Board of Directors

FYI, the Chicago Housing Trust (formerly known as the Chicago Community Land Trust) is a nonprofit inside Chicago’s Department of Housing focused on working with homeowners to preserve and promote affordable housing and prevent displacement.

Today we’ll hear reports from the Finance Committee, Homeowner Resources & Marketing Committee and Projects & Policy Committee.

Board members are introducing themselves now.

Starting the finance committee report. Board member Calvin Holmes introduces two presenters to summarize 2021 audit: Hilda Renteria and Patricia Fear

Except Fear isn’t here. We suspect she dropped off the call

Renteria says they’re about to give a clean opinion on the org’s financial statements … “We do not have any material weaknesses or significant deficiencies, to report to the organization.”

Also says they didn’t encounter any difficulties conducting the audit. They’ll request a management representation letter for the trust to approve, which is the last step of the process

Renteria presents financial statement highlights. “the most significant activities that you will see in comparison to the prior year are highlighted here, the first two items.” Also important to note that most funding comes from City of Chicago, she says. https://t.co/rKEYGbjflC

2020 was significant year for funding from city — the trust received a $3 million grant, and is now starting to use those funds.

Board member Calvin Holmes points out that we’re closing the year with “a small deficit of $23,000.” “We do expect to have possibly a number of years of negative net assets.” Don’t have new revenue to balance the expensing out. https://t.co/x742eIDeIl

New board member Anthony Simpkins asks: Do we take that on as a liability?

Renteria: Nonprofits must recognize contributions in the year they are received, per accounting rules. “It’s not a liability, but part of your net assets.”

Kathy Tholin: As we implement the program we’ll see an ongoing reduction in our net assets.

Tholin: We’ll explain the nature of the grant when distributing the audit “so it doesn’t appear to outsiders like declining net assets are a problem for the organization. Because they’re not, they’re just part of the plan”

Renteria: We can add a note disclosure “that 3 million has been and will continue to be utilized in the future. as you carry out those program activities.”

Holmes: Can you confirm the letter you’ll add is not an adjustments letter/material weakness/internal control letter? That it was a clean audit? Renteria says yes.

Renteria says most significant new accounting rule is the standard on reporting leases. Leases used to show up as an expense. Now, they are reported as both an asset and a liability, which will offset each other. Standard will be effective in FY 22.

Holmes asks if we should wait to release the audit with the new note.

Joy Aruguete says we can give contingent approval; if treasurer reviews additional wording is acceptable that’ll constitute final approval. “I don’t think there’s anything substantive that’s gonna change the numbers”

Holmes: Can we add another note to say we’ve been renamed? (From Chicago Community Land Trust)
Renteria: Yes, we already have that in subsequent events, just need the date.

Members approve motion for contingent approval of the audit.

Looking at Q1 financials/budget comparison. Holmes: $16,000 surplus happening because DOH is ahead of schedule. We still need to hire an outreach director / other operating expenses to come

Motion passed to approve the financial report.

Now we move to the Homeowner Resources and Marketing Committee report. Kathy Tholin points out website just launched: http://ChicagoHousingTrust.org. Marketing Committee working on a tagline for the new name.

Also: “We are about to enter a period with lots of housing units that will be available both in our traditional program and in our pilot programs” … need to market to target populations. Planning to do a trolley tour of available units.

Holmes: Is the trolley tour an opportunity to get elected officials who haven’t supported the Housing Trust in the mix?

Tholin: We haven’t talked about that. Primary purpose of trolley tour is to get people to buy property. Perhaps a separate event for potential supporters?

Towns notes with COVID-19 smaller tours are probably better, anyway.

Holmes proposes including media in the second trolley tour as well.

Will Towns now gives Policy & Projects Committee report. About 30% of the $3 million has been used so far. https://t.co/xcmMT8R8yD

In the coming months, properties will start to get marketed. When they’re sold, revenue will come back to organization and go back out again.

The trust is looking for a modular home builder. (Modular homes are built indoors in a factory. Builders assemble them on location)

Novara said “in areas where we may be most interested in creating long term affordability because of gentrification, those are not the areas where the city has vacant land.” Proposes a mix of city-owned land and not

Simpkins: A partner has acquired 20 lots and is starting on 3 homes. Fronczak: partners have done a deep dive into identifying the major barriers for homeowners within the first five years. Also — we’ve been working with Inherent Homes.

Holmes: Modular construction is sensitive. Is the department comfortable with design standards?

Novara: There is a general embrace with this as a way to bring affordable homeownership into the communities

Towns: In marketing approach, emphasize manufactured home less, “cutting edge”-ness more.

Aruguete: “We’re not ready to pull the trigger on it yet, but it’s certainly on the table”

Tania Kadakia asks — has a modular home been built in the city yet?

Novara: “There are two in backyard, one in North Lawndale and there might be other ones”

Factory for the homes is based in the Southwest Side. Little Village. 4647 W Polk.

Kadakia: If these are the same quality as homes being built around the city, who cares if it’s modular?

Towns compares marketing modular homes to marketing Teslas. Need to show the homes work. Also suggests we set up a time to go to the factory, see the facility + walk through a model

Aruguete: We are in a nascent point. We’re not saying we’ll adopt and do those homes tomorrow. We’ll pursue it because there’s efficiency and it makes sense.

Tim Klont: Liz Butler raised the point of risk. Does it make more sense to sell the lot with the concept of the house so we don’t enter into the chain of ownership? Should we connect the potential homeowner with the builder instead?

Ciere Boatright — we should, to be clear, say the homes start at $300,000 but cost will be added based on site improvements.

Towns : “We should be talking at least internally about what the true cost is. And then there’s our ability to subsidize that to get it to an affordable rate.”

Boatright: Have we seen any issues with the unions on the modular housing? Terri Haymaker: They have been working with the unions. Working on these projects is a path to get into the unions

Towns: We’re just getting started, will keep taking lessons learned.
Also: We need to know where to send dollars so they go back into the communities they’re from.

Aruguete: A lot of interest in continuing down this path. It’ll come back to the board again. Time for the last report, from executive director.

Fronczak is now overviewing budgets/balances on in-progress units.

Some overall numbers. She notes closings will start climbing at the end of the third quarter. “Our busy season hits late summer.” Volume has been increasing over the years https://t.co/2oy0G5evns

She notes that a foreclosure summons was issued to one of the homeowners. But with COVID-19 recover dollars the owner should be able to stay in the house.

Butler: Why did we receive notice?

Fronczak: Our covenant serves as a lean on the differential between the affordable purchase price and the full market value

She also notes a closing happened last week that “went a little bit sideways.” Two sets of documents were at play with conflicting depictions of when a loan needed to be paid back, confusing the buyer and Fronczak. Working on a solution.

Holmes: Financial presses say we’re heading toward something — a slowdown or a crash, perhaps. Aruguete: We’ve been through this before, were functional in 2008. Affordable housing doesn’t necessarily follow the market but we should keep an eye on that.

Meeting adjourns at 10:56 a.m. This concludes the Chicago Housing Trust Board meeting. The next meeting is scheduled for July 26. For more meeting coverage, check out http://documenters.org .