Property Name Address Alderman/Ward S. Wentworth 3146 S. Wentworth 3216 S. Wentworth 3250 S. Wentworth

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1 January 16, 2018 Revised ITEM No. 4 AUTHORIZATION TO: 1) SUBMIT RENTAL ASSISTANCE DEMONSTRATION FINANCING PLANS TO THE UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT AND ENTER INTO RENTAL ASSISTANCE DEMONSTRATION CONVERSION COMMITMENTS WITH HUD FOR 11 PROPERTIES; 2) COMMIT CHICAGO HOUSING AUTHORITY FUNDS NOT TO EXCEED $130,200,000 OVER THE NEXT THREE YEARS; 3) EXECUTE HOUSING ASSISTANCE PAYMENT CONTRACTS AND SUCH OTHER DOCUMENTS AS MAY BE REQUIRED FOR THE FINANCING AND OPERATION OF THE PROPERTIES; 4) TRANSFER OWNERSHIP OF THE PROPERTY IMPROVEMENTS AND EXECUTE 99-YEAR GROUND LEASES FOR THE LAND; AND 5) EXECUTE AND DELIVER SUCH OTHER DOCUMENTS AND PERFORM SUCH ACTIONS AS MAY BE NECESSARY OR APPROPRIATE TO IMPLEMENT THE FOREGOING. Property Name Address Alderman/Ward No. of Units 1 Maria Diaz Martinez 2111 N. Halsted St. 2 Margaret Day Blake 2140 N. Clark St. 3 Flannery - 2 buildings 1507 & 1531 N. Clybourn Smith, 43 rd Ward Smith, 43 rd Ward Burnett, 27 th Ward Armour Square - 4 buildings 3120 S. Wentworth 3146 S. Wentworth 3216 S. Wentworth 3250 S. Wentworth Thompson, 11th Ward Mary Jane Richardson 4930 S. Langley King, 4th Ward Maudelle Brown Bousfield 4949 S. Cottage Grove King, 4th Ward 92 7 Vivian Gordon Harsh 4227 S. Oakenwald King, 4th Ward Judge Green 4030 S. Lake Park King, 4th Ward Mahalia Jackson - 2 buildings 9141 S. Chicago & 9177 S. Chicago Mitchell, 7th Ward 10 Ella Flagg Young 4645 N. Sheridan Rd. Cappleman, 46th Ward Ada S. Dennison McKinley 661 E. 69th Street Cochran, 20th Ward

2 Presenters: Derek Messier, Chief Property Officer Jewell Walton, Senior Director, RAD & PBV Programming Recommendation The Chief Executive Officer (CEO) recommends that the Board of Commissioners (BOC) of the Chicago Housing Authority (CHA) authorize CHA staff to: 1) submit Rental Assistance Demonstration (RAD) financing plans to the United States Department of Housing and Urban Development (HUD) and enter into 11 RAD Conversion Commitments with HUD for Maria Diaz Martinez, Margaret Day Blake, Flannery, Armour Square, Mary Jane Richardson, Maudelle Brown Bousfield, Vivian Gordon Harsh, Judge Green, Mahalia Jackson, Ella Flagg Young and Ada S. McKinley Apartments; 2) commit CHA funds in a total amount not to exceed $130,200,000 over the next three years to fund an initial deposit to the replacement reserve, and facilitate rehabilitation, site work and transaction costs for the 11 properties; 3) execute Housing Assistance Payment (HAP) contracts and such other documents as may be required for the financing and operation of the listed properties; 4) transfer ownership of Maria Diaz Martinez, Margaret Day Blake, Flannery, Armour Square, Mary Jane Richardson, Maudelle Brown Bousfield, Vivian Gordon Harsh, Judge Green, Mahalia Jackson, Ella Flagg Young and Ada S. McKinley Apartments improvements to Chicago Housing Administration LLC and execute a 99-year ground lease for the land; and 5) execute and deliver such other documents and perform such actions as may be necessary or appropriate to implement the foregoing. The requested action complies in all material respects with all applicable federal, state and local laws, and CHA board policies. Staff have completed all necessary due diligence to support the submission of this initiative. 2

