2009-2013 Affordable Housing Plan

8/8/2019 2009-2013 Affordable Housing Plan

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Chicagos Five Year Affordable

Housing Plan for 2009-2013

City o Chicago

Richard M. Daley

Mayor

Chicago Department

o Community Development

Christine Raguso, Acting Commissioner

Accepting the Challenge


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Tank you or your interest in the City o Chicagos Five Year Aordable Housing Plan, Accept-

ing the Challenge.

Te Five Year Aordable Housing Plan draws on the expertise o people amiliar with every

aspect o urban housing, including not-or-proft developers and academics, builders and

oundation executives, lenders and borrowers, landlords, and tenants. Tese are the people who

make up the housing community in our city, and they have helped make Chicago a national

leader in aordable housing, investing more than $4 billion over the last two decades through a

variety o innovative programs.

Te success o the Five-Year Aordable Housing Plan, and the ongoing health o our city and its neighborhoods, requires

a coordinated eort. Along with housing, we must address issues such as transportation, economic growth and work orce

development to create and preserve healthy communities and encourage continued community development.

Te leaders o Chicagos housing community share a commitment to decent, aordable housing or people o every

age, income and background. Aordable housing is a critical ingredient in maintaining and strengthening the outstanding

quality o lie our residents have come to cherish.

In todays challenging economic times, it is more important than ever to preserve and expand the housing options or

all Chicagoans. With this Five-Year Plan as a guide, I am confdent we will continue to lead the nation in providing

high-quality aordable housing or our citizens.

Sincerely,

Richard M. DaleyMayor

Letterrom theMayor


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Two Decades o Progress

Over the last 20 years, under the leadership o MayorRichard M. Daley, Chicago has developed an interna-tional reputation not only as a great city to visit and dobusiness, but also as a great place to live, work and raise aamily. Once considered the crossroads o the United States,Chicago is now recognized as a global city, the center o theNorthern Hemisphere.

Chicagos visitors are dazzled by Millennium Park, the lake-ront, the dynamic downtown, the fowers and greenery andthe wide array o cultural and rec reational activities.

But those who delve deeper come away equally impressed bythe citys neighborhoods and the excellent quality o lie theymake possible.

As New York Times columnist David Brooks wrote in 2006,No American city has progressed as much in the past twodecades as Chicago. Its richer, cleaner, more livable . . .

Chicagos renaissance didnt just happen. It resulted romthe willingness o the public, private and not-or-pro-it sectors to adapt to change, to accept challenges andto work together on behal o policies that benet theentire city.

Chicago has survived by repeatedly reinventing itsel, said aWall Street Journal writer. As smokestack and meat-packingindustries shut down or moved elsewhere, Chicago adapted

to the increasingly global economy by attracting new indus-tries that processed inormation rather than iron or animalparts. Once considered the center o the Midwest, Chicago hasnow become the center o the Northern Hemisphere and one othe top ten global cities, according to rankings compiled byForeign Policy Magazine, A.T. Kearney and the ChicagoCouncil on Foreign Relations. Their study placed Chicagoeighth in the world among global cities, in rankings basedon the amount o business activity; human capital, includingethnic diversity and education; exchange o inormation withthe rest o the world; number and quality o cultural activities;and the citys involvement in international policymaking anddialogue.

These new industries attracted well-educated young pro-essionals and managers, many o whom preerred to live inthe city, close to work and to the cultural and recreationalopportunities the city has to oer. In the 1990s, downtownChicago became the citys astest-growing neighborhood, with4,000 to 5,000 new housing units each year. High-priced con-dos and town houses sprang up in close-in neighborhoods such

as Bucktown, Wicker Park, West Town and Lincoln Park.

This market-driven residential building boom made Chi-cago the envy o cities across the nation, many o whichcontinued to lose jobs and residents to the suburbs and watchtheir economies slide downwards.

But the growth in high-end jobs and housing tells only parto the story o a great city. Chicago is determined to be a citythat works or people o every age, income and background.It welcomes new immigrants seeking their piece o the Ameri-

A Global City

A Great Home Town

2 Aordable Housing Plan or 2009-2013


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Aordable Housing Plan or 2009-2013 3

can dream. Its population, like that o the rest o the nation,is aging, and it wants its seniors to be able to remain in theneighborhoods that mean so much to them, near riends,amily and places o worship. Low-income working amilies,long-time residents, previously incarcerated individuals, peoplewith disabilitiesall o them deserve the opportunity to livein clean, sae, aordable housing in strong neighborhoods withgood schools, parks and other public amenities.

In the 1990s, Chicagoans began a major eort to strengthentheir neighborhoods, beginning with the schools, which someexperts had declared beyond hope. Chicagoans invested billionsin new and renovated school buildings, and they didnt stopthere. Additional billions were poured into new libraries, seniorcenters, police and re stations and park acilities. These becamecommunity anchors, the building blocks or improvements inthe quality o lie in neighborhoods throughout the city.

A key element in the revival o Chicagos neighborhoods has

been aordable housing. In a global city like Chicago, themarket simply cannot produce enough aordable housing tomeet the needs o low-and-moderate-income individuals andamilies. Government has to play a role, and Chicagos Citygovernment accepted that challenge.

A Record o Accomplishment

Since 1989 the City invested more than $4.5 billion in localstate and ederal unds to create, improve and maintain morethan 170,000 houses and apartments or people o modest

means. These homes not only have improved the quality o lieor those thousands o Chicagoans, they have helped revive andsustain entire neighborhoods. The new residents have attractednew commercial activity to these neighborhoods, which in turnattracted additional residents in a sel-sustaining cycle o com-munity renewal.

The Mayors commitment to aordable housing has been laid outin three successive ve-year plans, beginning in 1993. The2004-2008 plan called or committing $1,877,090,250 tosupport 48,085 housing units. Through the second quarter o2008, we had committed nearly $2.2 billion to assist more than

39,000 units. Sixty-one percent o those units housed amiliesearning less than $37,700 or a amily o our, or 50 percent o areamedian income (AMI); and 83 percent were or householdsmaking below $59,600, or 80 percent o AMI.

