On September 19, the Chicago City Council amended the city's municipal code to give the housing commissioner new wide-ranging authority to restructure affordable housing loans and grants. The commissioner is now empowered to: defer loan payments; modify loan terms; grant loan forbearances; forgive default interest, overdue interest and fees; convert smaller ($500,000 or less) loans into grants; subordinate the city's mortgages to new senior loans; approve modifications and subordinations required by the US Department of Housing and Urban Development; and approve new general partners and managing members for existing borrowers and grantees. The commissioner can also now purchase other lenders' affordable housing loans and sell or donate the city's affordable housing loans and grants. Finally, if an existing city council ordinance specified an interest rate, maturity date or principal amount for a city loan to a particular affordable housing development, the commissioner now has a six-month window between ordinance passage and loan closing to modify those terms (although principal amount increases are capped at $75,000).
Thanks to this municipal code amendment, the commissioner can exercise all of these new administrative powers without having to submit specific legislative requests to the city council, a process that could otherwise take several months and cost projects time and money. Furthermore, limited partners and investor members simply exiting deals as part of these authorized restructurings are now no longer required to provide the city with economic disclosure statements, a requirement that sometimes proved to be a sticking point in the past.
Please let Katten know if you are a current or prospective owner of or investor in a city-financed affordable housing development and are considering restructuring that financing in some way. We would be happy to strategize with you regarding next steps.
Chicago
