The Return for These Investors Isn’t Money, It’s More Affordable Housing

A few months ago, Matt Bedsole got a call from two real estate developers asking for his help. Their plan to build a four-story apartment complex in Chattanooga, Tenn., had a financial hole that no backer seemed eager to fill. The developers needed $8 million. Would Mr. Bedsole be interested in stepping in?

Mr. Bedsole is not a normal investor. He is the chief executive of Invest Chattanooga, a fund set up by the city of 200,000 to invest in local apartment projects. Unlike private equity firms — the main backers of new construction — he judges deals not solely on their financial return, but also on how much housing they can deliver the city.

The apartment complex cleared that hurdle. It called for 170 new units that would replace a self-storage center ringed by barbed wire, in a gentrifying part of the city. But Mr. Bedsole had terms. In exchange for the $8 million investment, he got a 51 percent stake in the building and an agreement that 30 percent of its units be priced below market rate. The developers said yes. They closed the deal over pastrami sandwiches.

“Money is tight, and developers don’t have a ton of options for capital right now,” Mr. Bedsole said in an interview. “We have it, but we want affordable units in the deal.”

Article source: https://www.nytimes.com/2026/05/04/business/economy/affordable-housing-return-on-investment.html