Critical Decision Making: Designing Rental Subsidy Programs

1. Critical Decision Making: Designing Rental Subsidy Programs NAEH 2006 Annual Conference Presentation by Betsy Benito Chicago Department of Housing

2. Innovative Housing Subsidy:Chicago Low Income Housing Trust Fund (CLIHTF) • City-funded rental assistance program in operation since 1990 • Land-lord based program – provides “grants” to landlords to write down the rents for households below 30% AMI • CLIHTF currently targets special needs populations through small-scale programs: Families First, Street to Home, HUD SHP including Chronic Homeless Initiative

3. Major Victory: CLIHTF will double its capacity in 2006 • State legislation passed/signed in 2005 adding a $10 surcharge on real estate recording fees • New fee will generate $13 million or 2,000 rental subsidies for Chicago (doubling the number of households served) • Half of these new resources will be earmarked for Chicago’s Plan

4. Challenge and Opportunity: “Re” Designing the CLIHTF • Goal is to design newly allocated resources to make meaningful progress in our Plan to End Homelessness • Opportunity – exciting new resources with very few restrictions going to an existing, successful rental subsidy program • Challenge – deciding the best use of the resources amidst competing sub-populations

5. Pending Proposal with the Trust Fund for Use of New Resources • Current proposal developed by the Department of Housing and Department of Human Service seeks to meet the projected permanent housing resources needed to achieve the Plan • Permanent housing projections are driven by both data and assumptions on the use of Chicago’s shelter system • The pending proposal attempts to serve singles and families through short and long-term rental support.

6. Summary of data and assumptions about Chicago’s homeless system • 48% of sheltered homeless are disabled as defined by HUD (90% single, 10% family) • 15% of sheltered homeless exit to unsubsidized, private market housing • 37% need short term rental subsidy • 70% of Chicago’s shelter beds are occupied by the same people throughout the year • 20% of sheltered homeless earn income from employment

7. Summary of DOH-DHS Pending Proposal • 80% of the resources to be used as long-term rental subsidy (traditional CLIHTF) • 90% to singles (with set aside for chronically homeless, ex-offenders, other disabled) • 10% to families (priorities being considered for large families, Axis I and Axis II disabilities) • 20% of the resources to be used as short-term rental subsidy which would require a CLIHTF policy shift • For singles and families that may be non-disabled, current or recent attachment to the workforce, small families, etc. • We don’t want to create an incentive to use shelter, so are also designing how the households would be selected

8. Related Challenges: the need and funding of services • Community advocates are pushing for new funding of supportive services for the homeless-dedicated CLIHTF subsidies • Question: what is already being paid for in the system (city or federal funding) that would now serve people in housing versus shelter? • We need to understand better the service needs of our target populations, existing resources, and how to allocate new resources

9. Next Steps and Timeline in Completing theDesign • Get the Trust Fund to finalize its commitment and approve the DOH/DHS proposal • Identify existing service “slots” already funded to support households in permanent housing • Implement a tenant selection process to support the design • Funds are expected to be available no earlier than October 2006 • May take six months to fully allocate/commit resources

10. Contact Information • Betsy Benito, Projects Administrator, Chicago Department of Housing • 312-742-0633, 312-742-1397 (fax) elizabeth.benito@cityofchicago.org • Ellen Sahli, Mayor’s Liaison on Homelessness and Supportive Housing • 312-742-0594 • esahli@cityofchicago.org

11. More information on CLIHTF

12. Chicago Low Income Housing Trust Fund – Background • Established by City Council ordinance in 1989 • Incorporated as a non-profit organization in 1990 • 15-member Board, appointed by the Mayor • Staff and administration provided by the Chicago Department of Housing • Annual budget is $13 million (54% from City Corporate funds) • Budget expected to nearly double in 2006

13. Trust Fund Targets Very Low Income Chicagoans • Program targeted to households at or below 30% of Area Median Income ($22,600) • By ordinance, at least half of the Trust Fund resources must be used for families between 0-15% of AMI • 2,000 very low-income households are assisted annually • Over 25,000 households have been assisted since 1990 (includes duplication)

14. Trust Fund Programs • Rental Subsidy Program • Major program – 54% of funds • Corporate funds • Affordable Rents for Chicago (ARC) • Interest free, forgivable loans to replace up to 50% of a developer’s private mortgage • Savings used by developer to reduce rents of tenants below 30% of AMI • Examples: 2004, 66 units received ARC assistance