The Departments investments have been made through anumber o programs:

The Chicago Low Income Housing Trust Fund providedannual subsidies to support more than 2,000 very-low-incomerental units or the last several years. The number o unitsassisted each year reached 3,500 in 2008, as a result o a newprogram unded by a statewide $10 recording ee or real estatetransactions. The state legislation that created this programwas based on the Citys model and passed the Illinois GeneralAssembly in 2005 with the Citys strong support.The Multiamily Rehab and New Construction Programbuilt and preserved more than 19,000 aordable units rom

2004-2008.

The Multiamily Troubled Buildings Initiative has preservedmore than 5,600 units in more than 300 buildings rom2004-2008.

Through the Downtown Density Bonus, downtown developershave committed more than $44 million to aordable housingeorts. The program requires downtown developers either tobuild aordable units or pay a ee when they are granted thesquare ootage that exceeds zoning requirements.

The Supportive Housing Initiative has invested more than$80 million to create or preserve nearly 600 supportive housingunits during the 2004-2008 plan.

Since 2004, the Department o Housing has committed al-most $200 million in resources toward the Chicago HousingAuthoritys Plan or Transormation to assist 10 CHA mixed-income communities consisting o 1,590 units o replacement,aordable and market-rate housing. Overall, more than 15,000housing units have been demolished and more than 16,000replacement units have been constructed and rehabbed towardthe CHAs goal o 25,000.


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Since 1989, the Department o Housing has assisted more than7,400 units o aordable senior housing in 72 projects, almostone-quarter o all the senior units in the c ity.

Four years into the 2004-2008 Five-Year Plan, the Depart-ment o Housing has already exceeded its goal o assisting6,045 units o new single-amily housing through programs

such as:

City Mortgage, which provides mortgage nancing anddown payment assistance to make homeownership attrac-tive and more aordable.

TaxSmart, which provides an annual tax credit to qualiedhomebuyers to reduce ederal income taxes by an amountequal to 20 percent o the annual interest on a mortgage.

City Lots or City Living, which allows eligible applicants to

purchase vacant City-owned property or the constructiono aordably priced or-sale homes.

New Homes or Chicago, which provides purchase subsidiesand assistance with land costs to moderate-income home-buyers. This program has been improved to make it moreattractive to developers and rst-time homebuyers by ocus-ing subsidies on those who need them most and by oeringincentives to encourage construction in dicult-to-developareas o neighborhoods.

The Single-Family Troubled Buildings Initiative, created

in 2005, which ocuses on 1-to-4-unit buildings. UsingCommunity Development Block Grant (CDBG) unds,more than 600 abandoned and vacant properties have beenplaced into receivership or rehabbed and sold.

During the 2004-2008 Plan, the Department o Housinginvested $83 million to preserve and improve more than10,800 units o housing, through programs such as:

The Home Repairs or Accessible and Independent Living(H-RAIL) program, which invests CDBG unds to modiyhomes to make them more accessible or seniors.

The TIF Neighborhood Improvement Program (TIF-NIP)uses tax increment nancing to make exterior improve-ments on homes in specied neighborhoods.

The Emergency Housing Assistance Program, which usesCDBG unds to make emergency urnace, roo and porchrepairs or low-income households.

The Historic Chicago Bungalow Initiative has helpedrenovate more than 2,900 historic bungalows since 2004through a combination o private grants and assistance rom

the Chicago Department o Environment. More than 4,000bungalows have been assisted since the program began in2000.

Other Department o Housing programs have preventedoreclosures and helped reduce homelessness.

The Home Ownership Preservation Initiative (HOPI) hasprevented more than 1,800 oreclosures through ree counsel-ing, loss mitigation and loan workouts and reclaimed morethan 500 vacant, troubled buildings since 2003. More than

10,000 amilies at risk o oreclosure have been counseledand educated through HOPI. In 2007 alone, more than 6,000troubled borrowers received access to ree credit counseling,simply by calling 311. Under the Mayors leadership, Chicagowas the rst municipality in the nation to hold Borrower Out-reach Days. More than 2,000 people received in-person assis-tance at 10 o these events in 2007 and 2008. The Departmento Housing also sends out oreclosure prevention inormation tohomeowners within days o a oreclosure ling, giving them anopportunity to work out solutions that might help them retaintheir homes.


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Through the Plan to End Homelessness, which the Mayorunveiled in 2003, permanent housing or the homeless hasincreased by 67 percent to more than 2,400 units, and morethan 3,800 households are being assisted each year by homelessprevention programs. Homelessness decreased 12 percent rom2005 to 2007, based on homeless counts on comparable days.

More than 17,000 households have taken advantage o anew Homelessness Prevention Call Center, which was launchedin 2007 to centralize access and screening or preventionassistance.

Notable Recent Initiatives

Over the last ve years, the City has undertaken a number o newand innovative programs to meet its changing housing needs.

The Chicago Community Land Trust (CCLT) was created in

2006 to preserve the long-term aordability o home ownershipunits created through City programs. Chicago was the rst bigcity to create such a program, which is designed to ensure per-manent aordability. Under this program, assisted buyers agreeto resell the home to another income-qualied buyer at an a-ordable price. Property taxes are assessed with considerationor the aordable resale price, rather than the market value.Twenty-one units are currently administered by the CCLT, andan additional 200 homes are in the pipeline to become part othe program.

With support rom the Department o Housing, the Preserva-tion Compact was established in 2007 by the John D. and Cath-erine T. MacArthur Foundation, the Urban Land Institute andother organizations to preserve 75,000 aordable rental unitsthroughout Cook County by 2020.

The City Council approved a Preservation Ordinance in 2007to help keep apartment buildings aordable ater their ederaluse restrictions expire.

