In Roxanne Smith’s Chicago kitchen, a framed excerpt from Barack Obama’s 2008 Grant Park presidential victory speech hangs for all to see. “America, we have come so far,” it reads. “But there is so much more to do.”
Smith, 60, has come a long way herself in recent years. In 2013, she faced potential homelessness after the Northwest Side apartment where she lives with her 35-year-old son was foreclosed upon.
At the time, the downstairs neighbors in her two-flat apartment complex had accepted a payout and left the building. But Smith, whose son Roget lives with a developmental disability, couldn’t afford to leave.
Sitting in the dining room of her two-bedroom apartment, Smith holds tight to a green plastic bag, which was left on her door over a year and a half ago. It contained information about housing and rights for renters. “It was on my doorknob, and I said, ‘This is amazing.’ I’ve come too far to just let them take me out of here. Not without a fight.”
The green bag is the outreach tool of Renters Organizing Ourselves to Stay (ROOTS), an affordable housing program designed so working families and long-time residents can stay in Chicago as the city of 2.7 million people faces gentrification and displacement.
Resident-led Communities United, a Chicago grassroots organization, started the effort in 2014 after about 20 members met in an apartment to find more solutions to the city’s housing crisis.
ROOTS, which has gained attention in Illinois, attracted more exposure recently, as working families and housing advocates held events on Sept. 22 to mark a National Renters’ Day of Action in more than 45 cities. Their concerns: Soaring rent, keeping their families safe and finding answers to affordable housing.
In Chicago, ROOTS seeks to keep rent affordable for residents by bringing financers, development organizations and partners together to work toward acquiring foreclosed properties, which will be kept for long-term housing.
The Chicago Metropolitan Housing Development Corp. actually purchases the foreclosed properties at discounts up to 30 percent, according to ROOTS. A state of Illinois program also contributes some money to keep the housing affordable.
In 2015, the program secured its first cluster of affordable housing. In late July, ROOTS acquired nine more flats. In total, as of September, ROOTS has saved 18 properties and 41 units for affordable housing, all on the city’s Northwest Side. Supporters hope those 41 units can house about 200 people, though about 30 people to date have been able to stay in their homes with affordable rents.
The program is distinct because it focuses on two- and four-flats in gentrifying neighborhoods, said Diane Limas, board president of Communities United. Rather than honing in on vacant foreclosed properties, ROOTS aims to secure foreclosed buildings with tenants in them, though some structures the program has saved were empty.
The program has won political support from national leaders, including U.S. Rep. Jan Schakowsky and U.S. Sens. Dick Durbin and Mark Kirk. “Communities United led a unique and collaborative effort to save … affordable housing,” Schakowsky said in a statement. “I hope that this model can be used across Chicago and beyond.”
While about $7 million has been invested in the program so far, direct financial assistance from the city — something supporters view as crucial — has not yet materialized. While the Chicago Department of Planning and Development has said it supports Communities United’s housing goals, a city spokesman said discussions over lending money for the project are continuing.
The impetus for the program goes back a year and half ago, when Communities United was working toward amending the city’s affordable housing ordinance. Those efforts ultimately resulted in new rules, which aimed to make 10 to 20 percent of the units in market-rate developments more affordable. Additionally, they increased penalty fees for developers who opt out of adding affordable housing components.
Just one month later, Chicago’s City Council made amendments to a separate ordinance, requiring banks that acquire foreclosures to register with the city, send notices to tenants and give those renters a choice: Either a one-year lease extension with no more than a 2 percent rent increase or a one-time relocation fee of $10,600.
According to the city, those updates should ultimately generate an estimated 1,200 units, including 600 affordable units within or near market-rate developments and more than $90 million in penalty fees by 2020. The $90 million refers to when developers opt out of adding affordable housing components.
“It was the most significant renters’ rights law passed in over a decade,” Limas said, referring to the city housing ordinance approved in 2013. “It really did address renters living in these foreclosed buildings.”
But, even after those updates, Limas said her organization was still seeing one issue, in particular, replay itself within the city’s housing scene. Cash investors would drop into up-an-coming areas, buy two- and four-flat foreclosures and raise rents or convert them into condominiums, leaving tenants in the lurch.
At one point in the city’s history, two-flats — which Limas calls the “guts” of the neighborhood — were a popular way for buyers to get an introduction to Chicago real estate. Then, in the late 1990s, the market shifted, with speculative buyers swooping in to turn both short- and long-term profits on those properties.
