As Evanston officials rush to implement the recently announced $18 million federal housing grant, some residents are raising questions about the program’s impact on one of the targeted neighborhoods.

As Evanston officials rush to implement the recently announced $18 million federal housing grant, some residents are raising questions about the program’s impact on one of the targeted neighborhoods.

Carlis Sutton, who lives at 1821 Darrow Ave. in the west Evanston census tract, 8092, targeted for the grant, says he’s glad the city got the money, but he’s not sure how it’s going to be used.

Under terms of the grant, the city must rehab or demolish and rebuild 100 abandoned or foreclosed housing units within three years. The grant application calls for selling half of them to new home owners and turning the other half into rental units.

The other targeted census tract, 8102, is located along Howard Street in south Evanston. It’s not yet clear what proportion of the grant’s activity will happen in which census tract.

Competition for home sellers

Sutton says he fears the city program may only make things more difficult for people trying to sell homes in the west Evanstson census tract, like Joann Cromer, whose two-flat on Grey Avenue Sen. Dick Durbin and Rep. Jan Schakowsky toured last Friday before a news conference touting the grant.


Joann Cromer speaking to Sen. Durbin on Friday, Feb. 5. 

“It will be further competition to those trying to sell their properties on the private market,” Sutton says, “and it doesn’t look like they’re going to get any help.”

Cromer and her two sisters inherited the two-flat, and a single-family house across the street, when their father died.

She’s been able to rent out the house, but the upstairs flat in the two-unit building remains vacant.

The census tract has by far the highest vacancy rate in Evanston, with postal service figures provided by PolicyMap.com showing nearly 10 percent of all properties vacant as of last September.

Of the 949 properties in the census tract, Blockshopper.com shows 72 changed hands in the past 12 months, the highest turnover rate in the city.

But more than a third of the sales were foreclosures. Some properties changed hands twice within the year, first when the bank foreclosed to oust one owner, and then again when the bank sold the property to a new buyer.

With all the foreclosures and bank sales, the median selling price declined to just $113,500.

So far it’s unclear how much money the city plans to spend to rehab each of the properties it acquires and how competitive they will be with existing housing stock once they come back on the market.

The city originally applied for $40 million, with roughly half to be spent on the rehab program. That would suggest a purchase and rehab subsidy, net of any sales proceeds, of roughly $200,000 per unit.

But after being awarded less than half the money they requested, city officials now are trying to find ways to stretch the available funds to also build nearly 100 new housing units on the west side, the other half of the original grant proposal.

So, the depth of the subsidy for the rehabbed units — and thus how aggressively the properties will compete against the existing housing stock — is hard to estimate.

Sarah Flax, the city planning staff member who prepared the grant applilcation, says the staff is in the process now of developing pro formas for the project.

“Things have changed so much from the original application” submitted last summer, Flax says, “We have to do some collaborative work” with the federal Department of Housing and Urban Development to work through those issues.

Competition for landlords

For landlords like Sutton, who says he owns a total of about 30 rental units, the grant promises to bring a new, government-subsidized competitor to the neighborhood.

Brinshore Development of Northbrook, the city’s partner in the grant application, will end up owning the 50 rehabilitated rental units.

Census figures show just under half of the 1,710 dwelling units in the census tract have owner occupants. Aside from some abandoned properties, the rest are either rented out or available for rent.

“We have a hard time getting tenants now,” Sutton says, noting that while the program will pay to rehab the units that Brinshore will own, it provides no financial help for struggling existing landlords.

He says costs for landlords, especially with high vacancy rates, make it difficult to stay in business.

“Taxes are getting totally out of control, and we haven’t seen any tax relief,” Sutton says.

Work for local contractors

At Wednesday’s Plan Commission meeting, Commissioner Seth Freeman asked whether the grant will provide work for local contractors.

City planner Craig Sklenar said there are requirements for local hiring in the terms of the grant. “It is a priority,” Sklenar said, “and we’ll be trying to hire Evanston first.”

He said once the grant agreement with HUD is signed, the city staff will roll out plans for local hiring, including a website to promote it. In the meantime, he said, interested contractors could call the city planning division to be added to a list of people who will be notified once the plans are in place.

