We gather to bear witness to the creation of a Preservation Compact that celebrates the importance of affordable rental housing to our goal of a just society with security and opportunity for all. The MacArthur Foundation is proud to join in partnership with government agencies and financial institutions to enable Cook County to lead the way in stopping the loss of affordable rental housing.
While we work in 65 countries around the world, 20 percent of our giving is concentrated in the Chicago region.
The centerpiece of our work here is the New Communities Program, a 10-year partnership within LISC to strengthen 16 of Chicago’s most promising neighborhoods. Just last week we announced a further $26 million investment in that program, expected to leverage a half billion dollars of other public and private investment.
MacArthur has also provided $50 million to support Mayor Daley’s ambitious plan to replace Chicago’s run-down high-rise ghettos with new mixed income communities of opportunity. The success of both the CHA transformation plan and the New Communities Program depend on an adequate and growing supply of affordable rental housing.
Housing has been a priority for MacArthur for more than 25 years, with grants, equity investments, and financing that will exceed a quarter billion dollars by the end of this decade. We believe that stable, affordable housing is the threshold investment that leads to enhanced human security and individual opportunity. Stable and affordable housing is more than shelter. It may well be the critical path to better education, health, and employment outcomes for individuals and economic growth and vitality for communities.
The evidence behind this proposition is beginning to mount, but more research is necessary before we can know with certainty how housing matters. That is why MacArthur recently announced a five-year, $25-million research program to test this hypothesis, with a particular focus on children.
At the core of MacArthur’s housing work is a ten-year, $100-million initiative called Window of Opportunity. Its immediate goal is to preserve 100,000 affordable rental homes over 10 years. But our larger ambition is to change the policy environment so that organizations across the country can preserve one million affordable rental homes (not 100,000 but one million) in a decade. We are supporting fifteen not-for-profit organizations in 34 states – like Phipps Houses in New York, and Hispanic Housing and Mercy Housing Lakefront here in Chicago. And groups like the National Housing Trust, Preservation of Affordable Housing, Inc., and Stewards of Affordable Housing for the Future are hard at work on a consensus policy agenda for federal, state, and local governments. A top policy target is the need for more incentives for sellers to transfer properties to preservation owners, like exit tax relief.
In this era that celebrates home ownership, some ask, “Why emphasize rental housing preservation?” Consider these facts. In the second half of the 20th century, Congress responded to widespread housing shortages with financial incentives for the private sector to develop rental housing. From the mid-1960’s through the 80’s, these policies drove the construction of nearly 10 million new multifamily rental homes. Virtually all of us, at some time in our lives, have benefited from our nation’s stock of rental houses. Affordable rental homes are often essential to recent college graduates on entry-level salaries, newlyweds saving for their first home, temporarily displaced workers, seniors on fixed incomes, low-income families. Many people rent by choice, but for the majority of renters who have limited economic means, renting is a necessity.
Even with homeownership at an all-time high of 67%, one-third of all U.S. households – 35 million of them – still rent. And, the number is expected to grow, by another two million or more in this decade as foreclosures push homeowners back into the rental market. Keep in mind as well that almost 20 million of those households live on incomes of less than $30,000 a year, making affordability critical.
Losses can be attributed to several factors. Demand in hot markets is driving rents up, or making properties attractive for conversion to condominiums. Deferred maintenance in weak markets is running properties down, sometimes to the point of abandonment. Many of the owners who built with tax incentives a quarter century ago are aging and eager to sell their properties to the highest bidder, and time is running out on the government restrictions that kept many of the properties affordable.
This is surely a challenging picture at the national level, when, for every new affordable unit built, two are lost.
So we face a perfect storm, as the number of renter households is projected to increase by 1.8 million by 2015 and, according to Harvard’s Joint Center on Housing Studies, there may be as many as 2 million affordable units at risk nationwide.
MacArthur’s Window of Opportunity works on this issue across the country, but we put special emphasis on a few key places, starting with Chicago and New York, where we invested in the city’s Affordable Housing Acquisition Fund that aims to finance the construction and preservation of 30,000 affordable units.
But Chicago is our home and we want to do more here. That is why we took the lead in organizing the Preservation Compact that aims to preserve and improve 75,000 units in Cook County by 2020.
Let’s look at the challenge.
Here in Cook County, 40 percent of our families – nearly 2 million people – live in 845,000 rental homes. These apartments and homes – most of which receive no government subsidy – play a central role in the region’s $320 billion economy, and are as critical to its infrastructure as highways, transit systems, and schools – all essential to our collective well-being.
Cook County’s stock of rental housing is shrinking, even as demand for affordable rental units rises. The numbers are compelling. By 2020, the county’s supply of low-cost rental housing is expected to drop by about 75,000 units – outstripping the projected construction of 40,000 affordable homes. This mirrors the national picture: for every new unit, two are lost. At the same time, the number of low-income renters is expected to grow by 34,000 households.
Today, the Preservation Compact has announced an action plan to reverse this loss, to bring it down to zero, by putting in place strategies and resources that will result in the preservation and improvement of at least 75,000 units by the target date of 2020. That means the 40,000 new units will be a net addition to the inventory of affordable rental housing.
The inspiration for the Compact was a meeting in MacArthur’s boardroom, at which developers, bankers, government officials, advocates, and others said in one voice, “The loss of affordable rental housing in Cook County must stop.” The need was clear, the tools to intervene were available, the means to succeed could be assembled, and most important, the civic and political will palpable.
And so the group – led by MacArthur’s Vice President, Julia Stasch, and investor Quintin Primo – set out to craft a plan of action. The immediate goal is to stop the loss of affordable rental housing dead in its tracks. But the overarching ambition is to provide security and opportunity to thousands of our fellow citizens ready to improve their lives and contribute to our communities. The Preservation Compact is about people and their hopes and dreams. It is about our society’s most cherished values of fairness and opportunity; it is about our collective commitment to build a vibrant regional economy for the 21st Century globalized world.
Inspired by this vision and plan for action crafted by so many of you here in this room, MacArthur is pleased to announce our commitment to its success. We are awarding $15 million in grants and program-related investments in the Preservation Compact. We are gratified that others are joining us in strong affirmation that Chicago can lead the way to an America that realizes our highest values of security and opportunity for all. Working together, we can meet the challenge Harry Truman put to Congress more than sixty years ago, when he said, “A decent standard of housing for all is one of the irreducible obligations of modern civilization. The people of the United States, so far ahead in wealth and productive capacity, deserve to be the best housed people in the world.”
The Preservation Compact responds to that challenge and I can feel the will to win in this room. I am confident we will succeed.
Thank you. Now I would like to turn it over to Quinton Primo, who will tell you about the Preservation Compact.
