102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB4784

 

Introduced 1/27/2022, by Rep. William Davis

 

SYNOPSIS AS INTRODUCED:
 
20 ILCS 3805/7.33 new
20 ILCS 3805/14  from Ch. 67 1/2, par. 314

    Amends the Illinois Housing Development Act. Provides that no later than July 1, 2022, the Illinois Housing Development Authority shall establish and administer the Rehab Program to help reclaim vacant and abandoned properties in communities of concentrated poverty. Provides that the purposes of the Rehab Program are: to encourage private sector investment in acquiring, rehabbing, and placing on the market, vacant and abandoned properties located in communities of concentrated poverty; to provide low-income families with more affordable housing options in modern, safe buildings while redressing historic discrimination against African Americans in housing; and other stated purposes. Provides that within 45 days of the satisfactory completion of a qualified project, the Authority shall pay to the qualified developer responsible for the project a Rehab Program incentive fee. Provides that after the initial pilot of the Rehab Program ends, and continuing thereafter, the Authority may authorize qualified projects in any calendar year in an amount not to exceed either $50,000,000 for the year in question, or, if the Authority is then utilizing bond proceeds to pay Rehab Program incentive fees as permitted under the amendatory Act, more than $250,000,000 in aggregate bond indebtedness then outstanding for all such bonds. Provides that the Authority may from time to time adopt rules requiring qualified developers to hire a certain percentage of workers for the qualified project in question from the community in which the qualified project is located. Provides that initially the Rehab Program shall be piloted out in 10 communities identified by the Authority that span the State, to ensure the program generates economic benefits equitably across Illinois. Permits the Authority to issue bonds and notes for the payment of Rehab Program incentive fees to qualified developers. Effective immediately.


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A BILL FOR

 

HB4784LRB102 25339 KTG 34616 b

1    AN ACT concerning State government.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Housing Development Act is amended
5by changing Section 14 and by adding Section 7.33 as follows:
 
6    (20 ILCS 3805/7.33 new)
7    Sec. 7.33. The Rehab Program.    
8    (a) Findings.
9        (1) The General Assembly finds that vacant and
10    abandoned properties located in communities of
11    concentrated poverty across the State frequently become
12    crime centers, reduce the value of adjacent properties,
13    increase risks to general health and safety, and make it
14    exceedingly difficult to reverse long term cycles of
15    concentrated poverty.
16        (2) The General Assembly finds that, while
17    economically struggling communities across Illinois have
18    to deal with this issue, due to the legacy of historical,
19    overt racism under redlining policies, which systemically
20    denied African Americans access to the level of mortgage
21    financing needed to purchase homes in middle-income and
22    upper-income communities, a disproportionately large
23    percentage of African Americans have been forced to live

 

 

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1    in areas that suffer the negative consequences generated
2    by vacant and abandoned property.
3        (3) The General Assembly finds that private developers
4    frequently are not willing to acquire and rehab vacant and
5    abandoned properties located in communities of
6    concentrated poverty, because complying with federal,
7    State and local laws, rules, and ordinances covering
8    everything from prevailing wage and environmental
9    requisites, to building code standards, frequently pushes
10    the total acquisition and rehab cost to a level well in
11    excess of what could be charged for selling, renting, or
12    otherwise commercially utilizing the rehabbed property at
13    the depressed fair market rates that are generally
14    prevailing in these communities.
15        (4) The General Assembly finds that the stain of
16    historic discrimination against African Americans cannot
17    be erased, but a thoughtful approach to reclaiming vacant
18    and abandoned property through a strategic program that
19    leverages public and private investments can help break
20    the cycle of concentrated poverty in historically
21    low-income communities generally, as well as begin to
22    redress some of the legacy of overt racism in housing and
23    mortgage finance policies specifically. To further those
24    goals, the State is creating a new public financing
25    program (hereafter the "Rehab Program"), as provided in
26    this Act.

 

 

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1    (b) Establishment of the Rehab Program. No later than July
21, 2022, the Authority shall establish and administer the
3Rehab Program to help reclaim vacant and abandoned properties
4in communities of concentrated poverty.
5    (c) Purposes of the Rehab Program. The purposes of the
6Rehab Program are to:
7        (1) encourage private sector investment in acquiring,
8    rehabbing, and placing on the market, vacant and abandoned
9    properties located in communities of concentrated poverty;
10        (2) provide low-income families with more affordable
11    housing options in modern, safe buildings while redressing
12    historic discrimination against African Americans in
13    housing;
14        (3) reduce various commercial deserts that
15    traditionally plague communities of concentrated poverty;
16        (4) reduce both the taxpayer costs generally
17    associated with constructing and maintaining public units
18    of affordable housing over a duration of multiple years,
19    as well as the long-term revenue losses generated by
20    ongoing tax expenditures intended to promote business
21    activity in low-income communities, by replacing both
22    long-term, ongoing expenses with a significantly less
23    expensive, one-time public investment;
24        (5) leverage public taxpayer investments with private
25    sector dollars and land bank resources;
26        (6) begin creating or stimulating private markets in

