Illinois: Rescuing troubled scattered sites
Illinois has been hard hit by the foreclosure crisis. A total of 99,666 properties in the state had at least one foreclosure filing in 2013. The number was much improved from the year before but still enough to give Illinois the nation’s third-highest foreclosure rate, according to RealtyTrac.
“We recognized there were many abandoned and foreclosed single-family homes in the communities where we were working to put tax credit projects,” says Christine Moran, managing director, multifamily finance, at IHDA. “We were trying to figure out if there was a way to stabilize areas that had foreclosures and long-term vacancies. We didn’t want the properties to go into further decay.”
IHDA came up with a solution to help address the issue. In 2013, it amended its qualified allocation plan (QAP) to allow developers to use the LIHTC program to acquire and rehabilitate scattered-site foreclosed homes. For developers who were going to work with these properties, IHDA would be a little more flexible in some of its requirements. For example, the usual site-control requirements were replaced with more flexible conditions. Instead of needing to have specific properties under their control when applying for credits, developers could identify a neighborhood or target area where they’d deploy the credits to purchase and rehab homes.
Since 2013, IHDA has funded four projects with 150 units under the initiative. The effort earned IHDA an award for best preservation and rehabilitation program from the NCSHA last year.
Brinshore Development is one of the developers involved in the scattered-site initiative. It received an $841,000 LIHTC award to acquire and rehab 40 foreclosed homes in Aurora. Partnering with the Aurora Housing Authority on the effort, Brinshore will rent the homes to Housing Authority clients.
“The flexibility provided by IHDA was vital to doing a project that requires assembling multiple sites,” says David Brint, co-founder and principal of Brinshore.
At the end of March, the roughly $12 million project was about 65% completed. Families have moved into the finished homes, and more houses will be rehabbed as the project wraps up this year.
“We’ve tried to have a few homes on the same block to try to stabilize individual blocks,” says Brint, who is leading a similar effort in Bloomington. “We also looked for strategic homes. If a corner property is vacant and abandoned, that’s not good for the block.”
The financing partners for the Aurora Impact Initiative include LIHTC syndicator Red Stone Equity Partners, permanent lender IFF, and construction lender JPMorgan Chase.