Council Wrap for Feb. 25

City Council will be back to the drawing board tomorrow night, Feb. 27, trying to cobble together a budget package that had appeared at the beginning of the Feb. 25 Council meeting - on paper at least - nearly sewn up with a 6-percnet tax increase. After two major revenue-generating measures - a proposal to license rental units at up to $40 per unit and a proposed 1-percent prepared food and beverage tax - were defeated, Council members were left to seek an additional $1.2 million in new fees and taxes, make drastic cuts in existing or restored programs or settle for a 9.29-precent increase in the City's portion of the property tax. The rental licensing program was projected to bring in about $400,000 annual net income, and the food and beverage tax, about $800,000 annually.

"Let me know what you want and I'll follow your direction," City Manager Julia Carroll told the Council members. "It's going to be a lot of bodies [cutting programs and services] - about 15 people."

Some aldermen tossed out ideas but no one made a motion and there appeared to be little or no agreement among the aldermen. Among the ideas for the newest round of cuts were the following: the mental health board funds restored on Feb. 23; the additional money earmarked for Mason Park on Feb. 23; the branch libraries; the MWEBE (minority-owned, women-owned and Evanston-based enterprise) coordinator; the human relations division, and funding for cultural funds grants. 

A special City Council meeting is scheduled for 7 p.m. on Feb. 27 to hammer out the budget. By law, City Council must approve a balanced budget by March 1.

Budget Workshop Update:

7 Percent Property Tax Increase; Funding for Mental Health Board and Mason Park; Arts Programs in Doubt

25 February 2008:  At the Feb. 23 budget workshop, aldermen agreed upon several expenditures, some of which had been previously off the table, paying them with "found" revenue. With the sale of the Park Evanston and additional construction at Northwestern University, real estate transfer taxes and building permit fees are now projected to exceed initial estimates by nearly $1.2 million, and City Council members agreed to use that money in the upcoming budget rather than keep it as reserves.

Aldermen agreed to fund the City's Mental Health Board at the same level as last year (about $844,000) rather than cut the funding by 10 percent, as had been proposed last week. They also agreed to allocate an additional $50,000 for programming for Mason Park.

Council members will again consider budgetary matters at the Feb. 25 City Council meeting, but, saying they thought there might be insufficient time to approve the budget at that meeting, they scheduled an additional meeting for 7 p.m. on Feb. 27.

During the five-hour budget meeting on Feb 23, aldermen barely touched on two big-ticket budget items: the proposed 1 percent food-and-beverage tax and the proposed licensing of rental units at $40 per unit.

Arts funding appeared to take some aldermen by surprise, as they learned that cuts to the arts programs included eliminating the summer starlight concerts, the Ethnic Arts Festival and the Lakeshore Arts Festival. That is expected to be another topic of debate at the Feb 25 or the Feb 27 Council meeting.

If the rental licensing fee and the food and beverage tax are approved - and if nothing else changes from previous approvals or agreements - the proposed increase in the City's portion of the property tax would be about 5.91 percent. The City takes about a fifth of the property tax bill; the two school districts together take more than two-thirds

Recent Charges Involve D65 Custodian

By Larry Gavin

Feb. 22. Rengay Frazier, who was charged with misdemeanor and felony offenses on Feb. 15 (See story below "Stolen Property Seized"), was employed by School District 65 as a custodian at Haven Middle School, according to a press release issued by the District.

Patricia Markham, communications director for District 65, told the RoundTable that Mr. Frazier was employed by the District as a floater in 2004 and was employed on a full time basis in 2005. Ms. Markham said the District did a criminal background check of Mr. Frazier before he was hired, and that he was hired in compliance with the School Code. Ms. Markham said she could not disclose the results of the criminal background check that were contained in Mr. Frazier's personnel file.

The School Code precludes school districts from knowingly hiring a person who has been convicted of committing or attempting to commit first degree murder or a Class X felony or certain specified offenses.

Cmdr. James M. Elliott of the Evanston Police Department told the RoundTable that Mr. Frazier had been convicted of a prior felony, but said he was not permitted to disclose the nature of the felony.

