A number of affordable housing units developed by Evanston Community Housing Development Organizations (CHDOs) and subsidized by the City with federal HOME funds sit vacant because the CHDOs have not been able to find qualified buyers. On Aug.10, the CHDOs appeared before the City’s Planning and Development Committee, asking for assistance to pay the debt service on loans taken out to finance part of the developments.
Although Council had previously provided such assistance, and although the City could end up owing the federal government close to $750,000 if the projects fail, no cash assistance was forthcoming the night of Aug. 10, because at least two aldermen refused to continue spending housing dollars on the vacant units.
More than two years ago, Reba Place Development Corporation and Evanston Community Development Association, the CHDOs seeking aid, had a vision that they could develop affordable condominium units and sell them to lower-income home seekers. The City provided the CHDOs with significant financial assistance through the federal HOME program.
The developments, a 12-unit (11 affordable) building at 602 Mulford and a six-unit building at 736-38 Dobson, still have vacant units. To date, seven of the Mulford and three of the Dobson units remain vacant. Foreclosures and plummeting home prices have rendered many area homes just as affordable as these subsidized projects.
Six months ago the CHDOs asked City Council for assistance in paying debt service or “carrying costs” on the unsold units. Council reluctantly agreed, but some members indicated at that time that the subsidy would be the last of its kind.
Nevertheless, the CHDOs appeared before the P & D Committee on Aug. 10 looking for more help. This time, City staff recommended a two-part assistance package: carrying-cost assistance for another six months totaling at most $26,400 in HOME funds, plus an additional $175,000 in direct aid to lower the asking price on the unsold units. Members of the Committee did not even discuss part two because they could not get past part one.
Interim Community Development Director Dennis Marino pointed out that the City subsidized the developments using federal HOME funds, and that regulations of the Department of Housing and Urban Development (HUD) require that the funds produce affordable housing units. If the projects failed, HUD could ask the City to return any HOME funds used toward the rehab of any unit that did not ultimately meet HUD’s definition of affordable housing, Mr. Marino said. As a result, the “$26,400 [in additional carrying costs] secures an exposure of about $700,000 that we’re at risk to lose,” he said.
Alderman Ann Rainey, 8th Ward, was not swayed. “There’s probably no other issue over the past year that I’m more opposed to than this. … This was a bad idea to begin with, and bad decisions were made by both of these organizations. … This Council has no business supporting this any longer.”
Ald. Wilson also sought to extract the City from these projects. “I would like to see one or two exit strategies [that could] get us out, preferably without returning money to the [federal government].”
Asked when the City would have to repay HUD, neither Mr. Marino nor the City’s Housing Planner Donna Spicuzza knew the answer. “The time period is negotiable with HUD,” said Mr. Marino.
When asked by Ald. Rainey what would happen if Council granted additional assistance and the units still failed to sell, Ms. Spicuzza replied, “It would increase our obligation [to be repaid to HUD].”
Keith Banks of the Evanston Community Development Association pleaded with the City to not “turn its back on us.” He told members of the P & D Committee, “We’re not discouraged. We’ll get this done,” arguing there is a real need for affordable housing in Evanston and that the failure of the project thus far was due to economic conditions.
Ald. Wilson responded by agreeing that there is a housing problem, but said, “the concept here is that we’re continuing to spend money on vacant space. People need help paying rent, and we’re [spending our affordable housing dollars] paying for empty space… We want it to work out, but we need to see some other alternatives, other than continuing to write checks.”
With two aldermen opposed, Mr. Marino agreed to return the matter to staff for the formulation of alternative solutions. The number of parties working on the solution grew, as Ald. Rainey stated, “I would like to be involved in those discussions,” and Ald. Wilson could be seen after the P & D Committee meeting deep in discussion with Mr. Banks and David Janssen, Reba Place Development Corporation director, already trying to find possible solutions.