|HUD No. 23-047
HUD Public Affairs
March 2, 2023
HUD CLOSES $96.5 MILLION RENTAL ASSISTANCE DEMONSTRATION (RAD) CONVERSION TRANSACTIONS TO PRESERVE AND REHABILITATE 500 SENIOR HOMES IN CHICAGO, IL
Chicago Housing Authority leverages RAD to support rehabilitation of affordable rental homes at two properties for seniors.
WASHINGTON - The U.S. Department of Housing and Urban Development’s Office of Multifamily Housing is announcing today it recently closed two Rental Assistance Demonstration (RAD) transactions with the Chicago Housing Authority (CHA) to finance the rehabilitation of affordable rental homes at two CHA properties – the Irene McCoy Gaines Apartments and Albany Terrace. Through the RAD conversions, CHA will finance the rehabilitation of a total of 500 affordable rental homes for seniors between the two properties, turning the existing housing into vibrant, refreshed homes for the next generation of low-income Chicago seniors. Through RAD, the immediate and future needs of the properties are addressed through the recapitalization, setting the project up for both financial and physical stability over the long-term.
The Irene McCoy Gaines Apartments, built in 1964, consists of 150 affordable rental homes for seniors in the East Garfield Park neighborhood of Chicago, and was named in honor of the first African American woman to run for a seat in the Illinois Legislature. Albany Terrace, built in 1965, consists of 350 affordable rental homes for seniors and is located in the South Lawndale neighborhood of Chicago. Both properties are 17-story buildings which are aging and in need of rehabilitation to ensure they provide safe, affordable homes for many years to come.
The RAD conversions will support the rehabilitation of both buildings by updating each tower’s building systems, HVAC systems, electrical, and plumbing. The buildings’ masonry will be repaired, and new roofs will be installed. CHA will also upgrade the amenity spaces and outdoor parking facilities.
Albany Terrace and Irene McCoy Gaines were funded using 4% LIHTC awards via a co-development partnership with the Michaels Organization. The two buildings are approximately 2.5 miles apart and CHA will subsequently manage them efficiently post-conversion, providing safe, affordable housing for Chicago seniors.
The total rehabilitation costs are $96.5 million: $32.5 million for Irene McCoy Gaines and $64 million for Albany Terrace. Both are fully financed through RAD using:
- 4% Low Income Housing Tax Credit Equity
- Commercial First Mortgage Loan
- Public Housing Capital Funds
RAD was designed to help address the multi-billion-dollar nationwide backlog of deferred maintenance in the public housing portfolio and to stem the loss of affordable housing that could no longer be kept to decent standards. From the program’s inception through January 1, 2023, the Rental Assistance Demonstration has facilitated more than $16 billion in capital investment to improve or replace nearly 193,000 deeply rent-assisted homes, most of which house extremely low-income families, seniors, and persons with disabilities.
Under RAD, projects funded under the public housing program convert their public housing assistance to project-based Section 8 rental assistance. Under Section 8, residents continue to pay 30% of their income towards rent and the housing must continue to serve those with very low and extremely low incomes, as was the case when the property was assisted through the public housing program. Residents must be notified and consulted prior to conversion, are given a right to return to assisted housing post-construction so that the same tenants can enjoy these newly preserved and improved apartments and maintain the same fundamental rights they had as public housing residents.
View photo essays and read case studies where RAD is working to successfully preserve and improve public housing for low-income families.
Watch an educational video for public housing residents or those new to the RAD program.