What if I told you that a hugely underutilized market exists in Chicago for affordable housing—one that doesn’t depend upon government subsidies for its funding?
It exists, and it’s what is known to advocates and developers as NOAH, naturally occurring affordable housing. These developments are ones that, without rent restriction or rent subsidization, naturally fall under the “30 percent of Area Median Income” definition that we’ve all come to associate with the word “affordable.” The NOAH market segment proves particularly attractive right now, given the precariousness of funding for housing assistance subsidy programs under the new presidential administration. Sounds like the stuff of dreams, right?
And while affordable housing like NOAH is needed across the nation, some places in Chicagoland require assistance more than ever. Though most communities have bounded back financially since 2011, vulnerable neighborhoods continue to decline, according to new MPC analysis.
MPC crunched the numbers and discovered that Cook County’s most disadvantaged populations are worse off than they were just six years ago in terms of employment and financial security. Despite decreasing joblessness in the county overall, Census data shows that most of the county’s highest-need areas reported employment rates last year that were anywhere from 6 to 11 percent lower than they were in 2011. This finding is based upon the 60 county census tracts with the lowest 2011 rates; of this group, a troubling 42 tracts reported lower 2016 rates, and nearly half that amount (19) exhibited declining rates year-to-year.
These tracts tend to be in communities that are largely black, impoverished and earning well below the county average for median income (sometimes as much as $20,000 below).
Job loss for residents in these areas—which include Chicago Heights, Bronzeville, Englewood and Blue Island—is particularly devastating, considering that some financial assistance programs may be just beyond reach.
Housing assistance is a prime example. A scan of local Housing and Urban Development (HUD) data across these high-need tracts reveals an average wait list time of 45 months for participants in the Housing Choice Voucher (HCV) program in 2011. Though the wait had fallen to 27 months by 2016, this extended period essentially guarantees significant economic hardship for would-be participants. For public housing, this wait is only slightly less: 35 months, as of 2016.
Of course, there are no perfect solutions to a problem as complex as affordable housing, especially considering the incredible demand for it in the region.
The catch here is supply. Rental developments birthed out of the NOAH market (properties that aren’t rent subsidized or rent restricted) tend to offer a much smaller number of available units per building than, say, developments financed by Low Income Housing Tax Credits (LIHTC), voucher-supported housing or project-based federal assistance from HUD. In fact, according to HUD’s 2016 estimates, the average multi-family rental development in Cook County contains at least 83 units, with 73 of these in receipt of rental assistance. NOAH deals, however, tend to be on the scale of anywhere from 5 to 40 units at most, generally speaking.
A trade-off emerges between speed and impact: While an LIHTC or subsidy deal can take years to materialize, vacant or distressed buildings can be rehabbed relatively quickly to produce NOAH units, but in quantities that may not make a dent in the huge numbers that still require housing.
In other cases, policy strategies that would seem to generate community-wide understanding turn out to be surprisingly divisive. Affordability advocates in the state were jubilant when the Illinois Housing Development Authority reprioritized incentives for development in Opportunity Areas as part of its Qualified Allocation Plan (QAP) three years ago. (For more info on QAPs, as well as exciting changes on this front coming out of the City, see my colleagues’ recent post.)
Opportunity Areas are communities in the state that the Illinois Housing Development Authority (IHDA) characterizes as strong job markets, with low levels of poverty and existing affordable housing. Providing tax credit incentives for development in these areas reinforces the importance of generating affordability in areas of rich job opportunity—something we can all agree makes sense, right?
Apparently, it’s a concept that’s hard to swallow, as evidenced by months-long opposition to a mixed-income affordable housing development in Jefferson Park. On the surface, long-time residents appeared troubled that a 100-unit development could change the neighborhood’s density and character. But beneath this, an ugly thread of intolerance surfaced at community meetings, where concerns around “miscreants moving to the neighborhood” and “surging violent crime” were shared by more than a few, according to reporting by DNAinfo. Though designated as a 2017 Opportunity Area, it’s clear that some residents in Jefferson Park believe in affordable housing only if it’s not in their neighborhood.
Opposition to development in Jefferson Park is exactly the reason MPC advocates for more buy-in for affordable housing from private developers and community leaders in affluent areas.
At the same time, we recognize that much work towards equity and opportunity is still needed in concentrated areas of poverty—those same areas experiencing declining employment year after year. Tackling joblessness and creating stronger, more inclusive housing assistance programs can go hand-in-hand, and it is our firm belief that we should not prioritize one goal at the expense of the other. It is this approach that we’re currently bringing to the second phase of our Cost of Segregation Project. Stay tuned to hear more about the ways in which we’re vetting policy strategies in all communities in the region.