By Linda Lutton

When Marta Ayala stumbled across the “affordable housing program” at University Village, the University of Illinois at Chicago’s planned neighborhood, she thought of a dozen people who might be interested in it. Developers were offering qualified buyers deep discounts on lofts and condos in the pricey development; some applicants would qualify for additional discounts called grants.

Ayala, a real estate broker, has strong ties to the Pilsen neighborhood, which is just blocks from the big empty lots north of the 16th Street viaduct between Halsted and Morgan on which University Village is slated to rise–on the site of the old Maxwell Street market. She got on the phone and she also made the rounds, visiting teachers, activists, even business owners in Pilsen. “It was a short, sweet dream,” says Ayala, who thought about applying for a unit of her own until she figured out that she couldn’t afford it. “Once you looked at the numbers it was over.”

The 195 units of “affordable housing” at the University Village development–out of 930 units in all–are targeted to people who make between 80 and 120 percent of the six-county Chicago area median income. For a family of four that’s between $54,320 and $81,480; if you’re single it’s between $38,000 and $57,000. People on the low end of the scale (specifically, those whose income is at or below the six-county median) are eligible for the $10,000 to $25,000 grants. To discourage new owners from quickly reselling their units at a profit, these grants will be issued as loans that will be forgiven at the rate of 10 percent a year for ten years. Applicants with income above the Chicago area median won’t be able to get them, but they’ll still have access to lofts and condos–units the developers, the South Campus Development Team, say are indistinguishable from the units sold at market rates–that are priced to be affordable to them.

It’s not every day that you find someone offering you $25,000 to buy a brand-new loft in a near-to-downtown neighborhood that hasn’t been built yet. The line outside the sales office at University Village started forming at 4 AM on March 1, the day the development began accepting applications for the affordable housing program. For the most part it was a white-collar and white crowd, with a few blacks and Latinos.

Eric Krueger stood in the cold for two and a half hours to get a good place in line. Shivering, Krueger said he was hoping for a loft, which he figured would cost him between $177,000 and $189,000. That was more than he wanted to pay for a home, he said, but he considered it affordable. Currently a northwest-side resident who sells Volkswagens in Glenview for a living, Krueger said he’d live in the unit for a while and eventually rent it out.

Edgar Diaz, a UIC medical student, and his girlfriend, a nurse, hoped to qualify for a discounted one-bedroom unit, which they estimated would cost them between $160,000 and $175,000. “It’s close to downtown, so there’s a lot of things to do. It’s a great location,” said Diaz’s girlfriend, who planned to sell her home in Oak Lawn and move to University Village if they were offered a unit.

Some saw the program as a financial deal too good to pass up. “Joe,” in his early 20s, had stopped by from his Loop computer job to turn in an affordable-housing application. “It’s pretty effective if you think about it from an equity standpoint,” he said. Already paying more than $1,000 a month to rent a North State Street apartment, he said he wouldn’t consider buying a University Village unit at its market price. “The reason why I’m here is because of the deal,” he said. “I’m not out here freezing my ass off ’cause it’s a nice area.”

A brochure for the University Village affordable housing program says it was established “to ensure that a certain number of homes would be made available to a broader range of purchasers than the market would provide.” Market rates in University Village run from $185,000 for a one-bedroom loft to $719,000 for some town homes. Some $1.6 million in Tax Increment Financing district funds has been earmarked for the affordable housing program, but by targeting the program to the income levels it has, those subsidies might simply be mixing in a few nicely situated individuals with the really well-heeled. An analysis of the program prompts the public policy question: what’s the point of subsidizing people who are fairly well-off economically, especially people who already own homes, to move to University Village?

Rachel Weber, a professor of urban planning at UIC who was involved in the initial discussions of what University Village’s affordable housing program should look like, says things could be worse. “I feel like this is a better use of the TIF money than just a developer subsidy. It’s not optimal, but it’s a better version of a flawed public policy we have. All that money could have just ended up lining a developer’s pockets. This can help people buy homes.”

Still, Weber admits that the units are “horribly expensive,” completely out of reach even for two minimum-wage earners, and even more horribly expensive for families with children that need the larger spaces. The “affordable” units are priced from $143,000 for a one-bedroom to $234,000 for a threebedroom. Weber says a quick analysis she did some time ago showed that a large proportion of UIC employees wouldn’t be able to afford them. But spotting a silver lining, she credits the city–which negotiates the details of redevelopment agreements for TIFs–with forcing the developers to reserve half of the affordable units for people making under the area median. The alternative would have been to let all those units be gobbled up by applicants earning just under the 120-percent-of-median-income ceiling.