In 2007, the City Council expanded the Aordable Require-ments Ordinance to increase the supply o aordable housingwhile balancing the need with the benets that result rom de-velopment. The expanded ordinance requires that new residen-tial developments o 10 or more units make at least 10 percento the units available at aordable prices i:

The developer receives City nancial assistance; or The developer receives any City land, whether discounted

or not, or Any zoning change is granted that increases project density

or allows a residential use not previously allowed, or The development is a planned development, except or

developments outside o the downtown area that do notobtain residential density increases.

In lieu o providing aordable units, developers are permittedto make a payment to the Aordable Housing OpportunityFund o $100,000 per aordable unit not produced. The undswill be used to develop new units across the City and to assistthe Trust Fund.

The City convened a Condominium Task Force composed okey stakeholders to explore the issues related to condominiumdevelopment and conversion and make recommendationsor action by the City. The task orce is ocusing on our areas:1) a ramework or tracking condominium development;2) protections or tenants in buildings being converted to con-dominiums; 3) potential controls on condominium conversions;and 4) consumer education.

Planning or Aordable Housingin a Troubled Economy

Our 2004-2008 Aordable Housing Plan was developed in astrong national economy, which had bounced back smartlyrom the downturn that began in 2000. Housing prices wererising rapidly; employment was increasing; the stock market wasrising; and government revenues were expanding.


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The 2009-2013 plan is being created in a much dierentnational economic environment. Ater growing some 15 per-cent rom 2000 to 2006, the economy began to slow in 2007.The unemployment rate began edging up ater alling orthree previous years. The economy created 44,700 new jobs permonth in previous 2007 and early 2008ewer than hal thenumber needed to employ the 90,000 new entrants into theeconomy each month. The infation rate edged toward a 15-year

high, spurred by high energy and ood prices. Corporate protsand consumer spending declined. Ater reaching a historichigh in 2007, the stock market dropped more than 1,000 points;and tax collections slowed at every level o government.

Most important rom a housing perspective, residential real

estate sales ell some 33 percent rom 2005 to 2008 as theoverheated market cooled. The burden ell disproportionate-ly on moderate-income rst-time borrowers, many o whomtook out adjustable-rate mortgages and were unable to meetthe higher payments when the rates reset. Others were luredby predatory lenders into taking out home loans they could illaord. The result was a rising number o vacant and oreclosedhomes in many neighborhoods. There were 14,250 oreclo-sure lings in Chicago in 2007, an increase o 46 percent over2006 and 105 percent over 2000. The highest concentrationswere in low-income and minority communities.

Foreclosures have a devastating impact on neighborhoods.Vacant, boarded and abandoned homes attract vandalism,arson and other crimes. Blighted homes oten discourage ur-ther investment, limiting opportunities or economic growthwithin the community. A 2005 study or the HomeownershipPreservation Foundation estimated that a single oreclosed,vacant property can cost municipalities up to $34,000 inpolice and re protection, trash removal, courts, unpaid water

bills and demolition.

While many individual borrowers were taking out unaord-able mortgages, developers were using readily available creditto convert apartment buildings into condominiums, orcingthe tenants to look or new apartments, which were not alwaysavailable at rents they could aord. When the economy beganto turn sour, many o the new condos sat empty.

In summary, the economy has aected our aordable hous-ing eorts in a number o negative ways. Rising unemploy-ment, oreclosures and condo conversions have increasedthe demand or aordable housing, especially rental hous-ing. Rising ood and uel prices make it even harder or ami-lies to pay the rent or mortgage. Rising prices and slow taxcollections have let the city, state and ederal governmentswith less money or aordable housing programs and otherimportant priorities. Funding o key ederal entitlement pro-grams or ChicagoCommunity Development Block Grants,Community Service Block Grants, HOME unds and Work-orce Investment Acthas decreased steadily since 2000 andell 10 percent rom 2007 to 2008. Based on historical patterns,the current downturn in the housing market could continue

almost to the end o our 2009-2013 aordable housing plan.

Preparing a ve-year aordable housing plan in this environ-ment presents a challenge, but not an insurmountable one. Toassist us in developing this plan, the Department o Housingestablished a 46-member advisory group consisting o not-or-prot developers o aordable housing, community lead-ers, planners, and representatives o lenders, landlords, build-ers, real estate brokers, social service agencies and charitableoundations. They held ve meetings, hearing presentationsrom economists, planners, academicians, housing advocates


Real Residential Investment

percent

Percent change from a year earlier

1990 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

Quarterly change (saar)25

20

15

105

0

-5

-10

-15

-20

-25

-30


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and City ocials. The Department o Housing also held threepublic hearings, where we heard rom residents concerned aboutthe lack o aordable housing in their neighborhoods; romdisabled and low-income residents who could not nd aord-able apartments; and rom advocates o housing or previouslyincarcerated individuals and victims o domestic abuse.

Our advisory committee agreed that, at a time when the econ-omy is sluggish and government resources are limited, theDepartment must be especially creative in nding new ways toencourage aordable housing. It must make every dollar count,and explore every challenge or the hidden opportunity.

Fortunately, Chicago has advantages many other cities do notshare. Its neighborhoods have beneted rom two decades oinvestment in community anchors and inrastructure. It alreadyis a leader in aordable housing, with an active and dedicatedcommunity o aordable housing advocates who boast an envi-able track record. As Eric Belsky, director o Harvard Universi-tys Joint Center or Housing Studies, told our advisory commit-tee, Chicago is well-positioned to meet the aordable housingchallenge because our well-stocked toolbox o successulprograms is bigger than those o many other municipalities.