Design standards

Plan Commissioner Dave Galloway said he was thrilled to learn about the grant.

He said he’s driven down the affected section of Emerson Street and has been “dismayed year after year at the deplorable visual state of affairs, with a poor quality streetscape and poor quality of buildings.”

He said some of the best architecture in the neighborhood is represented by some of its older homes. “Some of the newer stuff is extraordinarily poor, and not well integrated into the neighborhood,” he added.

It was not clear from the Plan Commission discussion whether the grant would provide any funds for streetscape work, but Sklenar said any new construction work would be guided by the design standards incorporated in the recently adopted West Evanston form-based zoning code.

Neighborhood meeting

The $18 million housing grant is expected to be the main topic of discussion at a 5th Ward community meeting to be held by Alderman Delores Holmes at 7 p.m. on Thursday, Feb. 18, at the Fleetwood-Jourdain Center, 1655 Foster St.

Update 4:20 p.m. 2/13/10: Alderman Holmes now says she plans to postpone the discussion of the housing grant issues until the March 18 ward meeting. As of now “we don’t have enough information,” she says.

Bill Smith is the editor and publisher of Evanston Now.

Join the Conversation

15 Comments

  1. Weren’t these questions addressed at earlier meetings?
    I attended an 8th Ward meeting to discuss these very questions. Forclosed homes are driving down the market value of other homes in the area – even if nobody buys them. Why would you spend $250K on a condo when there is a comparable foreclosure available for $50K, even if buying a foreclosure is a hassle?

    The point of the grant is to ensure that the foreclosures are brought up to saleable condition, and resold only to those who income-qualify, who wouldn’t be able to purchase a market-rate home. Unlike foreclosures, the NSP2 properties can’t be purchased by anyone who could purchase a home at market rate, and therefore don’t compete with market-rate homes.

    1. 120% of AMI
      Hi Michele,
      The conditions of the grant say that 25 percent of the properties have to be reserved for people making no more than 50 percent of area median income. (Most or all of those will probably be rentals.) The rest of the properties can go to people making up to 120 percent of area median income.

      Given that the median sales price of homes in census tract 8092 is currently $115K and 120 percent of area median income for a family of four is $90,500, I think it’s pretty clear that the rehabbed NSP2 properties will be competing for some of the same potential buyers as non-rehabbed properties being sold by private owners.
      — Bill

      1. median sale price
        Bill, aren’t you including condos — including condos that could not accommodate a family of four — in that 115K median figure? What is the SFH median? I think Michele is more on track, the NSP2 and private-sale markets are by and large separate channels.

        1. Median sale price
          Hi Jeff,

          The median sales price data from Blockshopper includes condos. However, there were no sales of condos in tract 8092 during the last year. The data also includes multi-unit dwellings under a single ownership, which would tend to raise, not lower, the median price.

          Tract 8092 consists almost entirely of single family homes and two and three unit apartment buildings.

          So you can’t use the condo argument to claim the NSP2 properties won’t compete with the rest of the market in tract 8092.

          Also, I have difficulty figuring out how you can assume there will be no competition when NSP2 is a brand new program that hasn’t actually sold any properties yet.

          And didn’t the previous round of subsidized housing projects in Evanston get caught in the same downturn that the rest of the housing market experienced? Isn’t that why they have had such a difficult time selling?

          On what economic theory do you conclude that houses don’t compete with other houses in the marketplace?

          Bill

          1. Housing economics
            The question of competition involves both supply AND demand. If this project improves the desirability of the area, as a whole lot of renovated/newly built properties is likely to do, all property owners stand to benefit. I suspect the real competition will be between Evanston and other communities with similar affordable housing.

            In any case, the Federal money provides investment capital that will flow through the local economy and will improve the housing stock. One can argue whether it is appropriate for the Federal government to do this, or whether US taxpayers are getting value for their dollars, but for Evanston, hey, don’t look a gift horse in the mouth.

  2. Stimulus money helps Brinshore but not homeowners
    Michelle,

    Why do you suppose there are foreclosures in this targeted area? It’s because the property owners can’t pay their mortgages or their property taxes or both.

