How A Promise of "Better Housing" Put Hundreds of Chicago Buildings At Risk

 

The rise and fall of the Better Housing Foundation can be told several different ways. Practitioners in the field of affordable housing tend to treat the organization as a cautionary tale. Former tenants of buildings once owned by BHF often recount dysfunctional management and deteriorating physical housing conditions they endured during the Foundation’s brief period of activity. Local stakeholder groups in neighborhoods where the org was most active sometimes look back on BHF’s involvement as a negative inflection point, further destabilizing already vulnerable residential buildings and neighborhood commercial corridors.

Present perception of the now-inactive Better Housing Foundation is a far cry from the laudatory press coverage that greeted the organization’s arrival. Between 2016 and 2018, BHF purchased hundreds of buildings in Chicago containing nearly 2,000 apartment units with the stated intent to operate dignified, high quality affordable housing in disinvested parts of the city. Funded primarily by state-issued bonds and bolstered by tax exemptions granted on many properties they purchased, BHF’s leaders publicly claimed that they could acquire a large portfolio of properties quickly, operate them soundly, and become self-sustaining on income from public rental assistance programs.

Instead, BHF continuously bought new properties – mostly medium size apartment complexes and storefront buildings with residences on top – while deeply mismanaging their existing holdings. Unethical and abusive practices from some of its contracted property managers began to reach the ears of advocacy organizations, city and state housing regulators, and eventually the broader public. Simultaneously, the fledgling organization failed to deliver various social services and eviction protections that they had promised to state and local agencies when seeking financing, tax benefits, and partnerships.

After inspections turned up hundreds of building code violations in BHF-owned properties, the Chicago Housing Authority refused to continue placing its program recipients in the Foundation’s buildings. BHF’s lazy and dangerous upkeep and management practices disrupted its own revenue model, and their cash runway ran short as costs mounted maintaining structures that often had significant deferred maintenance needs at the time of purchase. As things spiraled, the Foundation eventually stopped paying some property managers and contractors altogether, carrying hundreds of millions of dollars in debt while residents were left without responsible stewardship of the buildings they lived in.

In 2019, the wheels came off. Following investigations by the press and enforcement action by state housing regulators, and in light of the growing insurmountability of the financial hole that BHF dug for itself, the organization ceased regular operations. A successor board emptied its properties and sold them off to service debt, often for less money than they purchased for and often to buyers who intended nothing more than to speculate on the future value of the empty structures. The co-founders of BHF walked away with millions of dollars in fees that companies they were affiliated with had previously received for services related to BHF deal financing and property management, leading some advocates, agency administrators, and affordable housing industry practitioners to conclude that the entire multi-year saga could have been a scam to siphon public dollars to private wallets.

 

This building at 115^th & Prairie is a somewhat typical example of what the Better Housing Foundation left in its wake. At the time the Foundation bought it in 2016, it was a tired but active neighborhood commercial anchor, with five storefronts that were generally fully leased and two apartments above. When BHF took ownership, it held a takeout restaurant, a couple salons, a barbershop, and a cell phone store.

 

 

During the Foundation’s collapse two years later, the building was emptied and boarded up, beginning a period of inactive stewardship. In 2020, it was purchased in a batch of former BHF buildings by Pangea – a massive landlord notorious at the time as Chicago’s biggest evictor. Pangea removed the board-up materials from the outside of the building, but did not perform any permitted repairs or return the building to use before selling it to a suburban realtor less than a year later. The structure has not held any commercial or residential tenants, nor received any permits for maintenance work, since 2018.

 

 

In the years that followed BHF’s involvement with the property, and especially in the three years since the most recent sale, this former stalwart of the 115^th Street corridor has deteriorated severely. Since 2023 it has been regularly inspected as part of the city’s Troubled Buildings Initiative, a program of Chicago’s Department of Housing that seeks to interrupt unsafe conditions in poorly maintained or abandoned structures. The TBI ultimately tries to find a future for buildings and avoid demolition, wresting control away from neglectful property owners through receivership or forcing a sale to more responsible parties, but sometimes those mechanisms aren’t enough. When a building is already too far gone at the time it enters the TBI process, demolition may still result. And the inspection records for this building are bleak, filled with notes about conditions like unmitigated water entry, mold growth, and failing masonry. Despite an actively leased billboard on the property, its current owner clearly isn’t checking in on the building or keeping up with it – a broken window spilled glass shards onto the sidewalk months ago, and it has yet to be cleaned up or secured.

 

 

In a very short amount of time, this building went from a bustling set of storefronts to a dangerous husk. It was set on that path not by a run-of-the-mill slumlord or land value speculator, but by a well-funded nonprofit whose leaders promised to deliver great affordable housing to needy families. The co-founders of Better Housing Foundation still live much more comfortably than the tenants who experienced the reality of their organization, and those co-founders live far from the neighborhoods that have to deal with the consequences of BHF’s reckless actions.