Substantial progress was made by the Federal government to help curb the foreclosure crisis that has gripped many communities and homeowners throughout the country. The successful passage of the landmark bill, The Housing and Economic Recovery Act of 2008, stands as a remarkable departure from the current administration's earlier promise to veto the bill.

Although the highlight of the bill is the much-anticipated $4 billion in emergency assistance for redeveloping abandoned and foreclosed homes, it also establishes key programs that impact broader housing issues and policies.

Here is a summary of important components of the Housing and Economic Recovery Act below:

Emergency Assistance for Abandoned and Foreclosed Homes

• $4 billion for the purpose of redevelopment of abandoned and foreclosed residential properties.
• All of the funds must serve households earning 120 percent or below the area median income. At least 25 percent of each funds must be used to serve households whose incomes are 50 percent or below the area median income.
• Allocation and appropriation of funds will be based on a formula determined by HUD and based on the following criteria: The number and percentage of homes foreclosed in each state; The number and percentage of homes financed by subprime mortgages by state; The number and percentage of homes in default or delinquency in each state.

The funds will be treated just like traditional CDBG funds. Every state receives at least 0.5 percent of the total funds (at least $19.6 million) within 60 days, which must be used for the redevelopment of abandoned and foreclosed homes. These funds must be used within 18 months by the state. The specific amount has yet to be appropriated to Illinois. As of June 2008, Illinois accounted for 4 % of the national foreclosures.

Housing Counseling

• Authorizes $260 million for housing counseling services.
• At least $27 million must be provided to counseling organizations that target loss mitigation counseling services to minority and low income homeowners.

Hope for Homeowners Program

• Provides authority for the Federal Housing Administration (FHA) to refinance up to $300 billion in mortgages of at-risk borrowers, still living in their homes who can afford to make a reduced loan payment. This will help roughly 400,000 homeowners nationwide
• This program is designed to benefit borrowers who spent more than 31% of their monthly incomes on their mortgages as of March 1 on loans that were written before January 2.
• The program starts October 1, 2008 and will terminate September 30, 2011.

Increase Assistance for Homeless

• The authorization level for homelessness will increase by $30 million (McKinney-Vento homeless assistance programs).
• These funds will be used to provide emergency assistance for homeless children and their families, who have become homeless due to foreclosures, whether they are renters or homeowners.
• These grants will be made by HUD to state educational agencies, who then in turn make sub-grants to local entities.

Low Income Housing Tax Credits

• The bill will temporarily increase, by 10%, the amount of low income housing tax credits to states for 2008 and 2009. CRN estimates that additional funding will be as follows: Illinois: $3,999,225.8 and Chicago: $876,334.2
• The bill will also include an additional $11 billion in tax-exempt mortgage revenue bond authority for the next two years.
• The bill allows LIHTC's to reduce an investor tax liability under the alternative minimum tax, allowing these investors to benefit from the LIHTC. This is expected to increase the pool of LIHTC investors, and hopefully cash going into the development of LIHTC.
• The bill will protect rental income to a LIHTC property by not allowing AMI declines for LIHTC properties.
• The bill increases the maximum initial Section 8 voucher contract term from 10 years to 15 years and allows PHA's to pre-commit to unlimited renewals of these project-based vouchers.
• The bill also includes provisions that should help the LIHTC serve lower income household. The bill will allow states to boost the value of LIHTC in properties by 30%.

National Housing Trust Fund

• Establishes a National Housing Trust Fund, a permanent program with a dedicated source of funding not subject to the annual appropriations process.
• At least 90% of the fund must be used for the production, preservation, rehabilitation, or operation of rental housing. Up to 10% can be used for the following homeownership activities for first time homebuyers: production, preservation, and rehabilitation; down payment assistance, closing cost assistance, and assistance for interest rate buy-downs.
• At least 75% of the funds for rental housing must benefit extremely low income households. And all funds must benefit very low income households.
• Funds for the Housing Trust Fund will come from annual contributions made by Fannie Mae and Freddie Mac. The funds will be based on a percentage of each company's annual business. Using this formula, the amount in 2007 would have been $557 million
• However, 25% of the funds each year must first go to a reserve fund at the Treasury to offset scoring problems. The remaining 75% of the funds will be divided between the Housing Trust Fund, which gets 65% and a new Magnet fund which gets 35%.
• For the first three years, a percentage of the funds (100% in FY09, 50% in FY10, and 25% in FY11) will be diverted to a reserve fund to cover losses that the FHA might incur by refinancing troubled mortgages through the new HOPE for Homeowners program.
• Based on this formula, if funds didn't have to be diverted, approximately $300 million would have been available for the Housing Trust Fund during Calendar Year 08.
• That said, Fiscal Year 2010, is the first year the Housing Trust Fund will gain funds.

