Chicago to Benefit from Large Neighborhood Stabilization Program Allocation

The City of Chicago has received one of the highest allocations to a single city in the nation - $55.2 million - for a new federal program designed to stabilize neighborhoods hit hard by foreclosures. Neighborhood Stabilization Program (NSP) funds were allocated to cities and states based on need and can be used for land and property acquisition, demolition of abandoned buildings, rehab and/or down-payment assistance. The entire state of Illinois including Chicago is receiving a total of $172 million in NSP funds.  All funds must be spent within eighteen months after they are received.

In Chicago, funds will be targeted to neighborhoods that meet several criteria, including:

• High concentrations of foreclosed properties;

• Proximity to recent public and private investments (e.g., schools, police stations, retail development) and community anchors and job centers;

• Presence of community partners engaged in stabilization activities; and

• Neighborhoods with a balance of single-family homes and 2-6 unit apartment buildings

All funds must serve households with incomes of no more than 120% of AMI with at least 25% of the funds targeted to households of 50% of AMI and below.

Mercy Portfolio Services has been appointed by the City of Chicago to distribute NSP funds to development partners.  A newly formed entity called the Chicago Neighborhood Stabilization Corporation will serve as the umbrella organization responsible for negotiating bulk acquisitions with lending entities, holding and maintaining properties, and overseeing the disposition of properties.

An RFQ is expected to be issued by the City later this month to solicit developers for the foreclosed properties.  This will be followed by an RFP for specific types of service providers, including appraisers and lenders.  Potential developers will be able to find further information on the Chicago Department of Community Development’s website.

According to the Woodstock Institute’s January 2009 foreclosure report, foreclosure filings in the Chicago region continued to grow at an alarming rate in 2008. Moreover foreclosures in small multifamily buildings remain a concern. According to the report, 35% of all foreclosures in 2007 and 32% of all foreclosures in 2008 in Chicago were in multifamily 2- to 6-unit properties. 

Economic Stimulus Package

The American Recovery and Reinvestment Act of 2009 signed by President Obama on February 13 is meant to stimulate the creation and protection of 3.5 million jobs across the country and provide funding for huge new investments in infrastructure, housing, education and training, and energy.

Several programs that affect affordable rental housing will feel the impact of this infusion of funds.  According to the Senate Committee on Appropriations, the anticipated benefits for the state of Illinois include:

• $94.8 million in HOME Funding to enable state and local government, in partnership with community-based organizations, to acquire, construct, and rehabilitate affordable housing and provide rental assistance to low-income families;

• $71.2 million through the Homelessness Prevention Fund to be used for prevention activities, which include:  short or medium-term rental assistance, first and last month’s rental payment, or utility payments;

• $103 million through the State Energy Program and $248.6 million through the Weatherization Assistance Program to provide investments in areas critical to the development of clean, efficient energy.

There are also provisions to address capital needs in public housing, investments in mass transit, an array of educational and training needs, tax relief for families and small businesses, and benefits to low-income households in Illinois including $47.6 million in Community Development Block Grant (CDBG) funds to local community action agencies.

One potential beneficiary of the influx of energy funds is the Cook County Energy Savers Program, a keystone initiative of The Preservation Compact.  The Center for Neighborhood Technology, in partnership with the Community Investment Corporation, is hoping to receive funds from the Chicago Department of Environment to offer low-cost financing to significantly more multifamily property owners that make energy-saving investments in their buildings.