Jonathan Rose Cos. acquired Barbara Jean Wright Court Apartments, a troubled 272-unit affordable housing complex sandwiched between the University of Illinois at Chicago and the Pilsen neighborhood, for $17.5 million from developer Anthony Fusco’s Chicago Community Development Corp. on Tuesday. It’s the latest in a string of purchases by the New York City investor, now a key player in Chicago’s affordable housing community.
It took years to negotiate the latest deal, which needed funding and approval from several government agencies. But with financing finally in place, long-suffering residents hope the new owner can tackle a rodent infestation, among many other maintenance issues plaguing the development.
“We’ve been through hell and back with this property,” said Jessie Johnson, the head of the Barbara Jean Wright tenant council and a resident since it opened in 1972.
Fusco could not be reached for comment, but the 73-year-old has previously said he wanted to retire, and that Rose was better able to refinance the property.
Jonathan Rose Cos. pitched itself to residents and government officials as a national company with deep pockets, one able to preserve and maintain affordable housing communities for many years. And although Rose partner and senior managing director Nathan Taft said the company’s growing Chicago presence won’t transform the city’s affordable housing portfolio, it will ensure a better, healthier life for residents at the several developments it now owns.
“What we can do with these individual properties is come in, and have a significant impact,” he said. “What we’ve been trying to do is our part to lift up these assets and have them be safe, stable places for people to live.”
Barbara Jean Wright was one of many affordable, privately owned complexes throughout the U.S. originally financed in the 1970s with loans from the Department of Housing and Urban Development. But the agency stopped handing out such loans, making it challenging for owners to recapitalize the properties and keep them affordable when the original contracts expired.
Fusco saved the development from foreclosure when he bought the 11.5-acre site in 1999, and residents had high hopes he would maintain its two- and four-story structures. His CCDC took over several South Side affordable housing developments around the same time, a portfolio which eventually included Archer Courts in Chinatown and Englewood Gardens, a scattered-site Section 8 portfolio in the Englewood neighborhood. But Johnson and other residents said the past several decades were a disappointment, marked by a steady decline in housing conditions.
“Once upon a time, (Fusco) was viewed as this affordable housing star, and that may have been the case, but sometimes the road to hell is paved with good intentions,” Johnson said.
Fusco did some renovation work in those early years, but the effort petered out, she added. “He let this property go to the dogs. They did not do anything in here for years.”
Rats eventually chewed holes in the walls of many apartments, black mold also spread, and attempts to address other problems such as broken sidewalks were often just patchwork, Johnson added.
Over the past several decades, rental income generated by the property wasn’t sufficient to maintain it, but this new deal finally puts the Barbara Jean Wright on sound financial footing, according to Brandon Kearse, managing director at Jonathan Rose Cos.
“It should set the development up for great success in the long run,” he said.
The Rose firm has been on an affordable housing buying spree over the past year, especially on the South Side. It bought Fusco’s 146-unit Archer Courts in February for $11.6 million, and in July along with partner 5T Management paid $10.7 million for Fusco’s 13-building Englewood Gardens. In August Rose joined with the national nonprofit Preservation of Affordable Housing to buy for $25 million Jackson Park Terrace, a 15-story high rise and some neighboring townhomes near the Obama Presidential Center development in Woodlawn, from the Rev. Leon Finney Jr.’s Woodlawn Community Development Corp., which filed for bankruptcy in 2018.
Rose acquired Archer Courts, Englewood Gardens and Jackson Park Terrace with its $525 million Rose Affordable Housing Preservation Fund V, and plans renovations at all three. The company now owns about 18,000 units nationwide, and more than 2,000 across the Chicago area.
The company took a different route to finance its purchase of Barbara Jean Wright. It paid Fusco $1, took over his $17.5 million in remaining debt on the property, and will launch a $46 million renovation financed by a Federal Housing Administration loan, federal tax credit equity, tax increment financing funds from the city and state tax credits, among other sources. Under the new agreement, rental assistance from both HUD and Chicago Housing Authority will keep most apartments affordable to those earning 60% or less of the area median income, and 21 units will be market-rate.
Rose didn’t need to tap all those agencies to buy Archer Courts, Englewood Gardens, Jackson Park Terrace or its other Chicago properties, because they only need relatively light renovations, while Barbara Jean Wright needs a complete makeover, inside and out, according to Taft.
“In this case, Barbara Jean Wright needed it,” he said.
The company promised to deliver new security gates, fencing, new kitchens, bathrooms, floors, carpeting and lighting, along with a 5,000-square-foot community center, and a renovated basketball court and playground, according to Karyntha Walsh, senior project manager.
“There is also a significant amount of deferred maintenance that we will address,” she said.
The tenant council is also negotiating an agreement with Rose on how the company will manage the community, according to Sam Douglas, the council’s vice president. He said the council wants to establish and help administer recreational and educational programs for neighborhood children and senior citizens.
“We want to be involved when Rose comes in here, and put it in writing, because we’ve suffered when things were not put in writing,” he said.
Walsh said the parties have been talking for 18 months, and are almost ready to sign an agreement, with many changes for the development coming from residents’ suggestions, including the new community center and better security measures.
“We are at a final draft,” she said. “They have been with us step by step.”
A. Robert DeBonnett, a neighborhood resident and tenant council volunteer, said he hopes the new owner will end decades of neglect. He said Barbara Jean Wright should be a gem, especially because it’s surrounded by so many key institutions and landmarks, including the university, St. Ignatius College Prep, and the historic South Water Market, now a 917-unit condo development called University Commons.
“Barbara Jean Wright could be a model community to hold up as an example,” he said.