Photo credits: Carolyn Yu, Medill Reports http://news.medill.northwestern.edu

On September 7th, it was announced that the government has taken over mortgage guarantors Fannie Mae and Freddie Mac. Under the takeover, the government replaced the companies' chief executives and shifted management control to their regulator, the Federal Housing Finance Agency (FHFA). The government has pledged to provide as much as $200 billion to help both firms ride through their expected losses.

The news signals a shift in the government's confidence in the ability of the two leaders in the secondary mortgage market to handle the housing downturn fueled by the wave of foreclosures on its own. Intervention by the U.S. Treasury could mean the reduction of mortgage interest and allow Fannie and Freddie, who have had difficulty raising capital in the rough economy, to begin backing more mortgages, at least temporarily. Furthermore, housing demand should get a marginal boost, by enticing potential buyers who have been sitting on the fence because of high interest rates.

Looming in the future is a fight on Capitol Hill over the future of Fannie and Freddie. The Treasury's plan leaves unresolved their ultimate fate and gives Congress the job of figuring it out. Many Democrats are pushing to retain some sort of structure that provides funding for home mortgages, while many Republicans wants the firms privatized and severed from the government.

CRN has been following the debate on whether the state of Illinois should hold a Constitutional Convention. (See latest article in the Network News Spring/Summer Issue here) A convention will allow the ability to review and take into account the state's activities thus far and as CRN has said in the past, addressing housing affordability through a constitutional review needs to be on people's minds.

Since June, interest over the Con Con referendum has increased in several arenas. On July 14th, the formation of the Alliance to Protect the Illinois Constitution, an anti-Con Con group, was formally announced. The Alliance draws together diverse interests from the business community. The Alliance's websites cites "significant risks and costs" for their opposing stance claiming that the Convention is dangerous both politically and financially. Reasons against holding a Convention include costs, the belief that existing governmental structures are sufficient for change, and the fear that inviting change at a politically volatile time could be detrimental.

The Convention is seen as an opportunity to change policies in educational funding, term limits, recall procedures, affordable housing and more. So far, the pro Convention camp has had little financial support but a modest presence in the media. A University of Illinois poll in early 2008 found that while most people have yet to give the Constitutional Convention much consideration with 43% of those polled undecided, another 40% would support the referendum.

United Power for Action and Justice has been actively supporting the passage of the Con Con. A rally has been organized for October 12th. Visit their website for more information.

CRN has completed the pilot of the 2008 CDC Census, which means that this online tool will soon be available to nearly 100 CDCs in the Chicago metro area. With the help of The Resurrection Project who piloted the Census, CRN is now compiling organizational data from developments, pipeline projects, budgeting, staffing, research, as well as answers to qualitative questions about organizational strength, weaknesses, opportunities, and threats into easily accessible information.

The goal of CDC Census is to create and disseminate a broad picture of the work of CDCs at large and provide data to help increase capacity among and between CDCs. It will also provide a busy organization with the opportunity to look back at their record of accomplishments, as well as a look inward to assess steps to move their organization to the future. Further details as to the release date will be available soon. Please contact Rachel Johnston at rachel@chicagorehab.org for more information or with any questions.

Alderman Pope lends his support to the Tenant Council

Germano-Millgate Apartments, a 350-unit Section 8 development located in South Chicago, has seen ups and downs in its 30 years of existence. Since its renovation in the 1980s following tenants' successful lawsuit against HUD over abysmal living conditions, Germano-Millgate has been a valuable source of affordable housing. It is one of the few remaining federally-subsidized housing developments in South Chicago.

Although residents face challenges there is reason to be optimistic. The recent hiring of a brand new security company has helped immensely to restore a measure of peace and a feeling of safety at the development. During a recent walk-through of Germano-Millgate with members of the Tenant Council and Angela Hurlock of Claretian Associates, Alderman John Pope (7th Ward) commented on the good physical condition of the development, while offering his support to the Tenant Council as well as helpful suggestions on how to further improve Germano.

"Germano Millgate represents the largest concentration of affordable family units in our neighborhood," says Hurlock. "Its physical and/or social destruction would mean devastation to the hundreds of families that call this neighborhood home."

