Investor

New York investor buys South Side affordable housing development

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

It took years to negotiate the latest deal, which required funding and approval from multiple government agencies. But with funding finally in place, 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 with this property,” said Jessie Johnson, Barbara Jean Wright’s tenant council manager and resident since it opened in 1972.

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

Jonathan RoseCos. presented itself to residents and government officials as a deep-pocketed national company capable of preserving and sustaining affordable housing communities for many years. And while Rose partner and 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 of the many developments it now possesses.

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

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

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

“Once upon a time (Fusco) was considered this affordable housing star, and maybe he was, but sometimes the road to hell is paved with good intentions,” Johnson said.

Fusco carried out renovations during those early years, but the efforts petered out, she added. “He left this property 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 fix other issues like broken sidewalks were often patchwork, Johnson added.

For decades, the rental income generated by the property was not enough to maintain it, but this new deal finally puts the Barbara Jean Wright on a solid financial footing, according to Brandon Kearse, general manager of Jonathan Rose Cos.

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

The Rose business has been on a buying spree for affordable housing over the past year, especially on the south side. He bought Fusco’s 146 Archer Courts units in February for $11.6 million, and in July, with partner 5T Management, paid $10.7 million for Fusco’s 13 Englewood Gardens buildings. In August, Rose partnered with the national nonprofit Preservation of Affordable Housing to buy Jackson Park Terrace, a 15-story skyscraper and a few nearby townhouses near the downtown development, for $25 million. President Obama in Woodlawn, Reverend 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 has about 18,000 units nationwide and more than 2,000 in the Chicago area.

The company took a different route to finance its purchase of Barbara Jean Wright. He paid Fusco $1, took over his remaining $17.5 million in debt on the property, and will start a $46 million renovation funded by a Federal Housing Administration loan, a federal tax credit, finance funds from city tax increases and state tax credits, among other sources. Under the new agreement, rent assistance from HUD and the 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 market priced.

Rose did not need to use all of these agencies to buy Archer Courts, Englewood Gardens, Jackson Park Terrace or her other Chicago properties, as they only need relatively light renovations, while Barbara Jean Wright has needs a complete overhaul, 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, as well as a 5,000 square foot community center and basketball court and playground renovated, according to Karyntha Walsh, senior project manager.

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

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

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

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

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

Neighborhood resident and Tenant Council volunteer A. Robert DeBonnett said he hopes the new landlord will end decades of neglect. He said Barbara Jean Wright should be a gem, especially because it’s surrounded by so many key institutions and landmarks, including the university, St. Ignatius College Prep and the historic South Water Market, now a development of 917 units called University Commons.

“Barbara Jean Wright could be a model community to look up to,” he said.