Author Archives: Rance

Woo NHS of Chicago to establish a greater presence

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This recommendation also calls for the invitation and support of Neighborhood Housing Services of Chicago to develop a field presence in Woodlawn. As was discussed in Chapter 5, much of the missing home-ownership infrastructure stems from the fact that (in the void created by Shore BankÕs demise) NHS only has a field presence in a subset of Chicago neighborhoods that does not include Woodlawn. Whether it is home-ownership counseling, marketing of home purchase and acquisition & rehabilitation loans, technical assistance for home renovation or housing preservation, NHS has a successful track record of providing these services for two- to four-unit buildings in other neighborhoods. The Small Building Initiative could enter a partnership with NHS whereby a NHS employee is subsidized by the Small Building Fund and spends 50% of their time working out of Woodlawn in space provided by POAH and eventually the Woodlawn Resource Center.

Freeze incremental property taxes for residents who don’t move

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A second more creative approach would convert the incremental property taxes into a lien on the property that would be deferred each year the homeowner continues to occupy the residence, but paid in full upon the sale of the home or discontinued use as a primary residence. The lien would be assessed by Cook County and found in a basic title search. This would enable occupancy of an owner-occupied two- to four-unit home by the same owner-occupants and tenants despite increases in neighborhoodÕs property values. The deferred lien, by design, also serves as a hedge against purely speculative rises in property values. If a household benefits from the inflated prices in selling their home, they pay the associated property taxes. If the values are not sustainable, as they were prior to the housing bubble, a household that does not move will face a predictable amount of property taxes that will prevent speculation from fueling vacancy.

Expand TIF-NIP renovation lending in both TIF districts

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While supporting new homeowners is one focus, another focus must be allowing current owners to upgrade their homes. Supporting their ability to refinance allows them to invest in their buildings as well, further upgrading the neighborhood. Several options exist. First, homes can be refinanced through the 203(k) loan program. Second, the TIF-Neighborhood Improvement Program has begun or will soon begin to provide renovations for existing homeowners covered by the West Woodlawn TIF, up to $22,500 for a 4-unit building, with up to 30% available for interior repairs that are health and safety related. Finally, NHS of Chicago also provides renovation loans. Facilitating greater access requires publicizing these existing opportunities, and possibly leveraging the TIF-NIP program with additional funds.

Monitor and support Sub-Area FMR Demonstration

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The second approach revolves around the Small Area Fair Market Rent demonstration discussed in Chapter 4. If adopted, this program would reduce the maximum rent any landlord could charge a Housing Choice Voucher recipient in Woodlawn. It would also increase the rent a landlord could charge in a higher-rent area within the region, creating more rental opportunities for assisted households. If successful, this program would work towards the same objective as the first approach, Unlike the first approach, however, it would not as effectively allow apartment and management quality to be a source of differences in rent, since the maximum rent will be reduced for all landlords regardless of quality. Less discretion would give way to a more uniform approach to reducing the incentives for targeting voucher holders.

Shift dominant strategy from demolition/new construction to rehabilitation

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The last recommendation calls for a clear shift in the redevelopment strategy of demolition and new construction (embodied by the both of the Columbia Point phases) to renovating vacant buildings. With the removal of tax delinquencies and municipal liens, not only would it be environmentally more sustainable to renovate, but it would also be less expensive and keep housing costs lower and minimize displacement through the continued provision of modest housing.

Fewer non-professionally managed two- to four-unit buildings that are 100% occupied by housing choice voucher recipients and/or exhibit weak property management

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Advocacy around the apparent sub-market of landlords targeting Housing Choice Voucher recipients should affect the behavior of these landlords without restricting the residential mobility of households. There are three approaches to this that can be used in tandem or pursued separately.

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Establish relationships with local acquisition/rehab lenders and particular lenders of 203(k) loans

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In addition, as part of the marketing of the Small Building Initiative, the marketing agent should establish relationships with Chicago lenders that provide acquisition and rehabilitation loans, as well as 203(k) lenders, to understand how to appropriately broker or otherwise prepare prospective buyers to successfully qualify for loans. Understanding and researching each individual lender requires consideration of the following elements:
¥ Is the lender a reliable entity and are their rates reasonable?
¥ How do they use the 203(k) program and other loans for two- to four-unit buildings?
¥ Do they exercise the 10% bonus on appraised property values?
¥ What protocols exist for how they count rental income in approving mortgages?
¥ Are there different reserve or down payment requirements specific to two- to four-unit buildings?
¥ How best can an intermediary support the rehabilitation/acquisition process?
¥ Do they loan to non-profits using the 203(k) program to create affordable rental housing?

Require all purchases of two- to four-unit buildings affiliated with the Small Building Initiative to get landlord training certification

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A third form of technical assistance is landlord education and training for landlords of two- to four-unit buildings in Woodlawn. This training is important because margins can be very tight with this type of housing. Community Investment Corporation provides such landlord education and certification, which applies to landlords of both multifamily and two- to four-unit buildings. Certification for completing this program is required by the Neighborhood Housing Services of Chicago for their CityLIFT program to assist homeowners in purchasing two- to four-unit buildings (NHS of Chicago, 2013c). In line with this practice, the Initiative should have the blanket requirement that any homebuyer or landlord that is assisted with funds from the Small Building Initiative must successfully obtain a certificate of completion from CICÕs landlord training.

Develop "lot next door" program

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Because the presence of vacant land has harmful effects, the Land Bank should develop a next-door lot program that builds on the existing efforts of Block Clubs and the Homeowner Association. Building owners would be given long-term leases for property if they maintain them as yards or develop them into parking lots. This might even include an option to buy the lot at an agreed upon price after market conditions have improved significantly.