    So, how will this stimulus money help THEM? Why not use this money to help the CURRENT homeowners and begin some type of new affordable rent program or mortgage assistance with these owners?

    All that is happening here is that government is conducting a social experiment while meddling in the free market. These properties that Evanston’s handpicked developer, Brinshore, will buy with the stimulus money will have an effect on the area’s real estate market.

    If the typical buyer or renter are not qualified to purchase or rent Brinshore’s product most likely at a reduced price why would they want to pay a premium price for a similar home in the same area? They will most likely look elsewhere.

    Remember, properties in these areas, including the foreclosures, are selling and renting, perhaps not at a level homeowners would like. But property values everywhere have declined. If they’re priced right they will sell or rent.

    To give you an idea how out of touch our elected leaders are, Dick Durbin Jan Schakowsky and Mayor Tisdahl chose to tour a home in the targeted area, claiming the homeowners had difficulty selling it. Well, that home was not for sale so how would anyone know it would not sell?

    What will happen here I think is simply there will be a new longterm landlord in town – Brinshore.

    Based on the recent failures of five affordable housing projects in Evanston in which the city had to bail out, the question could become: Who will bailout Brinshore when the stimulus money runs out and the properties are not sold or rented?

  3. Brinshore Development?
    Is the Brinshore Development CEO, the same guy who was partners with Tony Rezko in Rezmar?

    http://www.suntimes.com/news/metro/355100,CST-NWS-rezcast24.article

    Brinshore recently got cold feet on a development project in Hyde Park. Will that happen here?

    http://www.chicagobusiness.com/cgi-bin/news.pl?id=29666

    They have been involved in a bunch of “innovative” projects:

    http://arighttowrite.blogspot.com/2008/02/trip-to-future.html

    http://www.chitowndailynews.org/Chicago_news/Housing_authority_chooses_developer_for_Lawndale_Complex,25673

  4. This whole thing stinks
    The project is a big, unnecessary waste of Federal tax dollars and a give-away to Brinshore. I say send the money back.

  5. Yes, housing supply will increase as demand declines
    Mr. Zbesko,
    Let’s say you want to buy a home for 200k. Let’s say you look in one of the the two targeted areas. In the near future, there will be two types of homes – affordable homes for qualified low income buyers (The Brinshore home) and one for the typical buyer that does not qualify as low income.

    Let’s say your the typical buyer. Are you willing to pay MORE or just as much for a home compared to a rehabbed or new Brinshore home? Probably not.

    No one knows exactly how Brinshore will price their homes but it will increase supply but not necessarily demand for the TYPICAL buyers or even low income buyers.

    I read the city’s application for the stimulus grant and no where did I read that there was a swath of low income buyers chomping at the bit to buy. How do you explain the fact that five affordable housing projects have failed already and the city has bailed them out?

    In other words, the market is showing there is NO DEMAND TO PURCHASE AFFORDABLE HOUSING!!

    My guess is that Brinshore will purchase some foreclosed and vacant properties that are NOT on the market and build new properties, thus increasing supply.

    With an increase in housing supply and declining demand, what effect do you suppose it will have on the real estate market in these areas? Ya know, homes ARE selling in these areas as long as they are priced right.

    Yes, $18 million is nice to have. But nothing is free. What strings are attached to this grant? What happens when the money runs out? How much human resources is the city putting into this? Quite a bit actually, according to the grant application.

    Another question: What makes Brinshore so special to be able to own these rental properties and become the de facto dominant landlord in these areas? How did this development company get on the gravy train?

    Enquiring minds want to know.

    1. Where were enquiring minds at the front end of this project?
      I’m not certain if Bill Smith was there, I know the Tribune was, but there was a well-publicized public meeting regarding this grant BEFORE the City went forward with it. Most of these questions were asked and answered. I am not an expert, and I attended this meeting months ago, but I’d suggest if you have questions, maybe they’re best directed at the City Planning office or directly to Brinshore rather than asked of the open air.

      I will say this: from what I gathered, the idea is that homebuyers are more likely to buy in a neighborhood where there are fewer boardups and foreclosures, and foreclosures drive the median home price down more drastically than affordable housing.

