Preservation Proposal #3: Provide stabilization mortgages that counteract the impact of increases in home values, defer increases in property tax assessments and stabilize tax payments for fixed-income and other qualifying homeowners
Return to 2019 Chicago Housing Agenda
While there is often an important focus on the impact that gentrification has on renters, the impact also extends to homeowners. It is easy to identify stories like one resident in North Center who paid $1,500 in tax assessment 28 years ago but now pays $10,000 a year.
As a more immediate example, there has been significant upward pressure associated with the 606 trail in recent years (The 606 is Chicago’s version of the Highline in New York City that converted the 2.7-mile elevated railroad Bloomingdale Line in to elevated greenway that opened in 2015 in Humboldt Park and Logan Square). In one instance that is all too common, a property sold for $121,000 in 2014 before the opening of the trail and $642,000 just two years laters. To long-time homeowners (especially those with fixed-incomes), these rapid increases can make their housing instantly un-affordable and speed the uncomfortable process of gentrification if they risk falling behind on tax assessments, are unable to adequately invest in their property or choose to sell.
In response, the city has taken a novel approach: provide $25,000 home-repair loans in the areas surrounding the 606 to low to moderate-income homeowners. These grants, administered by Neighborhood Housing Services, are forgivable after 5 years with no change in property owner and are designed to encouraged homeowners to stay and invest in their homes as opposed to accepting significant cash offers that the 606 has made commonplace.
This provides an creative approach that can be expanded.
Proposal #1: These loans from the Affordable Housing Opportunity Fund can be expanded to all areas that are actively experiencing rapid increases in housing costs, encouraging stability and investment in areas like the Near West Side, Pilsen, and Uptown. In addition, they can provide an important, proactive preservation policy for areas at risk of future gentrification like Woodlawn and South Shore where community members are, rightfully so, anxious about the effect of the Obama Presidential Library and the South Shore-Jackson Park PGA Golf Course.
Proposal #2: In addition to the home-repair loans, a new “stabilization mortgage” would be created that captures the increase in one’s home value and transforms it into another forgivable loan that directly reduces one’s annual tax assessment. The focus would still be on promoting stability with the homeowner choosing to forgo the benefit of the increased housing prices for a period of time of 5+ years in exchange for stability of lower tax assessments.
A property tax “freeze” has been underway in Philadelphia for several years for low-income seniors, and was recently expanded to more seniors through an increase in the eligibility threshold. These policies reflect cities explicit efforts to forge an urban redevelopment policy that, in the rebound from the Great Recession, balances the desire to attract youthful newcomers with increases in municipal investment with protecting long-time residents who bear the burden of skewed tax policy priorities. As proposed, the stabilization mortgage would not permit a homeowner from selling a property at any time, they would just be legally obligated to pay the loan back based on a sliding scale of how quickly they sold their home.
Preservation Proposal #2: Create a $5 million resident relocation fund for both publicly-owned and privately-owned affordable housing
Return to 2019 Chicago Housing Agenda
Relocation is a big deal in Chicago. A really big deal. Under the Chicago Housing Authority’s Plan for Transformation, tens of thousands of residents were relocated from high-rise public housing to permit the redevelopment of these sites into mixed-income housing that aims to physically de-densify and disperse the concentrations of poor families blamed for the social ills of Chicago’s high-rise public housing. While the question of root causes is, perhaps, more complex, it is indisputable that relocation is a complicated but necessary aspect of affordable housing.
Even the most resident-centered organizations can be caught in a bind when it comes to resident relocation. Buildings and units require maintenance and upkeep, and despite an niche industry focus on resident-in-place renovations, there are occasionally limits to what can be done without having 15-30 units to create a vacant floor or two in the time frame needed. It is also not easy to strike the appropriate balance between avoiding disrupting the experience of residents and deferring maintenance to the point where it poses even greater costs, or worse, becomes a danger to the life and safety of the residents (something not always so clearly foreseen). However, simply renovating units when they become vacant can create an appearance of neglect for long-term residents and furthermore, the low margins of affordable housing often makes it financially difficult to comprehensively complete all the needed work only through resident turnover (vs. a single capital project).
