Illinois far from meeting high demand for affordable housing units

Published: Jul. 20, 2022 at 5:53 PM CDT
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SPRINGFIELD, Ill. (WGEM) - Illinois has an estimated shortage of over 288,900 affordable housing units. A grant program passed by Illinois lawmakers last year provided $75 million to create nearly 1,094 rental units for families, seniors, and people with disabilities. While many have celebrated the investment, it is nowhere close to meeting the demand.

The Illinois Housing Development Authority used the first $75 million investment to help build and rehab 20 developments in 17 towns and cities across the state. The COVID-19 affordable housing grant program provides funding for housing developments that were previously awarded federal low-income housing tax credits to overcome increased construction costs. Affordable housing developers continue to face challenges with economic uncertainty, labor shortages, supply chain disruptions, and rising costs of building materials.

“Our purpose in passing the Affordable Housing Grant Program was to help close the gap and allow for some of those projects that are receiving the federal tax credit to get the resources they need to be fully financed and get to fruition,” Rep. Will Guzzardi (D-Chicago) said during a hearing Wednesday.

The average grant from the Illinois Housing Development Authority was $3.6 million per development. IHDA Executive Director Kristin Faust told lawmakers that 17 of the projects had a nonprofit partner as a sponsor or co-sponsor. Fourteen of the projects include permanent supportive housing properties, totaling 154 units for people needing additional assistance.

The state prioritized developments in areas disproportionately affected by COVID-19, contracts with disadvantaged and underreported businesses, project labor agreements, and contracts with registered apprenticeship programs. Two of the projects are in Chicago, seven are in the Chicago metro area, six are in other metro areas of the state, and five developments are in rural communities.

State lawmakers provided an additional $150 million for affordable housing development in the Fiscal Year 2023 budget. Faust said the IHDA board plans to split that funding in half for projects over the next two years.

“We think that we can hold steady and continue to finance the number of projects per year that we have been funding because of this money,” Faust said.

However, Illinois would only have 3,300 new affordable housing units created in 2024 if the pace stays the same. Some lawmakers also worry Illinois isn’t using enough of the federal funding to rehab older properties. Rep. Deanne Mazzochi (R-Elmhurst) stressed that construction costs are skyrocketing, and the state should be trying to get these projects done faster.

Mazzochi said she would rather see $150 million go out the door now to get more affordable housing projects funded.

“Whereas if you spread it out $75 million and $75 million, you’re going to have fewer projects that are ultimately going to get off the ground because of the inflationary costs,” Mazzochi said.

Faust told Housing Committee members that it currently takes roughly 18-36 months to build or rehab units and have them ready for people to move in. Fause noted that none of the construction would be possible without the funding Illinois received through the American Rescue Plan.

“I know that there are other states where they’ve had to stop their pipeline and not be able to fund deals going forward, both rehab and new construction deals, because they simply couldn’t fill that gap,” Faust said.

The COVID-19 Affordable Housing Grant Program Act requires IHDA to submit an annual report to the General Assembly by March 31 of each year documenting the number and type of projects funded. Those reports must include the location of the affordable housing projects and the demographics of the surrounding community along with accessibility to public transportation, schools, health care, grocery stores, and banks. The law requires IHDA to document the total number of units built or rehabbed and the number of units put into service each year.

Lawmakers also want to see the number of applications for projects, applications awarded and the amount of funding granted each year. IHDA is required to note any delays or issues with development including acquisition, zoning and permits, labor, and materials. Any compliance issues with grant recipients and the actions taken against them must also be documented.

Faust told lawmakers Wednesday that IDHA never submitted a report for 2022 because there was no funding allocated by March 31 this year and emergency rules weren’t approved early enough in advance.

“We didn’t start allocating until April. The next time the report is due, it will be fully completed and submitted on time,” Faust explained. “But we are going to go back and retroactively fill out this form.”

Mazzochi suggested lawmakers should request a semi-annual report from IDHA in September or October to help understand the data associated with each of the projects.

“The whole reason that we wanted this information was to make sure that we’re actually targeting the right areas in connection with the spirit of what this legislation and the COVID funds and all the rest of it were entitled to be directed towards,” Mazzochi said.

Chairman Guzzardi said lawmakers anticipated it would only take six months to get the emergency rules ready to have the grant program running by January with enough data to have a report by March 31. He noted the process with the Joint Committee on Administrative Rules just took a little bit longer than expected. Guzzardi said he is willing to discuss a semi-annual report option with more relevant information moving forward.

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