their contributions every single day.
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https://www.housingwire.com/articles/chattanooga-unit-based-pilot-affordable/
🎖️ www.Veteransss.us 🎖️ VetBiz Resources 🎖️ Veterans Support Syndicate
