Ald. Austin got federally backed loan to buy home in development subsidized by taxpayers
The longtime 34th Ward alderman, who is under federal investigation, used a Federal Housing Administration mortgage — designed to help low- to moderate-income homebuyers — to cover almost the entire purchase price.
Ald. Carrie Austin got a $231,000 federal housing loan to purchase a home in a development that’s in line to get millions of dollars in city subsidies, records show.
The longtime 34th Ward alderman used a Federal Housing Administration mortgage — usually designed to help low- to moderate-income homebuyers —to cover almost the entire purchase amount of $236,000 for the single-family home in the 12200 block of South Laflin Street that she purchased in October 2018. The home is part of a larger $25 million Renaissance Estates development, by JTA Development Inc., earmarked for $5.5 million in tax increment finance money.
Austin’s home is a focus of federal investigators’ interest, according to a grand jury subpoena reviewed by the Sun-Times. Among other items, the subpoena asks for records related to the construction, purchase and financing of the home. Austin purchased the home as the feds were investigating her as part of wide-ranging probes of Chicago aldermen, sources said.
Today, eight months after the purchase, the Cook County assessor’s office estimates Austin’s home is worth at least $500,000.
On Wednesday, FBI agents carried out boxes of records and at least one computer during a raid of Austin’s ward office. They also took a roll of construction plans by an architect who designed her house and other homes for the Deerfield-based JTA Development.
Austin has not been charged with any wrongdoing. Her attorney could not be reached. She has denied wrongdoing and told CBS 2 she plans to return to work.
Austin, Chicaggo’s second-longest serving alderman, is the latest member of the City Council to face federal scrutiny. The longest-serving, Ald. Ed Burke (14th), was indicted last month on 14 counts in a political corruption case. Helping the FBI build that case was former Ald. Danny Solis, who secretly recorded Burke and others for more than two years by wearing a wire. Solis has not been charged. Burke denies any wrongdoing.
In October, Austin upsized from a modest, 1,250-square-foot, 94-year-old frame house with A’s on its awnings in Roseland across the street from her ward office, to a new 2,900-square-foot brick home in West Pullman, that boasts, according to the Cook County assessor’s office, three and a half baths and a two-car garage on a corner lot. Austin bought the house and property around it which spans three standard city lots, property records show.
Representing Austin at the Oct. 1 closing was Latasha Thomas, the former alderman of the 17th Ward, who now works as an attorney at Clark Hill, the firm also handling Austin’s criminal defense.
Thomas could not be reached Friday.
The 70-year-old alderman took out a 30-year FHA loan for $231,353 from Wintrust Bank at 4.875% interest to buy the home from JTA Development, records show.
Austin’s new house would cost $300,000 to build, a 2016 building permit estimated.
Federal Housing Administration loans were designed to help low- to middle-income buyers become homeowners because the loans, guaranteed by the federal government, require smaller down payments and lower credit scores than conventional mortgages. They also frequently offer lower closing costs and borrowing rates.
As an alderman, Austin earns about $120,000.
JTA Development is owned by John Powen, a former attorney at the clout-heavy firm of Sidley Austin LLP.
Earlier this week, Powen refused to confirm or deny that he had been questioned by federal investigators probing the construction and sale of Austin’s home.
“I’m not gonna get into it. I’ve never been through anything like this . . . I don’t know what to make of all this . . . It feels kind of shocking a little bit. I don’t want to comment further,” Powen said.
“But in terms of the house sale, everything was just above board and straight in terms of the paperwork,” Powen said.
Powen said JTA has a contract with Austin “as you would do with most” homeowners and he dealt directly with the alderman “at times.”
Powen’s company built Renaissance Estates, a townhouse complex next to Austin’s house on previously vacant land, with millions in city help.
In 2006, Powen laid out plans to the city for a $20 million, 86-unit development, which consisted of up to 80 townhomes and six single-family houses. At least 20% of the units would be set aside for affordable housing. The project since has risen in value to $25 million.
As part of a 2006 redevelopment deal, the city agreed to sell JTA Development eight lots for $1 each that would be combined with other property owned by Powen. The project spans 122nd and 123rd streets, Ashland Avenue and the Illinois Central Railroad tracks.
In 2010, the City Council approved $3.6 million in tax subsidies for JTA to buy the land and clean it up. The City Council increased those subsidies to $5.5 million last year, including $940,000 for land JTA bought. Austin abstained from both votes.