Wards site's affordable housing deal
Developer agrees to set aside 11% of new units

Crain's Chicago Business
September 03, 2001
By Steve Daniels

Some 230 units of affordable housing are slated to be constructed on property surrounding Montgomery Ward & Co.'s former headquarters under a unique deal struck between the city and the team managing the massive redevelopment.

Half those units will be set aside for public housing residents, most from nearby Cabrini-Green, who are being displaced as the Chicago Housing Authority (CHA) continues to raze high-rise complexes.

The city's deal with Chicago-based Centrum Properties Inc., master developer of the 23-acre property along the Chicago River that Wards once owned, is the largest such agreement that city planners have hammered out to date.

While the city customarily requires redevelopers of publicly owned land to set aside a percentage of their units as "affordable," it does so far less often on private property like the Wards tract. In the last several years, city planners have won commitments to build more than 2,000 affordable housing units from the developers of some 15 projects, but most of those have been on land once owned, at least in part, by the city.

But the massive nature of the Wards redevelopment presented city planners with an unusual opportunity. And they had leverage because Centrum, along with three other partners in the commercial redevelopment of the former Wards catalog building — now dubbed E-Port — sought millions of dollars in tax-increment financing (TIF). The Community Development Commission two weeks ago approved a TIF deal worth $28.7 million.

Included from the start

"The city made it clear from day one that some type of affordable housing would have to be part of the package," says John McLinden, a Centrum partner. "It was just part of the deal."

Centrum's residential plans call for a total of 2,000 units, including multi- and single-family residences. As master developer, Centrum has drawn up the broad plans for the land and has sold or is selling individual parcels to other developers that ultimately will do the build-out.

Completion of the project, dubbed Kingsbury Park, is expected to take at least five years and potentially transform an area that's been underdeveloped for decades.

Including the Centrum agreement, which the City Council will have to approve when it takes up the redevelopment plan later this year, the city has provided for about 320 units of Cabrini replacement housing; under the terms of a consent decree, it must provide 700 units.

"In the Near North redevelopment initiative, Mayor Daley committed back in 1996 that anyone who wanted to come back to the community could come back to the community," says Alicia Berg, commissioner of the city's Department of Planning and Development.

The city deal applies only to 9½ acres of the former Wards property located north of Chicago Avenue — the part within the city's Near North redevelopment area. The housing being constructed on Wards property south of Chicago Avenue all is market-rate.

Twenty percent of the 650 units proposed to be built on the north side — some 130 units — will be designated "affordable." Half of them will be offered to middle-income households, defined as those with an income no higher than 120% of the city's median, or roughly $59,000 for singles and $80,000 for a family; the other half will be for residents of public housing. They will live side by side with owners of townhouses and condominiums costing upwards of $300,000.

In addition, a 100-unit building will house seniors, with half the units set aside for elderly residents of public housing.

In an innovative aspect of the deal, Holsten Real Estate Development Corp. will own and manage the CHA units scattered among the mid-rise condos, townhouses and three-flats.

Holsten is the developer of North Town Village, just north on Halsted Street — a 261-unit project that has become something of a national model for mixed-income development.

At Kingsbury Park, Holsten will apply the same drug-screening and interview process that it's instituted for former Cabrini residents wanting to live in North Town Village. While that's created some resentment among public housing residents, housing advocates and city officials accept it as necessary to build confidence in the new mixed-income communities.

"This is, to a certain extent, a social experiment," Ms. Berg says. "We're very hopeful this can work, but this is new."

Start of a trend?

Housing advocates applaud the Wards deal and hope it will lead to something more.

"The land available publicly is insufficient to meet the growing (affordable housing) need across the city and region," says Kevin F. Jackson, executive director of the Chicago Rehab Network, a non-profit advocacy group. "This private piece is a significant step forward. We believe this should lead to a mandatory housing set-aside that is consistent and across the board."

Ms. Berg says the city is studying the feasibility of requiring residential developers to set aside a portion of their projects as affordable housing, as part of a comprehensive overhaul of the city's zoning code now under way. But there are questions about how that would be enforced, she says.

In the meantime, developers seeking TIF subsidies for residential projects should expect to help create more affordable housing.

"It's as much a benefit to the community as open space, green space and parks have been in the past," says Steven M. Elrod, partner with Chicago law firm Holland & Knight LLP, which does zoning work and helps municipalities negotiate with developers. "Chicago is at long last jumping on the bandwagon."

copyright 2001 by Crain Communications Inc.

More about Housing Set-Asides
View all articles In the News