IDB hears CHA presentation on James A. Henry hub funding; formal vote deferred

The Industrial Development Board on June 2 heard a presentation from the Chattanooga Housing Authority about Phase 1 renovation and expansion of the James A. Henry hub at 1241 Grove Street and a request that the IDB allocate $1,500,000 from its Renewing Chattanooga account to support the project. Board members did not vote on the allocation; staff said a vote is planned for the next meeting.

Mike, identified in the meeting as director of real estate development at the Chattanooga Housing Authority, said the James A. Henry building — constructed in 1937 and owned by CHA — will house a community hub including Head Start classrooms, incubator space and a medical clinic operated by Erlanger. "Phase 1 involves the renovation of the existing school in addition to the health center," Mike said, and noted construction delays have pushed the expected opening from August 2025 into late 2025 with Head Start occupancy now anticipated in the first quarter of 2026.

City staff described the IDB fund balances that would be used to fill the CHA request. Sherita Allen, senior advisor for economic development and workforce development, said the Renewing Chattanooga account's current balance is $2,873,422 and the $1,500,000 request would leave a balance of $1,373,422. Allen also listed expected incoming funds to the IDB roughly totaling $1,348,037 from a mix of future economic development fees, a Chattanooga Neighborhood Enterprise reinvestment return, revolving loan repayments and other programs; staff provided a line-item breakdown in meeting materials.

Several board members asked whether use of IDB funds for a housing-related hub is permissible under state law. A board attorney identified in the transcript as Mr. Noblin told the board that Tennessee Code Annotated, as cited in the meeting, gives industrial development corporations authority to assist housing opportunity developments and noted the statute became effective May 9, 2024. A board member said they would still like a written legal opinion clarifying that the requested expenditure fits within the IDB's statutory and corporate purposes before a final vote.

CHA staff outlined project costs and partners, saying Phase 1's projected budget is roughly $19 million and that the city had offered $6 million toward the overall project, including the IDB's prospective $1.5 million. The CHA presentation also noted the community was the top-ranked Choice Neighborhoods Implementation Grant applicant and cited partner commitments from the Boys & Girls Club, Chattanooga Area Food Bank and Erlanger.

The presentation included discussion of historic construction challenges: CHA staff said asbestos had been removed prior to starting work and that remediation of foundry sand and installation of helical piers added about $2 million in remediation costs to the project. Staff said, after accounting for the city's contribution and other sources, they did not currently characterize Phase 1 as having a funding gap that would prevent opening but cautioned budgets could change.

Because the item was listed as a presentation, the board took no formal funding vote at the June 2 meeting. Staff said the allocation and a companion accounting transfer item would be scheduled for a vote at the board's next meeting.