Housing Initiative Transactional Clinic—Significant Achievements for 2023-24
Students in the Housing Initiative Transactional Clinic provide legal representation on complex real estate development projects to build affordable housing. Clients include nonprofit, community-based affordable housing developers and housing cooperatives. Students serve as deal lawyers, working with clients and teams of professionals—such as financial consultants, architects, marketing professionals, property managers, and social service providers—to bring affordable housing and mixed-use development projects to fruition. Projects range from single family rehabs with budgets in the $30,000 to $75,000 range, to multimillion-dollar rental and mixed-use projects financed by low- income housing tax credits, tax exempt bonds, TIF, and other layered subsidies. Students also counsel nonprofit clients on governance and tax issues related to their work.
In the 2023-2024 academic year, some of the key clinic projects are described below.
Cabrini Green LAC Community Development Corporation
The clinic advised the Cabrini Green LAC CDC as it made progress with its developer partners on two major redevelopment projects that will serve mixed income tenants on sites that formerly held Cabrini Green public housing projects.
At Parkside of Old Town, in conjunction with Holsten Development, the next phase will include approximately ninety-nine rental units distributed among four buildings, providing a mix of market rate and affordable housing on land owned by the Chicago Housing Authority. Students this academic year negotiated the documents that will govern the property management of the development after it is built, including the tenant selection plan, the management agreement, the management plan, and the form of tenant lease, among others. The Clinic also reviewed and commented on the construction contract for the development and the contracts for the purchase of specialized electrical equipment that will be needed for construction, and which require a long lead time for design and delivery. On the financing side, Clinic students reviewed and negotiated financing agreements for eight different funding sources coming into the project, including construction financing, permanent loan financing, state donation tax credits, and federal low-income housing tax credits. In all, the financing layers that Clinic students reviewed included (1) a construction loan from JPMorgan Chase Bank, N.A. in an amount up to $34,700,000; (2) a permanent loan from a community development lender in the approximate amount of $10,100,000; (3) a construction/permanent loan from a community development lender in the approximate amount of $1,000,000; (4) a loan from the Chicago Housing Authority in the approximate amount of $11,500,000; (5) a loan of HOME funds from the City of Chicago in the approximate amount of $4,250,000; (6) a loan from State of Illinois donation tax credit proceeds from the Chicago Housing Authority in the approximate amount of $4,734,214.60; (7) a loan of tax-increment funds in the aggregate amount of $16,400,000; and (8) a loan of ComEd grant funds in the approximate amount of $331,415. In addition, the Clinic reviewed and commented on the partnership agreement for the syndication of an annual allocation of low-income tax credits of $1,911,000, resulting in a total equity contribution of $17,866,064. Parkside 5 is anticipated to close in the fall of 2024.
In its joint venture with Brinshore Development at Oak Street and Larabee Avenue, the Cabrini LAC CDC will participate in development of a seven-story residential building with approximately seventy-eight residential units, for market rate, low-income, very low-income and extremely low-income families, along with a community space, an outdoor space, a parking garage, and indoor bicycle spaces. The anticipated sources of financing total approximately $54 million, consisting of low-income housing tax credit equity, state donations tax credits, grant proceeds and tax increment funding from the City of Chicago, and loans from the Chicago Housing Authority and the Illinois Housing Development Authority. In 2023-2024, Clinic students reviewed the ordinance and redevelopment agreement for the tax increment financing, and participated in structuring discussions to arrive at the organizational chart for the project’s owner entity. In doing so, Clinic students learned about the tax rules regarding tax-exempt use and accelerated depreciation periods, which drive the organizational structure to arrive at an arrangement that maximizes depreciation deductions for (and hence the equity contributions from) the low-income housing tax credit investors. The Oak & Larabee transaction is anticipated to close in the first quarter of 2025.
The Clinic’s work on behalf of Cabrini Green LAC CDC continues to provide students with the rare opportunity to work on some of the most sophisticated affordable housing transactions in the country, utilizing the low-income housing tax credit. In addition to exposure to secured lending documentation, students learn about the tax rules for these tax-advantaged investments, which affect the financing for the deal and the entity structures that are required.
Oak Park Regional Housing Center
The Clinic represents Oak Park Regional Housing Center (OPRHC) in its Austin United Alliance development project. Since 1972, OPRHC has worked to counteract racial steering in housing and to promote pro-integrative choices through affirmative marketing. OPRHC promotes a racially balanced rental market by providing information and referrals to thousands of apartment seekers each year and by offering homeownership and rental counseling programs.