The advocacy and criticism of even the Chicago Housing Authority (CHA) in how it renovates senior housing renovations brings the situation front and center. Questions of who pays for moving expenses, how to manage inevitable changes in schedules, how much say residents have in the specific renovation plans of the owner, and other similar discussions only buttress how much easier it can for nothing to happen at all, even when nothing is in no one’s best interest. While one approach is to presume bad intentions, a more effective approach would be to view the controversies of relocation as an opportunity to invest in a manner that promotes making necessary improvements to properties to ensure their long-term affordability. The reliance of affordable housing on private ownership and public-private partnerships creates a disincentive for leaving any series of units vacant for any extended time, even when the economics of a renovation may otherwise suggest just that.
That reality is that while, yes, there is a robust Uniform Relocation Act and series of cascading provisions obligating a developer or landlord to strictly follow procedures in determining, informing, advising and relocating residents protected by relocation rights, these provisions frequently discourage extensive efforts to renovate housing for the residents they are designed to protect. Some programs, like the HUD’s Rental Assistance Demonstration Program designed explicitly to support building renovation while protecting tenants, have a an explicit contractual component of rehabilitation assistance payments that allow a housing authority or another landlord to temporarily relocate a resident (requiring payment of moving expenses and payments to offset any additional living expenses) and still receive associated subsidy to ensure the property does not suffer from the vacancy. This type of support must not be limited only to the subset of properties undergoing RAD conversions.
Proposal: Create a $5 million revolving resident relocation fund that would serve as a new source of operational support for landlords who make substantial improvement in rental property in Chicago in exchange for committing to a series of local and national best practices of how best to manage resident relocation. 75% of the funds would be earmarked for CHA, enabling it and other landlords to more aggressively improve it’s housing stock with the improved consideration of options to place residents in off-site housing when deemed necessary for their timely completion of the renovation work and in the best interests of the resident’s well-being. These funds could be used flexibly to cover costs related to the administration of relocation planning (providing notices, identifying alternative housing, relocation advisory services, submitting plans to city agencies), moving expenses and differences in rental expenses that residents may face. The fund will be funded by the existing Affordable Housing Opportunity Fund and it will provide loans in the form of a low-interest loans with payment schedules after the completion of the relocation and associated renovation activity.
Preservation Proposal #1: Re-Invigorate the Housing Preservation efforts within the Department of Planning & Development
Return to 2019 Chicago Housing Agenda
The current Affordable Housing Preservation Ordinance adds to state and Federal protections of federally-supported affordable rental housing in requiring proper notification to the Department of Planning & Development addition to tenants if there re plans to alter federal affordability restrictions. Part of the strategy around housing preservation acknowledges the sheer number of properties and units are under contracts between governmental entities and both non-profit and for-profit landlords that can expire, be terminated or sold even when there is compelling need. While the Chicago Housing Authority is the largest landlord in Chicago, according to the National Housing Preservation Database, there are over current affordable rental housing developments n Chicago. and, across the state, there are over 10,000 affordable rental units at risk of less within the next 5 years (2018 Preservation Profile). Through requiring notification, the Ordinance sought to bolster current building residents as well as qualified affordable housing providers an opportunity for them to purchase the property before another party.
In recent years, Planning & Development expanded to the approach to the Single-Room Occupancy Ordinance seeking to ensure opportunities for preservation of this, often non-federal, housing stock to be preserved.
Federal housing preservation has also evolved, most notably with the creation of the the Department of Housing & Urban Development’s Rental Assistance Demonstration (RAD). While most notable for facilitating the preservation of public housing through conversion to long-term Project-Based Voucher contracts, RAD also serves to provide various privately-owned federally-assisted or insured affordable housing a streamlined vehicle to assess identify capital needs and restructure it’s financial and subsidy structure for long-term
Housing preservation is a critical component of any comprehensive housing strategy, both in gentrifying communities where properties may be sold, in transitional neighborhoods where ensuring long-term stability is also important and in more distressed communities where subsidy programs can be leveraged as a catalyst for broader neighborhood improvements.
