City's housing efforts hit by downturn
The city fell short of its goal for building affordable housing units in 2007, a development that officials attribute to rising construction costs and fallout from the housing slump.
These findings and others from the Housing Department's fourth quarter 2007 report provided the topic of discussion for a meeting of City Council's housing committee today. The report documents the department's progress toward meeting goals of its five-year affordable housing plan.
According to the report, the Department of Housing spent over $661 million to build, preserve and renovate over 10,000 units of affordable housing in 2007. That figure represents 83 percent of its goal.
The department had projected spending only $537 million to support 12, 309 units of housing.
Housing commissioner Ellen K. Sahli attributed this partly to a "significant increase" in construction costs.
With the credit and housing markets reeling, Sahli says overall it's a challenging environment in which to develop affordable housing.
One effect of the housing crisis has been to reduce the price of low-income housing tax credits, the sale of which is a primary source of funding for the department's affordable housing projects.
Mortgage lenders Fannie Mae and Freddie Mac have been large purchasers of these credits in the past.
With the downswing in the real estate market, however, developers are less interested in tax credits because their tax rates are declining along with their profits.
Among the units in the department's plan are some also included in the Chicago Housing Authority's Plan for Transformation, a $1.6 billion program to move residents of the city's traditional housing projects into mixed-income communities and private market housing by 2015.
The housing downturn has affected those efforts as well.
"I have talked to developers and they're not selling any units," says Ald. Toni Preckwinkle (D-4), who has three mixed-income transformation projects in her ward. "The idea that we're going to have mixed income developments that include both rental and for-sale housing is in peril at the moment."
Sahli agrees that the city's public housing initiatives are facing the same challenges as other sectors of the housing market.
"We're all very concerned about developments in the housing market," Sahli.
Kevin Jackson, executive director of the Chicago Rebab Network, a coalition of housing non-profits, had several recommendations for the department. They included choosing nonprofits as developers, lease arrangements that would allow families in foreclosure to remain in their homes, and leasing homes already vacated through foreclosure.