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More Cheap Rents for Chicago

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More Cheap Rents for Chicago

Cook County is losing cheap rental housing.

A new study by DePaul University says by 2020 the number of units will drop by almost 40,000.

The heavy-hitting MacArthur Foundation funded the study, and it’s trying to do something about the findings.

Chicago Public Radio’s Catrin Einhorn reports the foundation is using its money and influence to try to keep cheap rents in Cook County.
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People who think about this stuff will tell you there are two ways low-cost rental housing gets lost.

You can lose it out the top end—for example the apartment building goes condo.

Or you can also lose it out the low end—the building deteriorates until it gets condemned, sometimes torn down.

The 3-story brick building on a corner lot on Chicago’s West Side was in danger of going out the low end.

TAPE: KEYS OPENING DOOR

Standing on new periwinkle blue carpeting inside one of the rehabbed two-bedroom apartments, developer Johnnie Herron says when she got the building, it was a mess.

HERRON: The porches were in disrepair, kitchens were in bad shape, baths were in bad shape.

Across the street, an empty lot speaks to what could have happened.

But Herron got the financing she needed to turn the building around and save its 18 units as rentals.

The MacArthur Foundation’s new initiative wants this scenario to play out more often.

STASCH: Think of the people who live in affordable housing.

MacArthur’s Julia Stasch co-chairs the initiative, which they’re calling The Preservation Compact.

STASCH: A starting-off social worker makes $30,000 or less. A starting-off librarian. People in service positions, a waitress, a maintenance engineer—all the kinds of professions that a vital city needs. And I don’t think we’re the kind of society that says those people should live elsewhere.

MacArthur got together with the Urban Land Institute to create the plan.

It’s not about building more low-cost rental housing—it’s about preserving what’s already here.

MacArthur’s putting $10 million into a fund that would help developers—both non-profit and for profit—get loans to do just that.

MacArthur says banks and other foundations will grow the fund to $100 million.

The idea is that it would help developers like Johnnie Herron buy buildings they otherwise couldn’t afford.

HERRON: If you pay too much for the property on the front end—you know, it can only afford to carry so much debt.
EINHORN: And it’s sometimes hard to make those numbers work? HERRON: If you buy at market rate, it’s not only hard, it’s nigh onto impossible and that’s why you see so much condo conversion, because they can’t make it work as a rental unit.

The initiative will also keep track of low-cost rental housing.

Partners say no one was really doing that, and buildings that aren’t subsidized can be hard to find.

Others face expiring subsidies, and the database would give advocates a heads up so they could negotiate new contracts.

Another aspect of the plan would bring together various levels of government, with the hope they’ll work on affordable rental housing together instead of separately.

City of Chicago Housing Commissioner Jack Markowski says it will save developers a lot of trouble.

MARKOWSKI: Now they go to every different table independently, so they would go to the federal table, the state table, the city table. And you know the state’s asking for one thing and the city’s asking for another. And this will put it together and try to standardize what’s being asked for and standardize the message.

But the whole effort raises a central question: what does affordable housing mean?

A lot of people talk about affordable, but there’s no standard definition.

The DePaul study released with the report defines it as rents that cost less than $750—that’s an amount that a family of four making $30,000 could afford.

The Preservation Fund hasn’t yet said how IT will define affordable, but its apartments would likely often rent for more than $750.

That’s because MacArthur staffers say the fund will probably use a formula that would allow more costly apartments to come under the umbrella of affordable.

It could mean, for example, that a 2-bedroom apartment could go for $927 and 3 bedrooms could go for $1064.

SMITH: If the target is to preserve affordable rental housing, the question always is affordable to whom?

Janet Smith is a professor of urban planning at the University of Illinois at Chicago.

She was on one of the committees MacArthur convened for the project, and she stresses how much she applauds the effort.

But she also worries it won’t reach those who need it most.

SMITH: Because if you look at the target population, which are families earning $30,000 or less, most of those families are very low-income, not what we call low-income, they’re in the $20,000 or less income category. And what they can afford is about $500 a month if they’re not going to be rent burdened. Most of those families right now are rent burdened. They’re renters who are paying 50 percent of their income probably for rent if not more.

Smith also says it’s too bad the initiative didn’t get started a few years ago, while the housing market was hot and so many apartments were going condo.

I’m Catrin Einhorn…Chicago Public Radio

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