Proposal #1. Create an Housing Preservation Advisory Committee to aid the Department of Planning & Development in ensuring the effective preservation of affordable housing throughout Chicago. It will bring together leaders and representatives from multiple neighborhoods in Chicago, and help chart the new path forward for housing preservation in Chicago.
Proposal #2. Conduct public outreach to expand the list of Pre-Qualified Entities under Sec. 2-44-111 of the Chicago Municipal Code. Under the Affordable Housing Preservation Ordinance, this list of not-for-profit and for-profit developers (individuals, entities, and organizations) are kept by the Department of Planning & Development who must notify them when a property owner takes steps towards eliminating or changing it’s affordability restrictions. The Department & Planning Development would, also, create a more publicly-accessible process through which the new developers and owners could apply and publicize the list.
Proposal #3. Re-tool the strategy of the DPD’s Housing Strategy to more pro-actively use public and community data to identify and track properties that may become affordability risk or for which there are important opportunities for long-term preservation, like through HUD’s Rental Assistance Demonstration. This should include all SRO properties. Once identified, owners can be provided technical assistance for feasibility analysis and other forms of support.
Housing as a Platform Proposal #1: Ensure all tenants are treated fairly by the legal system when facing eviction
Return to 2019 Chicago Housing Agenda
There is a far greater need for housing assistance than there are resources, so many in need are not served by traditional housing programs and the programs created to increase their individual outcomes. Out of more than 300,000 poor families in the Chicago metropolitan area in the 2017 US Census American Housing Survey, over 180,000 (45%) receive no type of government assistance for housing. In addition, over 200,000 (66%) are paying more than what constitutes an affordable rent (greater than 35% of their income). Tenants struggle to keep up with their rental payments and they interact with evictions and they remain locked in poverty, as has been spotlight by the best-selling book Evicted chronicling the lives of low-income families experience eviction in Milwaukee in 2008-2009. Protests have erupted just recently regarding the the predatory practices by one of Chicago’s largest landlords, Pangea, who often uses the site of eviction proceedings at the County Circuit Court to get tenants to agree to expensive payment plans.
Regardless of the neighborhood, housing burdens have a direct connection to perpetuating poverty. Even a moderate housing cost burdens lead to a reduction on child enrichment activities and can lead to negative impacts on children’s cognitive development (Newman and Holupka 2014).
As is the case in many communities across the country, the stability of low-income households and children in Chicago is jeopardized by the prevalence of eviction and lack of protections. The Chicago Reader analyzed Chicago eviction cases in 2016 and found that just 12% of more than 19,300 Chicago tenants facing evictions were represented by attorneys at any point in their process (Chicago Reader, September 14, 2017).
Proposal 1. In order to improve housing stability for the significant portion of low-income renters who do not benefit from subsidies, institute the requirement of legal counsel during eviction proceedings for indigent tenants and expands eviction legal services through the city funding.
Proposal 2. Create a new public database to track eviction proceedings initiated by landlords, along with other related city or court records. The prevalence of evictions have a such a destructive impact of low-income renters in Chicago and elsewhere, so better tracking will help identify it’s impact.
Proposal 3. Create a mandatory city inspection before any eviction can proceed, to be reported in the aforementioned database. This action would improve code enforcement through increased inspections, and better protect building residents. Minor code compliance issues need not drive the eviction, but they will serve as important considerations in the process.
Housing as a Platform Proposal #2: Dismantle barriers for ex-offenders to get housing across the city
Return to 2019 Chicago Housing Agenda
Studies frequently show that housing is not just a challenge in welcoming citizens back to our communities, but access to affordable housing also reduces recidivism and is an important public investment. In 2016, the number of returning citizens in Chicago was an estimated 21,000 with parolees returning primarily to four zip codes in the city. This is a prime example of why all types of housing must become more welcoming (City Lab, August 10, 2017).