Chicagos diversied economy provides stability during eco-nomic expansions and contractions. The peaks are not quiteas high as in other parts o the country and the valleys are notquite as low. According to the Oce o Federal Housing En-terprise Oversight, the Chicago area ranked th out o the 10largest metropolitan areas in terms o the change in averagehome prices rom April 2007 to April 2008. Prices decreased1 percent in the Chicago area, compared with a 4 percent

decrease in Houston and a 14 percent decrease in Los Angeles.Over the previous ve years, Chicago ranked sixth among the10 largest metropolitan areas, with a 34 percent increase in aver-age home prices, compared with a 75 increase in Miami and an11 percent decrease in Detroit. Many Chicago neighborhoodsare quite diverse, with a wide range o both amily incomes andhousing values. Even as their median home values rise, they stillcontain many aordable homes.

With guidance rom the advisory group and other members othe public, the Department o Housing has developed aplan that is orward-looking, compassionate and realistic.It embodies several principles that, we believe, are shared bymost Chicagoans:

Chicago should continue to be a city o strong aordableneighborhoods, with good housing, schools, parks, librariesand shopping districts.

Aordable housing is an asset to every neighborhood and tothe city as a whole. It helps ensure that Chicago continuesto be home to people o many dierent ages, incomes andbackgrounds.

Aordable housing helps build healthy neighborhoods.It creates a market or new retail stores, restaurants andother neighborhood amenities. Conversely, when Citygovernment brings public improvements to a neighbor-hood, the existing housing becomes more attractive to low-and-moderate income amilies.

Chicagos entitlement funding has decreasedSince 2002

Millions

$120.0

$100.0

$80.0

$60.0

$40.0

$20.0

$ 0.0 2002 2003 2004 2005 2006 2007 2008

Community Development Block Grant HOME

Workforce Investment ActCommunity Service Block Grant


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Aordable housing is good or the economy o the entirecity. When housing costs are minimized, low-and-moderate-income amilies have more money to spend on other items,including education, the passport to a better lie or theirchildren. Aordable housing also creates jobs in construc-tion, building management and other industries.

Aordability means more than just the size o the rent or

mortgage payment. A home is more aordable when it usesless energy, when it is less expensive to build and operate,when taxes are reasonable and when nearby mass transitmakes driving unnecessary.

Government support is necessary to ensure an adequatesupply o aordable housing in Chicago. Governmentsrole should be to work in partnership with the private andnot-or-prot sectors.

While homeownership has many positive eects on a city,it is not or everyone. The most critical need in Chicago isor aordable rental housing or those at the lower end othe economic spectrum.

Supportive housing must remain a high priority. ManyChicagoans need social services in addition to housing, tohelp them turn their lives around.

The Department should continue to direct the majorityo resources toward the neediest individuals and amilies.

We will need to be fexible, creative and open to new ideas.

The Five-Year Aordable Housing Plan or 2009-2013calls or investing $2 billion to assist 50,000 housing units.This is a modest increase over the 2004-2008 Plan but arealistic one in the current economic climate. I the economyimproves more rapidly than economists now expect, the Citywill respond appropriately to new opportunities that mightarise. We will use every tool at our disposal. At a time o limitedresources, we must invest more wisely and strategically thanever beore.

Five-Year Change (%) in Average Home Value:First Quarter, 2003First Quarter, 2008

Ten Largest Standard Metropolitan Statistical Areas

Miami 75.38

Los Angeles 63.12

Washington, D.C. 56.44

Philadelphia 52.28

New York

U.S. Average 34.84

CHICAGO 34.29

Houston 26.06

Atlanta 17.36

Dallas 16.20

Detroit -11.45

One-Year Change (%) in Average Home Value:First Quarter, 2007First Quarter, 2008Ten Largest Standard Metropolitan Statistical Areas

Houston 4.43

Dallas 2.05

Philadelphia 0.59

Atlanta 0.02

CHICAGO -1.15

New York

U.S. Average -1.71

Washington, D.C. -9.14

Miami -10.68

Detroit -10.81

Los Angeles -14.28

Source: Ofce o Federal Housing Enterprise Oversight


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Aordable Rental HousingOur top priority will be to build and preserve aordable rentalhousing, the housing option o individuals and amilies withthe lowest incomes, including seniors, people with disabilities,veterans, previously incarcerated individuals, recent immi-grants and homeless individuals and amilies. Our eorts willbe directed toward all types o rental housing, small buildings aswell as large, because they all play an important role in meetingthe housing needs o low-income Chicagoans.

The shortage o aordable apartments in the Chicago area

is expected to get worse. According to a study by the RealEstate Center at DePaul University, I recent trends inthe Cook County housing market continue, the supply oaordable rental units will decline by 38,000 rom 2005-2020to a level o only 315,000. Over the same period, it is expectedthat demand or aordable rentals will rise by 34,000 to morethan 500,000 units. The net result in 2020 will be more than185,000 households seeking, but unable to nd, aordablerental housing in Cook County.

Rent Subsidies

The Chicago Low Income Housing Trust Fund currently pro-vides annual subsidies to 3,500 apartments occupied by house-holds earning less than 30 percent o area median income.At least hal its resources go toward households earning lessthan 15 percent o the area median income, or $11,300 or aamily o our in 2008. We will continue this ecient andpopular program and look or ways to increase the availabilityo rent subsidies.

The

2009-2013 Plan

Cook County Affordable Rental Housing

Supply and Demand 1990-2020700,000

Housing demand Housing supply

1990 2000 2005 2020

500,000

300,000

100,000

IntroductionIn the tradition o Chicagos willingness to adapt, accept challenges, and work together on behal o policies that benetthe entire City, we are embracing change once again with our new Department o Community Development. This newdepartment, which merges housing, planning, and workorce development, will allow us to more comprehensively address aspectso community development and revitalization.

It will play a key role in enhancing the stability o our neighborhoods at a time when cities all over America are acing steepchallenges.


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Construction o Rental Housing

We will seek to spur the construction o new multiamilyhousing by developing new ways to make the ederal LowIncome Housing Tax Credit more viable.

