HB4784eng 102ND GENERAL ASSEMBLY

HB4784 Engrossed LRB102 25339 KTG 34616 b

AN ACT concerning State government.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Housing Development Act is amended by adding Section 7.33 as follows:

(20 ILCS 3805/7.33 new)

Sec. 7.33. The Rehab Program.

(a) Findings.

(1) The General Assembly finds that vacant and abandoned properties located in communities of concentrated poverty across the State frequently become crime centers, reduce the value of adjacent properties, increase risks to general health and safety, and make it exceedingly difficult to reverse long term cycles of concentrated poverty.

(2) The General Assembly finds that, while economically struggling communities across Illinois have to deal with this issue, due to the legacy of historical, overt racism under redlining policies, which systemically denied African Americans access to the level of mortgage financing needed to purchase homes in middle-income and upper-income communities, a disproportionately large percentage of African Americans have been forced to live in areas that suffer the negative consequences generated by vacant and abandoned property.

(3) The General Assembly finds that private developers frequently are not willing to acquire and rehab vacant and abandoned properties located in communities of concentrated poverty, because complying with federal, State and local laws, rules, and ordinances covering everything from prevailing wage and environmental requisites, to building code standards, frequently pushes the total acquisition and rehab cost to a level well in excess of what could be charged for selling, renting, or otherwise commercially utilizing the rehabbed property at the depressed fair market rates that are generally prevailing in these communities.

(4) The General Assembly finds that the stain of historic discrimination against African Americans cannot be erased, but a thoughtful approach to reclaiming vacant and abandoned property through a strategic program that leverages public and private investments can help break the cycle of concentrated poverty in historically low-income communities generally, as well as begin to redress some of the legacy of overt racism in housing and mortgage finance policies specifically. To further those goals, the State is creating a new public financing program (hereafter the "Rehab Program"), as provided in this Act.

(b) Establishment of the Rehab Program. Commencing in State Fiscal Year 2023, the Authority shall establish and administer the Rehab Program to help reclaim vacant and abandoned properties in communities of concentrated poverty.

(c) Purposes of the Rehab Program. The purposes of the Rehab Program are to:

(1) encourage private sector investment in acquiring, rehabbing, and placing on the market, vacant and abandoned properties located in communities of concentrated poverty;

(2) provide low-income families with more affordable housing options in modern, safe buildings while redressing historic discrimination against African Americans in housing;

(3) reduce various commercial deserts that traditionally plague communities of concentrated poverty;

(4) reduce both the taxpayer costs generally associated with constructing and maintaining public units of affordable housing over a duration of multiple years, as well as the long-term revenue losses generated by ongoing tax expenditures intended to promote business activity in low-income communities, by replacing both long-term, ongoing expenses with a significantly less expensive, one-time public investment;

(5) leverage public taxpayer investments with private sector dollars and land bank resources;

(6) begin creating or stimulating private markets in housing and commercial ventures in areas that are struggling to do so;

(7) help reduce the crime associated with vacant and abandoned property that frequently afflicts communities of concentrated poverty, thereby enhancing both the health and safety of residents;

(8) create jobs and an economic stimulus, initially through construction and related jobs, and after the new housing is occupied and new retail is open, generating ongoing economic benefits that should create a positive economic multiplier over time; and

(9) increase local property values, making future development more likely while enhancing tax revenues for local governmental authorities.

(d) Definitions. As used in this Section:

(1) "Community of concentrated poverty" means each of the following: (i) a census tract, or a set of contiguous census tracts, that has a poverty rate of 25% or greater, as determined using the American Community Survey's 5-year data most recently published by the U.S. Department of Labor; or (ii) a census tract or a set of contiguous census tracts that has a poverty rate of 20% or greater, using the American Community Survey's 5-year data most recently published by the U.S. Department of Labor, provided that such community is also either majority minority in composition, or is located in a non-metro area.