Cmdr. Elliott said Mr. Frazier was charged on Feb. 15 with unlawful use of a weapon by a felon, unlawful possession of a controlled substance with the intent to deliver, felony possession of cannabis and misdemeanor possession of cannabis.

On Feb. 22, Mr. Frazier was charged with additional offenses of violation of the gun card act, possession of a handgun in violation of a City of Evanston ordinance, and possession of stolen property.

A prepared statement issued by District 65 states the police investigation did not turn up information to suggest that illegal activities occurred at the school, but that the District will conduct its own investigation. The District also states that Mr. Frazier will not be allowed to return to his position at the school pending the District's investigation; at the conclusion of the District's investigation, a final determination will be made about Mr. Frazier's status.

Stolen Property Seized

Evanston police, in partnership with members of the North Regional Major Crimes Task Force, seized a large quantity of alleged stolen property while executing search warrants at 1904 Emerson on Feb. 15. Police Commander James Elliot said police believe the property was stolen in residential burglaries committed in Evanston and nearby suburbs over the past six months.

Evanston police initially obtained a warrant to search the house for narcotics after receiving complaints from the community that drugs were being sold from a residence in the 1900 block of Emerson. In searching the house, Cmdr. Elliot said police found a substantial amount of narcotics, as well as five handguns, three shotguns and two rifles. Police also discovered what they believed was a large quantity of stolen property. A second search warrant was then obtained to seize the alleged stolen property.

The second warrant was executed by members of the NORSTAF Burglary Task Force and the Evanston-Wilmette-Skokie task force. Cmdr. Elliot said investigators in the three communities have been working together for the last six months to gather intelligence and to solve residential burglaries, which showed a marked increase in each of the communities starting in August 2007. 

The alleged stolen property seized at the residence includes multiple flat screen televisions, digital cameras, high value watches and jewelry, numerous DVD and video games, fur coats, flatware, lap top computers, cell phones, crystal pieces, and coins. Police also seized $52,000 in cash.

 "It was the largest seizure of stolen property in Evanston, at least in my 20 years." Cmdr. Elliot said. "At this time the estimated value is in excess of $100,000."

So far, the seized property has been linked to 20 robberies in the area, Cmdr. Elliot said.

 Rengay Frazier, 36 years old, and Allan Boyland, 42 years old, both residents of 1904 Emerson, have been charged with misdemeanor unlawful possession of cannabis and the unlawful use of a weapon by a felon. Rengay Frazier was also charged with unlawful possession of a controlled substance with intent to deliver and with felony unlawful possession of cannabis.

Cmdr. Elliot said that after these charges were filed, Andre Frazier, the brother of Rengay Frazier, was charged with residential burglary. He added that Rengay Frazier was taken into custody and that additional charges may be filed today.

 Investigators are continuing to work on the case, and are continuing to attempt to link the property to reported burglary incidents. Burglary victims residing in Evanston may schedule an appointment through the Evanston police department to view the property. Burglary victims from other towns must schedule a time to view the seized property through the police departments in their own towns.

Cmdr. Elliot said that Evanston police have worked closely with Wilmette and Skokie police in the past. What makes this case different is they formalized their joint work. He said it is incumbent on police departments to form partnerships and to combine their resources to provide a high degree of services the public demands.

Budget Update

Food and Beverage Tax Proposed; Mental Health Board Budget Cut; Elms, Libraries OK

By Mary Helt Gavin

A series of new and increased taxes and fees, together with personnel and program cuts approved by City Council on Feb. 9 and 11 have brought the proposed hike in the City's portion of the property tax somewhat below 10 percent. Some aldermen have said they would like to cut even more programs and services. Others have called upon not-for-profit organizations - "those who can," said Fourth Ward Alderman Steve Bernstein - to contribute to Evanston coffers.

For now, the elm-tree-injection program and the two branch libraries are safe from the budgetary chopping block. However, aldermen have until March 1 to approve a balanced budget.

