Affordable Housing Planned in Lawndale Neighborhood

Posted on: January 23rd, 2013 by admin

A venture led by developer Cullen Davis is trying to line up financing for an affordable-housing project in the city’s Lawndale neighborhood, a stiff task given the limited amount of low-income housing tax credits that help fund such projects.

Mr. Davis, son of politically connected Chicago investor and developer Allison Davis, wants to develop a 49-unit building at a vacant lot at 2850 W. Harrison St., said Jessica Berzac, a consultant working on the project for Mr. Davis’s development entity, Chicago-based UP Development LLC. The four-story facility would provide housing and social services for adults with physical and mental disabilities.

With a $16 million price tag, Mr. Davis hopes to win enough low-income housing tax credits from the Illinois Housing Development Authority (IDHA), the state agency that distributes them, to raise about $12 million in equity, Ms. Berzac said.

In tax credit deals, companies buy credits as a way to shield their profits and provide financing for affordable-housing projects. The market for tax credits today is “robust,” said David Doig, president of Chicago-based Chicago Neighborhood Initiatives Inc., the non-profit developing the Pullman Park project in Roseland on the South Side.

It’s a big change from the years after the financial crisis, when the credits lost value as corporate profits sunk, pressuring affordable-housing developers. Money-making banks and oil companies, Mr. Doig said, are back in the market, seeking to make investments in the credits.

The challenge, Mr. Doig said, is securing the credits from the state amid fierce competition from other developers.

“It’s tough to get tax credits,” he said. “But if you get them, it gives you a basis to line up other financing,” usually in the form other government grants and housing subsidies.

Ms. Berzac acknowledged the difficulty in winning tax credits but said the firm’s inclusion of on-site services to tenants in its proposal should give the group an edge as IDHA considers applications for the credits this spring.

“We have a strong track record. A lot of developers are not necessary doing the permanent, supportive housing model,” she said, adding that tenants wouldn’t pay more than 30 percent of the income in rent.

Providers slated to operate at the development include two Chicago-based non-profits: Thresholds, a mental health organization, and the Near West Side Community Development Corp., which is also an ownership partner in the development, according to Ms. Berzac.

An IDHA spokeswoman declined to discuss Mr. Davis’ application for tax credits.

In addition to the credits, Ms. Berzac said the firm is seeking money from the city of Chicago, through an affordable-housing financing effort called the HOME Investment Partnership Program.

Mr. Davis’ firm owns about 400 affordable housing units across the state, Ms. Berzac said, as well as conventional rental buildings. It also owns property management firms Hallmark & Johnson Properties Ltd. and UPA LLC, which together manage more than 5,000 residential units in the Chicago area.

Last week, the City Council signed off on a zoning change permitting Mr. Davis’s proposed development.

“It has to have some ripple affect to help that community over there,” said Ald. Robert Fioretti (2nd), who represents the area in the City Council. “It can’t just be an island.”

While Cullen Davis is not as well known as his father, his property management firm Urban Property Advisors made news in 2008 when a gate at the Cabrini-Green public housing complex, where the company had a management contract, fell on a three-year-old child, killing him. The Chicago Housing Authority suspended the firm.

The mother of the child later settled a wrongful-death suit she filed against the housing authority and Mr. Davis’ firm for $2 million, according to an article last year in the Chicago Sun-Times.

Read More Here
View Original Article Here