An Uptown apartment building that was part of Heartland Housing, a nonprofit developer that belly in the air after the pandemic ravaged rent collections, could go to auction next year. The potential auction has raised fears among residents, including many with disabilities, that a for-profit developer will buy the property and turn it into luxury housing.
“I would have to find somewhere else, and honestly, I don’t know where,” said Jeff Martin, a 61-year-old who moved to Leland at 1207 W. Leland Ave. in 2022 after a stroke left him unable to live. to work. “Everyone wants to stay here and we fear being homeless again. »
The six-story Uptown building is one of more than a dozen former Heartland Housing properties that collectively provide hundreds of affordable housing units, many of which house those most at risk of homelessness, including seniors , veterans and people with disabilities or mental health issues.
After rent collections collapsed, Heartland had difficulty recruiting and maintaining properties. Residents complained about lack of security, high vacancy rates, and deteriorating physical conditions, and in 2023 a Cook County judge named the nonprofit Community Initiatives, which operates the Troubled Buildings Initiative from the city, as receiver to oversee the Heartland portfolio.
The collapse came as a shock to housing officials, who are now scrambling to find new owners willing to preserve the hundreds of affordable units in Heartland Housing’s portfolio.
“There is concern that there will be a significant domino effect,” said Susan Doig, CEO of Trilogy, which this summer began providing mental health care and other services in Leland.
State and city officials say most of Heartland’s properties are on track and a new ownership group will revive the buildings.
“To date, ownership of 13 of the 14 properties has transferred or is in the process of being transferred to new owners who will maintain the affordability of the properties and not evict tenants,” said Andrew Field, deputy director of the association. Illinois Housing Development Authority.
But Mercy Community Capital, the mortgage holder on the 137-unit Leland, filed a motion in September asking the court to authorize the foreclosure and sale. The national nonprofit lender has helped preserve more than 46,000 affordable housing units, but said Leland’s $2 million mortgage was in default and the property had fallen into even more debt since the collapse of Heartland, according to court documents.
Vice President Brian Sample told the court in an affidavit that Mercy contacted more than 30 potential buyers without success.
“Due to the extreme need of the property, none of these potential owners have been willing to take over the property,” Sample said. “MCC also met regularly with elected officials and government organizations to collaborate on potential solutions. »
The next court hearing is set for January 8.
Selling the Leland could be the worst possible outcome, said Hannah Gelder, organizing director of the nonprofit ONE Northside, because nonprofits that might preserve its affordability don’t have the financial means to participate. at auction, which require significant deposits and full payment. in 24 hours.
“We know that if the property goes to auction, it will be purchased by a for-profit developer,” she said. “Nonprofit developers simply cannot produce enough capital within 24 hours. »
Private buyers might find the Leland, built in 1926 and part of the Uptown Square Historic District, an enticing prospect. It is close to shopping, many entertainment venues, the lakefront and public transportation, and the developers have filled the neighboring streets with new apartment towers but little new affordable housing.
“Uptown has seen a huge increase in luxury developments,” Gelder said. “Developers are hungry for the North Side.”
Martin said the vibrant neighborhood and all its amenities make his life easier as he continues to recover from the 2018 stroke. He was driving for Uber at the time, but the illness stranded him in a nursing home. retired for several years.
“Nursing homes are not pleasant to live in,” he said. “But in Uptown, everything is so easy to get to. I go to the gym three times a week so I can get on the treadmill and run my three miles. You have Aldi and Target nearby, the train is also here and everything is within walking distance.
The lender said it has not given up on finding a solution that would allow residents like Martin to stay.
“Mercy Community Capital is working diligently with the city, IHDA, receiver, management company and elected officials to preserve The Leland,” the lender’s spokesperson said in a statement.
Other Heartland properties are on the road to recovery. Full Circle Communities, an affordable housing provider that has units throughout the Midwest, this year took over Hollywood House, a 12-story senior apartment building at 5700 N. Sheridan Road in Edgewater, and Town Hall Apartments, a modern with 79 housing units. affordable building for LGBTQ seniors at 3600 N. Halsted St. in Lakeview.
Both properties are financed by affordable housing tax credits, and investors with those credits only benefit if the buildings remain affordable, said Joshua Wilmoth, CEO of the nonprofit Full Circle Communities . That’s why National Equity Fund, a tax syndication company, and the receiver asked Full Circle to take over both properties.
The nonprofit also won approval from state and city housing officials, the local alderman, the full city council and other regulators after showing its plans to ‘operation and preservation of the buildings, with the understanding that Full Circle would develop plans to finance much-needed renovations to Hollywood House while keeping it affordable.
“We haven’t purchased anything, the ownership structures remain in place and we have stepped in as general partner, replacing Heartland Housing,” Wilmoth said. “Hollywood House was last renovated 15 years ago, so in the next few years we will be doing a major recapitalization. Our short-term hope is to prepare vacant units for new tenants, as there is an urgent need for affordable senior housing throughout the city, particularly on the North Side.
The national nonprofit Preservation of Affordable Housing has taken over several Heartland properties on the West Side, and POAH Senior Vice President Bill Eager said his group can better provide the support services residents need of Heartland needed.
“It’s a very difficult job for many reasons,” he said. “Heartland was a good developer with an important mission, but often some of the people who live in supportive housing have little or no income, as well as other challenges not found in affordable housing traditional. And we’re much more financially stable than Heartland. We’re bigger, more resourced, and can better weather the ups and downs of the industry.
POAH now operates Harvest Commons at 1519 W. Warren Blvd. in the West Loop, an 89-unit complex with mostly supportive housing, and Warren-Ashland Apartments, a new 75-unit building next door with a mix of supportive housing, traditional affordable housing and some market rate apartments.
Eager said both buildings are in excellent condition and should soon be financially stable.
“Both properties had significant vacancies that our team is working to refill, but I think it’s fair to say they are the best properties in the Heartland portfolio,” he said. “And with so much gentrification nearby, it’s become increasingly difficult to obtain affordable housing, so it’s more important than ever to make sure these assets are strong and protected.”
Gelder said bringing Trilogy on board to provide services to the Leland has stabilized the property, and she hopes the state or city will commit funds to the building next year, perhaps through ‘a new round of tax credits, allowing a non-profit organization to take over. .
A spokesperson for the Chicago Department of Housing said city officials could not comment on pending litigation, but added that “we are working with all stakeholders to identify a replacement landlord dedicated to affordable housing.” We remain hopeful that Leland’s affordability will be preserved and tenants’ rights will be respected.
“We’re keeping our fingers crossed,” Martin said.