In the 2023-2024 academic year, the Clinic successfully closed on OPRHC’s joint venture to develop a mixed income, mixed use project in the Austin neighborhood of Chicago, adjacent to the historic Laramie Bank Building. The project involves redevelopment of government-owned vacant lots into a new six-story structure containing seventy-two units of mixed-income housing and a community plaza. The closing was particularly complicated due to the negotiation of the replacement of OPRHC’s original development partner—which had run into financial difficulties for unrelated reasons—with a new development partner. With the new development partner in place, the closing on the land and financing involved the finalization and execution of documentation for a variety of funding sources, including (1) a federally-insured permanent loan of $3,200,000; (2) a construction loan of $23,400,000; (3) tax increment financing proceeds of $12,900,000; (3) ComEd grant proceeds of $324,680; (4) a loan from the City of Chicago’s Department of Housing of $14,450,000; and (5) low-income housing tax credit equity in the amount of $20,717,862. Construction is underway and is anticipated to be completed in 2025.
Community Male Empowerment Project
A longstanding client of the clinic, the Community Male Empowerment Project (CMEP) provides training and employment opportunities to disadvantaged populations through the mechanism of renovation of distressed single-family properties. In 2023-2024, the clinic advised CMEP in structuring of an ambitious project in Calumet City that would involve large-scale redevelopment of vacant city lots acquired by the municipality. In addition, the Clinic represented CMEP in finalizing the financing documents for its most recent acquisition and rehabilitation project utilizing CMEP’s line of credit with the Chicago Community Loan Fund.
Pilsen Housing Cooperative
The Pilsen Housing Cooperative (PIHCO) offers limited equity cooperative units to lower income families who have strong ties to the Pilsen neighborhood in Chicago. In 2023-2024, the Clinic’s work for PIHCO focused on the creation of a set of model share loan documents. A share loan is financing used by an incoming co-op member to purchase their share in the co-operative, similar to a mortgage loan for purchase of a single-family home. Share loans are prevalent in New York, with its abundance of co-ops, but are effectively non-existent in Chicago. The lack of share loans greatly constrains the supply of cooperative housing, including affordable housing co-ops, in our jurisdiction. By creating a model set of share loan documents that are tailored to Illinois law, the Clinic and PIHCO will create a pathway for CDFI’s to originate loans for this underutilized affordable housing approach.
Clinic students assembled a set of share loan documents from New York and made changes to fit within Illinois law. In drafting the remedies provisions, students researched the foreclosure process applicable in Illinois when share loans go into default. Students also researched and provided advice regarding applicable licensing and truth-in-lending requirements that would govern Illinois share loan originators. Thanks to the collaborative share loan advocacy project spearheaded by PIHCO and the Clinic, both a Chicago-based lender and the state housing finance agency are on track to begin offering share loans in 2024.
Chicago Family Housing Community
Chicago Family Housing Community (CFHC) is a new, affordable housing cooperative. In 2022-2023, the clinic represented CFHC in closing on the acquisition of its first multifamily building in Chicago. In 2023-2024, Clinic students have supported the group in an offshoot project to develop affordable housing condominiums. The Clinic helped form a new limited liability company development entity and represented that entity in successfully closing on the acquisition and financing of a six-unit building on Chicago’s north side. Next, Clinic students provided counsel on the process under state and local law for converting the property to condominium, and drafted the condo declaration, association bylaws, property report, form of condo purchase agreement, and form of deed. The Clinic also provided counsel on accessing affordable housing funding and navigating different options for restricting the resale prices of units to keep them affordable for the long term. The project is ongoing, with units expected to be sold to the first round of condo buyers in the third or fourth quarter of 2024.
Voice of the People in Uptown
Voice of the People in Uptown (Voice) is a longstanding community development corporation and service organization in Chicago’s Uptown neighborhood on the north side of the City. The Clinic has worked with Voice on the incubation of a new community land trust—the Dovie Thurman Affordable Housing Trust—that would serve as a vehicle for permanent affordability of multifamily housing in Voice’s service area and beyond. In 2023-2024, the Clinic advised the new board of directors on options for expansion and drafted proposed bylaws changes. The Clinic also provided counsel in approaching lenders for consent to implement affordability covenants on three properties that would be the inaugural properties governed by the Dovie Thurman Trust.
