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Lending a Hand

Gordon Walek

It’s been a busy end of the year for lending at LISC Chicago as the organization celebrated projects across the city that have been supported through LISC loan capital.

Community partners held ribbon cuttings for new affordable apartments in Woodlawn and suburban Northlake, and for new supermarkets in Englewood and Bronzeville. La Casa Norte held a ground-breaking ceremony for housing homeless families in Humboldt Park. In South Chicago, SkyART held a grand opening of a new studio for local youth.

Different kinds of development, different communities, different types of loans. What ties them all together is LISC’s capacity to provide the capital needed to bring crucial new assets to a neighborhood as it continues to build.

Nationally, LISC raises and invests more than a billion dollars annually in underserved communities. In September S&P Global Ratings assigned an “AA” credit rating to LISC’s lending, an unusual validation for a nonprofit investor.

“We respond flexibly to the unique needs of each community to help a neighborhood revitalize itself,” said Barbara Beck, LISC Chicago’s director of financial services and underwriting.

Gordon Walek

“We respond flexibly to the unique needs of each community to help a neighborhood revitalize itself,” said Barbara Beck, LISC Chicago’s director of financial services and underwriting. “That can be an under-invested area that is making improvements in residential, commercial or other kinds of real estate, and in another area it might be looking to preserve affordable housing because the neighborhood is changing.”

One example is La Casa Norte’s project at 3531-33 W. North Ave. The new facility is slated to include 25 affordable apartments with supportive services for homeless families and youth, the organization’s offices and facilities open to the neighborhood, such as a health center, computer lab and nutrition center.

“It’s going to be a wonderful community center, deepening the services we provide today and offering new services we know are critical in the neighborhood,” said Sol Flores, the organization’s founding executive director.

Typical of the complicated fiscal realities of developing property with a social mission in mind, La Casa Norte has pulled together a layered mix of private and public financing to fund the project: city TIF funds, philanthropic donations, New Market Tax Credits, federal HUD grants for supportive housing and more.

LISC’s role is to fill in gaps in financing as needed, ranging from early-on funds that help a nonprofit developer envision what could be possible to mini-permanent loans for longer-term, amortizing financing.

LISC support to La Casa Norte, for example, came in 2011 as a pre-development loan to fund initial costs like the zoning approvals and architectural drawings that transformed its initial ideas into an achievable reality.

With these specific, actionable plans in hand, the organization was ready to raise the other funding needed. “Without that pre-development loan, we wouldn’t be able move the project forward at all,” Flores said.

Loans In the gaps

Like the La Casa Norte loans, much of LISC’s lending is short-term and often during a moment in a development’s timeline when traditional loans aren’t easy – or sometimes possible – to find.

In Northlake, LISC provided a predevelopment and permanent loan for the development of Wisdom Village, a 71-unit affordable housing development for seniors. Then early this year, LISC arranged financing so Turnstone Development could proceed with construction when the state budget crisis held up federal funds committed to the project, which was about a third of the way complete at the time.

A LISC pre-development loan helped lay the groundwork for Englewood Square, the new shopping center at 63rd and Halsted that includes a Whole Foods market.

Gordon Walek

For the new Whole Foods at 63rd and Halsted, a LISC pre-development loan three years ago provided the capital the designated developer, Chicago Neighborhood Initiatives (CNI), needed to respond quickly with initial feasibility, engineering and legal work.

“When you have an interested, quality tenant, you want to move heaven and earth to meet their timetable and needs,” said Angie Marks, vice president of real estate at CNI. “Sometimes at the early stages of a project, all is not yet known. LISC really played a role that facilitated what it took to move the project forward.”

Marks said CNI has also turned to LISC because of its experience and comfort with complex public/private partnerships. For the new Mariano’s at 39th and King Drive, CNI had worked for years with the City of Chicago and the Chicago Housing Authority, which owns the land, to bring a grocery story to the food desert on the Mid-South Side.

CNI was able to finance most of the construction cost conventionally but to reduce its equity requirement, it needed to close a notable gap or face higher costs and the risk of delaying the project. LISC and IFF together provided CNI subordinate financing during the construction phase.

“We make loans carefully, of course, and need to balance the demand of fiscally-responsible lending with the proposed social and community impact. A variety of internal financing tools lets us take on a bit more risk so that we can support important community projects,” Beck explained.

The new 74,000-square-foot Mariano’s, now open, will have 400 employees and has turned a piece of land that has been vacant for more than a decade into a community retail anchor. These new retail developments in Englewood and Bronzeville fulfill community goals written into their community Quality-Of-Life Plans.

“The value we can bring to the table is we can work through a more complicated financing structure,” Marks said. “We can work with public agencies like CHA and negotiate benefits agreements that bring jobs to the community. To do the work, we need partners.”

LISC loans were instrumental in sustaining the South Chicago Art Center following its 2001 opening and with supporting its expansion to SkyART a couple of years ago, allowing it to serve even more youth with arts programming on the far South Side.

Gordon Walek

Lending to the mission

In 2001, the South Chicago Art Center opened with 18 students in a small facility open two days a week.

By 2014, the organization was serving more than 3,500 young people annually with a wide variety of programs and wanted to buy and rehab its own space. Now named SkyART, the group used a construction and mini-perm loan from LISC to give it the fiscal flexibility it needed to redevelop and move into a new studio.

This October, SkyART celebrated its one-year anniversary in the new space with a grand opening. The 6,000-square-foot studio has a state-of-the-art computer lab, an extensive art library, space to host visits from an entire local school, and as of January, a ceramics studio – all new with the new facility.

“The building is beautiful in a neighborhood without a lot of beautiful,” said Sarah Ward, SkyART’s founder and executive director. “A little girl walked in the other day in front of me, and she turned to her mother and said, ‘I can’t believe I get to go to a place so pretty.’”

Ward said that her team turned to LISC for loans because of its expertise and experience, a big plus for a nonprofit dedicated to developing young people, not real estate. “LISC is committed to our work. I can call them up and they’ll help me with paperwork or whatever I need.”

LISC has been a supporter of SkyART from the beginning – it provided the seed grant that launched the organization – and the development loans are just another way that LISC has helped advance arts and youth development in South Chicago.

“Our model at LISC is comprehensive community development, and we have a multitude of tools and approaches to help our partners reach their goals,” said Meghan Harte, LISC Chicago’s executive director. “Our loans that help build new housing, revitalize commercial corridors, and provide new cultural and social services work side by side with our other programs.”

As a banner 2016 comes to an end, LISC lending continues to feed a pipeline of new developments. One of the biggest is converting Lawson House, a 22-story SRO at 30 W. Chicago Ave. formerly run by the YMCA, into more than 430 units of supportive housing. The Lawson redevelopment will preserve a measure of affordability in the River North community.

LISC’s predevelopment loan, together with a matching loan from the Corporation for Supportive Housing, will allow Holsten Real Estate Development’s project to move forward with the architecture work and feasibility studies.

“Lawson House is an important resource in the community, but it needs a major upgrade. There is a lot of interest in making that happen, but to keep the project moving, the developers need funds early, while all the complexities are worked out,” Beck said. “That’s where we come in.”

For more information on LISC Chicago’s lending contact Barbara Beck, Director, Financial Services and Underwriting at or 312-422-9553.

Posted in Economic Development, Housing, Lending


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