#133 Jan/Feb 2004

Affordable in Name Only

At first glance the news of late has been good regarding fair and affordable housing in Illinois. In September Gov. Rod Blagojevich signed the Comprehensive Housing Initiative, an executive order […]

At first glance the news of late has been good regarding fair and affordable housing in Illinois. In September Gov. Rod Blagojevich signed the Comprehensive Housing Initiative, an executive order creating a state housing policy for the first time. But for those of us in the Chicago area who are committed to affordable housing for the neediest, there’s a rub.

Affordability ain’t what it used to be.

From the mid-1930s through the early 1970s, when the federal government was in the business of actually building public housing, the term “affordable” came to be associated in the public mind with mainstream housing for low-income people. It’s a perception the average person, for the most part, retains today. On the other hand, developers, landlords and even some local government entities tend to define “affordable” housing in whatever way best suits them. For years they have preyed on people’s fears of plummeting property values by using the term as a loaded code phrase for “undesirable people and their houses.”

But recent harsh economic realities have forced them to shift their tactics. Due to the widening gap between stagnating incomes and skyrocketing housing prices, a lot more folks in Illinois are worrying about meeting mortgage or rent payments. Since 1994, in the northern suburbs alone, housing costs have risen on average more than 75 percent, according to real estate multiple listing services. This has led to a recent groundswell of support for “affordable housing” even in wealthier communities.

Gov. Blagojevich responded this year with a housing initiative to specifically address the following underserved populations: households earning below 30 to 50 percent of Area Median Income (AMI), low-income seniors, low-income persons with any form of disability, the homeless, low- and moderate-income persons unable to afford housing near work or transportation and low-income persons living in housing that is in danger of becoming unaffordable or lost through economic development schemes, condo conversions and tear-downs. The Illinois General Assembly also passed the Affordable Housing Planning and Appeal Act, requiring all communities with less than 10 percent affordable housing to come up with actionable plans by July 1, 2004. But at the local level where housing gets built and vouchers get routinely rejected, developers and those who cater to them are responding by simply manipulating the term “affordable.” The affluent northern suburbs of Chicago in particular are rife with examples of terminology abuse:
• In Wilmette, the Village board responded to public demand for affordable senior housing in the historic Mallinckrodt building by recommending a developer who will set aside 25 percent of its units as “affordable”: $280,000 for a two-bedroom condo and $210,000 for a one-bedroom. These are, in fact, market rate prices.
• Earlier this year, Northbrook village officials touted their support for “low-cost housing” at a condo development in which the average price is expected to be $310,000 per unit.
• At a community meeting in Glencoe in 2002, Village officials spoke of developing “affordable senior housing” in the “$500,000 range.”

While $500,000 might qualify as “affordable” for some people, it doesn’t come close to meeting the affordability criteria set by the U.S. Department of Housing and Urban Development. HUD defines low-income households as those with incomes that are 80 percent of the AMI, based on household size. In Chicago, the AMI for a family of four is $68,700, and $54,960 is 80 percent of that. For a single person, $39,550 represents the 80 percent level. For a home to be affordable in this income bracket, a household should pay no more that 30 percent of its adjusted gross income for housing costs. Using this formula, a senior citizen living on $39,550 a year would not qualify for one of the $210,000 “affordable” units at the proposed Mallinckrodt development in Wilmette.

And what about very low-income families? What about those making 50 or 30 percent of Chicago’s AMI – or those at or below the poverty level, earning $18,000 for a family of four? They couldn’t even dream of living in any of these developments. The reality is most governments lack the political will to serve the people most in need. As a result, even the nonprofit housing community is not accommodating most low-income renters. According to a recent Chicago Rehab Network (CRN) study of Low Income Housing Tax Credit (LIHTC) properties in Chicago, two-thirds of renter households in the neighborhoods where the 16,000 LIHTC properties are located are too poor to pay the “affordable” rents. This is consistent with a national finding that 67 percent of renter households eligible for these units (at the 60 percent AMI level) could not afford them. This is a travesty, considering that 53 percent of the nation’s renters fall into this eligibility category. Nonetheless, this is the nation’s major affordable housing production program.