But when the housing bubble burst, two-flats were some of the first buildings people were willing to walk away from, ultimately leaving behind a mass of foreclosures.
Rather than aim to purchase vacant buildings — as is more typical in affordable housing efforts — program supporters purposely chose to grab up buildings which still had tenants in them. Community organizers obtained a list of foreclosed properties in Chicago and then would go knock on doors to talk with tenants who were home.
The green bags the organizers left on people’s doors contained information about renters’ rights and workshops on what to do while living in a foreclosed building – a grassroots strategy that Communities United views as an empowerment tool.
“It’s the first of its kind I’ve seen where it’s very focused on two factors — one is the gentrifying community, the second is the assets that they’re trying to acquire are occupied,” said Andrew Geer, the Chicago area vice president of Enterprise Community Partners, an affordable housing financier which has backed ROOTS.
“So it’s preserving the housing but, more importantly, keeping the families in those communities,” he said.
To date, Chicago Metropolitan Housing Development Corp. has received a $5 million line of credit from Enterprise to purchase buildings. In this case, the developer bought the buildings from Fannie Mae, which owned many of the foreclosed structures in the target areas where Communities United works.
One of the goals of Chicago’s 2014 five-year housing plan was to encourage financial institutions to expand neighborhood lending specifically for affordable housing projects. But private financial assistance, Geer said, can only take programs like ROOTS so far. At this stage, receiving money from the city of Chicago is crucial to helping ROOTS expand its ability to save additional foreclosed properties.
Residents and community advocates say the need to expand the program exists, especially as gentrification, displacement and soaring housing costs continue.
Rising Property Taxes, Ripple Effect
In the Chicago metropolitan area in 2014, about 27 percent of renters spent more than half their income on rent, according to census data from that year. Nationwide, those numbers put Chicago on the higher end of that rent spectrum, just behind Miami and New York City. Many advocates and analysts say that only 30 percent of a person’s income should go to housing.
Especially in Chicago’s gentrifying areas, higher rents correlate directly to tax increases. Over the past year, Chicago’s City Council approved a whopping $838 million in additional property taxes — a nearly 70 percent increase intended to cover school construction and previously unpaid police and firefighter pensions.
Trendy areas were hit especially hard, with the pension tax increases doubling down on costs associated with home growth values in those areas.
Those increases don’t affect all property owners equally. Property tax appeals are available to owners of small and large rental properties. But potential legal fees associated with such appeals may deter owners of smaller apartment buildings, those with six units or less.
“So the truth is, the smaller the building you’re in, the more likely you’re going to be hit with the tax increase,” said Molly Phelan, a Chicago lawyer who specializes in real estate taxation. “These smaller investors don’t get the same type of treatment as the larger investors, and therefore it’s harder for them to operate their apartment buildings.”
Over the next three years, Chicago’s property taxes will go up by another $475 million. The Chicagoland Apartment Association projects the city’s property tax hike could mean rent increases by as much as $32 more per month. That is a 60 percent increase from the figure the city of Chicago cites.
As of September, the city has only pushed legislation to boost the existing homeowner’s exemption, a move which, if passed, would give select homeowners a break while shifting the tax burden to renters. Affordable housing advocates are monitoring this issue.
Communities United estimates the city saves some $140,000 per unit each time it invests in rehabbing old properties versus building new ones. The city’s Department of Planning and Development couldn’t confirm that number, saying costs can vary.
Affordable housing advocates will continue to push for financial support of ROOTS from the city. ROOTS members are negotiating over more affordable housing units in seven buildings.
As for Roxanne Smith, she is pleased that she and her son are safe. The previous building owner tried to get her to leave the apartment but declined to pay the full $10,600 in relocation assistance that a city ordinance requires. So, she spoke up for her rights under Chicago housing law.
Inside her home, it’s only a few steps from the dining room to living room, but there is another photo of Barack Obama. This time, he is sitting for a portrait with Michelle, his wife. The photo hangs on a vintage white brick mantel among many more of Smith’s family members.
“I contributed to them and I said, ‘You gotta send me some pictures!'” Smith said, smiling at the photo.
Her light brown hair moves in the air, as she talks about what being able to stay in the apartment has meant for her and her son.
“If I can be one of the first examples of letting people know they have rights, then so be it, that’s what I’m gonna do,” she said. “You gotta stand for something honey, and I do believe I’m standing for my family.”