 

 

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1    housing and commercial ventures in areas that are
2    struggling to do so;
3        (7) help reduce the crime associated with vacant and
4    abandoned property that frequently afflicts communities of
5    concentrated poverty, thereby enhancing both the health
6    and safety of residents;
7        (8) create jobs and an economic stimulus, initially
8    through construction and related jobs, and after the new
9    housing is occupied and new retail is open, generating
10    ongoing economic benefits that should create a positive
11    economic multiplier over time; and
12        (9) increase local property values, making future
13    development more likely while enhancing tax revenues for
14    local governmental authorities.
15    (d) Definitions. As used in this Section:
16        (1) "Community of concentrated poverty" means each of
17    the following: (i) a census tract, or a set of contiguous
18    census tracts, that has a poverty rate of 25% or greater,
19    as determined using the American Community Survey's 5-year
20    data most recently published by the U.S. Department of
21    Labor; (ii) a census tract or a set of contiguous census
22    tracts that has a poverty rate of 20% or greater, using the
23    American Community Survey's 5-year data most recently
24    published by the U.S. Department of Labor, provided that
25    such community is also either majority minority in
26    composition, or is located in a non-metro area; or (iii) a

 

 

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1    community that is designated as or qualifies as a blighted
2    or slum area under any federal, State, or local
3    governmental authority or agency law, rule, regulation, or
4    ordinance.
5        (2) "Fair market value of a qualified project" means
6    that dollar amount that is equal to the average of 3
7    appraisals thereof conducted by 3 different certified
8    Member, Appraisal Institute (MAI) appraisers qualified to
9    work in Illinois with expertise in both residential and
10    commercial properties, one of whom shall be selected by
11    the Authority, one of whom shall be selected by the
12    qualified developer, and one of whom shall be selected by
13    the 2 aforesaid MAI appraisers. The fair market value of a
14    qualified project shall be determined within 30 days of
15    the completion of a qualified project.
16        (3) "Project costs" means the reasonable out-of-pocket
17    expenses a qualified developer actually incurs to acquire
18    a piece of vacant and abandoned property in a community of
19    concentrated poverty, and to complete a qualified project
20    thereon in full compliance with all applicable laws,
21    rules, ordinances, and regulations, provided however that
22    all such expenses are reasonably documented and approved
23    in writing from time to time during project construction
24    by the Authority. The Authority shall adopt rules from
25    time to time identifying the form and content of expense
26    reporting a qualified developer must utilize.

 

 

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1        (4) "Qualified developer" means each of the following:
2    (i) a private, for profit corporation, limited or general
3    partnership, or limited liability company; (ii) a
4    non-profit corporation organized for the purpose of
5    constructing, managing, and operating housing projects and
6    for the improvement of housing conditions, including the
7    rental or sale of housing units to persons in need
8    thereof, as well as a neighborhood redevelopment
9    corporation; or (iii) an Illinois Land Bank. In each
10    instance the Authority has the right but not the
11    obligation to request that any such entity acquire one or
12    more construction or performance bonds concerning the
13    qualified project in question, and obtain all applicable
14    permits as well as titles and easements necessary to
15    complete the qualified project in question, before
16    recognizing that entity as a qualified developer under
17    this Section.
18        (5) "Qualified project" means the acquisition of
19    vacant and abandoned property in a community of
20    concentrated poverty, and the development of such property
21    to become either affordable housing (single or
22    multi-family residences), or a mix of affordable housing
23    units and commercial units. In either case, the qualified
24    developer in question shall first submit a plan of
25    development to the Authority, and the Authority must
26    approve of the proposed development in writing and in

 

 

