$34M Multifamily Rental Phase Gets TIF Boost

CHICAGO-Tax increment financing of $3 million to $4.83 million will help build the first phase of a mixed-income residential development on the Chicago Housing Authority’s former Madden/Wells project. Without heavy government financial assistance, the $34.1-million, 163-unit multifamily rental phase would not generate adequate cash flow, the city’s community development commission was told Tuesday.

In addition to one-third of the units reserved by former residents of CHA housing projects, the city is requiring another one-third to be affordable to residents earning 60% of the area median income or less.

Madden Wells Phase 1A Limited Partnership, a partnership consisting of East Coast-based affordable housing experts Community Builders and local Granite Development, will negotiate a redevelopment agreement with the city. Community development commission chairman Joe Williams, who abstained from discussions and commission vote, is a partner in Granite Development.

Construction is expected to begin this spring on the project, being built on a 17-acre site at Pershing and Ellis avenues in the city’s Oakland-Kenwood neighborhood.

In addition to a tax increment financing package that will balloon to nearly $5 million if property tax abatement for part of the project is not forthcoming, 53% of the costs are coming from city department of housing HOME funds, the CHA and the Federal Home Loan Bank, the commission was told. Low-income housing tax credits also will be sold to provide equity, according to the department of planning and development.

In addition, financing provided by Prairie Mortgage considers the tax increment as well as operating income, notes department of housing commissioner Jack Markowski. “We see a lot of different forms of TIF assistance,” he adds. “But this is a very efficient form of financing.”

Eventually, the project will include 183 for-sale units and an additional phase of 162 rental units, according to the developers’ plans. While some commissioners wonder if the for-sale units will find a market considering they will be surrounded by subsidized and affordable rental units.

“(Community Builders) has experience across the country with these kind of mixed-use developments,” notes 4th Ward Alderman Toni Preckwinkle. She also notes a 225-unit mixed-use development already is located four blocks south. “Given our success there, I don’t know why we can’t be successful here with good management.”