From Eyesore to Asset: Revitalizing Vacant Properties in Lake County, Illinois
Revitalizing existing housing stock is an important affordable housing strategy to renew communities. In the greater Chicago area, the Affordable Housing Corporation of Lake County (AHCLC) has operated an acquisition and rehabilitation program for 50 single-family derelict, vacant homes in 2012-2017. This conversion of an eyesore to an asset not only reclaims an abandoned property—typically accomplished at a lower cost than new construction—but has the added advantage of neighborhood stabilization. but contributes to the stabilization of the entire neighborhood
AHCLC mission is to help Lake County residents rent, buy, and repair affordable homes—as well as save homes from foreclosure. The organization works with community leaders and elected officials to design affordable housing programs, policies and strategies for Lake County.
Lake County, population 703,910, is north of Chicago and spans rural, urban, and suburban communities, as well as supporting a tourist economy. The rehab program was launched with the help of a $2 million National Foreclosure Settlement (NFS) grant awarded in late 2012. Targeted to support revitalization efforts and housing counseling for Illinois communities burdened by vacant and abandoned properties and foreclosures, this funding was designed to complement and supplement other foreclosure response efforts using nationally recognized, innovative housing strategies.
To purchase the rehabilitated homes, eligible buyers must certify their intent to be owner-occupants (rather than investors) and household income must be less than 120 percent of the median family income—locally, $92.280 for a family of four.
AHCLC partnered with the Villages of Mundelein and Round Lake Beach, two communities that had been among the hardest hit by the foreclosure crisis, for the NFS-funded acquisition and rehab program. Local support for the program has been a crucial part of its success. In addition to municipalities making lines of credit available, they have waived or reduced building permit fees and reduced or waived liens on the properties.
Homes for rehab are often considered the “worst of the worst,” with significant structural issues, such as collapsed roofs, mold, water infiltration, or foundation cracks. Homes are often completely gutted and refurbished with new windows and doors, new appliances, improvements to electrical and plumbing, and new furnace and air conditioning.
AHCLC’s overall financing for the 50 homes targeted for this project has been $8 million: $2 million from the NSF funds, with $6 million in sales proceeds that are recycled back into the program to create a revolving loan fund.
The line of credit approved by the villages allows nonprofit to borrow up to $200,000 to purchase local homes. These loans are interest-free as long as AHCLC repays it within 12 months. The program is structured to absorb losses of up to $40,000 per unit. The actual subsidy for most transactions is closer to $14,000.
The price points for the rehabilitated homes, positioned at the low end of the local market offer affordable options in an affluent county. Home prices have been increasing, a positive sign in neighborhoods that had been experiencing stagnation. However, the increase in home values has been gradual, and gentrification seems to be a low risk. When distressed homes are renovated and sold to owner-occupants, property values increase, and neighborhoods are revitalized.