3 Property Summary Building Name Address Target Population RAD Units Financing Plan Meeting Date Maria Diaz Martinez 2111 N. Halsted St. Senior 98 TBD Margaret Day Blake 2140 N. Clark St. Senior 131 TBD Flannery - 2 buildings 1507 &1531 N. Clybourn Senior 248 TBD 3120 S. Wentworth 3146 S. Wentworth Senior TBD Armour Square - 4 buildings 3216 S. Wentworth 3250 S. Wentworth 379 Mary Jane Richardson 4930 S. Langley Senior 169 TBD Maudelle Brown Bousfield 4949 S. Cottage Grove Senior 92 TBD Vivian Gordon Harsh 4227 S. Oakenwald Senior 122 TBD Judge Green 4030 S. Lake Park Senior 150 TBD Mahalia Jackson - 2 buildings 9141 S. Chicago & Senior 277 TBD 9177 S. Chicago Ella Flagg Young 4645 N. Sheridan Rd. Senior 234 TBD Ada S. Dennison McKinley 661 E. 69th Street Senior 122 TBD Background and Approach RAD provides an opportunity for housing authorities to utilize either project-based voucher (PBV) or project-based rental assistance contracts to stabilize funding for up to 185,000 units of public housing. A primary goal of RAD is to use long-term contracts to leverage private financing for capital improvements while preserving affordability. Through the RAD program, HUD provides rental subsidies to the owners of properties pursuant to a long-term HAP contract that will be renewed at the expiration of each 20-year contract term. This ensures the units remain affordable to low-income households. Residents will continue to pay 30% of their income towards rent. Under the PBV program, HUD previously documented in its Notice (PIH (HA), which is consistent with its RAD Notices (PIH (HA), REV-1, PIH (HA) REV 2, and PIH (HA) REV-3), that the contract administrator and the owner of the converted RAD properties cannot be the same legal entity. CHA intends to assume the role of contract administrator for all of the portfolio properties converting to RAD. Therefore, a separate entity, Chicago Housing Administration LLC, has been established pursuant to Resolution No CHA-109, to own the 3

4 converted RAD properties that are presently owned by CHA. CHA is the sole member of Chicago Housing Administration LLC. At the RAD conversion closing(s), CHA will transfer ownership of the improvements to Chicago Housing Administration LLC and execute a 99-year Ground Lease for the underlying land. Finance Capital Work Needed at the Properties: RAD Physical Condition Assessments (PCAs) were prepared for the subject properties and are being updated to determine the capital needs of the buildings over the 20-year term of the proposed initial HAP contracts. Capital improvements identified as initial needs are financed at closing and are generally expected to be completed within the first two to three years post-conversion. The timing may vary for larger construction projects. The PCA also identifies the amount of funding needed to capitalize a replacement reserve for each property. The replacement reserves which are a combination of an initial deposit and annual funding through operations are intended to cover all identified capital needs associated with the PCA over the initial 20-year HAP contract period. It has been determined that all 11 buildings need, at minimum, partial rehabilitation and elevator modernization. Major structural work is anticipated at Armour Square Apartments. Construction Financing: It is anticipated that CHA will lend and grant funds to Chicago Housing Administration LLC to cover the cost related to the immediate work that will be conducted in the building (anticipated to be within the first two to three years of the HAP contract). The properties construction will also be supported by third-party financing, including a potential combination of grant, equity and debt sources. Total Funding: The estimated total amount from the RAD budget determined necessary based on CHA s preliminary review of the PCAs and planning for common area projects was determined to not exceed $130,200,000 for the following uses: Maria Diaz Martinez Apartments an estimated total of $6,800,000 as an initial deposit to the replacement reserve and for transaction costs and capital work over the first two Margaret Day Blake Apartments an estimated total of $9,200,000 as an initial deposit to the replacement reserve and for transaction costs and capital work over the first two Flannery Apartments an estimated total of $14,000,000 for two buildings as an initial deposit to the replacement reserve and for transaction costs and capital work over the first two to three Armour Square Apartments an estimated total of $30,000,000 for four buildings as an initial deposit to the replacement reserve and for transaction costs and capital work over the first two to three Mary Jane Richardson Apartments an estimated total of $16,000,000 as an initial deposit to the replacement reserve and for transaction costs and capital work over the first two to three 4

