Chattanooga, Tenn., has succeeded in bringing housing back to its downtown and its central city, just as it has succeeded in the rest of its downtown revitalization, because many interest groups agreed on the importance of the mission.

The effort began 20 years ago, and it wasn't the work of government or developers or social workers or philanthropists. Instead, they all shared in creating a demand for — and a supply of — housing.

Those leaders have made bringing housing back to the older parts of the city a priority for as long as riverfront and downtown revitalization have been priorities. In 1986, the same year RiverCity Co. was founded to lead the resurgence of downtown, Chattanooga Neighborhood Enterprise (CNE) was founded to encourage the return of downtown housing.

Bringing housing back to the depressed core of the city and revitalizing downtown have been intertwined ever since.

Invigorating downtown Chattanooga has created an atmosphere that invites new housing and creates jobs near potential housing. And the same players who helped restore downtown have helped encourage the development of housing along a corridor from the riverfront to the downtown office district to near-south-side areas.

♦Local foundations helped establish RiverCity and CNE, and they continue offering big financial incentives.

In one of the latest single-family-home developments, Jefferson Heights homes, “we have foundation grant support for the Art Moves program to entice selected artists to move into certain downtown neighborhoods. Down payment assistance of up to $15,000 is forgiven if they remain in the homes for five years,” said Jim Bowen, RiverCity vice president. “Additional foundation support has helped in historic restoration to save selected historic buildings and with grant funds for selected building facades.”

Through CNE, foundations have provided similar down payment incentives to, for example, hospital workers and police officers to buy downtown housing.

♦ City government coordinates improvements in sidewalks and street lighting, for example, with CNE and RiverCity development strategies. And though it doesn't provide direct cash subsidies to home buyers, Bowen said residential tax-abatement programs are another advantage for developers working downtown or on the near south side of town.

Bowen said one current tax-abatement plan “effectively freezes property taxes at the pre-development rate for a predetermined period of time — 10 years for new construction, 12 years for rehab of an existing building, 14 years for a Certified Historic Rehabilitation project. To date, only one riverfront development has used this program, and three have used it in the south-side neighborhoods.”

♦ Developers have seen population and real estate values along the city's riverfront, where the community's revitalization efforts have been most strongly concentrated, rise enough that developments there don't get much public assistance.

“Riverfront housing is now totally under its own power or straight up privately driven,” Bowen said.

CNE's record in housing development has been used as a national example by urban planners. According to information provided to www.Guidestar.org, a national database of nonprofit organizations, CNE has renovated more than 2,600 existing homes and built or helped build 1,500 affordable housing units. It also manages 800 affordable rental units.

In a 2000 analysis, the Fannie Mae Foundation said “the creation of CNE can be traced to local stakeholders who were concerned with the city's population decline and socioeconomic distress.”

In its first year, CNE's budget was funded 80 percent by government and 20 percent by private foundations. In 2006, about 60 percent of its $5.3 million in revenue still came from government grants, with about 20 percent each coming from donations and services and programs provided by the organization.

It uses that public funding to leverage much more investment. The group says it has used about $40 million in government and foundation funding to attract more than $190 million in private investment.

Population downtown grew 29 percent between 1990 and 2000, according to Chattanooga's Community Research Council, a nongovernmental policy analysis group. The population of Chattanooga as a whole grew less than 2 percent in the same period.

In the same decade, total housing units downtown increased about 8 percent to almost 5,000, and owner-occupied housing units increased 59 percent, from 833 in 1990 to 1,320 in 2000.

More housing downtown attracts more businesses and ensures year-round activity that doesn't fluctuate with the cycles of tourism. And that rebound in old, urban Chattanooga has contributed to a large increase in homeownership in the city, from 49 percent in 1990 to 55 percent in 2000, according to the U.S. Census. A 2005 estimate by the Community Research Council (calculated using tax records) pegged Chattanooga homeownership at 71 percent.

Helped by the prosperity and the low interest rates of the 1990s, homeownership in the U.S. increased dramatically in the same period — from 64.1 percent in 1990 to 67.5 percent in 2000 to 68.9 percent in 2006, according to the U.S. Census Bureau.

But Chattanooga succeeded where many other similar cities failed, by attracting many of those homeowners into its central city.