Housing Initiative Transactional Clinic - Significant Achievements for 2022-23

Students in the Housing Initiative Transactional Clinic provide legal representation on complex real estate development projects to build affordable housing. Clients include nonprofit, community-based affordable housing developers and housing cooperatives.

Students serve as deal lawyers, working with clients and teams of professionals—such as financial consultants, architects, marketing professionals, property managers, and social service providers—to bring affordable housing and mixed-use development projects to fruition. Projects range from single family rehabs with budgets in the $30,000 to $75,000 range, to multimillion-dollar rental and mixed-use projects financed by low-income housing tax credits, tax exempt bonds, TIF, and other layered subsidies. Students also counsel nonprofit clients on governance and tax issues related to their work.

In the 2022-2023 academic year, some of the key clinic projects are described below.

Cabrini Green Local Advisory Council Community Development Corporation.

The clinic advised the CDC as it made progress with its developer partners on two major redevelopment projects that will serve mixed income tenants on sites that formerly held Cabrini Green public housing projects. Students supported the all-volunteer board of the CDC in their participation in planning efforts and financing applications for two upcoming joint venture projects.

At Parkside of Old Town, in conjunction with Holsten Development, the next phase will include approximately 99 rental units distributed among four buildings, providing a mix of market rate and affordable housing on land owned by the Chicago Housing Authority. Over half of the new units will be affordable, allowing low-income families access to a neighborhood that has a wealth of community assets including multiple grocery stores, convenience shopping, daycare options, employment opportunities, and access to transportation. Construction costs are estimated to be approximately $51,000,000, with a capital stack that includes low-income housing tax credits, State of Illinois Affordable Housing Tax Credits, tax increment financing, private loans, and governmental loans.

In its joint venture development with the Hunt Companies and Pennrose Development, the CDC’s project will proceed in four parts, starting with construction of infrastructure improvements that will serve the entire site, followed by three phases resulting in construction of approximately 500 rental units and 50 to 75 homeownership units. The housing is anticipated to be approximately 30% market rate, 30% affordable, and 40% for public housing families. The overall construction budget for the rental units is approximately $316,000,000, and the project will feature a similarly complex capital stack as the Parkside of Old Town project described above.

In addition, the clinic provided counsel to the Cabrini Green LAC CDC as the organization transitions from an all-volunteer, operating board of directors to an organization with an expanded board and professional staff. Clinic students provided research and advice on a host of issues typical of those faced by small nonprofits or small businesses making that leap, including employment law, and tax and compliance issues. Students also participated in leading training sessions for new board members to help them understand their legal duties.

Common (Unity) Properties

Common (Unity) Properties is a start-up nonprofit that came out of the Booth School of Business Social New Venture Challenge. The organization is focused on bringing relief to marginalized populations by providing wraparound social services, education, and stable housing. Its services fall into three main categories: affordable housing, educational opportunities, and wellness. Through these services Common Unity aims to help close the racial and generational wealth gap by building sustainable communities for those exiting homelessness or who are at risk of becoming homeless. As the organization is in its very early stages, the work of the clinic thus far has been to draft articles of incorporation and bylaws, and to assist with board and officer recruitment and development.

Housing Opportunities and Maintenance for the Elderly

The clinic represents Housing Opportunities and Maintenance for the Elderly in the rehabilitation of its existing intergenerational housing development, the Pat Crowley House. The Pat Crowley House is a three-story, partially accessible, converted six-flat building located in the Edgewater neighborhood on Chicago’s north side. The building provides a cozy and inviting intergenerational community for 12 seniors, four resident assistants, and one family with children. The clinic negotiated the grant agreement with the Illinois Housing Development Authority, which is providing funding for the renovation, drafted the construction escrow agreement for the construction disbursements, and is currently working with the client and its consultants on the construction contract with the general contractor.

Kenwood-Oakland Community Organization

The Kenwood-Oakland Community Organization (KOCO) serves as a vehicle and voice of low-income and working families, utilizes direct action community organizing as its primary methodology for change, and develops new generations of African American leadership that will build stable, viable, and just communities where opportunity is not denied based on race or economic status. The clinic assisted this venerable community organization by negotiating and drafting the architect agreement for the design of KOCO’s new headquarters and services space. In the next phase of the project, the clinic will assist KOCO in negotiating its financing documents for the development and in drafting the agreement with the general contractor for construction.