Jumpstart Housing Cooperative
Jumpstart Housing Cooperative is a new, affordable housing cooperative started by members of ChiFresh Kitchen, a worker cooperative with businesses on the south and west sides of Chicago. In 2022-2023, Clinic students helped form the co-op and negotiated the purchase agreement for the co-op’s first multifamily building, in Chicago’s Bronzeville neighborhood. In 2023-2024, the Clinic closed on the acquisition and financing of the building purchase and the sale of Jumpstart’s first three membership shares to co-op members.
Here to Stay Community Land Trust
The mission of the Here to Stay Community Land Trust is to retain low- to moderate-income households across the rapidly gentrifying Chicago neighborhoods of Hermosa, Avondale, Logan Square, and Humboldt Park through affordable homeownership and communal ownership of the land. In 2023-2024, Clinic students advised Here to Stay in designing its application processes and housing preferences to ensure that selection of residents for the CLT will comply with fair housing laws. Clinic students researched applicable laws at the city, county, state, and federal levels, and worked with the client in crafting language and procedures to meet the client’s goals and legal requirements.
Unity Parenting & Counseling
Unity Parenting & Counseling (Unity) was founded in 1993 to protect and support the most vulnerable groups within the community—those who are homeless or in unstable housing situations, abused and neglected children in foster care and their parents including those with physical and mental health challenges. Unity is a social service agency invested in promoting the development of healthier and stronger family units, also resulting in cultivating more positive communities. Unity engaged the Clinic in 2023-2024 to represent Unity in the acquisition and renovation of a budget hotel on Chicago’s south side, to transform it into transitional housing for young adults who are homeless or at risk of becoming homeless. Financing for the project comes from the City of Chicago Department of Housing and Department of Family & Support Services. The Clinic negotiated the purchase agreement for the hotel, and the architect agreement for the renovation design. The project will feature private units for residents, a common kitchen and recreational space, and space for delivery of case management and health care services. The Clinic also coordinated with outside, pro bono counsel at a major Chicago law firm that is representing Unity in its special use zoning application. The project is on track to obtain zoning approval and complete the acquisition of the property in the latter part of 2024.
Claretian Associates Inc. and Villa Guadalupe Senior Services Corporation
The Clinic has long represented Claretian Associates Inc. and its affiliated senior housing developer, Villa Guadalupe Senior Services Corporation. Founded in 1991, Claretian Associates is a community development corporation that serves the community of South Chicago and surrounding areas by focusing on the three pillars of housing, convening and violence prevention. It is the only non-profit affordable housing developer in the South Chicago neighborhood and provides access to affordable housing, programs to address food insecurity, resources for homebuyers, financial stability, and generational wealth creation. The Villa Guadalupe is a senior housing development owned and managed by Claretian Associates’ sister agency, the Villa Guadalupe Senior Services Corporation.
In 2023-2024, the Clinic represented the Villa Guadalupe in a short-term refinancing with the Illinois Housing Development Authority. Clinic students negotiated the loan agreement and security documents, retiring a prior financing of tax-exempt bonds that the Clinic had worked on years before and that became due this year. With the Villa’s debt now restructured, the Villa will turn with the Clinic’s help to a longer-term rehabilitation and refinancing plan, anticipated to close in the next academic year.
The Clinic represented Claretian Associates in its acquisition of a vacant lot from the Cook County Land Bank. Students negotiated the purchase contract and advised the client on potential environmental issues. The parcel will be used by Claretian Associates as part of a future development plan.
The Clinic also represented Claretian Associates in its evaluation of a potential acquisition of a privately-owned senior housing development in the South Chicago neighborhood. Clinic students advised the client on what documentation to request from the potential seller, to help the client evaluate the prospective purchase. The Clinic also counseled Claretian Associates on the tax implications of an unusual, forgivable loan financing arrangement that encumbers the property. Evaluation of the project is ongoing.
Last, the Clinic represented Claretian Associates in its efforts to structure the financing and joint venture arrangements for its upcoming Sacred Apartments transaction. The Sacred Apartments will consist of a five-story elevator building that will contain eighty-one total and 100% affordable units, along with retail space. Claretian Associates is the co-developer. The Clinic provided counsel to Claretian Associates on joint venture questions and financing/guaranty questions as the project moves through approval processes at the City of Chicago and at the Illinois Housing Development Authority.