DNAinfo.com Chicago: Landlord criticized for displacing poor tenants to offer affordable housing

By Adeshina Emmanuel

UPTOWN — Flats Chicago — a booming real estate company that has been criticized for displacing poor tenants — has entered into a $4.3 million partnership with the city to provide dozens of affordable housing units in its buildings in Uptown and Edgewater.

The company’s agreement with the city’s Low-Income Housing Trust Fund will subsidize 58 units of affordable housing for low-income residents in four Flats buildings, city officials confirmed Tuesday.

A draft news release announcing the 10-year program that was obtained by DNAinfo Chicago called the new project “part of an ongoing effort to preserve diversity on the North Side lakefront while helping to foster a bustling cultural and entertainment district in the heart of Uptown.”

“Flats Chicago is dedicated to being a community partner through responsible development and neighborhood initiatives,” Flats partner Jay Michael said in the release, saying his company’s mission “is to redevelop dilapidated, mismanaged, unsafe, and financially distressed assets into high quality and authentic environments at approachable rents.”

Under the rental assistance program, the subsidized studio units will be available until the year 2023 at Flats’ Uptown buildings at 1325 W. Wilson Ave., 1020 W. Lawrence Ave., and 4875 N. Magnolia Ave. and at 5718 N. Winthrop Ave. in Edgewater.

Tenants making less than 30 percent of the Chicago area’s median income — $15,200 — will be required to pay no more than $255 plus utilities for studio units that normally rent for around $800, with the city subsidizing the difference, according to the city. Flats agrees to maintain the 58 units for low-income residents during the ten-year contract.

Of the seven Flats buildings on the North Side, most are vintage apartments in Uptown and Edgewater — including former single-room occupancy buildings for low-income people that had been in disrepair — which the company has bought in recent years to give makeovers that are still ongoing at some buildings. The $800 cost of an average studio is nearly twice what many former tenants had paid under previous owners.

The funds for the Flats rental assistance program will come from the city’s Low-Income Housing Trust Fund. City Housing and Economic Development spokesman Peter Strazzabosco said that some 600 buildings across the city have at least one unit subsidized by the fund, and that the average monthly rent subsidy is $600.

Strazzabosco said the program prioritizes tenants displaced from Flats buildings, including 1020 W. Lawrence Ave., also known as Lawrence House.

If there are still vacancies among the 58 units set aside, then qualifying residents of the Uptown and Edgewater communities would be considered as well. A Flats spokesman said the company has 875 apartment units between its five buildings in Uptown and Edgewater that are open or being remodeled.

The Flats news release also says that “working artists accepted into the Flats Studio program” would be eligible.

When it comes to the Flats partnership, Strazzabosco said “this is a unique agreement in that it’s targeting four specific buildings in two specific neighborhoods.”

Some of “these were former SROs,” he said. The program is “a way to help maintain income diversity.”

Tom McNulty, president of the Chicago Low-Income Housing Trust Fund, made a statement in the Flats release that characterized the Flats partnership as an “opportunity to preserve affordability in an area where rents have been increasing.”

That Flats maintain some degree of affordability in its buildings was the chief request of low-income residents and housing activists with ONE North Side, who protested outside of Michael’s former Gold Coast apartment last year, accusing him of helping displace hundreds of people who had lived in his buildings.

ONE President Jennifer Ritter wrote in an email to DNAinfo Chicago Tuesday: “We support the retention of affordable housing in the community, and this is a good deal for both the tenants and the owner.”

She said her hope was that folks displaced from Flats buildings could access the units.

Ald. James Cappleman (46th) said that the company has gone “above and beyond what is required of a developer in the City of Chicago.”

“They are saving some of our greatest architectural treasures in a responsible manner, while assisting tenants living in substandard housing to find better, safer housing,” he said in the Flats release. “It’s a win for the entire community.”

Applications for the rental assistance program should be available some time this month.

In May, the city also announced a partnership with Flats to support small businesses with rent reductions, navigating city red tape and developing their business plans.