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On the same night that City Council and staff discussed goals pertaining to affordable housing initiatives in Evanston, Council voted to deny a request by the Citizen’s Lighthouse Community Land Trust (a Community Housing Development Organization) for an additional $20,000 in HOME funds for a single-family house it rehabbed on Washington Street. The additional money was sought to cover cost overruns attributed by the Trust to the poor economy.
The Housing Commission recommended approval of the request, but the City’s staff did not. The split continued at Council, where the Council voted to side with City staff by the narrowest of margins: 5-4.
The Trust requested the additional HOME funds in order to pay off a new loan obtained when the completed project was sold to its new owner in July, 2009. The loan, provided by North Shore Community Bank, comes due in July 2010. According to the staff memo provided by Council, the loan allowed the Trust to pay off in full a $181,500 acquisition and rehab loan from the same bank when the house sold for only $169,000. The Trust took out the loan without first asking the City if it would be covered.
Speaking on behalf of the Trust, Winfred Gadsen explained that the timing of the closing and the need to act rapidly or lose the sale forced the Trust to take out an additional loan without first clearing the deal with the City. “The closing came fast and we didn’t have time” to get City approval, he said. He admitted that, contrary to representations made at the Feb. 22, 2010, Planning and Development Committee meeting, none of the members of the Trust’s board of directors signed documents that would make them personally liable for the loan. [P&D held this matter in committee awaiting documentation confirming personal liability; none was produced.]
The last moment additional loan was the last chapter in a troubled project. When Council added it all up, the additional $20,000 was just too much for five Council members to swallow.
Alderman Ann Rainey, 8th Ward, said, “I believe this organization made a bad decision to begin with. I think they got some bad advice from our staff.” Citing financials provided by the Trust that showed total development costs close to $336,000 and a sale price of just $169,000, she added, “You can’t explain it.” She also expressed concern that the Trust obtained the loan without first asking the City whether HOME funds would be available.
Alderman Donald Wilson, 4th Ward, said, “[The City] undertook to live up to a commitment and we have lived up to that commitment, but I don’t think we should be in the business of guaranteeing success. … We can’t have a blank-check policy.”
“My no vote goes to the whole concept of a community land trust,” said Alderman Delores Holmes, 5th Ward, who added that she thought the City had already spent more than enough money on the project. The concept, under which the Trust maintains ownership of the real estate while selling the house that sits upon it, thereby, in theory, allowing for more reasonably priced homes, has always been controversial.
The details of the loan seemed to trouble Alderman Jane Grover, 7th Ward, the most. “When was this loan secured? How long has this obligation been outstanding?” she asked, inquiring further whether City staff was involved.
Alderman Coleen Burrus, 9th Ward, agreed with Ald. Wilson that the City had met its obligation fully. “Did they think that if they had a cost overrun they would automatically be given more money?” she asked.
Alderman Lionel Jean-Baptiste, 2nd Ward, was the Trust’s most vocal advocate. He called a vote against the request a change in policy, adding, “I don’t think it’s time for us to change policy…. Once we agree as a Council to support a particular initiative, it’s our initiative.” It would be wrong, he said, to cut off funding after agreeing to support a project, no matter the reason for the overrun. In this case, however, when the overrun was caused by unavoidable economic conditions that affected everyone, it would be particularly troubling.
City Manager Wally Bobkiewicz agreed with the suggestion that the City’s recommendation against the funding request represented a policy shift, saying the City was moving away from “what had become an unlimited checkbook from the City.” He added, “When you weigh the amount of money spent against the value of the project, the money spent outweighs the value.”
Alderman Melissa Wynne, 3rd Ward; Alderman Judy Fiske, 1st Ward and Alderman Mark Tendam, 6th Ward joined Ald. Jean-Baptist in voting to approve the funding request, each citing the difficult economic times as the reason for their vote.
The vote coincided with a report from Community Development Director Lehman Walker outlining the City’s affordable housing strategy and work plan for 2010-11. “I am of the opinion that we should take a hard look at the CHDOS (Community Housing Development Organizations). … We have too many; we should have one or two.”
He said collapsing or combining some CHDOs with the clear implication that the Lighthouse Trust should be combined with other CHDOs or dissolved. “In this instance [the request for $20,000], the decision is based on performance, not cost overruns.”