CHICAGO Interfaith Housing Development Corporation of Chicago (IHDCC) is building three affordable housing projects in three different neighborhoods in the city, and like the other developments the small nonprofit organization has created, the new housing will be unique.

The latest developments will provide 164 units of permanent, supportive housing for very low income residents. Once completed, they will bring the number of units developed by IHDCC to more than 400. Two of the developments will bring together two populations—young adults aging out of foster care and families raising related children who would otherwise be in foster care. These projects will be the first of their kind in Illinois. The third development will provide housing for lowincome and formerly homeless families.

Closing the financing for these projects, which use private-activity bonds and low-income housing tax credits, is IHDCC’s biggest achievement so far, according to President Gladys Jordan, who would know. She’s been with the organization for 15 years, from the days when it was just a two-person shop.

IHDCC remains small, with eight employees. What the group lacks in size, it makes up for in determination. Since 1992, IHDCC has completed nine projects that serve some of the city’s neediest residents. They include women who have been incarcerated, families overcoming substance abuse, and people with AIDS. The earnings of the people being housed average about 10 percent of the area median income (AMI), according to Perry Vietti, IHDCC’s chief operating officer.

The latest projects break new ground with not only the residents they will serve but also the financing behind the deals. The financing closed May 24, with construction beginning soon after.

Coppin House is in Chicago’s Washington Park neighborhood. This 54- unit development will be Illinois’ first intergenerational development for young adults transitioning out of foster care and for kinship families, in which children are being raised by relatives other than their parents. IHDCC is partnering with Coppin A.M.E. Church on the $15 million project.

The second project is Sankofa House in the North Lawndale neighborhood, which will also cost about $15 million. The 58-unit development will also serve young adults leaving foster care and kinship families. Sankofa House is being developed in partnership with Sankofa Safe Child.

“Young people aging out of foster care need the safety net that permanent supportive housing provides, while enabling them to acquire skills and confidence necessary to thrive independently,” she said. “Low-income family members taking on the challenge of raising the children of other family members can be role models and provide emotional support while they receive the benefits of the supportive services as well.”

IHDCC will use a new subsidy to help with the costs. The Illinois Department of Children and Family Services (DCFS) has agreed to subsidize the rents of the young adults, who will pay 30 percent of any income they earn. The balance will come from DCFS. This will be the first time that the state is offering such a rent subsidy for the youth leaving the DCFS system.

The third development that is under way is Clara’s Village in West Englewood. The 52-unit project is for families, including those that are survivors of domestic violence. IHDCC’s partner is the West Englewood United Organization. Thirtynine of the units at this $16 million development will be subsidized by the federal Shelter Plus Care program.

The developments will serve individuals and families earning no more than 50 percent of the AMI, but if they are like IHDCC’s other projects, many residents will make significantly less.

Financing for these projects included private-activity bonds issued by the Chicago Department of Housing (DOH). In order to obtain 4 percent tax credits that go along with the bonds, developers must demonstrate that at least 50 percent of the eligible costs of the development are paid for using bond proceeds. That would be approximately $8 million for each deal.

To reduce debt service, IHDCC decided to split the bonds between long-term (42-year) “A” bonds that were enhanced with Federal Housing Administration (FHA) insurance under the Sec. 221(d)(4) FHA insurance program, and short-term (18-month) variable-rate “B” bonds that were enhanced by a letter of credit from Harris Bank, according to Vietti.

“In so doing, the ‘A’ bonds for each of the deals were between $2.7 million and $2.9 million per deal, and the ‘B’ bonds were between $5.2 million and $5.6 million per deal,” he said. “At the end of construction and three months qualified occupancy (18 months), the ‘B’ bonds will be retired with tax credit equity, and then the ‘A’ bonds will remain for the remaining 40 years. This structure allowed us to meet the 50 percent test without saddling the project with $8 million in long-term debt.”

The city provided the land for the developments.

Winning strategy

Homeless shelter providers have always had difficulty finding permanent housing for their clients. IHDCC was established to assist shelter providers in creating housing targeting this group.