Pension Mess
The debate on how to address the City's unfunded liability to the police and firefighters' pension funds continued. Figures from the City's new actuary show the present liability was about $140 million as of March 1 of last year. By law the City must make up the shortfall and continue to make the actuarially required contribution (ARC) each year so that both pensions are fully funded by 2033.

The required payments to the pension funds are responsible in large part for the budgetary problems this year, City Manager Julia Carroll has said.

Council members have agreed that Mayor Morton should appoint a blue-ribbon panel to investigate the genesis of the pension problems and come up with long-term solutions. That committee is said to be forming.

Ald. Bernstein said, "The blue-ribbon panel will deal with the validity of the actuarial assumptions [used in estimating the $140 million shortfall]. If they are valid … we have to deal with paying the pension obligations. A few months ago we were told that the world is flat; now it's round."

Alderman Lionel Jean-Baptiste, 2nd Ward, asked his colleagues to consider postponing paying the ARC until perhaps 2016, when the City had retired some of its debt. Ms. Carroll said, "We have to pay the actuarially required amount." Ald. Tisdahl added, "[Not paying] is how we got into this mess."

Alderman Cheryl Wollin, 1st Ward, said, "It's dangerous not to pay what we owe."

Alderman Delores Holmes, 5th Ward, said, "Alderman Jean-Baptiste is asking us to think outside the box."

Ald. Bernstein added, "We have to understand that we are pricing people out of the community. … If the pension numbers are accurate, we have no choice."

Mayor Morton said, "The mayors of the Northwest Municipal Conference want the legislature to come up with something new. The question [of the pensions] is a rough one, and I think it put me in the hospital. … There are foreclosures everywhere, and Evanston is not exempt. What are those people to do? What can we do so that all of us can live? Are the people who have to sustain an increase in taxes - can they sustain their homes?"

Opposition to Prepared Food and Beverage Tax
Neither residents nor Council members appear to be happy with proposed ways to resolve for next year the enormous shortfalls created by the City's heavy debt and its pension obligations. Both the aldermen and the Mayor appeared to favor increasing several taxes and fees, as well as implementing new ones, over using the property tax as the primary vehicle to fund most of the obligations.

Commenting on the failure of the Feb. 5 City-sponsored referendum to increase the real estate transfer tax, Mayor Lorraine Morton said, "When the community did not vote for the referendum, it told us how the community felt about taxes and the raising of taxes."

Alderman Elizabeth Tisdahl, 7th Ward, said, "I agree with you completely that a huge property tax makes people leave."

Not all citizens appeared to agree with that approach. Several local restaurateurs came to the budget workshop to oppose the proposed 1-percent tax on prepared food and beverages. Although the ordinance would not increase the liquor tax, those who opposed it said Evanston's taxes are already so high as to make it nearly uncompetitive with restaurants in nearby towns for the catering and banquet clientele.

Owners or managers of nearly all the locally owned downtown restaurants said they felt they would lose customers if the food and beverage tax were implemented.

Joel Fondell, manager of Le Peep restaurant, said he opposed the proposed tax. "We already pay for a business license, [and pay] taxes on the awning, fees for stickers and for our neon signs and outdoor seating. We also pay electricity, phone, natural gas, water, sewer, Social Security, liquor and sales taxes. Is there any industry that is taxed as high as restaurants?"

Other local restaurant owners and operators who said they oppose the tax include Jeff Muldrow of Va Pensiero, Scott Anderson of the Clean Plate Club, Patrick Breslin of the Celtic Knot, Dan Kelch of Lulu's and Russ Abels of Hotel Orrington. "We can pass on only a certain amount of our costs," Mr. Muldrow said, adding Evanston already has the highest liquor tax around. "Evanston cannot tax restaurants continuously," he said. "I feel I'm being driven out."

Mr. Breslin said, "With this proposed tax and other proposed fees, we feel less and less welcome in Evanston. If the plan is to squeeze us out, I ask that you be up-front about this so we can prepare our loyal customers."

The real problem, said Mr. Muldrow, Mr. Abel and others, is in the banquet and catering aspects of their business. Nearby communities such as Skokie and Wilmette can offer the same or similar packages at a lower price because of the lower taxes there.