Under the Low Income Housing Tax Credit program,ederal tax credits are allocated to developers o aordable

housing who sell them to investors, mainly nancial institutions.Because o declining housing and credit markets, manynancial institutions have less prot to shield through taxcredits, so they are buying ewer o them. The reduceddemand or the credits has lowered their price, leaving undinggaps that have to be made up through unds rom governmentor non-prot institutions. This in turn also means lowerproduction because ewer deals will nd nancing in a given year.In order to make the Low Income Housing Tax Credits asattractive as possible to investors, we will consider revisions toour policies and procedures related to this program.

We will explore additional ways to use ree-market mecha-nisms, similar to the Aordable Requirements Ordinanceand Downtown Density Bonus, to create aordable housing.We will consider making aordable housing part o publiccapital projects and private mixed-use developments.We already combine the development o senior centers with thecreation o aordable housing units as well as new retail stores.

We also will look or ways to expand the use o TaxIncrement Financing (TIF) to spur the construction o newaordable housing. TIF is an economic development tool that

allocates new property tax growth within a designated areatoward public projects that specically benet that area.

Preservation o Rental Housing

With construction o new aordable rental housing acing anuncertain uture, it is even more important that we preserve ourexisting supply. Preservation oten is more cost-eective thannew construction.

From 2009 through 2013 we intend to preserve more than5,000 rental units through the Multiamily Troubled BuildingsInitiative. Under this initiative, troubled buildings are reerredto the Department by the Police and Buildings departments,community policing volunteers and community organizations.When owners ail to bring their buildings into compliance withthe City building code, the Initiative allows the City to use anumber o strategies, including seeking a court-appointed re-

ceiver; transerring City liens to the Community InvestmentCorporation or oreclosure; purchasing delinquent notes ooreclosure; and selling the notes to lenders.

We intend to preserve more than 5,600 units in partnership withthe Preservation Compact during the 2009-2013 Five-Year Plan.The City is making $150 million in tax-exempt bonds availableor this program and has committed $12 million through 2010:$6 million to the Troubled Buildings Initiative and $6 mil-lion or an acquisition und to gain control o rental buildingsand to make grants to help responsible owners repair theirbuildings and reduce energy costs.

We will look or ways to leverage market activity to createincentives to support preservation, including exploring opportu-nities to leverage unused density to support aordable housing.

The Department will continue to educate landlords and tenantson their rights and responsibilities under the Residential Land-lord-Tenant Ordinance and the new Preservation Ordinance.The Preservation Ordinance was passed in 2007 and requiresbuilding owners to give 12 months notice beore ederal subsidiesexpire, so tenants have time to seek a developer who could keep

the building aordable. The owner also must notiy theCity, which could look or a qualied developer who couldmaintain the building as an aordable rental property. I theowner seeks to sell to a market-rate developer, the aordabledeveloper has the right to match the purchase price.

We will work with the Departments o Police, Buildings andLaw to enorce the Slum Nuisance Ordinance. Vacant buildingswith a history o building code complaints or criminal activitycould eventually be oreited and assigned to nonprot develop-ers or rehab through the Troubled Buildings Initiative.


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Supportive HousingOne o the principles behind the Five-Year Plan is that housingalone is oten not sucient to help people meet the challengesthat conront them. The Supportive Housing Initiative providesrental assistance and supportive services to help individuals andamilies with special needs maintain permanent housing. Theseservices include counseling on nances, parenting, substance

abuse and employment.

The Department will develop a new plan, similar to ourSenior Housing Plan, which will identiy the communities mostin need o supportive housing and create a pipeline o service-enhanced developments.

Chicagos Plan to End Homelessness

The Department will continue to be a partner in implementingthe Plan to End Homelessness. This plan seeks to end home-lessness by 2012 by realigning Chicagos homeless service sys-

tem rom a shelter-based to a permanent housing-based system.The Plan provides services to help people address the problemsthat caused them to become homeless and to keep people rombecoming homeless again.

Public Housing

The Department will continue to be a major partner inthe Chicago Housing Authoritys Plan or Transorma-tion, the largest and most ambitious public housing make-over in the history o the United States. Over the lasteight years, it has changed lives and transormed neighborhoodsby breaking down the barriers that separated residents opublic housing rom the rest o the community. The Plan orTransormation calls or replacing high-rise buildings withmixed-income developments, integrated physically, economi-cally and socially with the surrounding communities.

Senior Housing

As the population continues to age, in Chicago and through-out the nation, senior housing becomes increasingly important.Seniors are an important part o the social abric o Chicago, andthe Department is committed to helping them remain here.

The Department will move orward with its Five-Year

Senior Housing Plan or 2006-2010, which aims to create4,000 units o senior housing, using a variety o models:independent living, HUD Section 202 developments, sup-portive-living acilities, condominiums and ull-service seniorcommunities. Three years into the Senior Housing Plan, theDepartment has created 884 units, representing three quarterso the goal.

We also will develop an initiative aimed specically at grand-amilies, grandparents raising grandchildren.

ForeclosuresThe Department will devote considerable eort to the ore-closure crisis: preventing oreclosures whenever possible and,when they do occur, helping reduce their impact on amiliesand neighborhoods.

One o the keys to oreclosure prevention is early intervention.The Department will expand its outreach eorts to encourageborrowers to seek assistance at the rst sign o diculty in meet-ing their mortgage payments.

Through HOPI, immediate nancial counseling will continueto be available to troubled borrowers who call 311. In addition,the Department will continue its Borrower Outreach Days atlocations throughout the city to help those in the hardest-hitcommunities stay in their homes. At these events, Chicago resi-dents at risk o oreclosure can meet with lenders and nancialcounselors to help get their mortgages back on track.


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The oreclosure crisis is not limited to single-amily homes andcondominiums. According to the Woodstock Institute, over35 percent o oreclosures on residential properties in Chica-go in 2007 were on 2-to-6-unit apartment buildings, primar-ily in minority and low-income communities. This is a criticalproblem, because a oreclosure on one o these buildings canorce six times as many people into the rental market as aoreclosure on a single-amily home. Funding mechanisms must

be developed or the acquisition o these buildings to retainthem as active rental properties.

