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New York investor buys affordable housing in South Side and promises change

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

The final deal took years to negotiate, which required funding and approval from several government agencies. But with funding finally secured, long-suffering residents hope the new owner can tackle a rodent infestation, among many other maintenance issues plaguing the development.

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

Fusco could not be reached for comment, but the 73-year-old has previously said he wants to retire and that Rose would be better able to refinance the property.

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Jonathan Rose Cos. presented itself to residents and government officials as a deep-pocketed national company, one capable of preserving and sustaining affordable residential communities for many years to come. And while Rose partner and senior managing director Nathan Taft said the company’s growing presence in Chicago won’t change the city’s affordable housing portfolio, it will provide 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 do our part to lift these assets and make sure they’re safe, stable places for people to live.”

Barbara Jean Wright was one of several affordable, privately owned complexes in the US that were originally funded in the 1970s with loans from the Department of Housing and Urban Development. But the agency stopped making such loans, making it a challenge for owners to recapitalize the properties and keep them affordable when the original contracts expired.

Fusco saved the foreclosure development when he bought the 11.5-acre site in 1999, and residents had high hopes that he would keep the two- and four-story structures. His CCDC took over several affordable South Side properties around the same time, a portfolio that eventually included Archer Courts in Chinatown and Englewood Gardens, a dispersed Section 8 portfolio in the Englewood neighborhood. But Johnson and other residents said the past few decades have been a disappointment, marked by a steady decline in housing conditions.

“Once upon a time (Fusco) was seen as this affordable housing star, and it may have been, 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 petered out, she added. “He let this property go to the dogs. They haven’t done anything here for years.”

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

Over the decades, the rental income generated by the property has not been sufficient to maintain it, but this new deal is finally giving Barbara Jean Wright a sound financial footing, according to Brandon Kearse, director of Jonathan Rose Cos.

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

The Rose firm has spent the past year buying affordable housing, especially on the south side. It bought Fusco’s 146-unit Archer Courts in February for $11.6 million, and in July along with partner 5T Management paid $10.7 million for Fusco’s 13-building Englewood Gardens. In August, Rose joined the national nonprofit Preservation of Affordable Housing to purchase for $25 million Jackson Park Terrace, a 15-story high-rise and several neighboring row homes near the Obama Presidential Center development in Woodlawn. of 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 at all three. The company now owns approximately 18,000 units nationwide and more than 2,000 in the Chicago area.

The company chose a different route to finance the purchase of Barbara Jean Wright. It paid Fusco $1, took on its remaining $17.5 million debt on the property, and will launch a $46 million renovation funded by a loan from the Federal Housing Administration, federal tax relief, financing funds for tax increases from the federal government. city ​​and state tax credits, among other sources. Under the new agreement, rent assistance from both HUD and Chicago Housing Authority will keep most apartments affordable for those earning 60% or less of the area’s median income, and 21 units will be at market rate.

Rose didn’t have to tap into all those agencies to buy Archer Courts, Englewood Gardens, Jackson Park Terrace or the other properties in Chicago because they only need relatively minor renovations, while Barbara Jean Wright needs a complete makeover, from inside out, according to Taft.

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

According to senior project manager Karyntha Walsh, the company pledged to provide new security gates, fences, new kitchens, bathrooms, flooring, carpeting and lighting, along with a 5,000 square foot community center and a renovated basketball court and playground.

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

The tenants council is also negotiating an agreement with Rose on how the company will manage the community, according to Sam Douglas, the council’s vice president. He said the council wants to establish and help manage 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 parties have been in talks for 18 months and are almost ready to sign an agreement, with many changes to the development stemming from suggestions from residents, including the new community center and better security measures.

“We’re at a final design,” she said. “They have been with us step by step.”

A. Robert DeBonnett, a local resident and tenant council volunteer, said he hopes the new owner will put an end to decades of neglect. He said Barbara Jean Wright should be a gem, especially since it is surrounded by so many important institutions and monuments, including the university, St. Ignatius College Prep, and the historic South Water Market, now a 917-unit apartment building called University Commons.

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

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