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* Joe Mahr in the Tribune…
A newly formed charity came to Chicago pitching state officials on its “model” way to provide low-income housing.
The Ohio-based Better Housing Foundation said it would provide safe apartments. It would help tenants get jobs and health care. And it wouldn’t evict “solely on the basis that the tenant is unable to pay their rent.”
Starting in early 2016, with little scrutiny, a pair of state agencies helped the nonprofit borrow tens of millions of dollars at lower interest rates and obtain hundreds of thousands of dollars in property tax breaks that allowed it to rapidly buy dozens of buildings across the South Side.
But a Tribune investigation has found that many residents have been left to live in deteriorating buildings. The nonprofit hasn’t provided social services there. And the charity regularly has sued to evict those behind on rent. Meanwhile, a real estate manager, lawyers and others have been collectively paid millions of dollars in fees. […]
As for the buildings themselves, closing documents show that of the nearly $14 million borrowed, just $100,000 was set aside to cover repairs in 16 older buildings mostly in South Shore but also to the west in Park Manor and as far south as West Pullman. […]
After that $52 million deal closed, DeAngelis’ firm was paid more than $3.3 million from bond proceeds — double what the state board had been told in a presentation, records show. […]
Building code problems also continued to increase. By February of this year — 19 months into the nonprofit’s stewardship — code violations topped 500. […]
Getting cheap financing was just one part of the plan. The other: getting property taxes eliminated.
Looks like the state got snookered. Go read the whole thing.
posted by Rich Miller
Monday, Aug 20, 18 @ 2:48 pm
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Previous Post: State admits to $1.2 billion structural deficit
Next Post: Rauner won’t be deposed in Madigan case
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Runnin’ the state like a bidness.
Comment by Huh? Monday, Aug 20, 18 @ 2:56 pm
I don’t know the legal ins and outs, but the state should be able to go after the people who put the deal together on fraud charges.
Comment by Archpundit Monday, Aug 20, 18 @ 2:57 pm
This looks like a fraud, smells like a fraud. Probably pay offs as well. What a scam, state raises the $, private guys make millions, and the housing, same old same old. Literally no public reason to go near this transaction. Oh, the powerpoint said it is a charity, so look no further…. irritating.
Comment by 44th Monday, Aug 20, 18 @ 3:04 pm
“But wait,” intond GovJunk, ” I still guidin’ the Quincy vets coverup. I don’t have time to coverup a minority housin’ scandal too.”
Somebidy turn down the thermostat on our 16 wheeler. The exit interview appears to be continuin’
Comment by Annonin' Monday, Aug 20, 18 @ 3:12 pm
This story reads like an updated version of the Soprano’s plot line where Tony uses the City Councilman and his college buddy to buy properties for the sole purpose of stripping them clean and pocketing the rehab money.
This scandal has organized crime written all over it.
Comment by don the legend Monday, Aug 20, 18 @ 3:15 pm
So while Madigan uses his private law firm to change property taxes and make rich people richer, Bruce Rauner uses his state agencies to make rich people richer by just waiving property taxes?
That’s just fantastic
Comment by DuPage Bard Monday, Aug 20, 18 @ 3:23 pm
The question is who do these investors know. Probably a couple of aldermen involved too since they have such control of their wards
Comment by DuPage Saint Monday, Aug 20, 18 @ 3:23 pm
Cue the Rauner laugh track “answer” to any media questions
Comment by Leigh John-Ella Monday, Aug 20, 18 @ 3:24 pm
==. DeAngelis said he inherited dilapidated buildings and his staff did the best it could to promptly fix problems while treating tenants fairly.==
But the Tribune reports DeAngelis acquired the buildings. How could he claim he inherited them?
DeAngelis also charged the Better Housing Foundation 4.6 million in consulting fees to buy the poor quality buildings. 4.6 million and he blames the building inspector. I guess for 4.6 you shouldn’t expect too much.
Illinois Finance Authority and Illinois Dept. of Revenue say oversight is not their job, man.
Who’s job is it?
Comment by Da Big Bad Wolf Monday, Aug 20, 18 @ 3:41 pm
The headquarters for the Better Housing Foundation is a suburban home?
https://goo.gl/maps/JNJfzzzky9M2
Comment by City Zen Monday, Aug 20, 18 @ 3:41 pm
–Regarding the cost of issuance in such deals, the IRS typically limits them to 2 percent of the bond money raised. But records show this deal was structured in a way to allow the heftier fees, which equated to 4.9 percent.–
For a non-profit, a lot of sharpies certainly made some sweet scores.