Chicago Torture Justice Memorial Foundation

The Chicago Torture Justice Memorial Foundation is working to design and construct a memorial on the southside of Chicago to the survivors of the former Chicago Police Commander Jon Burge, who together with his collaborators tortured and coerced false confessions from innocent people for many years. The memorial will include a sculpture that features the names and dates of victims, a timeline of tortures, and an events and gathering space that allows for reparative and restorative activities like meditation, contemplation, and creative writing. During the 2022-23 academic year, the clinic provided support through assisting the Foundation in negotiating and drafting the architect agreement for the design of the memorial.

Oak Park Regional Housing Center

The clinic represents Oak Park Regional Housing Center (OPRHC) in its Austin United Alliance development project. Since 1972, OPRHC has worked to counteract racial steering in housing and to promote pro-integrative choices through affirmative marketing. OPRHC promotes a racially balanced rental market by providing information and referrals to thousands of apartment seekers each year and by offering homeownership and rental counseling programs.

The clinic supports OPRHC in its joint venture to develop a mixed income, mixed use project in the Austin neighborhood of Chicago. The $37.5 million project, known as Austin United Alliance, will renovate the historically significant, 1920s-era Laramie Bank, featuring an ornate terra-cotta exterior, and will redevelop surrounding vacant lots into a new six-story structure containing 72 units of mixed-income housing. The residential portion will be set back from the street to create a new community plaza along a busy boulevard in Austin. Under the plan, the historic landmark Laramie Bank will once again house a bank branch as well as a cafe space, business incubator, and a museum dedicated to blues music.

Clinic students have worked on all aspects of the transaction, including negotiation of the joint venture agreement with OPRHC’s co-developer, all the financing documents, the construction contract, the architect agreement, property management agreements, and many more. The focus in 2022-23 has been on the residential portion of the project, and in the next phase the clinic will work on the documentation for the historic rehab and buildout of the Laramie Bank building.

Community Male Empowerment Project

A longstanding client of the clinic, the Community Male Empowerment Project (CMEP) provides training and employment opportunities to disadvantaged populations through the mechanism of renovation of distressed single-family properties. In 2022-23, the clinic represented CMEP in broadening its sources of lender financing for its renovation projects, culminating in a closing on a line of credit extension with a major Chicago-area nonprofit bank. In addition, the clinic represented CMEP in drafting and negotiating the construction contract for its next single family renovation project.

Pilsen Housing Cooperative

The Pilsen Housing Cooperative (“PIHCO”) was formed by longstanding Pilsen neighborhood residents—many of them artists—to stem the tide of gentrification in their neighborhood. PIHCO offers limited equity cooperative units to lower income families who have strong ties to Pilsen. The pricing of the housing is designed to keep the apartments affordable for the long term, and provides an essential homeownership opportunity for families who otherwise could not afford to stay in their neighborhood. In 2022-23, the clinic represented PIHCO in the acquisition of its third multifamily building in the neighborhood, and the conversion of the property into limited equity cooperative units. Students negotiated and drafted the building purchase agreement, participated in the real estate closing at the title company, and drafted the membership share purchase agreements and occupancy agreements for the new members entering PIHCO. In addition, the clinic negotiated a grant agreement with the City of Chicago and lender financing documents in support of the acquisition, and counseled PIHCO on tax and compliance issues, including obligations under the Uniform Relocation Act and related City policies.

Chicago Family Housing Community

Chicago Family Housing Community (CFHC) is a new, affordable housing cooperative that emphasizes shared childcare, communal spaces and community events, and intentional inclusivity of people of different races, classes, genders, sexual orientations, and other social identities. In 2022-23, the clinic represented CFHC in closing on the acquisition of its first multifamily building in Chicago. Students negotiated the building purchase agreement and lender financing documents, participated in the closing with the title company, and worked on the drafting of the the co-op’s bylaws, membership purchase agreements, and occupancy agreements.

