Rafael Leon

The Chicago Metropolitan Housing Development Corp. started in 1982 as a government agency. Rafael Leon stepped in and restructured it as a non-profit in the mid-1990s. It is now independent of the government and provides low-income housing in parts of Chicago that other non-profit housing entities often overlook.

“We’re not associated with the Chicago Housing Authority anymore and we don’t receive any money from the city or the state.”

“As a non-profit entity, we’re obligated to provide low-income housing. Early in my tenure, we decided we would preserve affordable housing in gentrifying and emerging areas, so low-income families living in those areas wouldn’t be displaced.”

“Honestly, because of our mission, it wouldn’t help an area that is already saturated with low-income housing to get more low-income housing. So, we have properties in very stable areas. We’re in Evanston, Ravenswood, Rogers Park and many other areas. We have about 700 apartments all over the city.”

“For those limited units that are subsidized – about 100 – we report to the state about the income of the tenants. But for the majority of the portfolio, we don’t have to keep them limited to 60% of the median income. We qualify tenants up to 80% of median income, which is the threshold to be considered low income.”

“There are several trades that we work with to get the best deal we can for the work. When you get money from the city or the state, because of government requirements, it makes rehab more expensive.”

“For example, Low-Income Housing Tax Credit transaction projects are very expensive. With all the compliance and government requirements, the cost could be somewhere between $500,000 and $600,000 per unit. Without the restrictions, our cost for acquisition and rehab is more like $250,000. So, we’re very cost efficient.”

“We operate as being somewhere between a non-profit, which has to adhere to IRS guidelines and requirements, and a for-profit developer with no immediate restrictions. Our apartments typically rent for about $200-$300 below market rates.”

“It would be difficult to start another organization like CMHDC for non-subsidized affordable housing, because you need substantial capital to start with.  A for-profit developer, however, can raise money from friends, family, investors, lenders, etc. and then split the profits with them. They wouldn’t have the requirement to provide low-income housing, either, which means that their rents will be much higher.”

“The difference between CMHDC and other housing non-profits is that we’re talking about non-subsidized affordable housing. Usually, when you talk about affordable housing, what people think of first is government-sponsored housing, including Section 8. And some people do need a subsidy. But most people don’t. They work and they don’t receive subsidies, but they may not have a lot of money and they still need affordable housing.”

“We have the track record to provide non-subsidized affordable housing, and we’ve done it in a cost-efficient manner.  We just need to figure how to get additional funding to continue doing it right!”

Rafael Leon
CEO, Chicago Metropolitan Housing Development Corp.
Chicago, Illinois