      Furthermore, my understanding is that if the homes don’t sell, Brinshore will maintain them at their own expense until they do – and while some homes may be made available to the 120% of median income buyer, a requirement of the grant is to serve the lower end of the scale first. Either way, “typical” buyers won’t be buying many of these properties.

      1. You talking to me?
        “Where were enquiring minds at the front end of this project?

        I cannot speak for other Enquiring Minds…but I have not expressed an opinion either way on this particular project. In general I support the President’s stimulus and stabilization projects , except those that end up enriching bankers.

        Right now, this is not a major issue for me. I am more concerned about the wasteful branch libraries taking money away from vital city services, and the attempts by certain people to get special exemptions from city fees to support their pet anti-NU causes.

  6. Evanston does not need more affordable housing
    If the stimulus money was intented to buy and rehab foreclosed and vacant properties to rehabilitate the neighborhood then why is there a need to sell or rent to the 120% median income buyer?

    Why not just rehab these targeted properties and then sell them at market rate to whomever wants to buy them?

    BTW-properties, including foreclosures, have been recently selling in these areas.

    Again, where is there evidence that there is a big market of low income buyers looking to buy? Five affordable housing projects in Evanston recently went bust and the city, deep in the red, bailed them out. How do you explain that?

    If you read page 4 of the city NSP2 application grant you will note that these neighborhoods had a high rate of subprime loans, which helped cause the high number of foreclosures, although there are other reasons. Is affordable housing in these areas really the answer to stop the market decline and foreclosure rates? How?

    Here’s another juicy fact: On page 28 of the application it states that 26 percent of “Evanston’s housing stock was affordable in 2000.” That’s one out of every four. I’m sure that number has gone up. Each year, Evanston gets $2.5 million through its Community Development Block Grant to aid in dozens of affordable housing programs.

    How much more affordable housing is needed in Evanston?

    I did a search at the Chicago Tribune and could not find anything about a “well-publicized public meeting” before the NSP2 grant was made. In any event, what’s wrong with discussing this issue in “open air?”

    Why did Evanston chose to partner with Brinshore for this grant?

    1. Housing Problem and Lotto
      Certainly this does not apply to all or even a large portion of those with foreclosure and housing under-water.
      BUT when I go to some of the stores that sell lottery tickes and I see people buying substantial Lotto tickets and they certainly don’t look like they can afford to throw money away. I bet they also made poor ‘bets’ on housing and financing they payments as well as other expenditures.
      Someone in the schools and other community organizations should be teaching them about the odds—how big the jackpot would have to be given the odds, even if they did not have to split it and getting it as an annuity or a fraction if they take a lump sum.
      Where are the preachers telling their congregations about the same things and putting their family first and investing wisely and improving education/training instead with the money they save.

      1. Lotto, City Budget and ‘Gambling on a Miracle’
        I guess it is too much to expect that those who buy Lotto tickets [and other gambling] would know better when they see the City Council and “we want all our pet projects” spending as if there is no tomorrow [may be literally true !] with funding for branches, Media and Ecology Centers have have long ago failed to serve a purpose.
        If the Council and these ‘special project’ supports, who claim they are educated and want these for continuing education, don’t understand enough of economics [not to mention reality], why should we expect those ‘less educated’ to ?
        Some how these groups think everything can be done as it always was and ‘hope’ some miracle will bail the city out just as Lotto buyers ‘hope’ they win before they go broke.

  7. Owning vs. renting
    John Zbesko wrote “In any case, the Federal money provides investment capital that will flow through the local economy and will improve the housing stock. One can argue whether it is appropriate for the Federal government to do this, or whether US taxpayers are getting value for their dollars, but for Evanston, hey, don’t look a gift horse in the mouth.”

    Digging holes and filling them in again will employee people but that does not mean it is investment capital.

    Owning a house is nice—if you can really afford the purchase price and all the costs [repairs, taxes, time required for up-keep] but 3% and even 10% down loans don’t give owners a ‘stake’ in the property and can lead to a false sense of real ownership. For a lot of people renting is the only realistic and responsible thing. Also renting allows a person to move if laid-off, better jobs open elsewhere, etc. much more easily than trying to sell a house in a short time. Granted in the Obama recession that may not help [except moving to North Dakota] but in general it can.

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