Chicago’s Low-Income Housing Trust Fund subsidizing unsafe units, new audit shows

Chicago’s Low-Income Housing Trust Fund has been used to subsidize properties with building code violations and other “serious” deficiencies, including “missing and inoperable” smoke and carbon monoxide detectors, “significant roof leaks and fire hazards,” a new audit shows.

Mayor Lori Lightfoot’s 2020 budget includes a $5 million corporate fund contribution to the fund to create 520 rental units in gentrifying Chicago neighborhoods for low-income renters earning no more than 30 percent of the average median income. That’s roughly $25,000-a-year for a family of four.

But the audit released Thursday by Inspector General Joe Ferguson paints a dangerous picture of a program designed to help low-income families Housing Commissioner Marisa Novara has called the “hardest to house because they need the deepest levels of subsidy.”

Based on a “random representative sample” of properties subsidized by the city in 2017, Ferguson concluded that:

• 45.8% percent failed to meet “minimum housing quality standards,” despite a requirement that all units be “well maintained” and “contain no conditions that would endanger the health and safety” of residents.

• 61.4% did not fully comply with the Chicago building code, violating the requirement that properties “comply with all local, state, and federal laws, including the Chicago building code.”

• There is no evidence that Globetrotter International, the architectural and engineering firm hired to conduct annual “housing quality standard” inspections, met its requirement to notify the city within 24 hours of “serious deficiencies” uncovered at 13 of the 38 properties sampled.

• The trust fund overpaid at least $30,703 to six properties and $6,120 to one property in 2018 from a sample of 83 properties.

• The fund provided “inaccurate and incomplete” reports to the city and the public during the five-year period ending in 2018.

• The fund could not accurately gauge the amount of funding available for new subsidies.

Ferguson noted that the fund paid a collective total of $1.6 million to 38 properties that did not meet minimum housing quality standards.

Serious deficiencies included “missing and inoperable smoke and carbon monoxide detectors, significant roof leaks and fire hazards,” he said.

Non-emergency deficiencies included “properties with immediate extermination needs due to rodent and insect infestations, homes without escape mechanisms on windows and non-compliant electrical outlets,” he wrote.

“This shows that the Trust Fund did not ensure that all funded units were secure, safe and sound and that it continued to pay non-compliant properties, including those with serious health and safety concerns,” the report states.

To remedy the myriad problems, Ferguson recommended that the Trust Fund install a software system to monitor inspection compliance, conduct quarterly inspections to ensure building code compliance and make certain that its reports accurately “reflect full distribution of active subsidies...and the amount of available funding.”

The fund embraced those recommendations and said it’s working with Globetrotter to pave the way for “real-time inspection updates and improved reporting.” It’s also updating “property spreadsheets to reflect accurate property records,” the inspector general said.

“The Trust Fund is a city-funded non-profit that subsidizes landlords who rent to extremely low-income individuals and families. The city should not pay landlords who fail to provide the economically vulnerable with safe, clean and secure homes as the law requires. And the taxpayers should be able to rely on the Trust Fund to accurately report on its property inventory and funding allocations,” Ferguson was quoted as saying.

The Low Income Housing Trust Fund is a city-funded non-profit organization created by city ordinance and incorporated in 1990 to establish policy and dole out subsidies.

The fund operates independently with a 15-member board of directors appointed by the mayor and approved by the City Council.