Chattanooga Times Free Press | BY ELLEN GERST
Expecting to lose nearly $8 million in federal money for a community hub at Chattanooga’s Westside, officials made their case Monday for receiving $1.5 million from a city board to help replace that funding.
That money, plus $4.5 million proposed in Mayor Tim Kelly’s capital budget, would make it possible to complete the first phase of renovations at the James A. Henry building, Betsy McCright, executive director of the Chattanooga Housing Authority, told board members.
“Right now, we don’t feel like we have a funding gap for Phase 1,” she said.
Members of the Industrial Development Board are set to vote on the proposed funding at a July 7 meeting.
Board member Jimmy Rodgers said he wanted to be sure that the board, meant to support industry and economic development, was the best funder for the hub.
“I don’t know if this corporation was organized to help housing development, neighborhood development, that kind of project,” Rodgers said at the meeting. “I don’t know that I’ve encountered this kind of thing before.”
City attorney Phil Noblett told the board it was within their powers. Last year, the state passed a law making housing projects eligible for industrial funds, Noblett said.
The money would come from the board’s Renewing Chattanooga fund, meant to aid economic development in disinvested communities or rehabilitate blighted or vacant properties, according to a board agenda.
“We don’t want to be a piggybank for every project. It’s going to be tough economic times. We’re going to have to start making hard decisions,” board member Melody Shekari said. “But I was also driving over here thinking we have this money in the bank that hasn’t been spent. We don’t really have a plan for what we want to do with it.”
The $1.5 million is more than half of the money in that fund, said Charita Allen, a city adviser for economic and workforce development. But the fund should receive another $1.3 million by the spring of 2026, Allen told board members, from a combination of development fees and loan repayments.
Phase 1 of the project will cost an estimated $19 million, McCright told board members. The $6 million in requested local dollars would put the fund at around $20 million, just over the estimated cost.
“We had a bigger buffer when we started,” McCright said. “Now we’ve got a little buffer.”
The discovery of contaminated at the site has cost $2 million, including remediation and removal, she said.
The project, when completed, will include a medical clinic to be run by Erlanger, classrooms and an incubator space, McCright said.
“It’s tailored for the neighborhood, open to the community,” she said.
The first phase is expected to finish by the end of the year, McCright said. That’s delayed from August, when officials hoped to open the hub with 117 seats for students in the Head Start program in time for the school year.
FEDERAL FUNDING
Rep. Chuck Fleischmann, R-Ooltewah, had requested $5 million for the Chattanooga Housing Authority in last year’s federal budget, which was never approved because the budget did not pass. City officials are again requesting that money in the upcoming federal budget.
Another $2.9 million from the U.S. Department of Energy would have funded projects to make the site a “community resilience hub.” It seems that money won’t come through during this first phase, McCright said.
The federal employees overseeing that grant told city officials in April they were taking buyouts and leaving their jobs, McCright said.