A recent study by BPI and Roosevelt University found that 74% of ex-offenders were denied a rental application and that many of the 26% who were not had not even tried to find housing (BPI Report, No Place To Call Home, 2018).
In large part, the movement to bar individuals with criminal record stems from steps taken by the Federal government in the 1990s, and though steps have been taken at the Federal to improve the policies, it is up to local governments to complete the movement back to equitable and smart policies for returning citizens. In this vein, Chicago should create a local fair housing ordinance creating a uniform standard for considering criminal records in the leasing process for all market-rate, public, subsidized and affordable properties.
Proposal 1. Outside of two lifetime bans (manufacturing or production of methamphetamines on the premises of federally-assisted housing and sex offenders), HUD affords local Housing Authorities discretion in the three general categories for criminal activity that can disqualify someone to get housing: drug-related criminal activity; violent crime activity; and other criminal activity that may threaten the health, safety, or right to peaceful enjoyment of the premises by other residents or anyone residing in the immediate vicinity. These should become the standard for all how landlords should consider criminal records in making leasing decisions (including the Chicago Housing Authority). With the decriminalization of cannabis, all public and private landlords in Chicago should no longer disqualify applicants based on past criminal activity resulting from it’s usage.
Proposal 2. All public and private landlords in Chicago should rely on a uniform “lookback” period of no more than 5 years in considering criminal activity. Policies should be implemented to encourage the consideration of activity within 5 years.
Proposal 3. If an applicant is participating in an one of a number approved counseling programs, landlords should be encouraged to be more lenient than the 5 year maximum look-back period permits. This progressive approach has already been incorporated into the Administration Plan of the CHA Housing Choice Voucher Program as a result of the successful reentry pilot program at the request of a coalition of local organizations and serves to promote community-based services that can help ex-offenders in finding and maintaining housing as well as other facets of a successful transition home (City Lab, August 10, 2017).
Housing Integration Proposal #2: Target housing discrimination with a new focus and strategy
Return to 2019 Chicago Housing Agenda
Though not focused on Chicago where source of income discrimination is illegal but still an issue, a recent pilot study by the Urban Institute found denial rights for housing choice voucher applicants of as low as 15% and as high as 78% in Fort Worth Texas, and found higher denial rates in low-poverty communities (Urban Institute Pilot Study, August 20, 2018). Housing discrimination continues to be an impediment to mobility for households (for many minority and disabled households and individuals, not just those with vouchers) and municipalities like Chicago should step up in the void left by the retreat by the Department of Housing & Urban Development to the Affirmatively Furthering Fair Housing rule under the leadership of Secretary Ben Carson and President Donald Trump.
The “gold standard” of combating discrimination is “paired testing” where auditors go (one white, one minority) and gather direct evidence of unequal treatment. Though this approach has suffered cutbacks since its origination in Chicago in the 1960s, it should be continued and combined with an approach centered on targeting offenders based on data. Indeed, the recent lawsuit file by HUD against Facebook shows the extent the extent to which the advent of big data (and changes in how properties are marketed) can enable a more targeted approach to identifying housing discrimination.
Through the restructuring of the Chicago Fair Housing Ordinance, Chicago should set an example by embarking on re-establishing the importance of vigorously enforcing fair housing through the reliance of the old and new methods.
Housing Integration Proposal #3: Step up planning efforts to better deliver family housing across all affordability levels
Return to 2019 Chicago Housing Agenda
Both the current and previous Five-Year Housing Plans of the City of Chicago acknowledge something unfortunately known by far too few: new units being constructed are predominantly studio and one-bedroom units while he city has lost 20,000 two and three-bedroom units between 2010 and 2016 (Chicago’s Five Year Housing Plan: One Chicago, 2019-2023; Chicago Five Year Housing Plan: Bouncing Back, 2014-2018)
Though the Five Year Plans acknowledge the problem, they do little from the standpoint of planning to address it, taking a more passive strategy of effectively relying on the market to correct itself. If housing of adequate size needed by families (two-bedrooms and larger) isn’t getting built in Chicago, it’s because the city is allowing the market to be dominated by the construction of housing targeting young professionals looking for studio and one-bedroom apartments.
