September 18, 2018 Item No. 7

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1 September 18, 2018 Item No. 7 AUTHORIZATION TO 1) COMMIT CHICAGO HOUSING AUTHORITY FUNDS NOT TO EXCEED $24,800,000 FOR REDEVELOPMENT AND REMEDIATION ACTIVITES FOR SOUTHBRIDGE PHASES 1A AND 1B (FORMERLY PART OF HAROLD ICKES HOMES); 2) SUBMIT A PROJECT-BASED VOUCHER (PBV) RENTAL ASSISTANCE DEMONSTRATION FINANCING PLAN TO THE UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT AND ENTER INTO A RAD CONVERSION COMMITMENT; 3) EXECUTE PBV RAD HOUSING ASSISTANCE PAYMENT CONTRACTS FOR UP TO 68 RAD UNITS AND EXECUTE SUCH OTHER DOCUMENTS AS MAY BE REQUIRED FOR THE FINANCING AND OPERATION OF SOUTHBRIDGE PHASES 1A AND 1B; 4) APPROVE A TENANT SELECTION PLAN, LEASE, AND LEASE RIDERS FOR SOUTHBRIDGE ; AND 5) EXECUTE AND DELIVER SUCH OTHER DOCUMENTS AND PERFORM SUCH ACTIONS AS MAY BE NECESSARY OR APPOPRIATE TO IMPLEMENT THE FOREGOING Address: Property bounded by 23 rd Street on the north, State Street on the east, 24th Street on the south, and Dearborn Avenue on the west. Alderman: Pat Dowell Ward: 3 Presenter: Ann McKenzie, Chief Development Officer Tracy Sanchez, Deputy Chief Development Officer Recommendation It is recommended that the Board of Commissioners (BOC) of the Chicago Housing Authority (CHA) authorize the Chief Executive Officer or his designee to 1) Commit Chicago Housing Authority funds not to exceed $24,800,000 for the redevelopment and remediation activities for Southbridge Phases 1A and 1B (formerly part of Harold Ickes Homes); 2) Submit a Project-Based Voucher (PBV) Rental Assistance Demonstration (RAD) Financing Plan to the United States Department of Housing and Urban Development (HUD) and enter into a RAD Conversion Commitment; 3) Execute PBV RAD Housing Assistance Payment (HAP) Contracts for up to 68 RAD units and execute such other documents as may be required for the financing and operation of Southbridge Phases 1A and 1B; 4) Approve a tenant selection plan, lease, and lease riders for Southbridge; and 5) Execute and deliver such other documents and perform such actions as may be necessary or appropriate to implement the foregoing. 1

2 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. Funding Not-to-Exceed $24,800,000 in CHA funds for redevelopment of the property, including remediation activities. Phase IA o Funding not to exceed $11,400,000 Phase IB o Funding not to exceed $11,100,000 Environmental for both phases o Funding not to exceed $2,300,000 In addition, the transaction will require approximately $149,232 annually in CHA funds for the initial HAP contract rent with an estimated total HAP contract of $4,000,000 over 20 years. Compliance Subject to compliance with M/W/DBE & Section 3 Participation Background The Harold Ickes Homes development (Ickes) was originally situated on approximately 18 acres within the near south side community area of the city of Chicago and was located between 22nd Street (North), State Street (East), 25th Street and 24th Street (South) and Dearborn and Federal Street (West). The Ickes development consisted of eleven buildings with 1006 total units and the demolition of all buildings was completed in The Board and HUD previously approved disposition, by land exchange, of the portion of Ickes located between 22nd (North), Dearborn (East), 24th Street (South), and Federal Street (West) for land needed for the development of mixed income communities within other CHA developments. CHA disposed of this land for a track and field for Jones College Prep H.S. The remaining Ickes revitalization site is situated on approximately acres and is bounded by 22nd Street (North), State Street (East), 25th Street (South), and Dearborn Street (West). The development site is very conveniently located at a crossroads of many transportation opportunities. It is adjacent to the Stevenson Expressway, less than a mile from the Dan Ryan/Kennedy Expressway interchange, and just a few blocks from Lake Shore Drive. By public transit the Chicago Transit Authority (CTA) Red Line and Green Line trains and CTA six separate bus lines it is just a few minutes from the Loop or from the neighborhoods to the South and West. The proposed redevelopment plan includes approximately 877 new residential units including 244 units for CHA residents and up to 60,000 SF of planned commercial/retail space. 2