Voice of the People in Uptown

Voice of the People in Uptown (“Voice”) is a longstanding community development corporation and service organization in Chicago’s Uptown neighborhood on the north side of the City. The clinic has worked with Voice on the incubation of a new community land trust that would serve as a vehicle for permanent affordability of multifamily housing in Voice’s service area and beyond. As the City continues to gentrify on the north side, and to segregate by race in most of its neighborhoods, Voice’s community land trust project is integral both to preserving affordable housing on the north side and to preserving what racial integration does currently exist there. The clinic counseled Voice in the planning for the community land trust—now officially launched as the Dovie Thurman Affordable Housing Trust—and then in the drafting of articles of incorporation, bylaws, and the form of affordable housing covenant that the trust will use to maintain affordability.

Greater Chatham Initiative – Mahalia Jackson Court

Greater Chatham Initiative (“GCI”) was formed in 2016 to perform the role of a strong local anchor institution—by coordinating, planning, and fundraising for key synergistic initiatives in its focus neighborhoods on the Chicago’s south side. In 2022-23, the clinic represented GCI in its development of the Mahalia Jackson Court, a pop-up plaza that enlivens otherwise vacant City lots by bringing entertainment, commerce, and a celebration of Mahalia Jackson, widely considered to be one of the most influential vocalists ever from Chicago. The clinic represented GCI in negotiating and drafting the construction contract, site control documents, and financing agreements for the construction of the plaza. The project’s documentation included an agreement with the artist who was commissioned to create a larger-than-life sculpture of Mahalia Jackson to be installed at the site.

Jumpstart Housing Cooperative

Jumpstart is a new, affordable housing cooperative started by members of ChiFresh Kitchen, a worker cooperative with businesses on the south and west sides of Chicago. Clinic students have worked with Jumpstart on the negotiation and drafting of the purchase agreement for the co-op’s first multifamily building, in Chicago’s Bronzeville neighborhood. In addition, the clinic has drafted the articles of incorporation, bylaws, membership purchase agreements, and occupancy agreements for the co-op. Closing on the co-op’s first building acquisition is expected to occur in the summer of 2023.

Legislation for Additional Support for Limited Equity Housing Cooperatives

Working with a coalition of affordable housing cooperative supporters, including key personnel from the Pilsen Housing Cooperative, clinic students drafted a new law that was enacted by the State of Illinois to provide financial and technical support for affordable (limited equity) housing cooperatives. Limited equity housing cooperatives provide a model for homeownership in which residents collectively own and democratically control their building, in that each resident owns an equal share of their building and has equal voting rights for decisions about managing the building. Limited equity coops make it easier for those who struggle to qualify for individual mortgages to still achieve homeownership, and offer the benefits of affordability, housing stability, and resident control.

When Housing Initiative clinic students canvassed lenders in the Chicago area in 2020, the clinic found that housing cooperative share loans are much more difficult to access than other types of homeownership financing in the Chicago market. Only three lenders claimed to offer share loans at all, and none of those loan products were accessible to low- or moderate-income buyers. Lenders cite a small market share for co-ops, (unspecified) regulatory barriers, and restrictive underwriting requirements as reasons for not offering a share loan product. The Illinois Housing Development Authority, which offers down payment assistance and a reduced interest rate to other kinds of homebuyers, does not make its subsidies available to co-op purchasers. And, although there are lenders that offer building acquisition loans to co-ops, those resources are also much more limited than the lending market for condominium development.

Furthermore, existing co-ops are under threat. The same profit-minded investors who are purchasing large inventories of Chicago rental buildings and 2-4 flats are also targeting co-ops by buying co-op shares and seeking to deconvert the buildings to rental.

New initiatives are needed to build a robust lending market for co-ops. Giving co-op residents more opportunities to refinance their monthly housing costs and maintain their homes, through an accessible share loan product and affordable blanket mortgages on co-op buildings, will help to preserve and grow this important affordable housing resource.

The new law drafted by the clinic mandates that the Illinois Housing Development Authority each year devote one percent of its budget “to support limited-equity cooperative housing through programs and subsidies for cooperative homebuyer assistance, building acquisition and renovation, assistance with monthly housing charges, predevelopment funding, and technical assistance.” This financial commitment should be manageable for the Authority, and will spark the development of new share loan and building acquisition programs that can grow over time and serve as models for other lenders in the State. The legislation was introduced by Representative Theresa Mah as House Bill HB3291 and was enacted as Article 150 of the FY2024 Budget Implementation Act, available at https://legiscan.com/IL/text/HB3817/2023.