The federal government is not providing subsidies deep enough to serve the poorest of the poor. According to the National Low Income Housing Coalition, HUD’s budget has fallen 40 percent between 1976 and 2002, adjusting for inflation. This forces affordable housing developers to serve, at best, the high end of low income. Even then, these developments are strapped or have failed altogether. The majority of Chicago LIHTC properties (56 percent) are operating at a deficit.

Adding to the inadequacy of resources earmarked toward the lowest-income households is a bias in favor of segregating LIHTC developments in already low-income neighborhoods. The purpose of the LIHTC and other affordable housing programs should not be solely to build in areas shunned by the private market – i.e., “troubled” neighborhoods – but to build in high-end areas for the people the market ignores. According to the CRN study, only 2.5 percent of projects are located in neighborhoods where the AMI (for 1990) is 80 percent or higher. More than half – 51 percent – of projects are located in areas that are 90 percent non-white, with only 6.5 percent in neighborhoods where whites comprise more than 90 percent of the population.

To compound income segregation, the few LIHTC properties that do exist in higher income areas or suburbs are skewed towards seniors – apparently the only politically worthy population for government intervention. They don’t put kids in the schools, they don’t make noise, they don’t drive and they’re “local” (read: safe, white). In the Chicago suburbs, nearly 60 percent of all developments are for seniors only, compared to 9 percent in Chicago and 22 percent statewide. This represents not only the triumph of NIMBYism in white or affluent areas, but also a bias against supporting housing for low-income people in these areas even among “liberal” housing advocates. The downtown advocacy, business and technical assistance groups who are currently leading the affordable housing campaigns tend to view the suburbs from the inner city out. They miss the white cab driver, the Mexican laundry worker living in suburban motels, the unemployed disabled adult still living with parents fearful of becoming too infirm themselves to care for their child, and the divorced mom of any race paying 50 percent of her income for rent. There are lives of quiet desperation in the suburbs, people living paycheck-to-paycheck and vulnerable to homelessness. We cannot demand the services of low-wage workers and then refuse them a place to live in our communities.

Are CDCs trying hard enough to blow the whistle on “affordability”? Many CDCs are too busy working on their next deal to challenge the rules of the game. Since these CDCs are themselves financially strapped, they become opportunistic, pursuing deals (such as senior housing) they know will safely succeed with local elected officials. For others, their own governance structure skews them against the interests of the lowest-income households. Many CDCs have professional boards of bankers and private developers and don’t include any of their residents.

Imagine what could happen if more groups were driven by vision than by the need for “a deal a year.” We could build:

Truly affordable, intergenerational housing. An example of what is possible can be seen in the Nathalie Salmon House in Chicago, a 54-unit building where seniors live independently or through supportive living arrangements, and where their neighbors include families with children and college students. Salmon House also has common spaces and gardens that promote community living. The project was the dream of Michael and Lilo Salmon, Holocaust survivors who named the building after their only child who was hit by a car and killed at age 16. “Life encompasses all generations – the elderly should not be secluded,” says Michael Salmon, who founded and directed the U.S. Little Brother – Friends of the Elderly. In 1982, the Salmons founded the nonprofit Housing Opportunities and Maintenance for the Elderly (H.O.M.E.) and patched together the financing of Salmon House in 1986 from the City of Chicago, the Illinois Housing Development Authority (IHDA), and private individuals (most notably, actor Bill Murray).

At Nathalie Salmon House in Chicago, apartments are
affordable and invite a mix of the young and old.
Photo courtesy of H.O.M.E.