5 Maudelle Brown Bousfield Apartments an estimated total of $8,400,000 as an initial deposit to the replacement reserve and for transaction costs and capital work over the first two to three Vivian Gordon Harsh Apartments an estimated total of $6,500,000 as an initial deposit to the replacement reserve and for transaction costs and capital work over the first two to three Judge Green Apartments an estimated total of $9,000,000 as an initial deposit to the replacement reserve and for transaction costs and capital work over the first two to three Mahalia Jackson Apartments an estimated total of $11,700,000 as an initial deposit to the replacement reserve and for transaction costs and capital work over the first two to three Ella Flagg Young Apartments an estimated total of $12,100,000 as an initial deposit to the replacement reserve and for transaction costs and capital work over the first two to three Ada S. McKinley Dennison Apartments an estimated total of $6,500,000 as an initial deposit to the replacement reserve and for transaction costs and capital work over the first two to three Respectfully Submitted: Derek Messier Chief Property Officer 5

6 RESOLUTION NO CHA- WHEREAS, the Board of Commissioners of the Chicago Housing Authority has reviewed the Board Letter dated January 16, 2018 requesting authorization to 1) submit Rental Assistance Demonstration Financing Plans to the United States Department of Housing and Urban Development and enter into Rental Assistance Demonstration conversion commitments with HUD for 11 properties; 2) commit Chicago Housing Authority funds not to exceed $130,200,000 over the next three years; 3) execute Housing Assistance Payment contracts and such other documents as may be required for the financing and operation of the properties; 4) transfer ownership of the property improvements and execute 99-year ground leases for the land; and 5) execute and deliver such documents and perform such actions as may be necessary or appropriate to implement the foregoing. THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE CHICAGO HOUSING AUTHORITY: THAT the Chief Executive Officer or his designee is authorized to submit Rental Assistance Demonstration Financing Plans to the United States Department of Housing and Urban Development for Maria Diaz Martinez, Margaret Day Blake, Flannery, Armour Square, Mary Jane Richardson, Maudelle Brown Bousfield, Vivian Gordon Harsh, Judge Green, Mahalia Jackson, Ella Flagg Young and Ada S. McKinley Apartments. the Chief Executive Officer or his designee is authorized to enter into Rental Assistance Conversion Commitments for Maria Diaz Martinez, Margaret Day Blake, Flannery, Armour Square, Mary Jane Richardson, Maudelle Brown Bousfield, Vivian Gordon Harsh, Judge Green, Mahalia Jackson, Ella Flagg Young and Ada S. McKinley Apartments on behalf of the Chicago Housing Authority and Chicago Housing Administration LLC. the Chief Executive Officer or his designee is authorized to execute Housing Assistance Payment contracts under the United States Department of Housing and Urban Development Rental Assistance Demonstration program for Maria Diaz Martinez, Margaret Day Blake, Flannery, Armour Square, Mary Jane Richardson, Maudelle Brown Bousfield, Vivian Gordon Harsh, Judge Green, Mahalia Jackson, Ella Flagg Young and Ada S. McKinley Apartments on behalf of the Chicago Housing Authority and the Chicago Housing Administration LLC, and execute such other documents as may be required for the financing and operation of the properties on behalf of the Authority and Chicago Housing Administration LLC. the Chicago Housing Authority is authorized to commit funds in a total amount not to exceed $130,200,000 over the next three years to fund initial replacement reserves and other rehabilitation costs as well as transaction costs for Maria Diaz Martinez ($6,800,000), Margaret Day Blake Apartments ($9,200,000), Flannery ($14,00,000), Armour Square ($30,000,000), Mary Jane Richardson ($16,000,000), Maudelle Brown Bousfield ($8,400,000), Vivian Gordon Harsh ($6,500,000), Judge Green ($9,000,000), 6

7 Mahalia Jackson ($11,700,000), Ella Flagg Young ($12,100,000) and Ada S. McKinley Apartments ($6,500,000). the Chief Executive Officer or his designee is authorized to execute documents on behalf of the Chicago Housing Authority and Chicago Housing Administration LLC for Maria Diaz Martinez, Margaret Day Blake, Flannery, Armour Square, Mary Jane Richardson, Maudelle Brown Bousfield, Vivian Gordon Harsh, Judge Green, Mahalia Jackson, Ella Flagg Young and Ada S. McKinley Apartments in order to transfer title to the improvements and enter into a 99-year ground lease. the Chief Executive Officer or his designee is authorized to execute and deliver such other documents and perform such actions as may be necessary or appropriate to implement the foregoing. Eugene E. Jones, Jr. Chief Executive Officer Chicago Housing Authority 7