(2) "Fair market value of a qualified project" means that dollar amount that is equal to the average of 3 appraisals thereof conducted by 3 different certified Member, Appraisal Institute (MAI) appraisers qualified to work in Illinois with expertise in both residential and commercial properties, one of whom shall be selected by the Authority, one of whom shall be selected by the qualified developer, and one of whom shall be selected by the 2 aforesaid MAI appraisers. The fair market value of a qualified project shall be determined within 30 days of the completion of a qualified project.

(3) "Project costs" means the reasonable out-of-pocket expenses a qualified developer actually incurs to acquire a piece of vacant and abandoned property in a community of concentrated poverty, and to complete a qualified project thereon in full compliance with all applicable laws, rules, ordinances, and regulations, provided however that all such expenses are reasonably documented and approved in writing from time to time during project construction by the Authority. The Authority shall adopt rules from time to time identifying what may be included within the rubric of reasonable costs for purposes of this Section, as well as the form and content of expense reporting a qualified developer must utilize.

(4) "Qualified developer" means each of the following: (i) a private, for profit corporation, limited or general partnership, or limited liability company; (ii) a non-profit corporation organized for the purpose of constructing, managing, and operating housing projects and for the improvement of housing conditions, including the rental or sale of housing units to persons in need thereof, as well as a neighborhood redevelopment corporation; or (iii) an Illinois Land Bank. In each instance the Authority has the right to request that any such entity acquire one or more construction or performance bonds concerning the qualified project in question, and obtain all applicable permits as well as titles and easements necessary to complete the qualified project in question, before recognizing that entity as a qualified developer under this Section.

(5) "Qualified project" means the acquisition of vacant and abandoned property in a community of concentrated poverty, and the development of such property to become either affordable housing (single or multi-family residences), or a mix of affordable housing units and commercial units. In either case, the qualified developer in question shall first submit a plan of development to the Authority, and the Authority must approve of the proposed development in writing and in advance. The Authority from time to time shall adopt rules identifying the type of affordable housing and mixed use projects that it will approve, as well as the specific communities of concentrated poverty in which qualified projects may be sited.

(6) "Vacant and abandoned property" means: (i) property that has been empty for at least 6 months, and has had no construction done on it during that period, has had no attempt by the owner to occupy, lease, or otherwise commercially exploit such property during said period, and is delinquent in tax or mortgage payments during such period; or (ii) property that has been vacant for 6 or more months and that has become derelict, unsafe, uninhabitable, environmentally contaminated, a public nuisance, or a center for criminal activity, or otherwise has lost its value as an economic or social good.

(e) Administration of the Rehab Program. Within 45 days of the satisfactory completion of a qualified project, the Authority shall pay to the qualified developer responsible for such project a Rehab Program incentive fee in a dollar amount that is equal to: (i) the difference between the approved project costs for the qualified project in question and the fair market value of such completed qualified project; plus (ii) an amount equal to 5% of such approved project costs. As used in this Section, the "satisfactory completion" of a qualified project means all construction thereof has been done in accordance with all applicable laws, rules, regulations, and ordinances, and the qualified project is being marketed for its intended uses. After the initial pilot of the Rehab Program identified in subsection (f) ends, and continuing thereafter, the Authority may authorize qualified projects in any given calendar year in an amount not to exceed either $50,000,000 for the year in question. 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 such qualified project is located, or set aside a specific percentage of Rehab Program incentive fees for minority-owned or woman-owned developers.

(f) Initial pilot. 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. Those 10 communities shall at a minimum include the Chicago metropolitan area, the south suburbs of Chicago, central Illinois, northwest Illinois, and southern Illinois. This pilot program shall commence on July 1, 2022, and continue through and including December 31, 2023. The maximum amount of Rehab Program incentive fees the Authority may issue during the pilot period shall be $30,000,000. The Authority shall fund such incentive fees with appropriations from the State, if there are inadequate appropriations to cover the full $30,000,000 during the pilot period. To the extent authorized by the General Assembly and the Governor, the $30,000,000 appropriation for the pilot program shall be funded with proceeds the State receives under the federal American Rescue Plan Act of 2021.

Section 99. Effective date. This Act takes effect upon becoming law.