At the urging o Mayor Daley, the Illinois General Assemblypassed legislation in 2008 to strengthen protections or rentersimpacted by building oreclosures. Also in 2008, the ChicagoCity Council passed an ordinance requiring tenants to be noti-ed within 7 days o a oreclosure ling. The City will continueoutreach to ensure such tenants are aware o their protectionsand where to nd help.

Chicagos oreclosure prevention programs have been recog-nized nationally, and we will continue to implement and ex-pand them. But despite our best eorts, oreclosure sometimesis unavoidable. In those cases, the Department will work withcommunity groups, not-or-prot organizations and the ederalgovernment to nd buyers or renters or homes that have be-

come vacant because o oreclosure. Using unds appropriatedthrough the Housing and Economic Recovery Act o 2008 andadditional leveraged private unds, our public-private initiativewill seek to put vacant, oreclosed properties back into produc-tive use as quickly as possible. The initiative will oversee andcoordinate targeted revitalization eorts in key areas o Chicagoto mitigate the impact o oreclosure on our neighborhoods.

Our acquisition strategies will include expansion o HUDs$1 Homes program and bulk purchase o bank-owned proper-ties. We also are working with national partners to see wheth-er certain properties can be unlocked rom securitization.Our disposition options include sale to an owner-occupant,lease-to-own, rental, and when necessary, demolition.

Community partner organizations will provide input on the realestate market in specic areas o their communities; identiyand counsel potential homebuyers, renters, and lease-to-ownparticipants; and monitor the management o rental properties.

Housing and Economic Recovery Act

The Department will provide leadership in implementingthe Housing and Economic Recovery Act o 2008 to supportaordable housing and community development in Chicago.In addition to providing emergency assistance or redevelop-ing oreclosed homes, this legislation creates several new op-portunities or the Department and its partners. For example,we will work with our partners to develop a strategy or usingmortgage revenue bonds to renance subprime mortgages.We also will work to ensure that Chicago developmentsreceive unding rom the newly created Housing Trust Fundand Capital Magnet Fund.

Homeownership

Though aordable rental housing will be the Departments toppriority, we will continue to promote and support homeown-ership through proven, time-tested programs, including CityMortgage, TaxSmart, City Lots or City Living and New Homesor Chicago. Our Five-Year Plan calls or providing homeowner-ship assistance to 8,000 units.

1-Unit Building 2 to 6 Unit Building Condominium

Residential Foreclosure Filings by Building Type

2007


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Stimulating Market Activity

Changes in the economy and nancial sector have signicant-ly aected homeownership demand. Fewer buyers are able toqualiy or mortgages, and some would-be buyers are reluctantto purchase due to perceived volatility in the marketplace. TheDepartment will take a number o steps to increase demand orhomeownership.

As lenders tighten their credit requirements, thousands oChicagoans will need help in learning how to save money andenhance their credit scores. The Department will work witheducational and nancial institutions to provide renters, as we llas homeowners, with counseling, nancial literacy courses andsavings programs.

We will consider modiying our program o purchase-price as-sistance to stimulate market activity. Currently, purchase-priceassistance is available to low income buyers who purchasehomes produced through New Homes or Chicago and the

Chicago Partnership or Aordable Neighborhoods (CPAN).We will explore the possibility o expanding this program toprovide purchase-price assistance to buyers o single-amilyhomes and condos that are sitting vacant because o oreclosureor reduced demand. In some cases, this assistance may be con-nected to a requirement or long-term aordability.

The Department will also intensiy its marketing eorts orCity-assisted or-sale developments and will work with lend-ers to ensure that buyers have access to appropriate mortgageproducts.

Employer Assisted Housing

The Department will continue to work with local employers todevelop programs that give their employees incentives to buyhomes near their workplaces. Employer-assisted housing helpsemployees reduce commuting costs, encourages homeowner-ship, strengthens neighborhoods, builds employee loyalty andreduces turnover.

Preservation o Single-Family Housing

The 2009-2013 Five-Year Plan will continue our programsto preserve and improve the citys aging housing stock.The 2009-2013 Plan calls or investing over $100 millionto assist nearly 10,000 units through the Single-FamilyTroubled Buildings Initiative, Home Repairs or Accessibleand Independent Living (H-RAIL), the TIF Neighborhood

Improvement Program (TIF-NIP), and the Emergency HousingAssistance Program.

Neighborhood Lending Program

The Neighborhood Lending Program (NLP), a partnershipbetween Neighborhood Housing Services o Chicago, theCity o Chicago, and more than 20 lending institutions, pro-vides access to capital or purchase, rehab, and renancingo single amily homes. The loan products oered through NLPsupport aordable homeownership, prevent oreclosures, andhelp revitalize Chicago neighborhoods. The 2009-2013 plan

calls or the Department to invest $250 million to assist2,900 homes.

Other Paths to Aordability

Discussions o aordable housing tend to ocus on constructioncosts, rent subsidies and interest rates, but these are only part othe picture. Housing can be made more aordable by reducingenergy costs, creating new eciencies and aligning governmentpolicies.

Reducing Energy Costs

In addition to rent or mortgage payments, households payconsiderable sums or utilities and transportation and thosecosts can be minimized through wise government policies.


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In 2003, the Historic Chicago Bungalow Initiative wasestablished to provide nancial assistance to homeowners tomake their bungalows energy ecient. A $3.5 million grantrom the Illinois Clean Energy Community Foundation undedthree green bungalow model block projects to showcase newtechnologies in energy eciency. To date over 1,000 units havereceived assistance under this initiative.

The green building techniques saved each bungalow $700to $1,000 a year in energy coststhe equivalent o saving$60 to $80 a month in mortgage payments. In addition, greenbuilding helps the local economy by creating jobs in industriesthat produce environmentally sound building materials.