Advocacy for innovative finance. Nonprofit developers need to remember their original niche: serving those whom the market will not serve. They need to demand new financing schemes, especially those emphasizing long-term affordability and sustainability such as community land trusts and limited equity models. They need to increasingly demand reform in the way projects are evaluated for government financing and general operating funds so their staffs are able to spend unpressured time assessing community needs and developing creative solutions. For example, thanks to recent advocacy by the Statewide Housing Action Coalition, IHDA now encourages family developments in the suburbs by awarding these proposals more points than seniors-only housing.

Grassroots constituencies for truly affordable housing. The fact is politicians and community groups will respond only when those whom they serve demand that their communities build housing that is truly affordable for all income levels. One way to accomplish this is to encourage and underwrite the grassroots voices of “YIMBYs,” those who say yes-in-my-backyard, in suburbs such as those recently publicized in California or in Wilmette, IL, where the citizens group Mixed Use for Mallinckrodt (MUM) put affordable housing on the political map as a redevelopment option.

MUM was organized two years ago when Loyola University announced it was selling its 17-acre Wilmette campus, including a large historic building. MUM is an eclectic group of residents of all incomes and ages, people with disabilities, civic leaders and clergy who wanted to ensure that the Mallinckrodt building is reused for affordable housing. By collecting petitions, packing public meetings, writing letters to the editor and sitting down with elected officials, MUM succeeded in saving the building. While the final plan includes units that are not as affordable as MUM proposed and lacks the desired mix of age groups and abilities, MUM has been successful in raising the profile of the affordable housing issue in Wilmette. In fact, the Village board recently budgeted $10,000 in the 2004 budget for the development of an affordable housing plan which would include family housing and housing for the poor. MUM’s greatest success may be its own existence. The group is composed of a diverse cross-section of the community, proving that even in mostly affluent areas there is a constituency for truly affordable housing.

Community organizing is generally not a CDC-related strategy. But community organizing for truly affordable housing may well be the most important means for creating affordable units in the numbers that are required, forcing municipalities and private developers to use their ample resources and expertise to solve a major public problem. The issue of the high cost of land in affluent areas is a very real one, but it can be overcome by density bonuses or land subsidies from municipalities – concessions that governments will not grant without strong constituent demand. Developers prefer a free hand, but they also appreciate knowing the parameters within which they must operate, even where inclusionary zoning is mandatory. Nonetheless, not even a handful of foundations fund local, progressive activism in areas that have been hostile to affordable housing, or even see the link between building community support and sustainable developments.

As affordable housing advocates, organizers and developers, we need to put forth a unified vision focused on the lowest-income households. We must reclaim the concept of affordable housing to again include those for whom it was always intended: low-income people. Once we come up with a vision, we need energy, resources and above all, the political will to realize it. Further, we would do well to say no when municipalities permit every piece of available land to be littered with luxury housing or big-box retail; no to seniors-only housing as a bone thrown to affordable housing advocates; and no to communities that use their zoning powers to get rid of housing for the poor.

As the discerning Chicago columnist Sydney Harris once wrote, one cannot “argue economics in a moral void.” To adapt his philosophy to housing, we cannot turn our competitive system into a corral where the elephants trumpet, “Every man for himself,” as they dance among the chickens.



  • One City: Newark, NJ

    January 1, 2004

    Newark’s children are more likely to fail in school and suffer from health problems than children living elsewhere in New Jersey.Photo courtesy of Kerrie Ocasio/ACNJ Every day Gerard Joab receives […]

  • A Changed Block: Hillside Ave., Newark

    January 1, 2004

    When I decided to move to Newark a year ago my expectations weren’t all that high. I had heard and read about Newark’s poverty and downward economic spiral, the lack […]

  • CDCs in Gentrifying Neighborhoods

    January 1, 2004

    When community development corporations were created in the 1960s, their biggest challenge was assisting in the revival of neighborhoods that were physically and spiritually scarred by vacant land, abandoned buildings, […]