Jonathan Perman, executive director of the Evanston Chamber of Commerce, presented figures showing that Evanston's effective tax rate - that is, the rate of the levy when triennial assessments are comparable - is lower than it was in 1999 and is lower than those of several surrounding communities. Saying that an additional $500 on a $10,000 property tax bill was preferable to the proposed food and beverage tax, he urged Council members to increase the property tax rather than implement the food and beverage tax.

The proposed prepared food and beverage tax will be considered by the Council on Feb. 25. Council members have said they would direct the revenue generated by this tax to the firefighters and police pension funds.

Tentatively Approved Fees
Aldermen held three proposed revenue-generating ordinances in committee, with the understanding that they would be approved for the 2008-09 budget. The ordinances will increase ticket and towing prices during snow emergencies; impose a licensing fee for all Evanston businesses, including home-based businesses; and implement a licensing requirement and fee for rental units.

The business licensing ordinance was held in committee, because aldermen wished to learn how many businesses are exempt, how many that are not now licensed could be licensed and how many home-based businesses there are in Evanston.

The rental-unit licensing program could garner the City more than $400,000. And, said Community Development Director James Wolinski, the ordinance would help address non-compliance with City standards.

Jim Schermerhorn of Schermerhorn Realty Management in Evanston, and Mary Monaghan, who said she represented an association of rental property managers, both said they felt the proposed fee - $40 per rental unit - was excessive and that the rental-unit licensing ordinance as proposed might not accomplish its goals. Aldermen for the most part appeared to favor the ordinance; their referral back to committee was to clarify the section of the ordinance dealing with the appeals process.

Proposed New and Increased Fees
At the Feb. 11 City Council meeting, aldermen approved for introduction several increases in taxes and fees that will be up for a final vote at the Feb. 25 Council meeting. They include the following:

- A 1-percent tax on prepared food and non-alcoholic beverages

- An increase from $250 to $500 for the retail tobacco vendor license fee

- An increase from $82 to $100 for temporary food establishment licenses

- An increase from $36 to $50 for licenses for food-delivery trucks

- An increase in the price of vehicle stickers from $60 to $75

- An additional charge of $2.50 per month for pick-up from a second garbage cart

- An increase of 25¢ per hour - from 50¢ to 75¢ - in the downtown parking meter rates

- An increase of 1¢ per gallon - from 2¢ to 3¢ - in the motor fuel tax

- A new sliding-scale fee for historic preservation review


Several items were held in committee and will be considered at the Feb. 25 meeting.

Cuts to Programs and Personnel
At the budget workshop on Feb. 9 aldermen agreed to cut the funding to the City's mental health board by 10 percent, or about $86,000. They also cut one part-time bus driver position for the City's Levy Center bus, which ferries seniors to the Levy Senior Center on south Dodge Avenue and also takes school children to various after-school programs. Doug Gaynor, superintendent of Parks/Forestry and Recreation, said cutting the position would not interrupt those services, because stops would be consolidated. A part-time office position at the Noyes Cultural Arts Center was also cut.

Council agreed to continue the now-vacant position of victim services advocate but cut the vacant youth advocate position and the division chief in the health department. Evonda Thomas, director of Health and Human Services for the City, said the division chief had been chief of the clinic services, and most of the other duties would be folded into other department positions as she reorganized the entire division. Most of those services were discontinued by last year's budget cuts.

Harvey Saver, assistant director of mental health services for the City, has announced his retirement. Aldermen also agreed not to fill that position but to create a new lower-tier position to manage the services Mr. Saver now oversees.

Off the Table
Without comment at the beginning of the Feb. 9 budget workshop, aldermen agreed to remove the elm-tree inoculation program and the two branch libraries from the endangered-program list and keep them as ongoing City programs.

At the Feb. 11 Council meeting, they also removed from consideration a yard-waste sticker proposal that would establish a charge for the collection and disposal of yard waste. Alderman Anjana Hansen, 9th Ward, requested that the proposal be removed and Alderman Ann Rainey, 8th Ward, seconded the motion, saying she thought no one would purchase the stickers and the leaves would not be collected. "The streets will be full of leaves," she said.

