Politics
Mayor Brandon Johnson’s New Approach to Building Affordable Housing in Chicago Faces Skeptical City Council
Mayor Brandon Johnson’s effort to take a new approach to reducing Chicago’s massive affordable housing shortfall by creating a city-owned nonprofit housing developer faced deeply skeptical City Council members Wednesday, delaying a planned vote.
Even though the joint session of the Housing and Finance committees lasted more than four hours, several alderpeople said they were not prepared to vote on the proposal designed to leverage the city’s financial power to build what the city calls “green social housing,” permanently affordable, mixed-income and environmentally sustainable housing.
The joint committee will reconvene at 12:30 p.m. on April 14, giving alderpeople another opportunity to advance the plan after four days of additional negotiations and discussions. That could set up a final vote by the full City Council on the proposal on April 16.
The nonprofit developer, which would be known as the Residential Investment Corp. and operated by the Department of Housing, would be funded with $135 million from the $1.25 billion bond measure approved by the City Council a year ago.
“We are facing a critical moment, a moment that will determine how we respond to the ever-growing national crisis here in Chicago and how we will shape our city’s future,” Department of Housing Commissioner Lissette Casteñeda said. “This is an innovative plan that provides permanent affordability, supports mixed income communities, and promotes environmentally sustainable housing without relying on overburdened federal programs.”
Casteñeda and other city officials faced detailed questions about the structure of the nonprofit developer.
Despite deep skepticism about the structure of the program, even City Council members who routinely oppose the mayor’s programs and initiatives endorsed the concept as a way to speed the construction of affordable housing.
“The concept, the idea, is a good one, but my god the devil is in the details,” said Ald. Brendan Reilly (42nd Ward), who compared the act of creating the new nonprofit to handing the keys to a very expensive car to an untested driver. “I think this could be a great tool for Chicago but we have to get it right.”
The board that will run the nonprofit must be subject to state laws that require meetings to take place in public and require its records to be subject to the Freedom of Information Act, Reilly and other alderpeople said.
Casteñeda said that the nonprofit would abide by those rules.
Ald. Scott Waguespack (32nd Ward) said that board members, who would be appointed by the mayor and confirmed by the City Council, should serve terms no longer than three years, not the five years as proposed.
The nonprofit would make low-interest three- to five-year loans to affordable housing developers through a first-of-its-kind initiative, officials said. Chicago would be the largest city to set up its own nonprofit development arm.
“This financing model will ensure that we have a consistent funding commitment to answer our need for housing units that meet green building standards, and it will make Chicago a national leader for innovatively and steadfastly investing in our communities,” Johnson said in a statement.
The measure set for a vote does not spend any of the bond proceeds. Individual projects that request $5 million or more from the city require separate City Council approval.
Chicago faces an affordable housing shortfall of more than 119,000 units, and more than half of Chicagoans spend more than 30% of their income on rent and utilities, making them burdened by housing costs.
The goal of the program would be to build 400 affordable units annually, officials said. The nonprofit could also make loans to organizations working to rehabilitate existing residential buildings.
The effort would give affordable housing developers a way to finance their projects without relying on federal income tax credits or raising money from private equity funds, officials said.
In each development, a minimum of 30% of the units must be made permanently affordable for households earning no more than 80% of the area median income, which is $89,700 for a family of four, according to the proposal.
The buildings must also meet sustainability standards designed to decrease carbon emissions, save on energy bills and improve indoor air quality, according to the proposal.
The city, through its nonprofit housing developer, would own a majority stake in the buildings, which would be run by a management firm, according to the proposal.
Contact Heather Cherone: @HeatherCherone | (773) 569-1863 | [email protected]
