The city’s Housing & Community Development Committee on Tuesday, Jan. 17, recommended providing $4 million in gap financing to a non-profit developer partnering with a local church to create 44 affordable housing units at 1805-15 Church St., just east of Dodge Avenue.
Committee members voted unanimously at their meeting in favor of the financing for the Housing Opportunity Development Corporation (HODC), using a combination of Tax Increment Financing (TIF) and affordable-housing funds.
The committee’s recommendation will next go to the full city council, which has final say on the request.
The funding will draw on $1 million of the $2 million currently in the city’s affordable housing fund.
The $3 million in TIF money will come out of the West Evanston TIF, which the city has eyed to fund a number of other projects.
Funding reflects focus on affordable housing
Paul Zalmezak, the city’s economic development manager, told committee members that once they commit the $3 million from that fund, “and we accommodate some of the infrastructure planning that’s already underway in that TIF district – including lead pipe replacements, water main improvements, etc. – we are going to really have this TIF tapped out. There will not be additional funds for other projects.
“That’s only just underlining the fact that we have to hold our priorities,” he said, referring to the importance of affordable housing.
To reduce the dependence on TIF, staff also broached the possibility of using the city’s fast-diminishing federal Covid relief funds as an alternate source of funding. An update on the status of the $43.1 in American Rescue Plan Act funds the city initially received is expected at the Jan. 23 city council meeting.
In the project, Mt. Pisgah Ministry, whose church is located immediately west of the project site, is partnering with HODC to develop the two-parcel site with a mixed-use development with retail and rental housing that is affordable, as well as a new and larger church.
The Mount Pisgah project has been in the city’s pipeline for some time. On Feb. 8, 2021, members of the former city council voted to authorize the city manager to negotiate the sale of then city-owned lots to the church so it could move forward in its partnership with HODC on the project.
HODC has already received approval of its application to the state and will receive close to $13.5 million in Illinois Low Income Housing Credits, which will provide the bulk of the financing for the project.
The agency is requesting the $4 million in funding from the city. Of that amount, $2.5 million will be earmarked for the housing portion of the project and $1.5 million for the retail/commercial space and parking, said Marion Johnson, the city’s housing and grants supervisor, in a memo.
At the meeting, conducted virtually, Richard Koenig, executive director of HODC, told committee members that the group is requesting the funding from the city to fill a portion of the gap of the project’s full cost.
“We really wish the costs could be lower, but ‘affordable’ on the operating side does not mean ‘affordable’ on the development side,” he said. “We do pay market rates for construction; we pay union wages; we do pay for quality construction materials.”
HODC is a community-based nonprofit developer that has been developing affordable housing, primarily in the northern suburbs, including Evanston, going on 40 years.
Koenig told committee members that the agency is “excited about the opportunity to try and help revitalize this area and build this new building and create affordable housing long term and really be an asset to the community.”
According to staff, the proposal would increase the supply of affordable housing by providing 44 new units for households with income from 30% to 60% of the Area Median Income (AMI).
For a household of three, the AMI stands at $28,510 at the 30% income level, and $56,280 at 60%, figures show.
Staff noted that 11 of the units have been approved for Housing Authority of Cook County project-based vouchers, which allow residents to pay 30% of their income toward rent and utilities, with HACC paying the rest.
Committee members Hugo Rodriguez and Loren Berlin asked Koenig why the program was not using more vouchers.
Koenig noted there just are not that many vouchers available.
“And the goal really is to be able to serve households with lower incomes, without the vouchers,” he said. “You have a job paying in the $15 to $20-an-hour range and you can afford that with this amount, and we don’t need to vouchers to make it.”
Rodriguez also asked officials whether any assurance could be given that Evanston residents will get first preference for housing once the project is completed.
Koenig said current federal housing laws do not allow those types of preferences. At the same time, he said HODC has specifically asked whether the agency, based on particular circumstances, would be allowed to use the preferences for Evanston residents in the project.
Although the committee vote was unanimous in favor of the funding, Carlis Sutton, a longtime resident and landlord in the ward, voiced strong criticism.
Sutton said he was “appalled” by the group’s vote, maintaining that the majority of residents in the community do not want the development.
“You have not done a traffic study. You have not done any kind of studies of the people who would be adversely affected by this development,” he charged.