A Tally
Assuming no changes in projected revenues and expenses: Adding all the proposed increases in taxes and fees, with the proposed new taxes and fees and then adding in the savings due to proposed cuts in programs and services leaves an increase of less than 10 percent in the City's portion of the property tax. Or maybe not.

Next Steps
Council members will hold another budget workshop at 9 a.m. on Feb. 23, just two days before they are scheduled to approve the 2008-09 budget. If approved, the prepared food and beverage tax will become effective on April 1. The vehicle sticker increase will be effective with the 2009 stickers; all other ordinances will become effective once they have been approved by City Council.

Human Service Committee Defers Vote on Immigration Resolution

By Joe Linstroth

In a packed Council chamber Monday night, the Human Services Committee heard public comments on three proposed immigration resolutions, but held its recommendation to the Council in order to allow more time for the City's Law Department to conduct a thorough review of the proposals.

The initial resolution, first introduced to the committee on Jan. 7, aims to clarify the community's support for the local immigrant population and offers specific guidelines for City employees to ensure that immigration status is not a barrier to receiving social services or unlawfully used in criminal complaints against non-citizens.

Alderman Lionel Jean-Baptiste, 2nd Ward, himself a Haitian immigrant and a naturalized citizen, said he was concerned that the original resolution, with its specific focus on the conduct of City officials and employees, would bring undo attention from federal immigration authorities to Evanston. "I'm suggesting that this station of the Underground Railroad not be marked," he said. As an alternative, Ald. Jean-Baptiste drafted a second, broader resolution calling for comprehensive immigration reform at the federal level, eliminating specific references to Evanston. The group that drafted the first resolution incorporated Ald. Jean-Baptiste's version into a third proposal which appears to be the draft the committee is considering.

Safety was a concern among many residents who spoke on both sides of the controversial issue.

"If [local] law enforcement is checking immigration status then we are less safe," said Evanston resident Kathy Chiwah in support of the resolution. "If the criminals are going to be deported, what about the witnesses?"

Conversely, Rosanna Pulido, a Chicago resident, told the committee, "As American citizens we are frightened and intimidated when our laws aren't enforced."

Others evoked history. "Immigration law is based solely on race and ethnic origin," said Bennett Johnson. Referring to the past struggles of immigrant groups such as the Irish, as well as African slaves, Mr. Johnson said such proposals speak "to the conscience of America."

Opposing the resolution, Judith Treadway, a member of the Evanston/North Shore NAACP, said, "The consequences may give the perception of preferential treatment to one group in our community."

Fortino Leon, founder of Organizacion Latina de Evanston (OLE), said he is often asked ,"'What do you Mexicans want?' Hopefully the same thing as you do," he told the committee: "a decent place to live and raise our children."

John Drennan said the resolution could "potentially put the City at risk for litigation."

Aldermen Steven Bernstein, 4th Ward, and Delores Holmes, 5th Ward, were hesitant to offer their recommendations without a vetting of federal immigration statutes by the Law Department.

Co-author of the original proposal, Ald. Edmund Moran, 6th Ward, appeared undeterred by the notion of preempting federal law. "What we have to determine tonight: what is humane and just - not just with reference to a particular law or statute, but to what is right," he said.

"We can let folks know they can come out of the shadows, use our services..." said Ald. Jean-Baptiste. "But we don't have to declare it."

The Human Services Committee will resume the discussion on March 3.

Council Bytes

Public Works Director David Jennings, right, presented plaques to Dick Peach, president of Keep Evanston Beautiful, Inc., and to Suzette Eggleston, director of Streets and Sanitation for the City, at the Feb. 11 City Council meeting. The City and KEB were honored not only for recycling 20 tons of aluminum cans last October, but also for the creativity of the campaign "Evanston CAN Recycle."

The Tower
The 49-story tower proposed for downtown did not even make it to the City Council meeting on Feb. 11. The budget-heavy agenda of the Planning and Development Committee limited the Council's agenda for the most part to ordinances dealing with taxes and fees in the upcoming budget.

