CHATTANOOGA, Tenn. (AP) Chattanooga is eyeing a proposed $40 million housing and commercial project as a way to add homes and connect the city’s downtown and waterfront areas.

A Nashville development company plans to start working with the Tennessee Valley Authority to gain permits to kick off construction of the project that would add 70 cottage-style homes and 200 apartments.

Evergreen Real Estate official Aaron White told the Chattanooga Times Free Press the project would resolve the issue of Chattanooga’s downtown being undersupplied with housing.

The city’s planning panel gave a thumbs-up to the project recently. A rezoning of the 11-acre area from manufacturing to central business still needs to be approved by the city council.

If that happens, White said, construction could start next spring on one of the city’s largest-ever riverfront mixed-use projects.

Downtown’s riverfront underwent an array of new development over the past couple of decades, but the Great Recession sharply slowed additional projects.

Chattanooga auto dealer Tim Kelly, who owns nearby Riverfront Parkway property, said the area around Evergreen’s project is downtown development’s next frontier. Kelly said a proposed extension of the Tennessee Riverwalk through the site links Evergreen’s project to Ross’s Landing and the rest of downtown.

“The Riverwalk is a catalyst,’’ he said.

White said the Evergreen project would “integrate’’ with the $80 million Cameron Harbor plan put forth by Chattanooga developer Eugene “Buck’’ Schimpf on land next door. Schimpf has proposed new townhouses, condominiums and boat docks.

Evergreen has a contract with Vulcan Materials to buy the site. White said the cottages would go up in phases, with the single-family homes sitting about 80 to 100 ft. from the Tennessee River’s bank.

Evergreen is proposing that the cottages be two or three stories high and range from 2,000 to 2,500 sq. ft. with two-car garages.

Behind the cottages would go two four-story apartment buildings. The units would range from one to three bedrooms. And there’s room for another structure that could hold retail space and a parking garage.

White said he likes downtown Chattanooga for a variety of reasons, noting that many of its major employers have their offices in the central city. Also, he said, downtown has designated access to the river, such as that provided by the 21st Century Waterfront Project.

“We see that we’ll be one of many [developers] building downtown,’’ White said.

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