Local governments across the United States are abandoning traditional housing assistance programs in favor of directly investing in construction to create permanently affordable homes. This marks a significant shift from decades of relying on tax credits, vouchers, and incentives aimed at private developers.

Invest Chattanooga, led by Matt Bedsole, has helped seed housing funds in several cities as a model for this new approach. The strategy involves municipalities taking equity positions in development projects rather than providing subsidies after completion, ensuring affordability restrictions remain in place long-term.

The traditional system often resulted in affordable units reverting to market rates once initial compliance periods ended. By investing directly in construction, cities maintain control over pricing and can keep housing affordable for generations rather than just during compliance windows.

Chattanooga's model shows cities can maintain affordability for decades by owning equity in developments rather than writing checks to private builders, potentially reducing long-term spending on rental assistance.