Heartland Alliance, a Chicago-based social service organization that dates from 1888, is shutting down its division that operates affordable housing developments in Chicago and Wisconsin after laying off 65 workers.
Ed Stellon, the group’s chief external affairs officer, said the nonprofit is “managing a very severe cash flow challenge.”
He said the layoffs were among 125 workers who got temporary furloughs in recent months. “It’s just a terrible situation for them,” Stellon said.
Heartland’s setbacks have prompted speculation from laid-off workers that its housing unit will file for bankruptcy. Stellon said that won’t happen, but the unit has ceased operations.
He said the group is trying to sell its properties while making sure the trouble doesn’t spread to other Heartland services, which include health care and international programs for oppressed people. After the job cuts, Heartland has 1,236 U.S.-based employees, Stellon said.
“Our North Star throughout this process has been preserving the services we offer throughout the globe,” he said.
Heartland’s roughly 1,200 affordable housing units were turned over to receivers in May and June as the organization’s financial troubles mounted. More than 1,000 of the units are in Chicago.
Stellon said in an email to the Sun-Times: “We are currently working with investors and the receivers to transfer the properties to other owners who can continue to operate them as affordable housing. We are cooperating with receivers, public agencies and the investors to try to assure that tax credits are not affected.”
Furlough to termination
A former Heartland Alliance employee told the Sun-Times the organization was “sunsetting” due to financial difficulties and that “a small group of people were making the decisions with everyone else left unaware.”
The former employee, who wanted to remain anonymous, was told the organization’s “full intention was to bring furloughed staff back.”
Stellon said the laid-off workers were primarily in administrative and back-office roles.
Multiple former employees accused Heartland of violating the state’s WARN Act, which requires employers with 75 or more full-time employees to provide 60 days advance notice of pending closures or mass layoffs.
A mass layoff is when more than 25 employees — if they make up more than a third of the workforce at a single organization — are let go during any 30- to 90-day period without the organization itself shutting down, according to the Illinois Department of Commerce and Economic Opportunity. Terminations of more than 250 employees are also defined as a mass layoff in Illinois.
State WARN records show Heartland Alliance reported 48 “temporary layoffs” Sept. 29. Heartland’s health unit also reported 40 furloughs Oct. 28.
Olivia Moorer worked as an associate for Heartland’s internal communications department for nearly two years.
She said the furlough announcements were made Sept. 29, the same month former Heartland President Evelyn Diaz stepped down. After eight years, Diaz announced in August that she would be departing the nonprofit Sept. 1, with Don Laackman assuming the role of interim president.
Moorer said timing of Diaz’s departure and the subsequent furloughs was too much of a coincidence.
Diaz “was out at the end of August. I was furloughed at the end of September. I have a hard time believing she didn’t know what was about to happen to all of us,” Moorer said.
Moorer said she liked working with her team, but there was a “bit of a disconnect” between its business services, human resources and payroll and the programs that included employees working on the ground — like visiting prisons to help inmates before they’re released, or traveling to shelters to provide medical assistance.
Moorer also said there was a “lack of empathy” from leadership.
In an unedited farewell video viewed by the Sun-Times, Diaz said employees’ “jobs really were easy.”
“She’s gonna say that about folks who are working in shelters with migrants who have just come from Venezuela, who are dealing with some of the most difficult things a human can go through,” Moorer said.
Liz Proscia, former communications manager for READI Chicago, a program to fight gun violence, said her final straw with Heartland leadership came after her supervisor and team “put years into their work and were furloughed without notice.”
“None of us fault any of the program leadership for anything that has happened,” Proscia said. “It’s just really disappointing to see the people at the top do this to their staff, and ultimately, to the participants.”
Proscia, who worked with READI Chicago for over a year, said she was living paycheck to paycheck. She resigned Nov. 13, after finding another job.
“Even if they had given us a warning, we would have at least had time to prepare and figure things out,” Proscia said. “I got very lucky to find a job because I probably would’ve been unhoused if I didn’t.”
Moorer searched for jobs while she was furloughed because she anticipated she’d be terminated. Her grandmother died a week after she was furloughed, and Moorer said she had a depressive episode because of it.
“It made me feel like I wasn’t where I should be in life,” Moorer said.
Still, she said she appreciates the team she was able to work with at Heartland.
“The one thing I will always carry with me from Heartland is the people I worked with,” Moorer said. “My team was phenomenal, and I will always have an incredible network of professionals, individuals and friends that no amount of poor leadership can ever take away from me.”
Pandemic-related losses
Without discussing specifics, Stellon said the housing unit’s finances suffered during the pandemic, which caused heavy job losses among people with lower incomes. Many couldn’t pay rent, he said.
Other experts in affordable housing said Heartland was vulnerable because its properties were devoted to the lowest income groups that need support services, often to avoid homelessness.
“Developing and managing affordable housing is not for the faint of heart,” said Joy Aruguete, CEO of Bickerdike Redevelopment, a leading affordable housing provider in Chicago. “There’s not much fat in affordable housing to cover such a catastrophic situation as COVID.”
Bickerdike was a partner with Heartland in redeveloping the Chicago Housing Authority’s Lathrop Homes into a mix of market-rate and subsidized rental units. Aruguete said her group has taken over Heartland’s piece of the project.
The largest Heartland properties in receivership are Hollywood House at 5700 N. Sheridan Road and the Leland apartment complex at 1207 W. Leland Ave.
‘Tough model’
Heartland Housing’s most recent tax filing, for the 12 months through June 30, 2022, hints at its woes during the COVID-19 era. It said its “program service revenue,” principally rents, fell to $1.56 million from $3.17 million during the prior 12-month period, although donations and other income sources held steady.
“We have kept our donors apprised of the situation and have been gratified by their concern and willingness to help us preserve the vital services we deliver in the Chicago area,” Stellon said. Heartland’s website said it also serves Latin America, the Caribbean, the Middle East and North Africa.
The receiver for most of its Chicago-area buildings is a division of Community Investment Corp., whose main activity is arranging financing for investors to buy and fix up affordable housing.
Jonah Hess, director of the receivership unit, said Heartland’s buildings are generally older properties that suffered from deferred maintenance.
“Security was scaled back as Heartland was trying to cut costs. We have brought that back, and that has helped a lot,” Hess said.
Overall, he said Heartland’s buildings were in better shape than those his unit usually gets under the city’s Troubled Buildings Initiative. City officials filed the petition to put Heartland’s buildings into receivership.
Hess declined to speculate on why Heartland Housing was so deeply affected by the pandemic.
“The debrief on that will be an interesting one,” he said. “But in affordable housing, it’s a tough model when it works.”
Heartland Alliance started in Chicago in 1888 as Traveler’s and Immigrants Aid. It lists renowned social reformer Jane Addams as founder.
