OIG Recommends Improvements to City’s Affordable Housing Programs

FOR IMMEDIATE RELEASE: March 28, 2017

CONTACT: Danielle Perry, (773) 478-0534/ (773) 491-3997

 

OIG Recommends Improvements to City’s Affordable Housing Programs


An audit released today by the City of Chicago Office of Inspector General (OIG) examined the Department of Planning and Development’s (DPD) administration of the Affordable Requirements Ordinance (ARO). OIG found that,

  • DPD’s Lack of an Evidence-Based Strategy to Drive Investment May Have Discouraged Affordable Housing Development in High Opportunity Areas

Opportunity areas are typically measured by socioeconomic factors, such as job and transportation access. The absence of an evidence-based strategy to differentiate areas of the city may have impeded affordable housing development in high opportunity areas, where for example real estate may be more expensive but the concentration of jobs higher. The audit provides examples from the Illinois Housing Development Authority and the Chicago Housing Authority, two agencies which follow this best practice. In its response, DPD commits to amending the selection criteria to better take opportunity areas into consideration.

  • Never in its ten-year history has the Chicago Community Land Trust (CCLT) acquired land for construction of affordable housing units.

OIG concluded that CCLT is a community land trust in name only because it has never been given the resources to acquire land and use long-term ground leases to preserve affordable housing. Instead CCLT, with an 18-member board of directors, is staffed by 2 City employees and primarily serves 2 administrative functions—screening prospective low-income homebuyers and providing homeownership workshops, which do not necessitate a discrete non-profit entity. In lieu of working with City Council and OBM to secure the financial resources necessary for CCLT to act as a community land trust, DPD stated that CCLT will remove “land trust” from its name.

  • The City could not account for $4.5 million that should have been allocated for affordable housing programs.

City ordinance requires that ARO-related fees and Density Bonus fees be used for affordable housing programs. However, OIG reviewed the City’s affordable housing fund balances and found that the City did not appropriately budget $4,005,400 collected from fees. The City could not produce records showing that the monies were indeed used for affordable housing. In addition, DPD did not appropriately account for $541,252 in appropriation-authorized but unused ARO and Density Bonus fees. OIG therefore recommended that DPD ensure all $4.5 million is restored to the fund.

In the course of the audit, and in its written response, the City recognized that its past accounting practices made tracking affordable housing monies challenging. In fact, for just this reason the City created an Affordable Housing Fund in 2015 that is wholly separated from the Corporate Fund. OIG believes this should mitigate the accounting risks going forward.

Unfortunately, the City said it will not restore the $4.5 million to the Affordable Housing Fund, because the Office of Management and Budget questioned DPD’s accounting records. This contradicts earlier recognition by DPD and OBM of the unaccounted for shortfall.

“A lack of strategy and undelivered resources has negatively impacted the options available to those in need,” said Inspector General Joe Ferguson. “While the Department has committed to engaging in a more strategic and evidenced based approach in determining the location of affordable housing investments,  the City’s response to OIG’s remaining findings is concerning, including its decision to abandon the mission of the City of Chicago’s only affordable housing land trust.”

The full report, and DPD’s response to the findings, can be found online at OIG’s website:

http://bit.ly/DPDARO

 

Follow OIG on Twitter @ChicagoOIG for the latest information on how OIG continues to fight waste, fraud, abuse, and inefficiency in Chicago government.

 

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