CHICAGO (Legal Newsline) - While Mayor Rahm Emanuel proposes higher fees for apartment developers in the name of affordable housing, it appears the city hasn’t spent $23 million it has already collected from developers for that exact purpose.
Developers have paid about $32 million in “affordability fees” to the city’s affordable housing opportunity fund in 11 years, and the fund has spent about $9 million.
Developers also have paid about $21 million to a separate fund that subsidizes rental housing for persons of low and moderate incomes.
A proposed ordinance introduced by Emanuel in December would increase fees on developers and require for the first time that they include affordable units in new projects.
The measure passed a few committees last month and advanced to the city council on Jan. 21, when the council deferred action with some members expressing concern the increased fees would stifle development.
Currently, a developer must meet affordability standards in one of every 10 units or buy its way out of the requirement at $100,000 per unit. To the disappointment of affordable housing advocates, developers generally prefer to pay the buyout fee.
Calls for reform rang out after developers of 690 new apartments at Block 37 on State Street paid $6.9 million rather than include 69 affordable units. Block 37 is an area downtown bounded by State, Dearborn, Washington and Randolph.
Emanuel responded with his proposal to require developers to make one of every 40 units affordable before they could buy out of the requirement.
On Block 37, for example, that rule would have required the developer to include 17 affordable units.
Under Emanuel’s plan that appears to be stalled for now as the council has not scheduled action on it, the buyout fee would also increase from $100,000 to $125,000.
The fee would jump to $175,000 for Downtown projects, and $225,000 under certain conditions. In low income areas, the fee would drop to $75,000.
The city, however, appears to seldom spend the proceeds of the fees, and may not really need them, as it sustains an affordability program that rolled right along from 2009 to 2011, even though market rate activity stopped and developers paid no fees.
According to Chicago Rehab Network, which tracks housing programs, the city developed more than $1 billion in affordable projects from 2009 to 2012.
The network reported that those projects provided 3,564 affordable units and 273 market rate units, at a cost of about $270,000 per unit.
City records show that some projects cost more than $400,000 per unit, enough for luxury apartments or single family homes on the open market.
Cost estimation website Building-Cost.net shows that a frame home of average standard quality, with 2,500 square feet, plus basement and garage, would cost $333,188 in Chicago.
Most of the city’s projects depend on equity that developers of low income housing invest in exchange for credits that Congress allows against income taxes.
The city can also arrange tax increment financing, grants, easy loans, housing credits under Illinois law, historic tax credits, and more.
Many projects serve specific groups like veterans, homeless adults, and mothers with disabilities and serious medical conditions.
In 2012, the city raised about $12 million for an artist colony of 32 units.
Sometimes the city combines residential and commercial development.
In 2012, the city raised $34 million for 96 units next to a new Wal-Mart.
In 2013, the city raised $110 million for housing and $20 million for commercial space at Rosenwald Courts at 46th Street and Michigan Avenue in Bronzeville.
The city arranged for $58 million in tax-exempt bonds, $47 million in tax credit equity and $25 million in tax increments.
The project provided 229 units, with 120 for renters below 60 percent of area median income, 105 for renters below 50 percent and 14 at market rate. The apartments cost $460,955 per unit.
Last year, the city set up about $14.4 million in tax credit equity, a nearly $5.135 million grant from Housing and Urban Development, a $2.8 million city loan, a $900,000 private loan, $500,000 in state grants and $500,000 from the Federal Home Loan Bank for Woodlawn Park senior housing on South Cottage Grove.
The project provided 26 units for renters below 50 percent of median income and 39 for those below 60 percent. It cost about $24.27 million at $373,351 per unit.
Parkside of Old Town
For Park Side of Old Town, on the former Cabrini Green site, the city assisted with a $12 million grant from Chicago Housing Authority, $12 million in tax credit equity, $10 million in tax increments and a loan of $1.9 million.
The project provided three units for renters below 30 percent, four for those below 40 percent, nine for those below 50 percent, and 11 for those below 60 percent.
It also provided 36 units to replace Housing Authority units, and 43 at market rate.
It cost $40.95 million, at $386,335 per unit.
For Kennedy Jordan Manor, on West 118th Street, the city arranged for about $12.21 million in tax credit equity, a $4.5 million loan, $1.5 million in tax increments and an economic opportunity grant of $158,015.
The senior housing project provided three units for renters below 30 percent, 39 for those below 50 percent, 21 for those below 60 percent, and five at market rate.
It cost $18.37 million at $262,434 per unit.
For Sangamon Terrace senior housing apartments in Englewood, the city provided financial assistance in the form of a $3.89 million grant from the U.S. Department of Housing and Urban Development, $2.98 million in tax credit equity, a loan of $1.35 million and $432,546 from other sources.
The project provided 24 units for seniors below 50 percent of median income. It cost $8.66 million at $373,666 per unit.
For St. Edmund’s Tower, on South Michigan Avenue in Washington Park, the city arranged for a $5.52 million grant from Housing and Urban Development, $780,881 in other grants and $76,500 in state housing tax credits.
The city helped out by selling the land for a dollar. This senior housing project provided 34 units for renters below 50 percent and cost nearly $6.58 million at $193,444 per unit.
For the Cicero and George Elderly Apartments in the city’s Belmont-Cragin neighborhood, the city set up $11.84 million in tax credit equity, a $4.93 million loan, $4 million in tax increments and $815,100 in grants.
The project provided eight units for renters below 30 percent, 11 for those below 40 percent, 28 for those below 50 percent, 14 for those below 60 percent, eight for those below 80 percent, and one for a resident janitor.
It cost $21.6 million at $308,509 per unit.
For Milwaukee Avenue Apartments in Chicago’s Avondale area, the city provided slightly more than $7 million in tax credit equity, nearly $1.44 million in state grants and $1 million in tax increments.
The project provided 11 units for renters below 30 percent and 21 for those below 60 percent. It cost about $9.71 million at $303,422 per unit.
For housing project put up on the site of the former Strand Hotel on South Cottage Grove in Woodlawn, the city arranged for $12.4 million in tax credit equity, a nearly $4.71 million loan, $3.37 million in historic tax credits, $2 million in tax increments, $293,750 in state housing tax credits and $138,790 from other sources.
The project provided 10 units for renters below 50 percent, 43 for those below 60 percent, nine at market rate, and one for a resident manager. It cost almost $22.92 million at $363,807 per unit.
For Cornerstone Apartments, on East 50th Place on the Chicago’s South Side, the city provided assistance with about $9.55 million in tax credit equity, $1.61 million in state housing tax credits, $2 million in tax increments, a $1.25 million loan, and $995,705 from other sources.
The project provided 12 units for renters below 50 percent of median income, 40 for renters below 60 percent, and seven for renters below 80 percent. It cost $15.51 million at $262,841 per unit.
In all the activity last year, totaling about $170 million, less than two percent of the money came from the fund of developer fees.
The fund supplied $506,394 for Woodlawn Park and $2.1 million for Cornerstone.