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Housing authority says it acted to preserve 1,287 federal vouchers amid HUD deadline
Summary
Chattanooga Housing Authority general counsel Joe Kelly told the City Council the authority used emergency requests for proposals and bond inducement steps to preserve 1,287 units of Faircloth availability after new HUD guidance and a May 12 memo set an August deadline.
The Chattanooga Housing Authority took accelerated administrative steps this month to preserve 1,287 units of so‑called Faircloth availability, the agency’s general counsel told the City Council on July 28.
"It's either use it or lose it," Joe Kelly, general counsel for the Chattanooga Housing Authority, said in a presentation to the council. Kelly said a change in HUD guidance in 2025 (the agency's "Restore/Rebuild" approach) created the first mechanism to monetize Faircloth authority for new construction and that CHA's pool of vouchers translates, at conservative valuations, to about $340,000,000 in subsidy that could leverage several hundred million dollars in construction financing.
Kelly told council members that CHA issued an emergency request for proposals in April after receiving reports that the program might be wound down. He said the authority obtained bond inducements at recent hearings and submitted applications to the Tennessee Housing Development Agency (THDA) so it could secure conditional approval letters to take to HUD by the agency’s deadline. "If we do not do that, we will lose them and the $350,000,000 in investment," Kelly said.
Council members pressed CHA on communication problems and on whether the bond inducements were tied to specific project sites. Kelly said the bond inducements filed for THDA include physical addresses but that the vouchers themselves are portable and that THDA has indicated some geographic flexibility after HUD submission. He provided a list of preliminary addresses under consideration and emphasized that no bonds had been issued and no construction or land use approvals had been granted as part of the inducement step.
Kelly said CHA initially planned a phased, 10‑year rollout but compressed the schedule after HUD staff guidance and an administrative deadline forced faster action. He urged council members to engage in the next steps — rezonings, site plans, community meetings and regional planning reviews — that would follow the administrative filings. "We haven't committed the city or anyone to any specific course of action, but we've allowed ourselves to try to keep this value for the city," Kelly said.
The council did not take any formal vote on CHA's projects that evening; members asked for follow‑up materials and additional written guidance from HUD where available.