Developers James Klutznick and Tim Anderson brought their mock-up of the Fountain Square block to Council chambers last Monday, along with requests for zoning variances and for funds from the Washington National tax-increment financing district.

The proposed tower has generated talk, opposition and controversy throughout Evanston. It was approved 4-3 by the Plan Commission last fall after intense discussion. The four who voted to approve the tower said they thought it would be an elegant building and a benefit to the City.

The three who opposed the proposed tower filed a minority report with the City, detailing their concerns about the proposal and their belief that the proposal did not warrant approval under the Plan Commission's standards.

The development team is requesting added height and an exemption from the parking requirements in the zoning code. The present allowable height in the downtown area is 105 feet for residential structures, plus an additional 40 feet for parking, or a total of 145 feet. The proposed tower would be 523 feet. Most recent high-rises in Evanston have been approved as planned developments, under which the developer gives something to the City in exchange for zoning or other relief. The comprehensive downtown plan, still being hammered out by the Plan Commission, could allow up to 42 stories in the center of downtown, the site of the proposed tower.

The developers, who own the entire 708 Church St. block, also purchased the adjacent Hahn building, a local landmark, and have pledged to preserve rather than develop it. They are requesting $3 million from the TIF funds - the property tax increment generated by the improvement to the property - to help them do this. A new ad-hoc committee, Concerned Citizens for Responsible Development, is mobilizing opposition to the proposed tower.

The proposed 49-story tower is on the Planning and Development Committee's agenda for March 10. In addition, Council members have scheduled a special meeting of the Planning and Development Committee for 6:30 p.m. on March 17.

Request for HOME Funds
An application for $300,000 in HOME ( HOME Investment Partnerships Programs, a federal assistance program) funds for three affordable condominiums on Callan Avenue was held in committee. Neal Davidson of Econ Housing, a for-profit developer of affordable housing, requested the delay, said Director of Community Development James Wolinski, "to look at the numbers and try to revise them [downward]." Mr. Davidson is redeveloping a five-unit condominium building at 241 Callan Ave., three units of which he says he will make affordable.

Evanston Residents Reject Transfer-Tax Increase; Support Democrats

By Joe Linstroth

On Feb. 5 Evanston voters soundly rejected a proposed $1 hike in the City's real-estate transfer tax. The election results, reported by the Cook County Clerk's office, also reaffirm the City's reputation as a Democratic stronghold.

The $1 hike in Evanston's real-estate transfer tax was opposed by 12,110 residents, or 58 percent of the voters, meaning the City will have to look elsewhere for help with the shortfall in the police and firefighter pension funds.

Evanston residents cast a total of 23,320 ballots in this year's presidential primary, up more than 6,000 votes, or 26 percent, from the last presidential primary in March 2004. The increase is most likely due to the local referendum on the ballot and the fierce interest in both parties' presidential nominations. City Clerk Mary Morris also estimated there are an additional 6-7,000 registered voters in Evanston than in 2004. Nearly 1,000 more Evanston

Republicans cast a ballot for their party's presidential nominee this year with the field not limited to the incumbent president. Still, 88 percent of the ballots cast for the presidential nomination were for Democratic candidates, with nearly 4 out of 5 Evanston Democrats favoring Senator Barack Obama of Illinois over Senator Hillary Clinton of New York.

Senator John McCain of Arizona received 57 percent of the Republican votes.

In other contests of local importance, Evanston resident and Cook County Commissioner Larry Suffredin finished a close third in the Democratic primary for

Cook County state's attorney. Just over 6,100 votes separated the top three candidates; the winner, Anita Alvarez, received 26.83 percent of the vote; followed by Tom Allen with 26.16 percent, and Mr. Suffredin with 25.26 percent. Commissioner Suffredin garnered 60 percent of the Democratic votes in Evanston, which was 11 percent of his countywide total.

U.S. Representative Jan Schakowsky (D-9th District) overwhelmed Democratic challenger John Nocita with 94 percent of the votes. State Senator Jeff Schoenberg (D-9th District) and State Representative Julie Hamos (D-18th District) ran unopposed.

