Blog

Irresponsible Developers: 212 Developments

212 Developments. Principals: Adi Golan, Lior Ben Zur, Naomi Avitan. They are located at 5 S Wabash, ste 304. According to our research, (212 Developments Property Info) they have purchased 5 properties in the last few years in the Logan Square area.

In October 2015, they purchased a 4 unit building at 2310 W. Grand. It took them nearly 11 months to evict tenant Rosalinda Hernandez, who didn’t have a lease, using techniques that were ineffective, illegal, and frankly dangerous. During this time they were unable to rehab the building, rent the other units, or otherwise profit from the property. They are a seriously irresponsible real estate developer and investors should be aware that their practices carry significant risks of legal liability and failure to meet debt obligations. Details are as follows:

10-8-2015. Illegal eviction notice: They posted this vacate notice on the front door of the building. Such a notice corresponds to no law, gives the landlord no right to evict, and can even qualify as harassment.       10.28.15 Illegal notice to vacate

12-30-2015. Demanded rent without previous notification of who to pay.  Gave the attached 5-day eviction notice for non-payment of rent, without having ever informed her of where to pay in the first place.
5 day notice 12.30.15

1-4-2016. Received formal legal notice to restore heat. Though Ms. Hernandez paid full rent, 212 illegally failed to maintain heat in her apartment in the middle of winter. She delivered this formal Restore Heat letter to Mr Golan with witnesses demanding that 212 restore heat. Mr. Golan refused to do so, leading Ms. Hernandez to make a complaints to the City of Chicago & the Chicago Police Department. It was only after the involvement of a Chicago Police officer that heat was restored. (Unfortunately, we lack documentation of these complaints: 311 neglected to give her a reference #, choosing instead to refer her 911. The officer they dispatched called the owners, but did not provide a police a report.)

1-13-2016. Received demand letter to repair apartment. Ms. Hernandez’ apartment was in such significant disrepair that she successfully retained an attorney pro-bono attorney to sent 212 this Demand Letter.

2-15-16. Two Contradictory eviction notices. Ms Hernandez was given a 5 day notice & a 30 day notice on the same day. The 30 day notice gave her only 15 days to move and was invalid. Though the 5 day notice was given more than a month than the actual date it listed, she paid the rent they asked for.

Wrongly Dated 5-day Notice

Wrong date 5 day notice 2.15.16

Invalid 30-day Notice

Improper 30 day notice 2.15.2016

4-1-2016. Eviction action filed. They eventually gave a proper 30 day notice, and filed for eviction on April 1st, 6 months after their initial attempts to evict (Case #2016-M1-705815). The eviction did not conclude until 7/8/2016.

Statement on 88-unit Affordable Building Proposed For Logan Square

Somos/We are Logan Square was heartened to see the announcement yesterday of a 100% affordable 88-unit building planned for the 1st Ward.
We have been consistent and strong advocates of dense, affordable working class housing located near transit sites, and are glad to see it becoming a reality.
Unfortunately, this type of development is the exception rather than the rule in Ald. Moreno’s 1st Ward. He was complicit in the closing of 800 units of public housing at Lathrop Homes, refusing to until recently to defend them. Most recently, he is a supporter of AirBnB, a roomshare service that is well known to damage affordable housing. Finally, he has approved a luxury development boom, leading to the construction of over 600 units where rents for studios-3 bedrooms run from $1500-3,900/month.
That’s a problem because overwhelming evidence shows that not only do luxury developments fail to reduce market rents (1,2,3), but they in fact drive them up, leading to mass evictions & displacement. (4,5,6,7)
The much-hyped 10% supposedly ‘affordable’ units are intended for families making $46,000/year, when 50,000 families in our area make $50,000/year or less, and 18,000 of those make $25,000/year or less. They are too few, and too expensive, to address the displacement caused by 90% luxury buildings.
While we would like to show our full support at this meeting, not as many of us will be able to attend as we would like. The community was given only 2 days notice about it, and we’ve had a major demonstration against luxury development planned that day for several weeks.
Again, we fully support this development. but must continue to protest Moreno’s housing policies that destroy our community.
1. http://www.wsj.com/articles/new-luxury-rental-projects-add-to-rent-squeeze-1432114203

2. https://www.washingtonpost.com/news/storyline/wp/2014/08/19/why-its-so-hard-to-find-a-cheap-apartment-in-washington-d-c/

3. "While the increased development of luxury units may have a marginal negative effect on high-end rents, this activity may actually draw capital away from the more affordable sector leading to disinvestment and shrinkage of that supply..." https://www.scribd.com/doc/284775500/Loss-of-Low-Cost-Rentals-Atlanta-by-Dan-Immergluck-Oct-2015 

