HELPING A SUBSIDIZED BUILDING BECOME A TENANT OWNED COOP

November 9, 2001

Chicago Reader

A Place of Their Own

Hugh McGhee lives just off North Lake Shore Drive in a high-rise apartment complex whose location makes it ripe for condo conversion.

Except it's not being converted to anything. After months of thorny negotiations between residents and their landlord, the complex known as Lakeview Towers will remain what it's been for over 30 years--500 units of subsidized housing for low-to-moderate-income tenants who came precariously close to being priced out of the neighborhood.

Furthermore, it's now owned by its tenants, an unlikely consortium of housing managers that includes a retired bus driver, a cabdriver, and a retired librarian. For better or worse, and some sideline observers are expecting worse, they'll be running the complex for the next 40 years. "We're going to make this work," says McGhee, who helped organize the recent tenant buyout. "We're a poster child for this sort of tenant-owned management. All eyes are on us."

The towers, on Clarendon just south of Wilson, were built in 1969 as part of a federal program intended to provide affordable housing for the poor and working class. In 1992 the building was sold to Voice of the People, a not-for-profit organization that develops and manages low-income housing in Uptown. In turn, Voice turned management over to the Lakeview Towers Preservation Corporation, an entity specially created to run the complex. Voice agreed to put two tenants on the LTPC board and to offer the complex's residents right of first refusal if the building were put up for sale.

According to tenants, Voice (or LTPC) did a good job of managing the property, pumping in about $7 million worth of renovations over the years. During the LTPC reign, the towers came to symbolize the surrounding Uptown community--an amalgam of races and religions that included refugees and immigrants from Africa, eastern Europe, the Middle East, and Asia, as well as U.S.-born blacks, whites, and Hispanics. "It's a real melting pot here," says McGhee.

It was also economically diverse. Of the 500 units, distributed between two 25-story towers, 106 rent at market rate, the remaining 394 to low-income tenants who pay no more than 30 percent of their income in rent. "One of the reasons it's so nice here is that there's always been a rigorous screening process," says Diane Santucci, a cab-driver who lives in the complex. "They do a background check and a credit check on you. They send people to look at where you live. There's a waiting list. It's not easy to get in here."

Down through the years, residents had talked about buying Lakeview Towers. "It was always a dream of tenants here to own the buildings," says McGhee, who's a retired CTA bus driver. "It's not that Voice was doing a bad job running it. We just felt we could do a better job because we have so much at stake, living here and all. We talked to the local officials about it, particularly Alderman Helen Shiller. People knew what we wanted." In the fall of 2000, McGhee and Santucci were selected by their fellow tenants to fill two vacancies on the LTPC board. "I was eager to join the board because I wanted to do what I could to help us buy the building," says McGhee.

But at their first meeting in January, McGhee and Santucci were told by the other LTPC board members that the towers were going to be sold to Habitat, one of the city's largest housing management companies. "We were stunned. We didn't know about any sales agreement with Habitat--we didn't know the building was even up for sale," says Santucci. "We were two rookies on the board, not knowing what's going on, not knowing what to do or say."

As McGhee and Santucci tell the story, the other board members, who included tenant activist Denice Irwin and Voice's executive director, Gladys Dailey, told them it was hopeless to fight the sale. "They said it's a done deal," says Santucci. "I said, `But I just talked to Helen Shiller and she told me that we still can buy this building.' And Denice looked me right in the face and said, `Oh, Helen knows all about this.'"

Under the terms of the sales agreement, Habitat would have been obliged to keep the complex affordable until 2009. After that, however, they, or whoever owned the buildings then, would have been free to do what they wanted with the property, including converting it to condominiums. "Converting the towers to condos is a scary thought," says Santucci. "We have a lot of seniors in that building. Where would they go?"

After the LTPC board meeting, Santucci says she called Shiller's office and left a stinging message. "I felt Helen had betrayed us," says Santucci. "I wanted to know what was going on." Within a few hours Shiller called back with her side of the story. "I told Diane that I didn't know anything about the Habitat sale until I got Diane's message," says Shiller. "I immediately called Voice of the People, HUD, and Habitat. I discovered that the deal between Habitat and LTPC was not finalized. According to HUD, the tenants still had a chance to buy the building. Diane and Hugh had been given erroneous information. I don't know why the other board members told them that. You'll have to ask Gladys and Denice."

Irwin didn't return phone calls and Dailey would not comment.

According to Shiller, the tenants still had the right of first refusal. "I told Diane that I still supported tenant ownership, if that's what the tenants wanted," says Shiller.

So McGhee and Santucci gathered the tenants to discuss buying the building. It was not a venture without risks, they realized. It's one thing to get sentimental over the dream of working folk controlling their lives. It's quite another to deal with the headaches of overseeing 500 units. "You could argue that the tenants might be better off with Habitat running the complex, since they have so much more experience in housing management," says one lawyer close to the deal. "I can understand why some people might doubt the residents' ability to run the property." But McGhee and his allies say the doubters motivated them. "We're tired of being underestimated-- there's a lot of talent in this building," says Patricia McGhee, a retired librarian and Hugh McGhee's wife. "You've got to figure that we'll know what's best for this building."

By the end of January, the tenants had announced their intentions to buy the buildings. It wasn't going to be easy. They would have to raise over $50,000 in earnest money by March. "To get the money we turned to all of our friends," says Santucci. "One of the first groups we went to was the Jewish Council on Urban Affairs. All I can say is, thank God for the Jewish Council."

JCUA, a not-for-profit social service and advocacy group, was formed over 40 years ago as part of an effort to build a bridge between Jews who had left the city and blacks who had moved to old Jewish west-side neighborhoods. "We have an investors program in which some of our members agree to make no-interest loans for projects like Lakeview," says Rob Sadowsky, JCUA's community development consultant. "We were able to come up with over $40,000."

In addition, the tenants passed the hat. "Serafim Kogan, a tenant here, came up with the idea of raising some of the money ourselves," says Patricia McGhee. "It was a great idea to show how serious we were. So we did it. I sat behind that desk and the people just came in. Most of the people gave about $100. The lowest amount was $5 from a lady on fixed income with medical difficulties. That $5 was like the widow who gave a mite. It was very moving."

By spring they had the money they needed. The state kicked in a $500,000 no-interest mortgage that enabled them to pay back all of their lenders, including the JCUA. For several months they haggled with Voice over details, took tenant management courses, and filled out pages of federal and state application forms. In October the deal was completed and the building was theirs.

"The October 17 celebration we had was one of the most rewarding moments in my career, coming as it did after September 11," says Sadowsky. "I was struck by the number of Muslim Pakistani men, tenants in that building, who came up to me to say how appreciative they were of the Jewish community."

Now comes the hard work for the tenants. "We have to worry about the leaking roof, we have to deal with disputes between tenants, and we have all the problems of management," says Santucci. "So we have some headaches. So what? We got what we wanted. We can't wait to get to work."

Copyright 2001 Chicago Reader, Inc.