Chicago NSP helps fill demand for affordable rental housing
When Chicago first applied for Neighborhood Stabilization Program funds to help stabilize neighborhoods hit hard by foreclosures in 2008, it imagined that most of that money would go toward buying and rehabbing foreclosed single-family houses and getting them into the hands of homeowners. City officials thought only about 40 percent of their NSP money would go towards creating affordable rental apartments.
The 46-unit building at 60th Street and Indiana Avenue, formerly a neighborhood eyesore, was acquired and renovated through NSP.
“Very early on that flip-flopped,” said Katie Ludwig, the assistant commissioner in the city’s Department of Housing and Economic Development who helped apply for, and helps administer, Chicago’s NSP.
One reason for the switch was that the city, and Mercy Portfolio Services, which administers NSP, was discovering more and more multi-unit apartment buildings in distress. Some of those buildings, which can span entire city blocks, were abandoned and deteriorating, and their hulking remains cast foreboding shadows through many neighborhoods.
Meanwhile, “People think landlords are raking in cash hand over fist,” Ludwig said. “But when renters are having a hard time paying their rent, yes, you can evict people, but that’s not easy – it’s long and costly. And in the meantime they’re not paying rent. How are you supposed to maintain your building? Pay your taxes?”
Leasing agent Jim Watts, left, in one of the apartments on Indiana Avenue.
And while prices for single-family homes still remain within reach for many people, it’s less common to find someone able or wanting to purchase a multi-unit building that might cost hundreds of thousands of dollars.
But, working with a variety of developers, that’s exactly what NSP has done, and in the next three to four months a number of fully rehabbed larger apartment buildings will open their doors to tenants for the first time in years.
NSP rentals in Washington Park
On South Indiana Avenue, in the Washington Park neighborhood, a 46-unit blonde brick courtyard-style building runs almost the entire block from 60th to 61st streets. In recent years, empty and deteriorating, it had been more a drag on the neighborhood than a benefit. But now, thanks to NSP and Brinshore Development, it’s been completely rehabbed.
Ironwood Courts, as it’s now known, has already leased 28 of its 46 apartments, with plans to fill the rest of the two-, three- and four-bedroom units by the end of the year. Jim Watts, the leasing agent, said he’s had no trouble finding tenants.
“We had some signage up,” said Watts, adding that a lot of people looking at the apartments already live in the area, but are interested in moving to this building.
Two blocks away, at 59th and Wabash, a 36-unit building, St. Edmund’s Court, will open in November, also thanks to NSP. St. Edmund’s Redevelopment Corporation, which is doing the rehab, has been building affordable housing inWashington Park for more than two decades.
“As soon as people see the construction underway, there’s a waiting list,” said Kevina Bronaugh, regional manager for St. Edmund’s. She noted that people looking for affordable apartments come from all walks of life, but that St. Edmund’s properties often include many seniors and single mothers. Affordable housing is not synonymous with the unemployed, though a quarter of all the rental units are set aside for low-income individuals and families. A teacher could qualify for affordable housing, for instance.
Though St. Edmund’s Court is still under construction, building managers are accepting general inquiries about the apartments. They want to know what the potential renters’ annual income is and how many people are in their household. As the project nears completion, they’ll begin processing applications – interviewing potential renters, running credit checks, going on visits to their current homes. They want to have the building full by February.
What Chicago can learn from other locales, and vice versa
Chicago is not alone in thinking about how to use NSP dollars to create affordable rentals and stabilize neighborhoods.
A spokesman for the U.S. Department of Housing and Urban Development, which administers the NSP, said funds are being applied differently in cities and counties across the country, according to each place’s temperament. Some places – such as Detroit and Cuyahoga County, in Ohio – use demolition as a primary strategy for stabilizing communities. Other locales started off with a strategy that emphasized homeownership and have since shifted to more rental approaches.
Katie Ludwig, assistant commissioner in Chicago's Department of Housing and Economic Development, speaking at an NSP event.
In Milwaukee, for example, there is strong demand for affordable rental apartments. Between 400 and 500 rental units were created in Milwaukee using money from the second round of NSP, said Maria Prioletta, the city’s redevelopment manager. She said because more units are at stake than with single-family home transactions, rehabbing apartments allows the city to have a strategic impact on particular neighborhoods.
Ditto for Pinellas County, Florida, which comprises St. Petersburg and Clearwater and has endured a large number of foreclosures in the past few years.
Anthony Jones, the county’s community development director, said the housing crisis showed that homeownership isn’t necessarily good for everyone, especially people of modest means. So he and his colleagues have worked to acquire and rehab rental units as part of their evolving approach to using NSP funds.
When asked if he had any advice for Chicago as it embarks down this new path of creating rentals in concentrated areas, Jones said Chicago should consider putting properties in land trusts, which can impose rental price restrictions beyond the limits required by the NSP, and for longer periods of time.
Maybe, said Ludwig, but land trusts can also serve as a deterrent to potential investors. And, she said, rents are already low in the Chicago neighborhoods where the NSP is focused.
Posted in News