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.