4. file:///C:/Users/Owner/Downloads/Reef_Health-Impacts_ExecSummary_EN_final.pdf

5. "With the arrival of residents willing and able to pay a lot more for rent, landlords saw huge incentives in evicting existing tenants as a way to vacate previously occupied units, and bring in higher income residents. Between 1998 and 2002, the number of “no fault” evictions tripled in Oakland at the same time that rents increased 100 percent.(3)" Pg. 22, http://cjjc.org/images/development-without-displacement.pdf

6. "The two ends of the market are in-fact segmented from each other, but they compete for land and capital and so the proliferation of the luxury market may, in fact, result in less on the more affordable end.Meanwhile, those with modest incomes may be faced with higher rents in the lower-cost segment of the rental market" https://www.scribd.com/doc/284775500/Loss-of-Low-Cost-Rentals-Atlanta-by-Dan-Immergluck-Oct-2015

7. “It feeds the frenzy because when you have new high rise luxury development, it makes real estate in the surrounding areas more attractive, and will increase land values and attract more development,”  http://www.citylab.com/housing/2015/06/the-big-money-behind-tall-buildings/395690/

How Does Moreno’s Luxury Housing Policy Drive Displacement?

Alderman Moreno claims that his luxury development policy generates affordable housing. The idea is that giving zoning changes to developers increases the supply of housing, which reduces prices, and that 10% of the new units will be affordable.

Unfortunately, his claim is based on myths about the impact of luxury development and the definition affordable housing. Moreno’s policies are in fact deeply destructive to affordable housing, though they are effective for fundraising.

Let’s take a closer look:

Increasing the supply of luxury units does not reduce rents overall. Although the supply-demand argument seems right in theory, real experiences with luxury development reveal a more complicated situation. Rents in the the new Milwaukee avenue luxury developments are between $1500-3200/month for studios & 2 bedrooms. Since these are so much higher than middle class rents, they  actually become a separate market. In cities throughout the country, adding luxury units to the market hasn’t reduced surrounding rents. In fact-

Luxury development increases surrounding rents. Luxury units increase displacement by:

– Jacking up the value of surrounding properties, and so the likelihood that developers will buy them, evict tenants, and replace them with luxury units.

– Encouraging surrounding landlords to try to charge as much as the new luxury developments. (See pg. 22 of the linked article.)

– Increasing property taxes,  rents, and the likelihood that individual property owners will sell to developers.

The 10% ‘affordable’ units in new luxury developments are not actually affordable, and there are nowhere near enough of them. According to the Affordable Requirements Ordinance, a unit is considered affordable if intended for a family making 60% of the Area Median Income, or $46,000/year for a household of 4. However, the median Latino household income in Logan Square is $34,000/year, and nearly 18,000 families in our area make $25,000/year or less.

An ‘affordable’ studio is between $715-800/month, and 2 bedroom between $900-1000/month, depending on which utilities the tenant pays. While these prices might seem low to some, they’re out of the question for many of us. It was only a few years ago (2011-12) that these rents were closer to the average,  and by then, thousands of people had already been displaced from Logan Square.

To stem the tide of displacement, and to create opportunities for people to return to the communities they built, we’re going to need a real affordable housing policy, driven by the community members most at risk of displacement, not the developers and politicians driving them out.

Note: Here’s an article from Harvard Law & Policy Review about why Airbnb is so bad for affordable housing.

The Mega Mall Redevelopment

Support true Affordable Housing in our community!

Please call or email Alderman Scott Waguespack (32nd) at

(773) 248-1330 / scott@ward32.org / info@ward32.org

And tell him:

[As a resident of the 32nd Ward] I urge you to deny rezoning for the Mega Mall redevelopment until Terraco Inc. commits 20% of the units as affordable housing, using available subsidies.”

This is urgent, and you don’t need to be a resident of the ward to do it. The rezoning is on City Council’s agenda for this Thursday Dec. 17thand the Mega Mall is big enough that it affects everyone in our community.

The developer, Terraco Inc,. is planning to build 240 residential units above ground floor retail space. Rents haven’t been advertised, but they’ll probably be similar to those in other new developments, $1250-1500/month for studios, and up to $2500/month for 2 bedrooms.

Like other developers, Terraco is complying with the Affordable Requirements Ordinance (ARO) by reserving 10% of units as ‘affordable’. But as we’ve pointed out, these units will simply not be affordable to people in our community.

That’s why we support Logan Square Neighborhood Association’s proposal to reserve an additional 20% of the units as affordable, using a subsidy called ‘Project Based Vouchers’. This subsidy is provided through the CHA, which has a huge surplus, and has already expressed interested in the Mega Mall redevelopment. These units would be truly affordable for tenants, while allowing the owner to charge up to 150% of the market rate rent.

Unlike other Aldermen, Waguespack has been a leader on affordable housing issues. However, despite weeks of back and forth, Terraco hasn’t agreed to LSNA’s proposal, and Waguespack hasn’t required them to. Because of Chicago zoning procedures, Aldermen usually have decisive influence over zoning in their wards.

Please take a minute today to tell Alderman Waguespack how important this issue is.

