How developers are rebuilding affordable units 20 years after Chicago began to dismantle its public housing
Twenty years into Chicago’s plan to privatize building low-income houses, the effects are varied: Mixed-income, mixed-demographic neighborhoods now exist where dilapidated public housing projects once stood, yet large tracts of vacant land still lie where there were once communities. But between complex financing models and even more complex historical considerations, the face of affordable housing is changing in Chicago. Slowly but surely, areas like Cabrini–Green on the city’s near North Side are developing. Developers like Holsten Real Estate Development Corporation have found a niche in providing mixed-income projects while understanding the intricacies of the affordable housing market.
From the time of its earliest German settlers, the area now known as Cabrini–Green has been a space of displacement, and more often than not, neglect. The area was first a landing site for European immigrants fleeing poverty and famine in their home countries—first German, then Swedish, followed by Irish, and lastly settled by Sicilians, the area was known as Little Hell. The fire spewing stacks of the People’s Gas Light & Coke Co. plant and squalid conditions made the name unfortunately appropriate. By the early 20th century the area became known as Little Sicily, despite few improvements to living conditions.
By the 1940s the newly founded Chicago Housing Authority (CHA) had begun a slum-clearing program. Eventually, there would be few traces of the area’s history. Though few would feel nostalgic for the over-crowded, unplumbed tenements, the complete displacement of the Sicilian community would eventually ring familiar for the area’s future residents.
This first public housing in the area, the Frances Cabrini Row-houses were initially envisioned as an integrated neighborhood of whites and African-Americans. By the time construction was completed in 1962, the area had shifted to be almost completely African American. The following 50 years would see Cabrini–Green become the most notorious, and often misunderstood, public housing project in the country. From the outside, the vision of Cabrini–Green was one of gang violence, sniper shootings, and drug trade. Conversely, the projects were also close-knit communities that knew their built environment was being neglected by the city that had put them there. It should be noted that despite the conditions, Cabrini–Green was likely not as violent or impoverished as Little Sicily, which it replaced. Some cite Little Sicily as having a crime rate 12 times that of the rest of the already extremely violent early 20th century Chicago.
Today, like Little Hell and Little Sicily before them, there is barely a trace of the Cabrini–Green Homes left. Starting in the mid-1990s, the city began a 15-year plan to demolish most of the then-dilapidated projects. The demolition and relocation of the residents were outlined by the city’s $1.5 billion Plan for Transformation and by most accounts, this happened with little input by the nearly 15,000 residents. March 2011 saw the last of the high-rises come down, leaving just a small handful of row houses standing. This new plan would be an experiment in social housing that would replace the projects with mixed-income townhouses across the whole city. Residents were told they would be able to return to the area once new housing was built. However, the slow speed at which new housing has been built and the intense restrictions placed on returning residents means that this has not been particularly successful on many levels.
Holsten has found a way to work within this delicate environment, which many developers avoid at all costs. In fact, the latest Affordable Requirement Ordinance (ARO) allows for developers to pay “in-lieu” fees to avoid including affordable housing in developments that would normally require them. The goal of the ARO is to distribute affordable housing throughout the city to require it in any development that receives a zoning change, city land, or financial assistance. When developers opt to pay the fee, which can reach $175,000 per affordable unit not built, that money goes to a fund that developers like Holsten can use.
Peter Holsten, founder and president of Holsten Real Estate Development, explained how complicated the financing can be for building or renovating buildings to be affordable housing.
“There are non-carry mortgage loans, there are tax credits, historical tax credits, and new market tax credits to build retail in neighborhoods. There are Housing Opportunities & Maintenance for the Elderly (H.O.M.E.) money. There’s Community Development Block Grants (CDBG) money. There are grants from the Federal Home Loan Bank. There is trust-fund money from the Illinois Housing Development Authority (IHDA). There are all sorts of rental subsidies. So your financing could be subsidized or your rent could be subsidized. That’s how you can spend market rate money on renovating a property, but still charge low rents. It is like a Rubik’s Cube.”
Navigating the finances of building affordable housing is only half the story for Holsten. Going back to when he was buying and renovating buildings part-time in the 1970s, Holsten manages all of his own properties. Seeing a need, Holsten also started Holsten Human Capital Development (HHCD), a nonprofit, charitable organization set up to provide resources to promote self-sufficiency and stability to residents.
Recent years have seen Holsten getting involved with more architecturally significant developments. Along with many of the first wave row houses built in Cabrini–Green, Holsten has recently finished Terrace 549. Designed by Chicago-based Landon Bone Baker Architects (LBBA), Terrace 549 is part of a much larger mixed-income development. Rather than the austere modernist concrete towers or generic row houses often associated with public housing in Chicago, Terrace 549 includes large units, colorful finishes, courtyards, balconies, and lush plantings. Along with community resources areas, the building is a mix of 43 market rate, 27 affordable, and 27 public units.
Holsten is also responsible for redeveloping another former CHA site, the Hilliard Homes. The Hilliard Homes broke the mold of public housing when they were first built in 1966; the towers’ architect Bertrand Goldberg believed that public housing should “recognize them [public housing residents], not simply store them.” From the beginning, the campus of 16- and 18-story curving towers was set apart from the rest of the city’s public housing. Though controversial, a strict acceptance policy is credited with making the Hilliard Homes the safest project in the city. A similar policy is now standard in most mixed-income developments. Despite its relative success, Hilliard fell into neglected disrepair with the other CHA projects. Holsten now manages Hilliard and has converted it into a mix-income community.
The complex issues surrounding affordable housing go well beyond architecture. Yet many of those issues are intrinsically linked to the built environment. Even with all of the plans on the boards for areas like Cabrini–Green, the number of units is still staggeringly short of those that were demolished. Conversely, market-rate housing in these new developments rarely has trouble selling. For the first time in Chicago’s history, new neighborhoods are starting out with a diverse mix of demographics and economic situations. Thankfully, now with the help of architects like LBBA and developers like Holsten, architecture is also being factored into the equation. For better or worse, Chicago is once again home to a grand affordable housing experiment.