The applicants in line March 1–who might have been making as much as $60,000 more than a family of four living at the poverty line–could thank advocates for the poor for giving them a shot at this bargain-priced downtown living. From 1992 to 1996 the Statewide Housing Action Coalition (SHAC) and the Chicago Coalition for the Homeless (CCH) waged a “South Loop Campaign to Prevent Displacement.” Angered by the use of public TIF funds to subsidize the developers of Central Station–where no units were ever sold to low-income buyers–SHAC and CCH demanded that 20 percent of all new housing in TIFs be made affordable to such applicants. “The city was real adamant about setting any policy,” recalls Judy Meima, SHAC’s executive director. But in the end the Department of Planning and Development agreed that, at its own discretion, it would tell TIF developers to set aside 20 percent of new housing in TIFs as affordable (though Planning adopted much higher income levels to define eligibility than SHAC and CCH had wanted). The city’s decision to impose this standard at University Village can also be traced to steady pressure from Pilsen community groups. Fearing the effect of high-end housing on their own housing market, Pilsen community groups reacted with a loud outcry to the announcement that UIC intended to expand southward, fairly ensuring that the university would have to make some gesture to those unable to afford half-million-dollar homes on their own. (Chicago’s Department of Planning did not return phone calls asking for comment.)

Meima says Chicago’s insistence on using median income figures from the six-county area rather than from Chicago proper has meant a spate of affordable housing initiatives, particularly in TIFs, that favor the wrong people. “HUD uses these medians for their federal programs, but there’s a real problem with the city using these numbers,” says Meima. “We think public subsidies should always go first to those who need them most.”

According to 1990 census data, the most recent for which these comparisons can be made, the median family income for the six-county area was $42,781. The median family income for Chicago alone was almost 30 percent less–$30,705. The median family income for Pilsen, the nearest residential community to University Village, was $22,127. Some community groups have suggested using community-level data to determine affordability. In Uptown, the Organization of the North East (ONE) seems to be making headway in a fight for community input into two new TIFs, and one of its goals is to create housing that can be afforded by the neighborhood’s current residents. “We have positioned ourselves to make sure that a greater percentage of the TIF dollars will go toward the preservation and development of housing that serves moderate-, low-, and very low income people in our community,” says Tom Walsh, cochair of ONE’s housing committee.

The Chicago Rehab Network, a coalition of 45 nonprofit community development groups, formally suggested some five years ago that city officials use local medians to determine affordability, rather than the six-county median. The response, says executive director Kevin Jackson, was “basically, ‘Don’t go there.’ It was a really strong response.”

Jackson says, “What you have are competing philosophies about what one should be attending to in terms of the housing market.” Analyses done by the Rehab Network show that last year just 9 percent of the city’s Department of Housing budget served what Jackson considers the neediest Chicago households–those making 30 percent of the area median or less.

“There are very clear decisions being made about what kind of housing we’re going to have in these communities,” says Jackson. “We certainly believe there are other options. It’s a political will issue, and it’s a resource issue. It’s a question of how the precious resources we have are being dedicated.”

Lisa Beacham, affordable housing consultant for the University Village project, doesn’t want to say that there’s a minimum income required of anyone hoping to move into University Village–she notes that lenders look at things like credit rating and outstanding debts in addition to income. But she sees little hope that a family earning $30,000–roughly the median family income for Chicago–could afford a home there. “It’s very difficult to get home ownership to households with incomes less than 80 percent of median,” says Beacham. “I’ve been pleased with the program in that we’ve got it set up to be able to serve that group in a project that is in a very desirable location.” But just south of the 16th Street viaduct, the Resurrection Project, which is a nonprofit Pilsen community development corporation where Beacham used to work, is setting families up in new three-bedroom, single-family subsidized homes for between $82,000 and $112,000. Granted, there are no posh loft options, but families making $25,000 can qualify for this housing if they can put 5 percent down.

When asked why at least some housing in University Village wasn’t targeted at people making less than 80 percent of the area median, Larry Justice, project executive for the South Campus Development Team, said that “the whole development was always envisioned as an owner-occupied development, and not to have rental property in it. We wanted it to be owner occupied.”

Next week Beacham will mail letters to the 140 people who turned in applications March 1, letting them know whether they meet the income test. She says she’s disqualified people on both the upper and lower ends of the income scale, and she’s still accepting affordable housing applications. If you make more than most Chicagoans you might qualify.

Art accompanying story in printed newspaper (not available in this archive): photo/Jim Newberry.