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1    advance. The Authority from time to time shall adopt rules
2    identifying the type of affordable housing and mixed use
3    projects that it will approve, as well as the specific
4    communities of concentrated poverty in which qualified
5    projects may be sited.
6        (6) "Vacant and abandoned property" means: (i)
7    property that has been empty for at least 6 months, and has
8    had no construction done on it during that period, has had
9    no attempt by the owner to occupy, lease, or otherwise
10    commercially exploit such property during said period, and
11    is delinquent in tax or mortgage payments during such
12    period; or (ii) property that has been vacant for 6 or more
13    months and that has become derelict, unsafe,
14    uninhabitable, environmentally contaminated, a public
15    nuisance, or a center for criminal activity, or otherwise
16    has lost its value as an economic or social good.
17    (e) Administration of the Rehab Program. Within 45 days of
18the satisfactory completion of a qualified project, the
19Authority shall pay to the qualified developer responsible for
20such project a Rehab Program incentive fee, in a dollar amount
21that is equal to: (i) the difference between the approved
22project costs for the qualified project in question and the
23fair market value of such completed qualified project; plus
24(ii) an amount equal to 5% of such fair market value. As used
25in this Section, the "satisfactory completion" of a qualified
26project means all construction thereof has been done in

 

 

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1accordance with all applicable laws, rules, regulations, and
2ordinances, and the qualified project is being marketed for
3its intended uses. After the initial pilot of the Rehab
4Program identified in subsection (f) ends, and continuing
5thereafter, the Authority may authorize qualified projects in
6any given calendar year in an amount not to exceed either
7$50,000,000 for the year in question, or if the Authority is
8then utilizing bond proceeds to pay Rehab Program incentive
9fees as permitted under Section 14 of this Act, more than
10$250,000,000 in aggregate bond indebtedness then outstanding
11for all such bonds. The Authority may from time to time adopt
12rules requiring qualified developers to hire a certain
13percentage of workers for the qualified project in question
14from the community in which such qualified project is located,
15or set aside a specific percentage of Rehab Program incentive
16fees for minority-owned or woman-owned developers.
17    (f) Initial pilot. Initially, the Rehab Program shall be
18piloted out in 10 communities identified by the Authority that
19span the State, to ensure the program generates economic
20benefits equitably across Illinois. Those 10 communities shall
21at a minimum include the Chicago metropolitan area, the south
22suburbs of Chicago, central Illinois, northwest Illinois, and
23southern Illinois. This pilot program shall commence on July
241, 2022, and continue through and including December 31, 2023.
25The maximum amount of Rehab Program incentive fees the
26Authority may issue during the pilot period shall be

 

 

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1$20,000,000. The Authority shall fund such incentive fees
2either with appropriations from the State, or by issuing bonds
3as permitted under Section 14 of this Act, if there are
4inadequate appropriations to cover the full $20,000,000 during
5the pilot period.
 
6    (20 ILCS 3805/14)  (from Ch. 67 1/2, par. 314)
7    Sec. 14. The Authority may from time to time issue its
8negotiable bonds and notes in such principal amount, as, in
9the opinion of the Authority, shall be necessary to provide
10sufficient funds for achieving its corporate purposes,
11including the making of mortgage or other loans for the
12acquisition, construction and rehabilitation of housing to be
13occupied by low and moderate income persons, for the
14acquisition, construction and rehabilitation of community
15facilities as provided in this Act and for the acquisition,
16construction and rehabilitation of housing related commercial
17facilities; the acquisition of land and land development; the
18purchase of residential mortgages from lending institutions;
19the making of loans to lending institutions; the payment of
20Rehab Program incentive fees to qualified developers; the
21payment of interest on bonds and notes of the Authority; the
22establishment of reserves to secure such bonds and notes; and
23all other expenditures of the Authority incidental to and
24necessary or convenient to carrying out its corporate purposes
25and powers, including the reimbursement of the Authority for

 

 

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1expenditures made by it from other funds for achieving its
2corporate purposes set forth in this Section. The bonds and
3notes of the Authority may be issued as general obligations of
4the Authority payable from such revenues, funds and
5obligations of the Authority as the resolution authorizing
6issuance of the bonds or notes shall provide, or may be issued
7as limited obligations with a claim for payment solely from
8such revenues, funds and obligations as the resolution
9authorizing issuance of the bonds or notes shall provide. The
10Authority is specifically granted the power and authority to
11issue Affordable Housing Program Trust Fund Bonds or Notes,
12provided that the use of the proceeds thereof is subject to the
13limitation provided in the Illinois Affordable Housing Act.
14Except for such limitation and the dedication and pledge of
15Trust Fund Moneys provided for in that Act, Affordable Housing
16Program Trust Fund Bonds or Notes shall be treated in all
17respects as, and shall be entitled to all the benefits,
18rights, grants and authorizations in respect of, bonds and
19notes issued pursuant and subject to the provisions of this
20Act. The Authority shall have no taxing power.
21(Source: P.A. 88-93.)
 
22    Section 99. Effective date. This Act takes effect upon
23becoming law.