We expect additional unding or energy-saving initiatives to bemade available over the next several years rom local utilities, aswell as the ederal government. Mayor Daleys Chicago ClimateChange Action Plan has a goal o retrotting 400,000 housingunits by 2020 and reducing energy use by 30 percent.

The Department will work closely with the Department oEnvironment to ensure that aordable housing developmentshave a high priority in receiving grants or incentives or energyconservation.

We look or creative ways to build aordable housing thatcontains the most green eatures at the lowest cost, usingenvironmentally riendly, locally produced building materi-als whenever they are economically easible. Green building isnot an all-or-nothing proposition. A variety o environmentaleatures can be incorporated into any building, and we can

choose those that make the most sense or each project.

The Citys expedited green permitting process oers developersan additional incentive to build green. And we will work withthe Cook County Assessors Oce to explore the possibility oreal estate tax incentives or green construction and retrots.

Transit-Oriented Development

With gasoline costs rising, transportation can add thousandso dollars a year to living costs. The Center or NeighborhoodTechnology reports that some suburban amilies spend as muchas 26 percent o their income on transportation, almost as muchas they spend on housing. In compact, transit-rich communi-ties, the Center reports, transportation can take up as little as

14 percent o household income.

The Department will encourage developers o aordable hous-ing to seek sites with easy access to public transportationand will encourage mixed-use, transit-oriented developmentsthat include aordable housing. We also will look or ways toimplement an aordable housing density bonus program neartransit nodes.

Creating Efciencies

When the economy is sluggish and government resources aretight, we must work even more eciently to make the mosto every dollar. However, as members o our advisory commit-tee reminded us, the cheapest products and procedures are notalways the most cost-eective in the long run. We will workwith experts in the eld to study the costs associated with theconstruction and preservation o aordable housing.

The Department will review policies and procedures involvedin the creation and preservation o aordable housing with aneye toward making them more ecient.

We will seek to align the operations o all City departmentsinvolved in housing to the greatest extent possible.

The need or aordable housing is not unique to Chicago;it extends throughout the Chicago metropolitan area. The De-partment will work with the Metropolitan Mayors Caucus andthe Chicago Metropolitan Agency or Planning to coordinatehousing eorts throughout the region.


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Maintaining Aordable Rental Housing

We will explore the possibility o expanding the Chicago Com-munity Land Trust (CCLT) to cover rental housing. The pro-gram, designed to maintain long-term aordability o initiallysubsidized homes, currently applies only to or-sale housing.

One o the key benets to CCLT homeowners is a reduction in

property taxes. The CCLT will also position itsel to oer theproperty tax benet to existing homeowners in exchange orlong-term aordability.

Advocacy and Leadership

A nation as rich as ours should work to make aordable housingavailable to those who need it. The Department will continueto work at every level o government to ensure that aordablehousing remains a priority and receives its air share o any newstate or ederal unding that becomes available.

We also will advocate or government policies that enable low-and-moderate income residents to obtain and remain in hous-ing they can aord. This could include reducing property taxes,better social services, tougher regulations o predatory lendersand additional nancial counseling, and seeking every oppor-tunity to advocate or policy and nancial resources to addressoreclosures.

Chicago is a national nancial center, home to large numberso creative and talented nance experts in private industry, uni-versities and the nonprot sector. The Department will seek tomarshal this expertise in an eort to make this city a nationalleader in developing new and innovative nancing tools toexpand aordable housing.

Aordable housing is not solely a government responsibility.Whenever possible, the Department will work with its non-governmental partners to achieve our common objectives.

Moving Forward Together

Meeting the housing needs o Chicagos low-and-moderate-income residents in an uncertain national economy presents amajor challenge.

In a diverse city with a wide variety o housing, there is noone-size-ts-all solution. Under the Mayors leadership, Chicagohas become a national leader in the eld o aordable housingby successully implementing a number o dierent programs,each aimed at a specic housing need. Over the next ve years,we will continue to make the most o all these programs. Andas new needs arise, we will develop new programs to addressthem. We will continue to call on the best minds in the eld tohelp us become even more innovative and creative as we adaptto changing circumstances. The Department will be ready andeager to take advantage o positive developments over the nextve years, such as an unexpected improvement in the nationalhousing environment or the selection o Chicago as the host

city or the 2016 Olympic and Paralympic Games.

Fortunately, Chicago has a long tradition o partnerships in-volving the public, private and not-or-prot sectors. We have amultitude o individuals and organizations dedicated to creatingand preserving aordable housing and removing the obstaclesthat keep too many o our residents rom a decent home.

Chicago also has a tradition, extending back or more than acentury and a hal, o meeting the most daunting challenges.This is a city that rebuilt ater a disastrous re, reversed the fowo a river and reinvented itsel time and again. Its a city that

has the energy and creativity to nd new ways to ensure that itsresidents are able to live in decent, sae aordable housing.


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Estimated Five Year Unit Production 20092013(Anticipated use o resources subject to program review and budgetary authorization)

TO CREATE AND PRESERVE AFFORDABLE RENTAL HOUSING

MULTIFAMILY REHAB AND NEW CONSTRUCTION

Multiamily Loans $145,450,915 610 430 2,150 1,610 150 0 0 4,950

Multi-year Aordability Through Up-ront Investments (MAUI) $18,375,000 213 212 0 0 0 0 0 425

TIF Subsidy $100,000,000 100 170 1,265 940 25 0 0 2,500

Tax Credit Equity $325,000,000 550 440 2,850 2,160 200 0 0 6,200

Multiamily Mortgage Revenue Bonds $300,000,000 300 250 1,720 1,300 180 0 0 3,750

City Land (Multiamily) $5,000,000 125 85 435 325 30 0 0 1,000

City Fee Waivers (Multiamily) $6,000,000 935 660 3,325 2,480 225 0 0 7,625

Illinois Aordable Housing Tax Credit (value o donations/equity) $10,000,000 110 80 390 290 30 0 0 900

RENTAL ASSISTANCE

Low Income Housing Trust Fund (LIHTF) Rental Subsidy Program $72,650,000 1,900 1,100 0 0 0 0 0 3,000