3 Proposed Southbridge Phases 1A & 1B The combined Phase 1A and Phase 1B will consist of a total of 206 units including 68 RAD PBV units 26 affordable units and 112 market rate units. Total CHA Unit Size Total PHA Affordable Market Total Phase 1 Studio BR BR Total Development Entities A joint venture consisting of The Community Builders (TCB) and McCaffery Interests (MI), LLC, was selected as the development team and approved by the CHA Board in June 2015 for the revitalization of the Harold Ickes Homes. Ickes Master Developer JV LLC entered into a Master Development Agreement with CHA in June CHA Financing The not-to-exceed total CHA funding of $24,800,000 will provide funds for project redevelopment activities, including remediation. The total estimated project budget of $51,401,990 for Phase 1A covers the new construction of one mixed-use building and the infrastructure for Block B. The $41,586,773 total estimated project budget for Phase 1B covers the new construction of one mixed-use building. CHA plans to provide approximately $11,400,000 for the project budget in Phase 1A. CHA plans to provide approximately $11,100, 000 for Phase 1B. The loan amounts average to $330,882 per unit. CHA also plans to fund an amount not to exceed $2,300,000 for remediation and other required CHA redevelopment activities. Rental Assistance Demonstration and Housing Assistance Payment Contract Submit a RAD Financing Plan to HUD and enter into a RAD Conversion Commitment. Execute a PBV RAD HAP Contract for the Phase 1A Units and the Phase 1B Units. 3

4 Residents will continue to pay 30% of their income towards rent. Tenant Selection Plan The proposed resolution also requests approval of the form of Tenant Selection Plan, lease, and lease riders to be used for Southbridge. It is understood that the owner has an interest and desire to implement its own lease forms and policy that encourages consistent community standards for the effective management of Southbridge. Respectfully Submitted: Ann C. McKenzie Chief Development Officer 4

5 RESOLUTION NO CHA- WHEREAS, the Board of Commissioners of the Chicago Housing Authority has reviewed the Board Letter dated September 18, 2018 entitled Authorization to 1) Commit Chicago Housing Authority Funds Not To Exceed $24,800,000 for the redevelopment and remediation activities for Southbridge Phases 1A and 1B (formerly Harold Ickes Homes); 2) Submit a Project-Based Voucher (PBV) Rental Assistance Demonstration (RAD) Financing Plan to the United States Department of Housing and Urban Development and enter into a RAD Conversion Commitment; 3) Execute PBV RAD Housing Assistance Payment Contracts for up to 68 RAD units and execute such other documents as may be required for the financing and operation of Southbridge Phases 1A and 1B; 4) Approve a tenant selection plan, lease, and lease riders for Southbridge; and 5) Execute and deliver such other 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 Board of Commissioners authorizes the Chief Executive Officer or his designee to: 1) Commit Chicago Housing Authority Funds Not To Exceed $24,800,000 for the redevelopment and remediation activities for Southbridge Phases 1A and 1B (formerly Harold Ickes Homes); 2) Submit a Project-Based Voucher (PBV) Rental Assistance Demonstration (RAD) Financing Plan to the United States Department of Housing and Urban Development and enter into a RAD Conversion Commitment; 3) Execute a PBV RAD Housing Assistance Payment (HAP) Contract for up to 68 RAD units and execute such other documents as may be required for the financing and operation of Southbridge Phases 1A and 1B; 4) Approve a tenant selection plan, lease, and lease riders for Southbridge; and 5) Execute and deliver such other documents and perform such actions as may be necessary or appropriate to implement the foregoing. This award is subject to the Contractor s compliance with the CHA s MBE/WBE/DBE/Section 3 Hiring and Subcontracting and insurance requirements. Eugene E. Jones, Jr. Chief Executive Officer Chicago Housing Authority 5