New York Investor Buys South Side Affordable Housing Development, Promises Change

Jonathan Rose Cos. acquired Barbara Jean Wright Court Apartments, a troubled 272-unit affordable housing complex nestled between the University of Illinois at Chicago and the Pilsen neighborhood, for $17.5 million from developer Anthony Fusco’s Chicago Community Development Corp. on Tuesday. It’s the latest in a series of purchases by the New York City investor, now a key player in Chicago’s affordable housing community.

The latest deal took years to negotiate, requiring funding and approval from various government agencies. But with financing finally in place, long-suffering residents are hoping the new owner will be able to tackle a rodent infestation, among many other maintenance issues plaguing the development.

“We’ve been through hell and we’ve come back with this property,” said Jessie Johnson, director of the Barbara Jean Wright tenant council and a resident since it opened in 1972.

Fusco could not be reached for comment, but the 73-year-old has previously said he wanted to retire and Rose was in a better position to refinance the property.

Jonathan Rose Cos. it was presented to residents and government officials as a national company with deep pockets, capable of preserving and maintaining affordable housing communities for many years to come. And while Rose’s partner and senior managing director Nathan Taft said the company’s growing presence in Chicago won’t transform the city’s affordable housing portfolio, it will ensure better, healthier lives for residents in the various developments it now owns. .

“What we can do with these individual properties is come in and have a significant impact,” he said. “What we’ve been trying to do is our part to lift these assets up and make them safe and stable places for people to live.”

Barbara Jean Wright was one of many privately owned affordable developments across the United States originally financed in the 1970s with loans from the Department of Housing and Urban Development. But the agency stopped making such loans, making it difficult for homeowners to recapitalize properties and keep them affordable when the original contracts expired.

Fusco saved the development from foreclosure when he bought the 11.5-acre site in 1999, and residents had high hopes that it would keep its two- and four-story structures. His CCDC took over several southside affordable housing developments at the same time, a portfolio that eventually included Archer Courts in Chinatown and Englewood Gardens, a Section 8 portfolio of scattered sites in the Englewood neighborhood. But Johnson and other residents said the past few decades have been disappointing, marked by a steady decline in housing conditions.

“Once upon a time, (Fusco) was seen as this affordable housing star, and that may have been the case, but sometimes the road to hell is paved with good intentions,” Johnson said.

Fusco did some renovation work in those early years, but the effort fizzled out, he added. “He let this property go to the dogs. They didn’t do anything here for years.”

Rats eventually tore holes in the walls of many apartments, black mold spread, too, and attempts to address other problems, such as broken sidewalks, were often just patchwork, Johnson added.

For decades, the rental income generated by the property hasn’t been enough to support it, but this new deal finally puts Barbara Jean Wright on solid financial footing, according to Brandon Kearse, CEO of Jonathan Rose Cos.

“It should set up development for great long-term success,” he said.

The Rose Firm has been buying affordable homes for the past year, especially on the South Side. It purchased 146-unit Archer Courts from Fusco in February for $11.6 million, and in July, along with partner 5T Management, paid $10.7 million for Fusco’s 13 Englewood Gardens buildings. In August, Rose teamed up with the national nonprofit Preservation of Affordable Housing to purchase Jackson Park Terrace, a 15-story skyscraper and a few neighboring row houses near the Obama Presidential Center development in Woodlawn, for $25 million from the Rev. Leon. Finney Jr. Woodlawn Community Development Corp., which filed for bankruptcy in 2018.

Rose acquired Archer Courts, Englewood Gardens and Jackson Park Terrace with its $525 million Rose Affordable Housing Preservation Fund V and plans renovations on all three. The company now owns about 18,000 units nationwide and more than 2,000 in the Chicago area.

The company took a different route to finance the purchase of Barbara Jean Wright. Paid Fusco $1, taken care of his $17.5 million remaining debt on the property, and will launch a $46 million renovation financed by a Federal Housing Administration loan, federal tax credit equity, tax increment financing funds city ​​and state tax credits, among other sources. Under the new agreement, rental assistance from both HUD and the Chicago Housing Authority will keep most apartments affordable for those earning 60% or less of the area median income, and 21 units will be market rate. .

Rose didn’t need to go through all those agencies to buy Archer Courts, Englewood Gardens, Jackson Park Terrace, or her other Chicago properties, because they only need relatively light renovations, while Barbara Jean Wright needs a complete renovation, inside and out, according to Taft.

“In this case, Barbara Jean Wright needed it,” he said.

The company promised to deliver new security gates, fencing, new kitchens, bathrooms, flooring, carpeting and lighting, along with a 5,000-square-foot community center and a renovated basketball court and playground, according to Karyntha Walsh, senior manager of Projects.

“There is also a significant amount of deferred maintenance that we will address,” he said.

The tenant council is also negotiating an agreement with Rose on how the company will run the community, according to Sam Douglas, the council’s vice president. He said the council wants to establish and help run recreational and educational programs for neighborhood children and seniors.

“We want to be involved when Rose comes in here, and put it in writing, because we’ve suffered when things weren’t put in writing,” he said.

Walsh said the sides have been talking for 18 months and are almost ready to sign an agreement, with many changes to the development coming from residents’ suggestions, including the new community center and better security measures.

“We are in a final draft,” he said. “They have been with us step by step.”

A. Robert DeBonnett, a neighborhood resident and tenant council volunteer, said he hopes the new owner ends decades of neglect. He said Barbara Jean Wright should be a gem, especially since it is surrounded by many key institutions and landmarks, including the university, St. Ignatius College Prep, and the historic South Water Market, now a 917-unit condominium development called University Commons.

“Barbara Jean Wright could be a model community to hold up as an example,” he said.