Given the IRS and tax-exempt bonds issue, I imagine the federales would be first in line to go after these guys.
Great work by Mahr at the Trib.
Comment by wordslinger Monday, Aug 20, 18 @ 4:06 pm
We really need to start investigating this kind of stuff as criminal fraud and prosecuting if appropriate.
Claiming that the staff wasn’t to keep up with it is a claim that can be verified, by looking at who was hired, their skill set, when they were hired, their responsibilities, and how they spent their day to day.
The should have plenty of receipts and wage reports for their workers if they gave it a “College try” and be barely breaking evening on the books.
Having worked with non-profits in the past, the decent ones are often almost on the verge of financial ruin — to the point where one bad governor can put them under by refusing to pay them for services for a relatively short duration.
Comment by Anon Monday, Aug 20, 18 @ 4:10 pm
The board members were half asleep and passive, and rubberstamped everything while lawyers and consultants gorged themselves on taxpayer money and tenants lived in raw sewage. I almost feel embarrassed for them. Except the board member who was fraudulently listed and had no idea she was on the board.
Comment by Da Big Bad Wolf Monday, Aug 20, 18 @ 4:14 pm
Excellent reporting. What a lousy, rotten deal. The BTIA needs to be asking some serious questions about why the agency with the mandate to bond housing (IHDA) was bypassed in favor of the agency with no mandate and no experience in housing (IFA.)
This entire deal just reeks, from the absent board members to the fat fees to why IFA did it in the first place.
Comment by Arthur Andersen Monday, Aug 20, 18 @ 4:31 pm
That’s some great reporting. For some people, this would be a great business model…form a corporation, purchase some kind of nursing home or housing provider, get a lot of money in consulting fees, fail to maintain, run up bills, declare bankruptcy and walk away after you’ve make your money. Also for some, this would be a great model for running a state…contract with large, out-of-state corporations, avoid social service organizations based in their local communities, avoid wasting money on those oh-so cost-inefficient state employees who will purchase homes in that area and pay property and other taxes.
Comment by Earnest Monday, Aug 20, 18 @ 4:32 pm
Outstanding reporting.
A must read, but a “must pass on” far more.
The facts speak for themselves and told in the framing of so much of what needs to told them explain what has happened to Illinois.
Comment by Oswego Willy Monday, Aug 20, 18 @ 4:35 pm
Excellent story and reporting. I wish there were more of this type of reporting.
I would assume the governor will speak about this and how as governor he holds himself accountable./s
Comment by JS Mill Monday, Aug 20, 18 @ 5:22 pm
There is something that smells worse than the article suggests; this organization paid overmarket for some of these properties. Us real estate folks were shocked by all of this. It fell apart faster than expected.
Comment by Anonymous Monday, Aug 20, 18 @ 5:44 pm
No one is going to take over this mess, without the current, and unsustainable debt that is on the properties. It needs to be written down.
Comment by Anonymous Monday, Aug 20, 18 @ 5:49 pm
It’s Madigan’s fault because he demands so much of Rauner’s attention.
Comment by My New Handle Monday, Aug 20, 18 @ 5:50 pm
–There is something that smells worse than the article suggests; this organization paid overmarket for some of these properties. Us real estate folks were shocked by all of this. It fell apart faster than expected.–
Wonder how that got past S&P?
The triggerman for subprime MBS strikes again?
Comment by wordslinger Monday, Aug 20, 18 @ 6:20 pm
But we need more of these “job creators.”
Comment by Yu2 Monday, Aug 20, 18 @ 7:05 pm
Will Rauner go live in one of these buildings like he did at the Quincy Veteran’s Home? Preferably the one with raw sewage in the basement.
This is clearly on Rauner’s watch and should be showing up in a political ad.
Comment by A Jack Monday, Aug 20, 18 @ 7:21 pm
Great reporting.
Saw this the other day and thought about all the other great stories like this they’ve done.
But nothing changes.
Comment by TinyDancer(FKASue) Monday, Aug 20, 18 @ 7:24 pm
@Anonymous ==properties. Us real estate folks were shocked by all of this. It fell apart faster than expected.==
As a real estate folk is that normal to pay a real estate lawyer $200k for 5 loans and a consultant 4.6 million to acquire 3 buildings? I’m afraid my experience purchasing a townhome isn’t the best gauge for prices, but that seems like a lot.
Comment by Anonymous Tuesday, Aug 21, 18 @ 9:48 am