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CHICAGO-City officials will exercise their right of first refusal to acquire 1,240 multifamily units in the Lawndale community from the US Department of Housing and Urban Development, which is looking to dispose to the 97 buildings before winter. Although 25 potential developers have been identified by a request for qualifications, the 97-building package will immediately go to a subsidiary of multifamily lender Community Investment Corp., which will be in charge of handing them off to new owners.

New owners will be able to tap nearly $52 million in HUD matching grants, or about $40,000 per unit, to rehab the properties. In addition, HUD will provide project-based Housing Choice Voucher assistance to tenants that stay in the buildings.

HUD is taking the properties back in lieu of foreclosure from two entities, Lawndale Restoration and Lawndale Douglas, then selling the properties to the city for $20. In turn, the city will sell the buildings to Community Investment Initiatives for $2. Although developers are now doing due diligence on potential acquisitions, HUD requires a quick closing because the units are in need of immediate rehab, federal funds are being cut and the onset of winter could further jeopardize the buildings, according to Angie Marks of the city’s department of housing. Three buildings already have been demolished after being deemed unsafe.

Meanwhile, developers are attempting to convince remaining tenants in the buildings to stay after HUD’s sale. However, 70% of the tenants are electing to take a Housing Choice Voucher and move, Marks reports.

Community Investment Initiatives could act as interim property manager if would-be buyers cannot close quickly, according to a proposal endorsed this week by the community development commission. The department of planning and development got 74 responses to a May request for qualifications, whittling the list to 25.

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