CRN and Claretian Associates have partnered with the Germano-Millgate Tenant Council to help build the organization's capacity and bring together South Chicago leaders who hold a stake in the long-term preservation of Germano's 350 affordable units. Community allies will be invited to attend the upcoming Germano-Millgate Resident Forum, a major event organized by the Tenant Council which will focus on examining tenant rights, responsibilities, and challenges. Speakers will include representatives of local service organizations, tenant leaders, Tio Hardiman of Ceasefire and Alderman Pope.

**Coming up in October: Germano-Millgate Resident Forum**

CRN has been working with the Preservation Working Group nationally to ensure that timely HAP payments are maintained. For more information, click here.

On Saturday, August 23rd, a meeting among cooperative board members was hosted by the Preservation Compact, including the Rental Alliance Initiative--represented by the Chicago Rehab Network and the Sargent Shriver National Center on Poverty Law. The meeting was a learning experience for all involved. The board members shared their stories and view points on the challenges faced by cooperatives. Other meeting participants added legal expertise, practical knowledge, and a historical understanding of cooperatives.

Cooperatives are an important housing strategy that can be beneficial in providing stability and affordability to their residents. Within a co-op, residents purchase a share and then pay a monthly fee to cover mortgage, repairs and other costs that the co-op may incur. Purchasing the share gives the resident a right to live in the property but also the ability to participate in the governance of the property making cooperatives a democratic housing option.

Cooperatives can be tied to affordability restrictions, making them a viable avenue for providing affordable housing. One of the goals of the Preservation Compact is to maintain the affordable housing stock in Chicago and cooperatives with affordability restrictions are an important part of this stock. Different affordability options for cooperatives were discussed at length during the meeting, specifically the particularities of Section 8 subsidies in regard to cooperatives. This proved to be an important lesson as several co-opers shared stories of how cooperatives have faced financial hardship during a transition from project based Section 8 subsidies to voucher based. The Preservation Compact's Interagency Coordinating Council can be helpful for mediating interaction between government agencies to make such processes easier for cooperatives.

The meeting also served to explore areas where further education may benefit cooperatives. Participants indicated that board members and co-op residents could use further education to help understand the fundamental differences between cooperatives and other forms of housing and to help clear up questions about share prices, monthly charges and other issues. But participants indicated that government agencies and policy makers need similar education to help understand the uniqueness of their housing option and their needs. Such education could aid both the day-to-day functioning of cooperatives and also allow interaction with housing agencies to run more smoothly.

CRN presented its analysis of the Department of Housing's 2nd Quarter Progress Report on Tuesday, September 16th at 10 am at the Committee on Housing and Real Estate meeting in City Council Chambers. Download the report here.

More than 35 percent of foreclosures in 2007 were on multifamily properties putting thousands of renters at risk of displacement. One August 14th, the city announced an emergency assistance program for tenants of foreclosed apartments which includes rent payment assistance for up to three months and moving expenses in the case eviction as a result of foreclosure.

Many renters have been innocent bystanders in the wake of the increasing numbers of foreclosures in Chicago. The expanded emergency assistance will keep renters housed during a difficult transition. In addition, the new program will expand free legal services for tenants facing eviction from foreclosure to be provided by the Lawyer's Committee for Better Housing. For more information read the press release. Renters facing eviction because of foreclosure or anyone having difficulty paying their mortgage are urged to call 311 for assistance.

The June report is available on our website. Download the report here.

On September 4th, community members, financing partners, Alderman Walter Burnett Jr., and representatives of Chicago Department of Housing and the Illinois Housing Development Authority turned out to celebrate the ground breaking of Bickerdike's new Rosa Parks Apartments. The ground breaking celebrated the culmination of several years of planning and marked the start of construction of 94 new and affordable housing units. Bickerdike's success in this project is especially impressive considering the record number of sources of funding for the project, the added complexities of green development, and challenges added by the downturn in the housing market.

Bickerdike, a multimillion dollar nonprofit corporation, has developed 1063 rental, for sale, and cooperative units since 1967. Bickerdike also manages 918 units, which are located on multiple sites throughout the Chicago communities of West Town, Humboldt Park, Logan Square and Hermosa.

Located in Humboldt Park, the eight buildings of Rosa Parks are planned on land that has long been vacant, marking some of the first new construction seen in the area in years. The new one, two, three and four bedroom apartments provide housing for low and very low income families or households at 50% or below of the Area Median Income with multiple subsidy programs utilized to make the units more affordable. Total development costs are $27,147,184 and the project is slated to be completed in spring 2010.

