A tiny solution to a big problem

Martina Guilfoil, President and CEO, Chattanooga Neighborhood Enterprise

Challenge: While the need for affordable housing continues to grow in Chattanooga, Tennessee, government subsidies continue to dwindle. Homeownership is at an 18-year low and a large percentage of lower income households are spending more than 30 percent of their income on housing.



The shortage of affordable housing is on the rise in Chattanooga, Tennessee, but government subsidies continue to fall. Homeownership is at an 18-year low and a large percentage of lower income households are spending more than 30 percent of their income on housing costs. In addition, the neighborhoods of Highland Park and Ridgedale suffer from years of disinvestment and blighted buildings. In an effort to spur revitalization in those neighborhoods, Chattanooga Neighborhood Enterprise (CNE) created a cottage home prototype as an affordable housing option.

Property values in the Highland Park and Ridgedale neighborhoods of Chattanooga, Tennessee have declined since the 1960s when Highland Park Baptist Church demolished blocks of houses to build Tennessee Temple University (TTU), a small seminary. Initially the seminary brought jobs and demand for rental housing into the area along with institutional buildings and parking lots, but as the neighborhood declined, the church lost members and school enrollment declined. In the 2000s the church moved its campus to the suburbs, leaving blighted vacant properties and empty lots.

CNE purchased 34 vacant parcels from TTU with the goal of rebuilding the fabric of the Highland Park and Ridgedale neighborhoods and spurring rental and homeownership development. CNE's work is revitalizing both areas into safe, affordable and inclusive neighborhoods on par with other urban neighborhoods in the city. The result is renewed market interest in forgotten neighborhoods.
Our organization has a history of introducing new housing types as part of a neighborhood revitalization strategy. In the early 2000s, CNE built the first townhouses in the Cowart Place neighborhood and the first narrow-lot houses in the Jefferson Heights neighborhood. Both of these housing types were designed to add density to offset increasingly expensive land costs and offer a smaller housing product. Smaller units are more affordable and additional density provides economic development for emerging neighborhood businesses.

The property acquisition in the Highland Park and Ridgedale neighborhoods gave us an opportunity to create another new housing type in Chattanooga: the "tiny house." Tiny homes are small, well-designed homes that can be built at a lower price point due to their smaller size. The concept of tiny houses has generated interest in Chattanooga and elsewhere, so we decided to build one in the Ridgedale neighborhood. The strategy had three goals:

1. Create a house for a lower income person.
2. Establish a homeowner in a neighborhood where rentals dominate.
3. Up the cool factor of the historically underserved neighborhood by building the very first tiny home in Chattanooga.

After researching the phenomenon of tiny homes, CNE developed a 532-square foot cottage on a small truncated gravel lot. Zoning restrictions do not permit tiny homes on wheels so the house was built on a foundation, which means the homeowner owns both the house and the land, which could appreciate in value. The cottage has one bedroom, a full bath, a big kitchen and open dining and living space, 10-foot ceilings and a fenced backyard. The prototype, a small, well-built home that can be sold at an affordable price due to its smaller size, has created interest in the Chattanooga community as an alternative form of housing.

The home's sales price is $79,999, which makes the home affordable for someone earning $12 an hour. As public funding for housing shrinks, CNE has created an alternative way to provide housing for people earning 60 percent of the area median income. Building smaller homes is one of the best ways to meet that need, so we plan to build a cottage home community in the Ridgedale neighborhood to spur more investment in the area.

CNE learned two lessons through this process. First, even the cool factor of a tiny house can't overcome a depressed neighborhood by itself. Building the real estate market where there has been years of disinvestment takes more than a single house. We hired a professional urban designer to design a community of small cottages adjacent to the first cottage. The cottage community will create seven new units of affordable housing and provide outdoor space to promote community for residents.

CNE also learned that it needs to differentiate the cottage product from a tiny house on wheels. Shows like "Tiny House Nation" feature tiny homes on wheels that range from basic to custom cabinetry throughout. We worked with a local homebuilder to build the cottage efficiently and affordably with design standards to fit any neighborhood.

Ultimately, these homes will be an innovative solution to revitalization and affordable housing. These cottage homes are a market-based approach to affordable housing that the private sector can produce without government subsidy.