Chicago’s Low-Income Housing Trust Fund making progress on changes after 2019 audit

The organization was subsidizing rent in possibly dangerous properties that didn’t always comply with the city’s building code, according to a 2019 audit.

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Chicago Inspector General Joe Ferguson speaks during a news conference at City Hall, Thursday morning, April 11, 2019.

Chicago Inspector General Joe Ferguson

Ashlee Rezin/Sun-Times file

Chicago’s Low-Income Housing Trust Fund has made some improvements more than a year after an audit found it was subsidizing properties with building code violations.

Details of the improvements were outlined Wednesday in a follow-up report issued by Inspector General Joe Ferguson after a previous audit by his office found that 61.4% of the properties the trust fund provided subsidies to did not comply with the Chicago building code. The audit, which was published in December 2019, also found that 45.8% of the properties failed to meet “minimum housing quality standards.”

In response to the report, the fund has partially implemented an online system called the “Trust Fund Central,” which will include inspection reports and allow for an integration of subsidy payments so that it could withhold payment for properties not in compliance, according to the follow-up report. The fund also hired two new vendors: one to provide software development assistance and another to conduct inspections.

The Office of the Inspector General believes the new centralized software could solve many of the issues found in the 2019 report.

“Once fully implemented, OIG believes the corrective actions reported by the Trust Fund may reasonably be expected to resolve the core findings noted in the audit,” Ferguson stated in the report. “We urge the Trust Fund to fully implement an electronic system that allows it to actively monitor inspection and contract compliance, write instructions for how to identify building code violations, transition away from its manually updated spreadsheet, and implement controls to ensure accurate payments.”

The fund did not immediately respond to a request for comment.

The Low-Income Housing Trust Fund dates back to a 1989 city ordinance that established the nonprofit organization. The organization is overseen by 15 individuals who are appointed by the mayor and confirmed by the City Council. It provides rental subsidies to residents whose income do not exceed 30% of the area median income, according to its annual report.

As of March 31, the fund was subsidizing 2,640 units across the city, ranging from studios to apartments with more than four bedrooms, according to a quarterly report from March 2021. Many of the units — 1,030 — subsidized by the organization are studio apartments.

In response to the 2019 report, the fund is in the process of finishing in-person inspections by September after a delay caused by the coronavirus pandemic, according to the report.

The staff now also uses the city’s Department of Building website and the city’s Data Portal to identify if any buildings are facing municipal code violations.

In response to the 2019 report, the fund also conducted an audit of its payment ledgers through 2016 after the inspector general found it had overpaid some property owners.

The fund has not implemented a process for completion and confirmation of renewal contracts by December. Once the centralized portal is fully implemented, the fund anticipates property owners won’t be able to request payments without uploading required documents. The fund aims to send renewal contracts by January, according to the report.

The Inspector General’s office had also recommended the fund stop having someone manually input information into a spreadsheet to reduce errors. The fund stated it would replace its manual spreadsheet once the “Trust Fund Central” is fully implemented, according to the report.

Elvia Malagón’s reporting on social justice and income inequality is made possible by a grant from The Chicago Community Trust.

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