DEVELOPMENTS

June • 2014

222 South Riverside Plaza, Suite 2200 | Chicago, IL 60606-6109 | www.cicchicago.com

cicRecipient of the 2012 MacArthur Award for Creative and Effective Institutions

Community Investment Corporation • Chicagoland’s Leading Multifamily Rehab Lender

New cic 1-4 loan fund creates more affordable housing

“Investing

in affordable

housing will

help families

move forward

on the road

to recovery” – Illinois Attorney

General Lisa Madigan

Illinois Attorney General Lisa Madigan and Chicago Mayor Rahm Emanuel jointly announced the launch of Community Investment Corporation’s new 1-4 Unit Rental Redevelopment Loan Program at an April community meeting in the Auburn Gresham neighborhood on the South Side. This innovative takeout loan program is among the first in the United States to finance the redevelopment of smaller buildings for affordable rental housing.

The 1-4 Unit Rental Redevelopment Loan Program will fill a need in the market by financing approximately 200 buildings and 400 residential units over three years, helping bolster areas still reeling from the recession.

Capitalized by 11 banks, a program-related investment by the MacArthur Foundation and a grant from the Attorney

General’s foreclosure settlement funds, the loan pool will finance responsible investors in rehabbing small groups of distressed 1-4 unit buildings in targeted areas.

“Headlines might be touting a rental comeback, but many neighborhoods still struggle with distressed buildings and a significant need for affordable rental housing,” said CIC President and CEO Jack Markowski. “By financing clusters of distressed 1-4 unit buildings, our new program will help improve these neighborhoods and provide more affordable rental housing.”

“The new loan pool targets the redevelopment of one- to four-unit buildings, which represent nearly 50% of all rental units in Chicago and are too often under-resourced,” Mayor Emanuel said at the announcement of the new program. “Through collaboration between the City, businesses, and nonprofits like CIC, the financing will help small- and mid-sized investors make a strong investment in our communities, while most importantly providing affordable housing options for Chicagoans.”

“This funding is a down payment on the future for communities hit hardest by the foreclosure crisis,” said Illinois Attorney General Madigan, whose office allotted $2 million toward the loan pool from relief secured in the national foreclosure settlement. “Investing in affordable housing will help stabilize these neighborhoods and help families move forward on the road to recovery.”

Chicago Mayor Rahm Emanuel and Illinois Attorney General Lisa Madigan joined CIC in launching the new 1-4 unit loan program at a community meeting in Auburn Gresham.

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2 | CIC DEVELOPMENTS

The new CIC loan program emerged after The Preservation Compact, a policy collaborative housed at CIC to keep rental housing affordable, delved into the dynamics of 1-4 unit buildings during the downturn. The findings were surprising: Small buildings comprise 48% of Chicago’s rental stock, and areas with concentrations of these buildings were disproportionately hit by the crash. Yet, there was no financing available to help investors rehab groups of small buildings. CIC’s new program fills this gap.

In addition to the $2 million grant from the Illinois Attorney General’s Office and a $5 million program-related investment from the MacArthur Foundation, the 1-4 unit loan fund investors include:

PNC Bank, The Northern Trust, BMO Harris, Urban Partnership Bank, First Savings Bank of Hegewisch, Leaders Bank, First Eagle Bank, and

four Wintrust banks: Northbrook Bank, Lake Forest Bank, Village Bank, and North Shore Community Bank.

“Supporting private investment in small rental properties that provide housing options to many Chicagoans is one of the most effective ways to maintain and grow our affordable housing stock,” said MacArthur President Robert Gallucci. “The fund will help ensure that entrepreneurs in Chicago can continue and even increase their efforts to support the

stabilization of city neighborhoods as well as the region’s housing recovery.”

A separate program funded by The JPMorgan Chase Foundation (see below) facilitates the acquisition and creative financing of 1-4 unit buildings, which will complement the activities of the Rental Redevelopment Loan Program loan pool.

“We greatly appreciate the participation of Attorney General Lisa Madigan, the MacArthur Foundation, and all of our bank partners. The capital they’ve provided will improve distressed neighborhoods and spur additional investments,” Markowski commented.

Chase 1-4 program a joint effortIn January, The JPMorgan Chase Foundation announced a $5 million grant to an innovative partnership of three local Community Development Financial Institutions (CDFIs) – CIC, Chicago Community Loan Fund (CCLF), and Neighborhood Housing Services of Chicago (NHS) – to stabilize neighborhoods hit hard by foreclosures and vacancies resulting from the recent recession.

