Community Group Develops New Model to Fight Gentrification, and It Works
CHICAGO – August 18, 2016 – As rents continue to rise across Chicago and tax burden is pushed onto renters, community leaders have partnered with nonprofits, affordable housing developers and government stakeholders to develop a model for preserving foreclosed properties in gentrifying areas as long-term affordable rental housing.
“Across our city families are struggling to deal with the rising rents that are pushing long-time residents and low-income families out of neighborhoods they have lived in for decades,” said Rep. Jan Schakowsky. “Communities United led a unique and collaborative effort to save 44 units of affordable housing and halt the displacement of families, through Renters Organizing Ourselves to Stay (ROOTS). I was proud to work with Communities United, Fannie Mae, Enterprise Community Partners (Enterprise), Chicago Metropolitan Housing Development Corporation (CMHDC), the Cook County Land Bank and local elected officials to preserve this affordable housing, and I hope that this model can be used across Chicago and beyond.”
Rep. Schakowsky stood alongside ROOTS partners and elected officials—Commissioner Bridget Gainer, Aldermen Deb Mell and Carlos Rosa, and Fannie Mae, the nation’s largest foreclosing owner—to announce the acquisition of 44 rental units that will provide stable, permanently affordable housing to an estimated 200 residents. ROOTS works by leveraging cost avoidance strategies to secure discounts up to 30 percent on foreclosed properties, allowing Enterprise, the Land Bank and CMHDC to work together to preserve them as long-term affordable rental housing.
Rafael Leon, CMHDC executive director, stressed the importance of the unique partnerships ROOTS relies on. “To date, this initiative represents a $7 million commitment. We are able to create more affordable housing than other more expensive new construction programs,” Leon said. “We will need sustained support from partners and the city to grow the initiative.”
The ROOTS model is driven by renters like Roxanne Smith and her son Roget, who has a developmental disability. When Smith found out her building had been foreclosed and she faced the threat of having to leave, she did not know where to turn, "If I wanted to stay on my block, I would have had to fork up another $150 and utilities on top of that. I couldn't afford that, and it would have been impossibly difficult for my son."
“Preserving affordable housing connected to quality education, jobs and transit is critical to a family’s success. The ROOTS initiative demonstrates that we can keep families in their homes and communities,” said Andy Geer, vice president and Chicago market leader for Enterprise, a key funder of the initiative.
The success of this innovative model has provided a formula for preserving affordable housing in Chicago’s rapidly gentrifying communities, and aims to scale up efforts to stabilize housing for low- to moderate-income families. “From the housing crisis to rising property taxes, Chicago’s homeowners and renters have encountered times of economic struggle during recent years. Maintaining affordable, safe and stable housing in our communities is essential to the overall well-being and health of families,” said Rep. Mike Quigley.
“I cannot express enough how excited Roget and I are about the opportunity to stay in our home thanks to ROOTS. Now that I know what we can do together, I want to make sure that other families in the same situation have the opportunity to stay in their homes and in the communities they love,” Smith said.
ROOTS is a collaboration between Communities United, Chicago Metropolitan Housing Development Corporation (CMHDC), Enterprise Community Partners and Cook County Land Bank with support from Fannie Mae and both local and federal level elected officials. Below is an outline of how the model works and the role that each partner plays:
- Communities United works with community residents directly impacted by gentrification to continually inform affordable housing solutions for low to moderate income families through ROOTS and engages elected officials to build support for the initiative
- Enterprise Community Partners provides up-front financing, which allows for affordable developer CMHDC to compete with cash investors and purchase properties quickly before they disappear from the market to be flipped for maximum profit in gentrifying communities
- Chicago Metropolitan Housing Development Corporation (CMHDC) acquires, rehabs and manages foreclosed rental units, maintaining them as affordable for low to moderate income families
- Cook County Land Bank Association acts as the intermediary for the transaction, allowing CMHDC to take advantage of Illinois Affordable Housing Tax Credits and lower rents for maximum long-term affordability
- Fannie Mae—the nation’s largest foreclosing owner and the first financial institution to partner with ROOTS—sells their foreclosed, occupied properties at a discount up to 30 percent using cost-avoidance strategies, allowing for CMHDC to maintain the units as affordable and keep renters in their homes