Chicagoan is committed to making affordable housing a reality
Bonita Harrison’s goal has always been to own 200 property units. As a residential developer, his mission was to create a noticeable change in a South Side neighborhood when it comes to affordable housing for and by people of color.
She was on track with her company Sunshine Management, which had 68 units before the pandemic. Now she only has 15 left, a mix of two and four apartments and single-family homes.
“When you’re a small business, it’s hard for someone to have that capital to get you through tough times,” Harrison said. “I had to sell because I was constantly taking money from myself, my family, my daughter, trying to make decisions: ‘I don’t pay my own mortgage, but I pays the mortgage on all those other buildings. ‘”
In the real estate business since 2006, Harrison, 40, is just one of many homeowners trying to keep what they worked for. After many conversations about tenant-landlord relationships during the pandemic and hundreds of millions of dollars in rental assistance going to thousands of former for latter, Michael Glasser, president of the Neighborhood Building Owners Alliance, wants people know that losses like Harrison’s can influence an area’s housing market and result in divestment. A recent study by the Alliance, which represents Chicago’s small and medium homeowners, showed persistent difficulties for housing providers in southern and western neighborhoods and suburbs.
“It was the small housing provider that really took on a huge challenge because it might just have four units in a building or two units or 10 units,” he said. “With a few people not paying… it can absolutely destabilize housing. “
“Our gas prices will be the big problem this year. Our insurance rates are increasing because of all the calamities in the world. And we all know what’s going on with property taxes. These bills are going to be very expensive. And that will be destabilizing for many owners of working-class neighborhoods.
Tanya Woods, executive director of legal aid organization Westside Justice Center, fears homeowners selling due to COVID-19 challenges may open the door to non-local investors as local wealth leaves communities, opening doors the way to gentrification.
“When we talk about affordable rentals, the vast majority are located in these low cost neighborhoods and are owned by people like Bonita and other small, for-profit landlords,” said Stacie Young, president and CEO of Community Investment Corporation. , which lends money for the acquisition and rehabilitation of affordable multi-family housing in low- and moderate-income communities in Chicagoland. “Our borrowers, half are headed by people of color. The typical story of a borrower we finance would be a janitor saving his pennies to buy the six-apartment down the block. They probably employ local people to maintain their building; go to local vendors to get their stuff. It is a disturbance. “
Young said that is why more attention and support is being given to small housing providers nationwide. She, too, is concerned about large corporations and / or outside investors who come to buy properties from local developers who know the area well. According to Young, CIC worked with partners for years to create and champion a proposal that would offer property tax relief to homeowners who invest in their buildings and hold a certain proportion of units as affordable. This proposal became state law this summer.
“This type of property tax incentive is one of the few types of government-related policies / resources that small for-profit rental landlords can access without relying on a glut of expensive government regulations,” Young said. “These guys (the small rental landlords) anchor our neighborhoods and our blocks. We have heard a lot about money coming from out of town. They don’t know there’s a difference between Auburn Gresham and a property on Lake Shore Drive. They say to me, ‘I can buy this building for such a low price. And they don’t know their neighborhood, like small owners do.
Harrison said the majority of buyers for his properties are from outside the community. She said six months after an old property in Greater Grand Crossing was sold, tenants were still contacting her to try to find out where to send their rent checks because the new owners had never contacted them.
Harrison, a former financial analyst, moved into real estate full time after buying and selling her first home before the Great Recession. The sale was a “blessing,” according to Harrison, who made more money with his first house than his working salary, owning it for less than a year. Harrison toppled homes in Greater Grand Crossing, Chatham, Pullman, Roseland, Morgan Park, Bronzeville, Englewood and Auburn Gresham. It acquired a large portion of the properties through the Cook County Land Bank Authority.
The Land Bank is an independent agency in Cook County, founded by the Cook County Council of Commissioners. The agency acquires properties that have been vacant, derelict and years past due and sells them at below market rates to skilled community developers who then rehabilitate the homes and sell them. Properties are assigned to developers through an assessment, in which the developer’s plan, past work, and references are taken into account. You don’t need to be a licensed or certified professional to rehabilitate a property. The agency is currently running a vacation buying program through mid-January to help local developers acquire vacant properties in their neighborhoods; and give 10 packages to the first 10 approved applicants. The majority of properties available in Chicago are in Englewood, North Lawndale, Roseland and West Pullman, according to the organization.
Harrison taught the business to his daughter, Kenya, 25, a real estate agent, who is buying her first six homes on the South Side.
“People when they look at our community they think there is no value there. But there are, ”said Harrison. “There are a lot of people who want to be here. Like me, I was born here. I was brought up here. I raised my family here. I want to be in my community; I want to work here. It matters to me. I want to see the change here.
Harrison said one of the challenges she and other developers face are scarce and expensive materials, which are causing project budgets to increase. Many developers of color are using hard money loans to fund their entrepreneurship. This form of asset-based financing is a quick way to get financing, but it usually has higher interest and shorter payback periods.
“How do you get along with a project, if you’ve got some hard cash to pay and you’re making a profit as well?” It was very difficult. Many of us who have these short term loans have no choice but to move the project forward. If we don’t, then it’s very damaging.
Harrison said she received a P3 loan and three of her 68 tenants received federal rent assistance funds. She hopes more incentives will be provided to current residents of the community to thwart gentrification. She knows the city has a number of developer programs like her, but admits paperwork can be a barrier. According to Land Bank President and Cook County Commissioner Bridget Gainer, the organization continues to lower the barrier to entry for developers. According to CCLBA Executive Director Eleanor Gorski, the organization registered some of its highest numbers of nominations this summer.
“We have over 600 small, mostly Black and Latino developers in the neighborhood who know how and what to develop out there,” Gainer said. “I don’t know if you’ve seen Zillow’s recent story where they tried to buy all these houses and turn them around on a large scale… They had no idea what the local market like, what type of house people did they want to buy, what were they willing to pay? ”
Is there a case where an outside investor makes sense? By Young, the national nonprofit Preservation of Affordable Housing is a prime example.
“About 12 years ago, they were the out-of-town investors,” she said. “They had never worked in Chicago before, but what they brought with them was that expertise to do large-scale developments in a neighborhood. POAH came here from Boston with that ability, and because they work so hard in the field… it really added value to this neighborhood and the rest of the city as well.
Bill Eager, senior vice president of Midwestern Real Estate Development for Preserving Affordable Housing, said what made the difference for POAH was spending a lot of time connecting within the community, with individuals and local organizations. He said much of the early work took place at Woodlawn – working with neighborhood clubs and tenant associations. Eager said POAH hired a full-time director of community engagement to help the organization build the network it needed to be a part of the community it wanted to belong to.
“When we buy a property, we are not looking at short term property at all. We’re going to want to make a deal and stay there for 20 to 30 years or more, ”Eager said. “I don’t think it’s outside or inside with investors. I think the bigger question is whether the people reviewing the properties are interested in being long term stewards, putting financial and other resources into keeping the properties healthy, or are they just looking to turn them over. in a few years. The question is: what are their plans once they’re here?
When the pandemic is over, Bonita Harrison will try to achieve the objectives she had initially set, namely 200 units. And she is trying to cooperate with other developers to concentrate the efforts to redo the houses one block at a time.
“We can do better together; I can find other developers, ”she said. “Let’s focus and that way we can bring equity to the community and it could be us in the community who are doing that.” It helps against me doing one here, someone else doing one in Pullman, someone else in Roseland, the effect is not as great.
Bonita Harrison is redeveloping a single-family home on Normal Avenue south of 113th Street in Chicago on October 14, 2021.