Not producing sufficient family housing is counter the Fair Housing Act and should be stopped. Furthermore, when projects covered under the Affordable Requirement Ordinance disproportionately deliver smaller-bedroom units, they fail to match the true needs of families. 68% of families below the poverty line in Chicago have 3 or more people in their family (2017 American Community Survey, US Census)
Proposal 1. Revamp the Housing Plans to clearly identify the existing family housing stock (two, three and four-bedroom apartments) and to set specific targets for family housing. This should be done at the community area and city level.
Proposal 2. Ensure that each year’s city project approvals be consistent with the housing plan. If a the plan calls for 200 studio and 1BR apartments over 5 years in a community area and 400 units of 2BR and larger, this should be a direct consideration in whether a project proceeds or not. Projects consisted with Chicago’s housing needs should and would be prioritized.
Housing Integration Proposal #1: Expand and re-direct the City’s Affordable Requirements Ordinance to produce more units overall, more integrated developments and better serve families.
Return to 2019 Chicago Housing Agenda
Recent research has bolstered the positive impacts of moving children from low-income . Children who were younger than 13 years old, who moved to a low-poverty neighborhood had significantly higher earnings by their mid-twenties. Increasing access to low-poverty community with quality schools has long been an important strategy in promoting equity in our society (Chetty, Hndro & Katz 2016)
A centerpiece of how modern, progressive cities accomplish this is through inclusionary housing policies that link development of affordable housing to new development of market-rate residential housing. Chicago’s Affordable Requirements Ordinance has been an important tool, but needs to be expanded and revised to more effectively addressing the need and create more affordable housing in more places.
Proposal 1. Expand the PILOT areas created under the 2017 Ordinance to more areas required to have 15% of units build-onsite or 20% built in the same neighborhood. These would add to the existing PILOT locations of Milwaukee Corridor, Near West, Near North (and Pilsen as of Jan 1, 2019). Proposed “PILOT” areas include: South loop, Lincoln Park, Hyde Park, Logan Square, Woodlawn and any residential development city-wide on land previous publicly-held lands.
Proposal 2. Expand the in-lieu fee to $350,000 per unit when studio and 1BR units are not built on-site everywhere under the program and $300,000 per unit for all 2BR units and above. This should intentionally serve as an means to promote construction of more family housing at all levels of affordability.
Proposal 3. Restore ARO to the concept of “value capture” that capitalizes on the byproduct of previous public investments (ones that created today’s hot markets and land values) and curtails the over-reliance on other public subsidies. Simply-put, this seeks to normalize the view within the local market that ARO projects create affordable housing as a return on previous public investment. In practice, this would mean that ARO projects that benefit from other direct government subsidy programs (LIHTC, Project-Based Vouchers, etc) will be required to deliver twice the requirement for affordable housing.
Proposal 4. Require units created under the ARO to have the same bedroom composition of the units in the project that triggered, regardless if they are on-site or completed nearby. It is widely recognized that lack of building family units is not in the interest of affirmatively furthering fair housing, and it currently a major flaw in the ordinance since inception.
Proposal 5. Improve transparency and reporting of projects covered by the ARO. As recommended by my own analysis of the Quarterly Affordable Housing reports provided by DPD on the ARO, each projects covered by the ARO should published in the City of Chicago Data Portal along with the overall unit requirement (not just the units proposed), the associated in-lieu payment fee, the bedroom sizes and general inventory of challenges and successes in the programs. The City of Cambridge, Massachusetts produces such a report that could serve as an example for Chicago.
Proposal 6. Expand the ARO to require linkage payments from commercial and office developments over a reasonable size threshold (similar to how the ARO applies to projects with more than 10 units). These projects increase the demand for housing and should also be held responsible for funding affordable housing through a $3-$7 per square foot of construction payment into the appropriate affordable housing fund. Boston has implemented this policy for several years, recently increasing the affordable housing linkage fee to $9.03 per square foot of construction and $1.78 per square foot of job training.
