Chicago Low-Income Housing Trust Fund's Rental Assistance Will Expand with New State Resources

by Doug Dobmeyer

About $12 million, or 40 percent, of the $30 million estimated annual proceeds from Illinois’s rental assistance program, set to start this summer, will come to the Chicago Low-Income Housing Trust Fund and enable the trust fund to expand its current rental assistance work. The new Illinois program will be funded by recordation fees of documents in real estate transactions in the state.

This year the housing trust is funding a program that Chicago has developed to house homeless men and women staying in Chicago’s parks and other outside spaces. This pilot seeks to house 100 people in 2006. The challenge here is that this group tends to be the hardest of the homeless to place in housing.

The beginnings of the trust fund date to the late 1980s—a noisy time. Chicago’s building boom included the Presidential Towers on the west edge of the Loop. Street protests raged against the destruction of single room occupancy (SRO) housing while luxury housing went up in its place. I was a leader and president of the Chicago Coalition for the Homeless and helped lead the protests at the Presidential Towers. This was a site where 1,200 units of SRO housing were demolished.

Fast-forward to 1987 when McHugh, Shannon and Levin, the Presidential Towers’ owners, agreed to donate an initial $3.1 million to a fund to provide housing for homeless people. Fast-forward again to 1989. Mayor Harold Washington had died and Mayor Eugene Sawyer was fast becoming a memory. Richard M. Daley became mayor that year and quickly followed through with an ordinance that established the Chicago Low-Income Housing Trust Fund.

By 1990 the housing trust fund had been launched. The fund’s board appointed by the mayor and confirmed by the City Council worked closely with Chicago’s Department of Housing. During the past 16 years the fund distributed over $113 million to provide almost 26,000 units of housing for low-income families and single people.

The rental assistance program represents the largest use of this money. The fund has used $73 million to provide 24,000 apartment units. Today the fund is providing over 2,000 units a year with rental subsidies. The average cost per unit during the past 16 years has been $3,060 annually or $255 a month in subsidies. The $73 million has funded all sizes of apartments from SRO units to six-bedroom units.

The balance of the fund—$40 million—has been used to write down development costs in exchange for rental units for low-income families. The trust has also funded some units to house homeless families. From 1999 to 2001 the trust provided the Salvation Army with funds for people who were on the state’s General Assistance program and faced assistance cutoff and losing their housing.

The trust fund provides rental assistance directly to landlords through yearly contracts. The landlord is responsible for maintaining safe and sanitary housing that meets Chicago’s building codes. Each unit is inspected by the Department of Housing before any agreement is signed with landlords.

Chicago’s contracts with landlords benefit tenants. For example, if tenants can afford only $250 a month for a two-bedroom apartment and the rent is $750, the trust fund will pay the $500-a-month difference or $6,000 annually. Tenants’ portion of the rent is targeted to be capped at 30 percent of the tenants’ income—the same as Section 8 rents. The trust fund seeks to limit subsidized tenants in larger buildings to no more than one-third of the total number of tenants.

Tenants are eligible if they have incomes of no more than the amounts for the family size in the following chart. This income equals between 0 and 30 percent of the median income for the Chicago area.

GROSS HOUSEHOLD INCOME LIMITS

Either landlords or tenants may bring a unit or number of units in a building to the trust fund for possible subsidy. While subsidies depend on available financial resources, the trust will fund as many units as its dollars allow. Unless an eligible tenant moves, the units fail to meet building codes, or the landlord opts out, the subsidies may be renewed annually. There is no time limit on how long a subsidy may go to a unit or tenant.

Tom McNulty, the trust fund’s president, said, “The past 16 years has been an example of what local government can accomplish working with the private sector and those committed to ending homelessness.”

The Chicago Low-Income Housing Trust Fund may be reached by calling Nora Saldivar at 312.742.0290

Doug Dobmeyer has been a member of the board of directors and secretary of the Chicago Low-Income Housing Trust Fund since 1990.

Poverty Action Report
February 2006