One of the challenges to funding the Rosa Parks Apartments has been the changes in the tax credit equity market. The initial funding package had credits pinned at $0.93 on the dollar and the recent crash of the equity market left a development funding gap of $1,350,000. Ultimately, after extensive negotiations and multilevel solutions between Bickerdike and the City, IHDA and the syndicator, the project successfully closed on August 28, 2008. The implications of the equity market changes for other CDCs are unclear however - the low income housing tax credit resources are being stretched more than anticipated.

Rosa Parks is an exemplary model of positive place-based development for several reasons. Over 50% of the project is targeted at large families with three and four bedrooms helping to meet the needs of existing residents of Humboldt Park. The scattered site and infill approach of the development spreads benefits throughout the community. Additionally, the "green" focus will create long term sustainability of the asset itself.

The buildings of Rosa Parks will be examples of affordable green development, which has added complexity to the planning process but will have long-term benefits. When referring to housing, "green" can mean a variety of things. One way of making buildings more green is by ensuring they are well constructed and highly energy efficient. The Rosa Parks project goes beyond this baseline by also offering a green roof, geothermal heating, solar heated water, in one building with numerous green elements incorporated throughout the development, including native landscaping. Bickerdike will seek LEED (Leadership in Energy and Environment Design) Silver certification from the United States Green Building Council for this building. The Rosa Parks project is an opportunity to increase green affordable housing in Chicago and also a learning experience for Bickerdike as it applies a comprehensive green philosophy to the planning, construction, management and maintenance of the buildings.

Joy Aruguete, executive director of Bickerdike, sees the Rosa Parks as a step towards positive change in the area in more than just housing stating "With Rosa Parks, Bickerdike will provide homes for nearly 300 residents. At the same time this project brings investment to an under-invested community and our subsidiary, Humboldt Construction Company will create jobs for people living in the neighborhood." Alderman Walter Burnett Jr. of the 27th Ward where Rosa Parks is located also speaks passionately of the project for providing "safe, decent and affordable places to live...the Rosa Parks Apartments will allow families to stay in the area and benefit from community improvement".

In July, the Chicago City Council passed the Vacant Building Ordinance that would strengthen penalties for owners of vacant properties that are not maintained up to code or properly secured.

The passage of the ordinance was preceded by much debate over the increased fees imposed on owners and concerns about making reuse and rehab more difficult as result of the higher maintenance cost. With higher number of foreclosures high, there is also a greater likelihood of vacancies.

CRN, along with other concerned groups, were able to reach more agreeable fees which can still compel owners to keep up their properties, but also reduce the financial burden that could make reuse and rehab infeasible.

Dan Burke is the new Director of the Chicago office of Preservation of Affordable Housing, a national, non-profit housing developer. Mr. Burke was most recently Vice President of the Chicago Community Development Corporation and served in that capacity since 1988.

Sharon Legenza is the new Executive Director of Housing Action Illinois. Ms. Legenza previously served as Interim Director of ACLU of Alaska and was Fair Housing Project Director and attorney at the Chicago Lawyers Committee for Civil Rights Under Law for nearly a decade.

On September 20th, the fifth annual Rents Right Rental Housing Expo will take place at Malcolm X College located at 1900 W Van Buren from 9am to 3pm. The Expo is hosted by the Chicago Department of Housing and will feature dozens of vendors as well as workshops focusing on rental housing. Admission is free. More information is available at www.cityofchicago.org/housing.

The Renaissance Collaborative is hosting its Fall Gala on Sept. 25th at 6:00 pm at 1043 West 43rd Street. The event will feature live music, dinner, dancing, and live and silent auctions. Click here for more details.

Lawyers Committee for Better Housing will hold its Anniversary Reception and Awards on Thursday, September 25th from 5:00 pm to 7:00 pm at Wildman, Harrold, Allen, and Dixon LLP, 225 W. Wacker, 30th Floor. Contact Harriet McCullough at 312-347-7600 x512 or email emiller@lcbh.org for more information.

Bank of of America will celebrate Chicago neighborhood leadership on November 19, 2008 at 5:00 pm at its 2008 Neighborhood Excellence Initiative Awards at the Chicago Cultural Center. Please contact Alva Winfrey at 312-904-0877 or email alva.winfrey@bankofamerica.com,

In the 2004 Presidential Election only 5.6 million of the 12.7 million Illinois residents voted. That is less than half! Make a difference this year and get out and vote. The last day to register is October 7th. Vote!

Click here for information on Voter Registration for Illinois