Lawndale Restoration


The Lawndale Restoration

The Lawndale Restoration is a multi-family subsidized property comprised of approximately 25 city blocks on the West Side of Chicago. It is the largest privately owned subsidized apartment project in Chicago, consisting of 100 small and large buildings containing a total of 1,240 units.

  • 99% of the residents at Lawndale are African-American and 80% are female-headed households with minor children.
  • 10% of the residents are senior citizens and 10% are disabled.
  • 93% of the families are considered very low income, making less than 30% of the area median income.
  • 13% of the families live in four and five bedroom apartments, necessitated by family size.

The History of the Lawndale Restoration

  • 1960s: HUD began its long history of grossly under funding the 100 buildings making up the Lawndale Restoration. Around that time, HUD-insured mortgages under the 236 Program went into default and left the buildings in a terrible state of disrepair.
  • 1970s: Pyramindwest Realty and Management, Inc., of which Chicago businessman Cecil Butler was the president, began managing the 100 buildings after HUD insured a $22 million mortgage to rehab the apartments.
  • 1980s: HUD and Butler entered into a project-based Section 8 contract for Lawndale Restoration.
  • 1990s: Boulevard Realty Service Corporation, entirely owned by Butler, made a deal with the Illinois Housing Development Authority (IHDA) and HUD: IHDA sold $51 million in tax-exempt bonds to provide a HUD-insured mortgage to Butler. In spite of this deal, the buildings continued to fall into disrepair.

For the last twenty years, the City repeatedly sued Butler and his corporate entities for substandard building conditions, citing the property for more than 1,800 local code violations in the fall of 2004 alone. The property suffered and continues to suffer from serious building and federal Housing Quality Standards code violations, including cracked masonry, defective porches, rodent infestation, leaks, broken doors, missing locks, and standing water. During the same time period however, HUD continued to purport to inspect the very same property and give it high marks for building maintenance and housing conditions. In 2004, HUD gave it a score of 90 out of a possible 100 points for its annual inspection, after inspecting just 26 of the more than 1,200 apartments.

In the fall of 2004, HUD officials confirmed that Butler was approximately $900,000 behind in payments on his HUD-subsidized $51 million mortgage. On October 1, 2004, HUD and Butler renewed the project-based Section 8 contract for another five years, through 2009. Four buildings within the project were put into emergency receivership after city inspectors found approximately 192 units to be uninhabitable and beyond repair. The residents within those properties received or will be receiving vouchers to move into the private market with no promise of returning to their historic community. The City or HUD will demolish the buildings in the near future.

HUD's Redevelopment Plans for the Lawndale Restoration

On December 21, 2004, HUD mailed a 21-day foreclosure notice to Boulevard Service Realty Corporation. HUD intends to foreclouse on the HUD-held mortgage on the property, prematurely terminate the project-based Section 8 contract, and break up or sell the property to as many as 60 different owners. The residents of Lawndale Restoration will be given vouchers and may or may not be given relocation assistance.
  • On March 18, 2005, HUD notified the City of Chicago that it could exercise a right of first refusal to purchase the property from HUD, should HUD be the successful bidder at the foreclosure sale. The City’s position is that it will accept title to the property under certain specified conditions, the principal of which was the maintenance of the project-based Section 8 subsidy for the majority of the properties.
  • HUD has rejected the City’s request to convey the property with project-based Section 8 and stated that it has adopted instead a new national, unwritten policy not to maintain project-based Section 8 subsidies when a property enters foreclosure unless senior citizens make up the majority of the development.
  • According to HUD estimates, the cost of repairs to the units that will not be demolished will be $44.9 million or $44,000 a unit.
  • HUD has indicated that unless the City of Chicago gave up its bid for maintenance of the project-based Section 8 subsidies, it would deny the City matching grant money equal to half the hard costs of rehabilitation or approximately $20 million. In addition, HUD will keep the City out of the project entirely, break it up at foreclosure and not bid into it, allowing a variety of private developers to buy the property. Developers would be unable to access to any grant money for rehabilitation costs unless the City is involved.
  • HUD has not initiated or conducted a market study to establish that there is sufficient, habitable, affordable rental housing available in the market area in which Lawndale Restoration is located to ensure that low-income and very low-income families can use tenant-based Housing Choice Vouchers there.
  • Tenants unable to use their Housing Choice Vouchers at the Lawndale Restoration will likely follow the locational patterns of other African-American tenants with Housing Choice Vouchers in the Chicago metropolitan area, living in racially segregated, poverty concentrated areas.
  • This potential loss of 1,240 subsidized units comes at a time when nationally and locally there is an increasing loss of subsidized housing. Nationally, since 1995, about 236,000 units of subsidized housing have been lost.  Since 1999, in Illinois, 5,787 units have been lost, and in the next five years, over 17,000 units of project-based Section 8 housing are set to expire and lose their subsidies in the Chicago metro area alone.
  • The impending loss of the Lawndale Restoration is coupled with the fact that 137,312 Chicago renter households with incomes less than 30% of the area median income are in need of affordable housing, with most paying over 50% of their income towards rent. 56,000 families are on Chicago’s public housing waiting list and 24,000 are on Chicago’s Section 8 Housing Choice Voucher list. Both waiting lists are currently closed.