Jordan, who used to work as an accountant, first got involved in affordable housing as a shelter volunteer.

One reason for the nonprofit’s success is its practice of partnering with a neighborhood or faith-based organization on all of its projects.

“Our focus is development,” Jordan said, explaining that the partner agencies bring services or other insight to the deals. She pointed out that Chicago is also made up of different communities. “We don’t want to be presumptuous and say we know what each community needs,” she said. “That takes someone who lives there.”

Ellen Sahli, DOH’s acting commissioner, said the partnerships are one of the unique aspects of IHDCC. “Interfaith Housing describes themselves as a ‘pathfinder,’” she said. “They really help community-based organizations to develop affordable housing that responds to the unique needs in their community. Their partner organizations tend to be organizations with long-standing roots in the community, tackling issues that impact the families that live there—whether it is youth aging out of foster care, grandparents raising children, or individuals in substanceabuse recovery.”

Providing affordable housing is part of a large plan for these organizations, but they often lack the technical development experience to realize that goal. “Interfaith Housing, through partnership, makes the housing a reality,” Sahli said.

The Illinois Housing Development Authority (IHDA) has also been a financing partner on many of the nonprofit’s projects. “Interfaith Housing is not afraid to tackle the needs of some of the toughest populations, populations with complex needs,” said Man Yee Lee, IHDA spokesperson.

IHDCC projects feature crisis intervention and case-management services on site. However, the group prefers to link residents with job training and other programs that are available in the community rather than offer them on the properties.

This is to avoid having the housing feel institutional. “We also want to bring people out into the community,” said Jordan. “And, the community into the building.”

At any time, Jordan and her team have a few projects in the pipeline, so more housing will be coming from IHDCC.

“We want to stay true to our mission,” Jordan said.

Financing the Deals

Interfaith Housing Development Corporation of Chicago has started construction on three new supportive-housing developments.

Coppin House is a $15 million project. The Chicago Department of Housing (DOH) issued $8.3 million in tax-exempt bonds (the “A” bonds were $2.7 million and the “B” bonds were $5.6 million) and $679,000 in 4 percent low-income housing tax credits (LIHTCs) that will generate $6.7 million in equity). The Illinois Housing Development Authority (IHDA) is providing $5 million in loans ($3.5 million in HOME funds, $750,000 from the IHDA Trust Fund, and more than $900,000 in Illinois Donations Tax Credits that generated slightly more than $400,000 in equity). In addition, the project received $600,000 from the Federal Home Loan Bank of Chicago’s Affordable Housing Program (AHP) through Harris Bank, and more than $250,000 in grants from the Illinois Department of Commerce and Economic Opportunity (DCEO), Enterprise Community Partners, and the Illinois Clean Energy Community Foundation.

Sankofa House is also a $15 million development. DOH issued $8.4 million in taxexempt bonds (the “A” bonds were $2.8 million and the “B” bonds were $5.6 million) and $683,000 in 4 percent LIHTCs that will generate $6.7 million in equity. Additionally, more than $5 million was provided by IHDA ($3.5 million in HOME funds, $750,000 from the IHDA Trust Fund, and more than $900,000 in Illinois Donations Tax Credits that generated slightly more than $400,000 in equity). In addition, Sankofa received $500,000 from the Federal Home Loan Bank of Chicago’s AHP through Harris Bank and more than $175,000 in grants from the DCEO and Enterprise Community Partners.

Clara’s Village will cost approximately $16 million to develop. DOH issued $4.6 million in loans (HOME funds), $8.1 million in tax-exempt bonds (the “A” bonds were $2.9 million and the “B” bonds were $5.2 million), and $693,000 in 4 percent LIHTCs that will generate $6.8 million in equity. The project also received $750,000 from IHDA; $546,000 from the Federal Home Loan Bank of Chicago’s AHP program through Cole Taylor Bank; and more than $240,000 in grants from the DCEO, Enterprise Community Partners, and the Illinois Clean Energy Community Foundation.

The National Equity Fund was the tax credit syndicator on the deals.