“JPMorgan Chase views Community Development Financial Institutions as critical change agents in underserved communities,” said Matt Reilein, senior vice president in charge of CDFI and New Markets Tax Credit lending for Chase. “Our $5 million commitment in Chicago is part of the $33 million made through our new CDFI Collaboratives program that will help our partners serve more people in need, as well as catalyze investment in low- and middle-income communities across the US.”

CDFIs are designated by the US Treasury to provide loans, investments, financial services, and technical assistance to underserved populations and communities.

CIC, CCLF and NHS will coordinate acquisition and lending activities to 1-4 unit properties in low- and moderate-income communities throughout the Chicago area. They will:

■ Expedite acquisition of buildings shackled with back taxes or stalled in the foreclosure process;■ Finance redevelopment of acquired properties for rental housing; and■ Finance improvements in owner-occupied properties to upgrade conditions and enhance affordability.

CIC President Jack Markowski and CIC Board Member Tony Smith welcomed Illinois Attorney General Lisa Madigan at the launching of the new CIC loan program.

CIC DEVELOPMENTS | 3

For the first time, rehabbers of vacant multifamily buildings can access tax increment financing (TIF) funds to reclaim vacant buildings and provide new affordably priced apartments. In designated TIF districts, developers of multi-unit rental housing will be able to use TIF funds to pay for up to 50% of purchase/rehab costs if up to 50% of the rehabbed units are affordable to and occupied by households that earn no more than $37,700 for a family of four, which is half of Area Median Income.

CIC will administer the TIF Vacant Multifamily Rehab Program on behalf of the City of Chicago. By combining private funds (including CIC loans) with TIF funding, developers will be able to restore vacant buildings that would otherwise be too costly to rehab. “The program will provide an efficient means to remove blight, and add freshly rehabbed affordable units back to our housing stock,” said Lawrence Grisham, managing deputy commissioner of the Housing Bureau, City of Chicago Department of Planning and Development.

The full implementation of the TIF program is a key element of Chicago’s newly approved five-year housing plan, which calls for the City to use more than $1.3 billion to create, improve, and preserve over 41,000 units of housing from 2014-2018. Under the new program, the City has committed to spend up to $35 million in TIF funds ($7 million per year) to rehab vacant multifamily buildings.

In a 2013 pilot program, $1 million in TIF funding was awarded to restore 35 apartments in two buildings located in the Ogden/Pulaski TIF district. In the first TIF funded project, Pangea Properties was awarded funding to rehab a vacant 26 unit building at 1860 S. Komensky. For 2014, the City has already passed an ordinance authorizing expansion of the program to the Chicago/Central Park, Division/Homan, and Humboldt Park TIF districts.

“Pangea Properties was thrilled to be selected to participate in this initiative, which will help expedite the City’s continued housing recovery. Pangea is dedicated to providing quality apartments at affordable prices, and this program helps solidify both our mission and the City’s goal to redevelop neighborhoods in need. We are hopeful to continue to work with CIC via the TIF program and will continue

One of the buildings in the TIF multifamily program, 1860 S. Komensky

TIF funds bring vacant buildings to life

to revitalize Chicago’s underserved neighborhoods with our private funds as well,” said Peter Martay, executive vice president and chief acquisition officer, Pangea Properties.

The TIF Vacant Building Rehab Ordinance was originally created by the City of Chicago and 11 organizations called the Sweet Home Chicago Coalition, led by the Chicago Coalition for the Homeless (CCH). “The good thing about being able to use TIF funds to rehab vacant buildings is that they are a flexible, locally generated, locally administered funding source that creates units in an efficient and cost-effective way,” noted Julie Dworkin, CCH director of policy. “We are very happy to see the City recognizing affordable housing as a high priority use of TIF funds.”

“We are very happy to see the City

recognizing affordable housing as a

high priority use of TIF funds”– Julie Dworkin, Chicago Coalition for the Homeless

“We are excited to be administering this vacant building rehab program with the City,” said Mike Bielawa, CIC senior vice president. Prospective rehabbers of vacant multifamily buildings should contact CIC at 312.258.0070 for more information and a fact sheet on this new program.

cic profile: JACK CRANE

CIC DEVELOPMENTS | 4

How did you get into this business?

As a young Loop banker I volunteered to work for a church-based group, Good News Partners, in the North of Howard neighborhood of Rogers Park. After several years of volunteering, I decided to hang up the pinstripes, grow a big beard, and hang out in the street ministry for a couple of years. I worked out of a Single-Room Occupancy hotel for the homeless, where we grappled with affordable housing issues. I learned a lot about the devastating effects of entrenched poverty.