Ms. Morris said her office is still waiting for a report of the absentee and overseas ballot totals from the Cook County Clerk.

Correction

In the City Council story on page 3 in the Feb. 6 issue, David Hodgman, who received a community
service award for his work on the City's recreation board and other activities, was misidentified in paragraph three as "Mr. Hageman." The RoundTable regrets the error.

Preserving the Affordability of Subsidized Housing for the Long Term

By Larry Gavin

ECON Development is seeking a HOME grant to assist in the development of three of the five condominium units at 241 Callan St. If approved, the affordability of the three units would be preserved for 15 years.

When a city makes a substantial grant to develop affordable housing, an important issue is what happens to the grant down the road. How long should the grant benefit the public's interest in affordable housing? After a set period of time, should the grant become a gift to the owner of the subsidized housing?

Under some models, all or a portion of the grant is recaptured by the city if the subsidized property is resold, and the recaptured amount may be reinvested in other affordable-housing projects.

Under another model, if the property is resold, it must be resold to a low-income household at an affordable price, which is set by a predetermined formula. In this way, the public subsidy invested in making the home affordable in the first instance is retained in the housing itself, keeping it affordable for the next generation of homebuyers.

In the case of grants of $40,000 or more made through the federal HOME (HOME Investment Partnerships) program, federal regulations require a city to recapture the grant or to impose a resale restriction on the subsidized property for a minimum of 15 years, referred to as the "affordability" or "control" period. After the affordability period expires, the subsidized home may be sold in the open market; and the owner may pocket the equity, including the equity attributable to the HOME grant.

Thus the affordability period sets the time during which the public will benefit from the public subsidy. After that, the subsidy in essence becomes a gift to the homeowner.

In its Consolidated Plan, the City of Evanston states that it bases the affordability period for HOME grants on the "minimum HOME requirements." The plan goes on to say the period may be increased with the approval of the Housing Commission and City Council.

Affordability for 15 to 20 Years
In the last four years, the City has approved HOME grants totaling approximately $2.4 million to subsidize nine housing projects containing a total of 30 condominium units, townhouses or homes. The affordability period set for 29 of these units is 15 to 20 years. After the affordability period expires on these 29 units, they will no longer be in the pool of the City's affordable housing, and the City will not recoup any portion of the grants made for those units.

Econ Development Corporation's pending request for a HOME grant of $250,000 to develop three affordable condominium units at 241 Callan St. provides an example. If approved (City staff has recommended that the request be denied), the HOME funds would help finance the rehabilitation of the units and enable EDC to reduce the sale price of each unit by $83,333. City staff estimates that the HOME grant would reduce the sale price of each of the three units from $285,000 to $191,667.

As a condition for receiving the HOME grant, the three units would be subject to a 15-year resale restriction that would require the units to be sold to income-eligible persons at an affordable price. The affordable price would be the initial subsidized price of $191,667, plus three percent each year, plus the cost of certain capital improvements made after the initial sale. The resale restriction thus attempts to ensure that the subsidized units remain affordable for 15 years. It would thus preserve the public benefit for 15 years.

After the 15 years, however, the owners of the subsidized units would be allowed to sell the units in the open market, without any restrictions and without having to repay the HOME subsidy of $83,333. The unit would no longer be available as an affordable housing unit, and the City would not recapture the HOME grant to develop other affordable housing units.

Donna Spicuzza, housing planner for the City, acknowledged in a telephone interview with the RoundTable that the $83,333 in essence becomes a gift to each owner of a unit, built up over 15 years.

When asked why the City sets the affordability period at 15 years rather than a longer period, Ms. Spicuzza said the period meets the requirements of the federal regulations. She added that the life expectancy of a rehabbed condominium unit is about 15 years, and after that it may require an additional investment of funds to keep it affordable. She said staff would not recommend a change in the affordability period.

Federal regulations, however, allow for longer periods and provide flexibility.