Supportive Housing Program $18,000,000 400 0 0 0 0 0 0 400

SAFETY & CODE ENFORCEMENTHeat Receivership $6,250,000 200 910 2,075 660 155 0 0 4,000

MULTIFAMILY PRESERVATION

Troubled Buildings Initiative $10,000,000 0 0 4,500 0 0 0 0 4,500

TIF-NIP (Multiamily) $3,750,000 0 0 0 437 438 0 0 875

MF Neighborhood Stabilization Program $38,000,000 20 100 200 0 0 0 0 320

Preservation Compact: Preservation Loan Fund $25,800,000 75 50 260 200 15 0 0 600

Energy Savers $2,500,000 4,100 4,100 1,635 165 0 0 0 10,000

SITE ENHANCEMENT

Site Improvements (Multiamily) $3,750,000 105 480 1,090 345 80 0 0 2,100

Subtotal $1,090,525,915 9,743 9,067 21,895 10,912 1,528 0 0 53,145

Less Multiple Beneits (2,372) (2,272) (9,861) (6,908) (675) 0 0 (22,088)

Net, Creation and Preservation o Aordable Rental $1,090,525,915 7,371 6,795 12,034 4,004 853 0 0 31,057

Breakdown o Income Level Distribution, % o Net 24% 22% 39% 13% 3% 0% 0% 100%

Program Name 5-Year Estimated Funding 5-Year Projected Units Assisted by Income Level Total015% 1630% 3150% 5160% 6180% 81100% 101 + % Units

16


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TO PROMOTE AND SUPPORT HOMEOWNERSHIP

SINGLE FAMILY REHAB AND NEW CONSTRUCTION

New Homes or Chicago/City Lots or City Living (value o City-owned land) $18,000,000 0 0 0 0 150 300 150 600

Chicago Partnership or Aordable Neighborhoods (CPAN) $6,000,000 0 0 0 0 50 100 50 200

Aordable Requirements Ordinance (Single-amily) $75,000,000 0 0 0 0 0 500 0 500

City Fee Waivers (Single-amily) $6,000,000 0 0 0 0 310 630 310 1,250

SITE ENHANCEMENT

Site Improvements (Single-amily) $1,250,000 0 0 0 0 250 500 250 1,000

ABANDONED PROPERTY TRANSFER PROGRAMS

Troubled Buildings Initiative (Single-amily) $10,000,000 0 0 0 0 560 190 0 750

HUD Homes & Preserving Communities Together $0 0 0 0 0 55 20 0 75

SF Neighborhood Stabilization Program $95,500,000 0 0 0 50 200 200 250 700

HOMEOWNERSHIP ASSISTANCE

City Mortgage $224,250,000 0 0 30 75 245 430 370 1,150

TaxSmart (Mortgage Credit Certiicate Program) $112,500,000 0 0 25 30 130 225 215 625

Public Saety Oicer Homeowner Incentive Program $625,000 0 0 0 0 10 50 140 200

Teacher Homebuyer Assistance Program $3,500,000 0 0 0 0 90 270 490 850

Home Purchase Assistance $15,000,000 0 0 190 170 315 135 190 1,000

Neighborhood Lending Program: Purchase/Purchase Rehab (NHS) $100,000,000 0 40 60 120 230 250 550 1,250

Neighborhood Lending Program: Homeownership Preservation (NHS) $110,000,000 0 50 70 75 170 135 150 650

Subtotal $777,625,000 0 90 375 520 2,765 3,935 3,115 10,800

Less Multiple Beneits 0 0 (189) (187) (717) (968) (674) (2,735)

Net, Promotion and Support o Homeownership $777,625,000 0 90 186 333 2,048 2,967 2,441 8,065





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TO IMPROVE AND PRESERVE HOMES

Emergency Housing Assistance Program (EHAP) $40,300,000 350 1,500 2,650 0 0 0 0 4,500

Home Repairs or Accessible and Independent Living (H-RAIL) $9,100,000 300 1,280 685 135 100 0 0 2,500Targeted Blocks $3,800,000 40 60 75 40 25 10 0 250

TIF-NIP (Single-amily) $10,000,000 100 200 250 100 150 200 0 1,000

Neighborhood Lending Program: Home Improvement (NHS) $40,000,000 50 50 90 40 175 95 150 650

Historic Chicago Bungalow Initiative $5,000,000 0 0 225 260 560 365 90 1,500

Subtotal $108,200,000 840 3,090 3,975 575 1,010 670 240 10,400

Less Multiple Beneits 0 0 0 0 0 0 0 0

Net, Improvement and Preservation o Homes $108,200,000 840 3,090 3,975 575 1,010 670 240 10,400


PROGRAMMATIC APPLICATION TBD

G.O. Bonds $7,500,000 200 200 200 200 200 0 0 1,000

Less Multiple Beneits (100) (100) (100) (100) (100) 0 0 (500)

Net, Programmatic Application TBD $7,500,000100 100 100 100 100 0 0 500

PROGRAMMATIC INITIATIVES: NET TOTAL $1,983,850,915 8,311 10,075 16,295 5,012 4,010 3,637 2,681 50,022


OTHER INITIATIVES

Citywide Resource Centers $5,395,680

Housing Resource Centers $4,049,980

Homeownership Counseling Centers $2,097,500

Community Housing Development Organization (CHDO) Operating Support $3,700,000

SUBTOTAL, OTHER INITIATIVES $15,243,160

OPERATING & ADMINISTRATIVE EXPENSES

Corporate $10,888,415

CDBG $68,674,860

HOME $12,500,000

NSP $15,500,000

SUBTOTAL, OPERATING & ADMINISTRATIVE EXPENSES $107,563,275

GRAND TOTAL $2,106,657,350 8,311 10,075 16,295 5,012 4,010 3,637 2,681 50,022



2009-2013 Affordable Housing Plan

Documents