How did you come to work at cic?

After a two year stint in North of Howard, I sought ways to merge my financial trade skills with a desire to assist neighborhood revitalization. I did a hitch with Organization of the NorthEast (ONE) in Uptown. ONE managed a division of the Chicago Energy Savers Fund in the late 1980s, and CIC worked with the multifamily part of this program, assisting landlords with energy conservation retrofit financing. Several years later, I joined CIC, staying for three years. Fast forward 20-plus years, and I am back at CIC, launching the new 1-4 Unit Rental Redevelopment Loan Program, as well as booking multifamily business.

What’s your favorite part of working at cic?

I grew up in lily white Boston suburbia. The multi-racial, multi-ethnic experience in Chicago through my work at CIC was all new and exciting to me. It is a pleasure to work with pioneering entrepreneurs, many recent immigrants, investing their talent and resources toward creating affordable, decent housing in the neighborhoods we serve. The CIC staff also represents Chicago’s rich diversity. As my son said recently, “CIC is the real Chicago.”

What changes do you see on the horizon for this business?

I have worked with small business owners, primarily real estate investors, for 30-plus years now. They are a wild, eclectic bunch, taking calculated risks to create wealth, and they nurture a strong desire to grow their independent family-owned businesses. All neighborhoods, especially depressed ones, need this kind of chutzpah to bring genuine life and character to the streets.

Yet, the longtime failure of our neighborhood schools, combined with fraudulent housing finance schemes and devastating gun violence, have sapped significant progress. Be that as it may, CIC continues to use its resources in collaboration with business owners, community groups and public agencies, to challenge the despair and blight by bringing a little light and hope to the day. As the Brooklyn poet, June Jordan, once said, “We are the ones we have been waiting for.”

What is something interesting about you that most people don’t know?

I tried out for a Broadway musical, Oliver, when I was nine years old. “Nice voice,” but I failed the audition due to no acting experience. Perhaps I missed out on a VH1 docudrama! Nevertheless, I have been known to show up at open mike sessions with guitar in hand. Rock on!

Challenging despair, bringing hope

All neighborhoods,

especially depressed

ones, need small

business owners’

kind of chutzpah.

Jack CraneSenior Loan Officer/Manager of 1-4 Unit Program

CIC/CII Program Officer Laura Armgardt shows CIC Board Member Tony Smith of PNC Bank her wheelbarrow technique.

CIC DEVELOPMENTS | 5

On Saturday, June 7, CIC staff and board partici-pated in “NeighborWorks Day,” an event created and sponsored by Neighborhood Housing Services (NHS) of Chicago to beautify various Chicago area neighborhoods.

CIC focused on two sites in East Chatham and Woodlawn, with President Jack Markowski joined by Angela Maurello, Travis Kluska, Cathy Gerlach,

Laura Armgardt, Liz Castaneda, Jamila Danzy,

Jim Wheaton, and Tom Hinterberger in digging, planting and gardening. CIC Board Member Tony

Smith of PNC Bank dug in as well.

CIC chose these two neighborhoods because CIC is leading the City’s Micro Market Recovery Program (MMRP) efforts in these two areas. The recovery program, developed with input from CIC and other community development organizations, was initiated by the City in August 2011. MMRP concentrates multiple programs and resources to address the blight caused by abandonment, fore-closure and vacancy in areas of Chicago that most need intervention.

In addition to NHS and CIC, NeighborWorks Day sponsors included the City of Chicago, Preserva-tion of Affordable Housing, Inc., Urban Partnership Bank, and First InSite Realty.

cic digs in to beautify East Chatham, Woodlawn

“The corner parkways are gateways to these blocks,” said Ald. Michelle Harris (8th) of Chatham, an avid gardener and NeighborWorks participant. “We’re here to resuscitate the local housing market.”

CIC Treasurer/CFO Tom Hinterberger wields a broom on South St. Lawrence.

Children joined in to beautify the neighborhood.

222 South Riverside Plaza, Suite 2200 Chicago, IL 60606-6109

cic Community InvestmentCorporation

Non-Profit Org.U.S. Postage

PAIDChicago, IL

Permit No. 8493312.258.0070www.cicchicago.com

What’s InsideJune 2014

cic 1-4 program provides more affordable units

page 1

TIF funds bring vacant buildings to life

page 3

cic profile of Jack Cranepage 4

cic digs in to beautify East Chatham, Woodlawn

page 5

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and Rehab

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