John Emmeus Davis, a research fellow with the National Housing Institute and the author of "Shared Equity Homeownership," (2006) told the RoundTable that federal regulations allow cities "to adopt a control period that extends longer than the 15-year period specified in the final rules for HOME. This statutory period, in other words, is a minimum, not a maximum." He added that "HOME is an unusually flexible program that grants [cities] a wide degree of discretion."

Debbie Willis, operations specialist for the Department of Housing and Urban Development in Chicago, also told the RoundTable that a city can impose an affordability period that is longer than 15 years. She also said that cities have flexibility in their approach. She said if it was disclosed upfront to the homebuyer and included in a promissory note, the city could impose a resale restriction for 15 years, and then if the property were sold in the open market after the 15-year period expired, the city could recapture the HOME subsidy.

In "Shared Equity Homeownership" Mr. Davis says most proponents of affordable housing prefer that subsidized housing remain affordable forever. He also states, "As the size of the subsidy required to boost a lower-income household into homeownership has grown ever larger - now exceeding $100,000 per unit in some communities - it has become harder to justify the loss of these public subsidies - and the loss of affordability these subsidies have bought."

Mr. Davis told the RoundTable, "Cities cannot afford - and cannot justify - allowing precious affordability and scarce subsidies to be lost after 15 years (or sooner)."

The Community Land Trust Model
The Citizens Lighthouse Community Land Trust of Evanston (CLCLT), a nonprofit organization, provides another approach to preserving affordability. The housing developed by CLCLT remains affordable forever.

Betty Ester, board chair of CLCLT, told the RoundTable that she and other members of the community selected the land trust model, which is used nationwide, because under the 15-year affordability model used by the City, "every 15 years you need a new unit, because every 15 years you lose a unit." Under the land trust model, the "house remains affordable forever and never goes back on the open market," she said.

The City granted $99,500 in HOME funds to CLCLT to rehab a single-family, three-bedroom home at 2212 Washington St. The total cost of the project is about $300,000. Together with fundraising efforts, the grant will enable CLCLT to sell the property to a qualified family for $180,000.

Under the land trust model, CLCLT will retain title to the land and give the buyers a deed conveying title to the physical structures on the land. The land will be leased to the buyers for 99 years for a nominal rent of $25 per month.

When the new homeowners sell the home at a future date, they will be required to sell it to a qualified buyer at a price that is affordable to a family earning 80 percent or less of the area's median income. They will also be allowed to keep the principal they paid toward the purchase price and about 25 percent of the appreciated value of the physical structure of the land. The balance of the sale price will go to CLCLT to use to further its goal of developing affordable housing. CLCLT will also retain title to the land.

Ms. Ester said CLCLT maintains a connection with the owner of the home and that it will buy the property back or help the owner find an income-qualified person to buy the home. "We'll be there when they're ready to do that," she said. "Our goal is to keep homes in Evanston affordable for the next generation."

Affordability As Long As Allowed By Law

While the City generally uses a 15-or 20-year affordability period in administering its HOME grant program, it imposes a longer affordability period when it subsidizes housing with a grant made from the City's Affordable Housing Fund or when the affordable housing is created under the City's Inclusionary Housing Ordinance.

CLCLT rehabbed 2212 Washington St. with the assistance of a HOME grant. The home will remain affordable in perpetuity.

In discussing the length of time the affordability period should last under the City's Guidelines for the Administration of the City's Affordable Housing Fund, Alderman Edmund Moran, 6th Ward, said at the City's Planning and Development Committee meeting held on April 23, 2007, that the City should use the longest affordability period that could be obtained. He said the longer the affordability period, the more the City was leveraging the community's investment in the property.

Under the guidelines adopted by City Council, if the City provides $30,000 or more from its Affordable Housing Fund to subsidize a housing unit, then the home is subject to a resale restriction "for as long as allowable by law." During the affordability period, the property must be sold to a qualified household earning 100 percent or less of the Area Median Income. The sale is to be at a price that includes the original subsidized price, plus three percent per year, plus certain capital improvements to the home.

In a similar fashion, the City's Inclusionary Housing Ordinance provides that any affordable housing units required under the ordinance "shall remain affordable in perpetuity or as long as allowable by law."