Housing Redevelopment #2: Improve market viability in low to moderate-income communities through procurement and direct investment to support Opportunity Zone eligible communities and businesses
Return to 2019 Chicago Housing Agenda
The Tax Cut and Jobs Act is, is not an ideal example of public policy but it’s an opportunity that will be taken advantage and will likely lead to changes in local investing. It lacks the governmental oversight and skews to the benefit of investors. While it is not guaranteed to create a socially equitable benefit to revitalizing communities, the program will be a fixture of the federal tax code for years to come and has no budgetary limitations like many other federal programs. It represents a unique opportunity for local public policy to support and re-direct Opportunity Zone investments in a manner that will have such an impact (Tax Policy Center).
Opportunity Zone funds can make equity investments in businesses, real estate and business assets. By pairing additional incentive for Opportunity Zone investments with community economic development components missing from the federal legislation, Chicago can increase the likelihood that the local impacts are most consistent with local priorities (Opportunity Finance Network fact sheet).
Proposal #1: Create explicit contracting incentives for firms beyond those that exist for Section 3 Businesses, MWBEs and those employing substantively diverse workforces to increase support for those businesses that also meet the criteria for Opportunity Zone investments.
Proposal #2: Create a Qualified Opportunity Zone fund that will attract Opportunity Zone investments (a vehicle for investors to deposit capital gains to defer payment for a period of time and reduce the tax owed) and combine the benefits of Community Reinvestment Act-minded financial institutions. By matching these private funds with a 1:1 ratio, the fund can re-position properties in Opportunity Zones at a lower cost and rely on the completion of Section 3 Job Opportunity Contractors and MWBEs.
Housing Redevelopment Proposal #1: Expand efforts to re-position residential properties through code enforcement and community receivership
Return to 2019 Chicago Housing Agenda
Neighborhoods that struggle with disinvestment and vacancy also struggle with violent crime. Families in high-poverty census tracts experience serious violence crime at a rate of 15.2 out of 1000 compared to 4.5 out of 1000 for the census tracks with the highest income (Heartland Alliance 2017).
This represents an opportunity build on what has working and expand it through greater local attention and funding, namely the combination of targeted code enforcement of vacant properties in and the reliance of an expanded network of community receivers.
The Trouble Building Initiative is a program of the city that works to identity properties and brings city agency attention in compelling landlords to rectify issues negatively impacting neighbors and the community surrounding (HUD Case Study)
The Micro-Markets Recovery Program was another program by the City that identified community-based housing providers, financial services agencies and technical assistance providers who were hired to take on the role of “community stewards” and act on the community’s behalf in (NHS Chicago Micro Market Recovery Program; Next City Micro-Market article 2016)
Proposal: The combination of these efforts, though most prominent when the city benefited from HUD Neighborhood Stabilization Program and NSP2 funds to invest in specific represented qualifying census tracts as a means for climbing out of the Great Recession, reflect a series of creative policy around community revitalization that should serve as the basis of a bolstered Mayoral effort. They have even resulted in additional efforts to train local community receivers to act in a similar role in re-positioning local properties and creating local ownership and entrepreneurship. These have been sponsored by the likes of the Chicago Community Loan Fund and the Community Investment Corporation, as well as the Dearborn Realtist Board.
Policies should also be advanced that expand the technical assistance to support these efforts, provide mini-grants and loans to support these local efforts.
Urban Vitals?
The launch of my Urban Vitals blog coincides with my journey to gaining a graduate degree in city planning. Though at the ripe age of 24, I have sought intently to make productive use of my collegiate and professional career to garner a variety of experiences in the sphere of “public service.” This is blog is my conscious effort to collect and articulate my thoughts about cities, their inhabitants, my learning process and the academic and professional field of Housing, Community and Economic Development (HCED) that I dedicated my life to in March of 2010.
