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Mayor Lori E. Lightfoot announced today that nearly $400 million in affordable housing construction projects have been selected to move forward through the City’s improved, more targeted and transparent federal tax credit allocation distribution process.
The 11 projects reflect the diversity of Chicago’s neighborhoods. All told, the developments will create 1,083 units of affordable housing in Pilsen, Humboldt Park, Woodlawn and several other communities across the North, South and West sides of the city. The creation and equitable distribution of affordable housing throughout Chicago’s 50 wards and 77 communities is a top priority for Mayor Lightfoot.
“Taken together, these projects represent the dynamic innovation and partnership our city is bringing to expand affordable housing across each of Chicago’s communities and neighborhoods,” Mayor Lightfoot said. “Our future rests on keeping Chicago safe and affordable for every family and resident, providing them the stability and foundation we all need lay to down roots, start a family, grow a business, and pursue our dreams.”
Chosen from a pool of 43 applications, the 11 projects are an exciting mix of new construction, rehabilitation and innovation, including the winner of an international sustainable design competition in East Garfield Park using first-of-its’-kind modular construction produced in a factory here in Chicago.
The projects are the first selected under the City’s improved Qualified Allocation Plan, or QAP. Each year, the City of Chicago receives an allocation of federal Low-Income Housing Tax Credits (LIHTC) to create affordable rental housing. The QAP encompasses the application requirements and selection criteria for receiving these federal tax credits and tax exempt bonds.
LIHTC is a public-private partnership in which investors provide equity for low income rental properties in exchange for a federal tax credit. LIHTC is the most significant resource for creating affordable housing in the United States today. Without the equity generated from the sale of these tax credits, affordable rental housing projects often do not generate sufficient funds to work financially. The City of Chicago receives a limited number of these housing tax credits to allocate each year based on its population.
In the past, a lack of consistency on a QAP release date hampered the development community’s ability to plan for new affordable developments. Moving forward, the Department of Housing (DOH) will update the QAP and host a funding round every other June, with the next round coming in June 2021.
The 2019 QAP was designed with unprecedented transparency to help developers apply for Low Income Housing Tax Credits. For the first time, the City’s allocation plan specified three market types to receive priority consideration:
“Federal tax credits are the heart and soul of the affordable housing community — they’re the biggest opportunity we have to make an impact,” said Department of Housing (DOH) Commissioner Marisa Novara. “This year’s QAP gave clear selection criteria to ensure tax credits go to projects that meet Chicago’s most pressing housing needs.”
Total development costs for the 11 projects are estimated at $398 million and include all public and private resources: $13.2M in 9% Low Income Housing Tax Credits to generate an estimated $126.2 million in private resources and equity; an estimated $60.4 million in federal subsidy and $23.5 million in tax increment financing (TIF).
The selected projects are:
The projects will now move forward with project underwriting, design review, zoning approvals and City Council approvals for any public subsidy. Closing on these projects is anticipated within the next 8 to 14 months. A complete list of the 43 projects that applied for the 2019 funding round can be found at www.chicago.gov/qap.