City purchase of long-vacant Pilsen site, tax credits highlight mayor’s plan to build over $1B in affordable housing

Outlining an expansion of affordable housing, Mayor Lori Lightfoot said Monday the city has acquired a critical vacant parcel in Pilsen and approved federal tax credits to support $1 billion worth of projects throughout Chicago, with an emphasis on the South and West sides.

The Pilsen site is more than 6 acres at 18th and Peoria streets, and the city is buying it for $12 million, said Housing Commissioner Marisa Novara. The parcel could accommodate at least 280 affordable homes, Novara added, although details will depend on standard zoning reviews.

Novara said the city acted to preserve economic diversity in the neighborhood. She called the site “the last large, vacant, developable site in Pilsen, where we’re seeing rapid gentrification.”

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The federal low-income housing tax credits will support 24 additional developments that create or retain 2,428 living units, of which 2,175 will be affordable under city ordinance, officials said. The allocation is more than double the number of projects and units backed during 2019, the most recent round of awards, officials said.

At an event announcing the tax credits, Lightfoot said the developments “move us one step closer toward our vision of a more equitable and inclusive city of Chicago. We envision a city where every resident, no matter age, income, identity, ability, have the opportunities and the resources to lead comfortable lives in the communities they call home.”

Discussing Pilsen, Lightfoot said, “We recognize that gentrification is taking a devastating toll on long-term residents who are being driven out of their homes because they are unable to afford to stay in their communities.” Noting that she lives in Logan Square, which she called “ground zero” for gentrification, the mayor said, “Shame on us if we don’t learn a lesson of those experiences.”

Of the 24 projects, 10 are within or close to the 10 communities Lightfoot has targeted for special attention in her Invest South/West program. Five involve units set aside for Chicago Housing Authority tenants, such as work at the Lathrop Homes on the North Side and the LeClaire Courts redevelopment on the Southwest Side.

Officials said 684 of the new units will be family-sized, with two to four bedrooms. Housing programs have been criticized for subsidizing too many small apartments.

All projects involve minority-owned firms as investors or contractors, officials said. The city decides which projects merit the tax credits, which amount to 4% or 9% of construction or property acquisition costs, under rules the federal government has set. In exchange for the credits, developers agree to offer units at below-market rents with income limits for qualified tenants.

Novara said her agency emphasized racial equity in reviewing the projects. “We feel very strongly about the way we are doing this and not just the number of units,” she said. The department’s review was “really our own check on ourselves to say, despite our best intentions, what are the ways we may be unintentionally reinforcing racially discriminatory outcomes and how do we solve for that?” she said.

Ashlee Rezin/Sun-Times

Some projects also could get a city tax subsidy. The proposals are at various stages of financing and zoning review and could move forward over the next eight to 18 months, officials said.

They are located across the city, including the Near North and Near South sides, Austin, Englewood, Lincoln Square, Humboldt Park, Uptown and Woodlawn.

The Pilsen site has been controversial for years. New York-based Property Markets Group proposed building 434 units on the property in 2019. A lack of commitment on affordable units brought opposition from Ald. Byron Sigcho-Lopez (25th) and residents concerned about being pushed out by rising rents and property taxes. The project never advanced.

Property Markets Group had sued the city earlier, in 2018, over its rezoning to limit the property to industrial use. The move, championed by former Ald. Danny Solis, was designed to make any developer negotiate a residential plan with city officials and local groups.

The case is still pending, but Novara said the property owners have agreed to the $12 million sale. She said the city will sell the land to a developer, perhaps after requesting competitive proposals.

Records indicate interest in the property has transferred to New York-based Raven Capital Management, which Property Markets Group identifies as a co-developer. The firms could not be reached for comment.

Sigcho-Lopez said he supports the city’s plans as they respect Pilsen’s social fabric, in contrast to the developer wanting luxury housing. “It’s a welcome change. The credit goes to the community residents that overwhelmingly asked for something else,” he said.

The city also announced it has opened a second round of applications of rental assistance for tenants and landlords affected financially by the pandemic. The applications can be submitted via the city’s website until 11:59 p.m. Dec. 18.

The program has $102 million from the federal American Rescue Plan Act and will offer up to 18 months of help with rents and utility bills.