FAQs

What is the Mega Mall? A massive indoor commercial space located at 2500 N Milwaukee. For years it allowed small businesses to offer affordable goods to local residents.

What is Terraco Inc? The developer behind the Mega Mall plans. They have more than 20 commercial properties spread throughout Illinois1. The owner is Marc Realty, which purchased the Mega Mall in 2014, and owns 34 multi-unit buildings throughout Cook County2.

What is the current plan for the Mega Mall? 240 residential units and commercial spaces on the 1st floor. While the developer has not quoted rents, comments made at the first community meeting suggest they will be in similar to those of other new developments, $1250-1500/month for studios, and up to $2500/month for 2 bedrooms.

What are the available subsidies?  The Logan Square Neighborhood Association has urged the use of Project Based Vouchers, a Chicago Housing Authority subsidy that stays with the unit rather than the tenant, guaranteeing stable affordable housing in our community.  Last year, the Chicago Housing Initiative revealed that CHA was hoarding $450 million in cash reserves.3

Why demand affordable housing? Massive luxury developments like this contribute to real estate speculation4, signal to local landlords that they can increase rents5, and increase property taxes. These mechanisms increase rents, take affordable units away, and lead to the eviction of long term residents.

1 – http://terracorealestate.com/listings/2

2 – http://www.marcrealty.com/properties/

3- http://chicago.suntimes.com/uncategorized/7/71/178718/housing-for-the-poor-going-unbuilt

4 – http://www.scribd.com/doc/217112947/SF-Controller-Shows-Supply-and-Demand-Does-Not-Work

5 – http://cjjc.org/images/development-without-displacement.pdf.  “…With the arrival of residents willing and able to pay a lot more for rent, landlords saw huge incentives in evicting existing tenants as a way to vacate previously occupied units, and bring in higher income residents. Between 1998 and 2002, the number of “no fault” evictions tripled in Oakland at the same time that rents increased 100 percent.” (p. 22)

Why affordable to a family making $30,000/year?

The City’s Affordable Requirements Ordinance (ARO) defines affordable housing on the basis of income, specifically the Area Median Income, or AMI. A unit is considered affordable if the person living there makes up to 60% of the area median income.
According to the City, 60% of area median income for a family of 3 is $41,000/year.
However, the average household income for a Latino family in Logan Square is only 34,346/year, and the average household size is 3.6.  That’s more people, living on much less, than the City allows for.
Developers who comply with ‘onsite’ provision of the ARO are nevertheless utterly failing to provide housing to the families most threatened by displacement.
Therefore, we ought to demand something closer to the reality. 60% of the AMI for an average Latino household would be closer to $20,000/year. (Keeping in mind that area median income is close, but not the same as average household income.)
However, in the spirit of negotiation, we’re demanding something a little more “reasonable”, between what we believe is right and the status quo.

Lessons from the Courtroom – Voter Fraud

On May 22nd, 2015, members of our group went to the courthouse to support Anne Shaw and Ronda Locke in their voter fraud lawsuit against 1st Ward Alderman ‘Proco’ Joe Moreno. It was an eye-opening experience for us as we witnessed the Chicago ‘Machine’ in action as the case was dismissed by the judge. All those rumors and jokes about our city are true, the law is set up to protect public officials and allowing them to commit fraud.

Somos at Courthouse with Anne ShawPhoto: Steve Weishampel, Logansquarist

Despite having 51 signed affidavits of voter fraud, they were unable to present them as evidence. Shaw & Locke were seeking a run-off election for relief and because of short time table (5 days after Feb. election) and little legal precedence for allowing a run-offs in Illinois, the judge dismissed the case before the fraud evidence could have been presented to the court.

Why would we support this case, it has nothing to do with housing? Alderman have great power in the neighborhoods to change zoning and allocate TIF funds. During the 2015 election cycle, our leadership voted to support progressive alderman candidates that were not in the pockets of developers. Yes, it is true that Joe Moreno has used the Affordable Requirement Ordinance (ARO) to have some affordable units built in the 1st Ward, but he also takes thousands of dollars in contributions from developers that are looking to drastically change the landscape of Logan Square for the sole purpose of making large profits and building luxury housing for people who do not already live here. At community meetings he often makes remarks that he is taking this money and giving it back, like a modern day Robin Hood, but there is no direct evidence or transparency available to the public to support this notion.

What we do know about him is that he is very passionate about not listening to the voices of the community as large-scale developments along Milwaukee Ave. are green lighted by him without community input. When the community met with him on Ward night in April, backed by a petition with hundreds of signatures to have a community meeting to better discuss the Twin Towers project, he was late, gave us a 15 minute time limit and was inflammatory and hostile.

The new developments along Milwaukee Ave. will severely change the fabric of the neighborhood and are not an affordable option to many who live in the community. Simple supply and demand will not solve the housing crisis in Logan Square.

http://logansquarist.com/2015/05/27/moreno-lawsuit-dismissed/