You are here

Affordable Housing Crisis: Longstanding Challenges Call for Non-Traditional Approaches

Affordable Housing Crisis
June 2019

The numbers speak for themselves: With a shortage of 7.2 million affordable and available units for the lowest-earning rental households—those with incomes at or below the poverty level, or 30 percent of their area median income, according to the National Low-Income Housing Coalition—the nation’s affordable housing crisis is prompting developers to explore new solutions to looming problems.

Headwinds include wage growth that has failed to keep pace with rental inflation, a surge in construction focused almost exclusively on the upper-end of the market and a net loss of apartments that were once considered attainable. For example, more than 20,000 rental homes were lost in Chicago from 2010 to 2016 as two-, three- and four-flat buildings were demolished to make way for new single-family homes, according to DePaul University’s Institute for Housing Studies.

In response, affordable housing developers are using a combination of local, state and federal resources to get new—and sometimes unconventional—projects off the ground.

Mixed-Income + Mixed-Use = Feasibility

One approach to bringing affordable housing to residents who need it most is identifying opportunities to subsidize the cost of these units with market-rate residences and, in some cases, commercial space housed in the same development. This helps prevent economic segregation by better integrating affordable residences into the urban fabric while making the development of new units more economically feasible.

At The Habitat Company, finding those opportunities is a primary focus for its affordable housing division, Habitat Affordable Group. One such example is the newly opened Concord at Sheridan, which the company leases and manages for Three Corners Development. Located in Chicago’s Rogers Park neighborhood, this development offers a mix of 46 market-rate and 65 affordable housing units for households that receive rental assistance from the Chicago Housing Authority (CHA) and is home to a small-format Target store on its first level. Target not only serves residents living in the apartments above, it also adds much-needed retail to the neighborhood as well as permanent jobs. As a result, it supports the financial health of both the building and the surrounding community.

A key to success for these developments is bringing like-minded partners together to drive change, including local agencies such as the CHA. On Chicago’s West Side, CHA and Habitat are partnering to develop Ogden Commons, a 10-acre mixed-use development in North Lawndale. When complete, it will drastically change the face of the neighborhood, with up to 400 units of mixed-income housing and approximately 140,000 square feet of retail and commercial space. Partners Cinespace Chicago Film Studio—where TV shows such as “Chicago Fire” and “Empire” are filmed—and Sinai Health System will occupy the commercial space.

Co-Location: Two Developments in One

Combining affordable housing with a public service is another innovative approach being employed to address the shortage of low-income units. Through public-private partnerships, developers have teamed up with municipalities on co-located projects that offer a two-fold benefit to neighborhoods: Expanded housing options, some of which are reserved for seniors and families, as well as new public amenities that serve the community at-large.

Chicago-based Evergreen Real Estate Group, which owns, manages and develops affordable multifamily housing and senior housing communities in 10 states, recently joined forces in an inter-agency partnership with the city of Chicago, CHA and Chicago Public Library to build co-located developments—Independence Apartments and Northtown Apartments—that place affordable senior housing atop new public library branches.

Each of these mixed-use projects will deliver state-of-the-art library facilities as well as 44 units of housing. Fourteen of the apartments in each community will be affordable units for households earning up to 60 percent of the area median income, while the remaining 30 will be set aside for CHA residents. Both projects, which have garnered national attention, are preparing to welcome first move-ins.

This model increases the community acceptance of affordable housing by adding a valuable community amenity. Like neighbors in the surrounding community, senior residents at these new communities will be able to access the myriad programs and services that will be offered at the libraries—for example, computer classes and one-on-one coaching to build digital literacy and technology skills. Career services as well as traditional library programs, such as book clubs for seniors and inter-generational educational and cultural programming, also will be available.

A similar model broke ground this spring in Brooklyn, N.Y., where construction has started on a 21,000-square-foot library connected to 49 affordable residences.

Adaptive Reuse Preserves History While Creating a Future—and Reducing Costs

Mining the existing resources within communities is another creative way to boost affordable housing. Whether they are beloved architectural gems or eyesores eager for a new life, adaptive reuse projects that reinvent existing buildings as affordable housing can achieve multiple community benefits while lowering construction costs.

Evergreen Real Estate Group recently completed Legacy Lofts, a 64-unit mixed-income rental community in Milwaukee. Housed in the former Blommer Ice Cream Factory, a three-story factory that was built in 1928 and remained largely vacant for more than 20 years, offers a mix of one-, two-, three- and four-bedroom apartments—54 of which offer affordable rents. In addition to the apartments, a new-construction building adjacent to the former factory will include 1,565 square feet of street-level commercial space. Together, the rehabilitation of a long-blighted property and creation of housing where none previously existed are contributing to the overall revitalization of the neighborhood.

Another example of successful adaptive reuse is Evergreen Real Estate Group’s Aurora St. Charles Senior Living, an affordable senior housing community in Aurora, Ill., a western suburb of Chicago. The redevelopment project transformed the former St. Charles Hospital, a historic art deco building completed in 1932, into a modern 60-unit affordable senior housing community.

For both projects, local officials supported the efforts as a creative way to return an obsolete property to use while simultaneously filling the void for affordable housing. As a result, the projects received significant public financing.

These three creative approaches show how breaking the mold of what affordable housing is—and can be—has the potential to create new affordable housing opportunities in communities small and large. By making the most of the resources we have today and by advocating for those we will need in the future, we can begin to close the affordability gap and create better, more equitable housing for those who need it most.

Charlton Hamer is Senior Vice President, Habitat Affordable Group, and Steve Rappin is CEO of Chicago-based Evergreen Real Estate Group and an NAA Region Vice President.