CHICAGO - Two years after Island Terrace Apartments in Woodlawn was saved from being purchased by market-focused buyers, work to modernize the building and extend affordability for generations will begin Jan. 3 and continue for the next two years. This marks an important victory in the Woodlawn community’s efforts to preserve and expand affordable housing near the Obama Presidential Center (OPC) just a few blocks away.
Preservation of Affordable Housing Inc. (POAH), a national non-profit affordable housing developer, closed on Dec. 20 on a complex $117 million financing deal that will generate resources needed to overhaul residents’ apartments and many of the 21-story, 240-unit building’s major systems. This will be the property’s first comprehensive renovation since its construction 50-plus years ago.
The deal also adds to POAH’s extensive affordable housing portfolio in Woodlawn and to its growing presence in the Chicago market, where it has developed and acquired more than 2,800 mixed-income homes, most of those in the past decade. “Island Terrace is a critical source of affordable housing in this part of Chicago, and we are delighted to invest in its future,” said POAH Vice President for Development Molly Ekerdt. “With the investments of public and private partners and the involvement of residents, this property will serve low- and moderate-income families for many years to come.”
POAH acquired Island Terrace in 2021, competing against market-rate buyers hoping to capitalize on Woodlawn’s economic growth and the property’s location overlooking historic Jackson Park, Chicago’s lakefront and the OPC. That effort includes substantial commitments from the Illinois Housing Development Authority (IHDA), the City of Chicago and the U.S. Department of Housing and Urban Development (HUD). Ultimately, the final deal includes 9% and 4% Low-Income Housing Tax Credits, $24 million in secondary loans from IHDA and the City, a HUD-insured mortgage, HUD Green and Resilient Retrofit Program (GRRP) funds and a Com-Ed energy-efficiency grant.
Merchants Bank, which provided the initial financing to purchase Island Terrace, is also the FHA mortgage lender and is investing more than $45 million to purchase the federal tax credits. The AFL-CIO Housing Investment Trust is contributing funds for the FHA mortgage.LBBA is the architect, and a joint venture of Walsh Construction Group and GMA construction Group is the general contractor.
"The preservation of Island Terrace is emblematic of our commitment to creating a Chicago where every resident has access to affordable, quality housing," said Jim R. Horan, Chicago’s acting housing commissioner. "In the short few years since the passing of the Woodlawn Preservation Ordinance, we continue to actively address the challenges posed by urban development while safeguarding the rights of our communities to remain in their homes. Island Terrace is a marker of this effort."
The extensive renovations at Island Terrace will include updated kitchens, bathrooms and other work inside all 240 apartments; a redesigned first floor, community room and laundry facilities; new roof, windows, plumbing and electrical systems; and new outdoor resident seating and playground.
Construction will last 24 months and require the temporary relocation of all residents. POAH will cover all relocation costs, and all residents will return to Island Terrace.
Affordability will also be expanded and extended. Currently, 88 (37%) units carry affordability restrictions, with the balance unrestricted. POAH will make nearly all of the units affordable, though any residents currently living there with higher incomes will be able to stay. Affordability will be in place for at least the next 30 years.
“IHDA is proud to be a part of this effort that will not only preserve but expand the affordable housing options in Woodlawn as the neighborhood continues to develop and grow,” said IHDA Executive Director Kristin Faust. “This milestone is proof of what is possible when public and private partners join forces to address housing and equity needs in our state.”
Island Terrace is one of the largest preservation deals in Woodlawn since the City of Chicago passed the Woodlawn Preservation Ordinance in 2020 to minimize displacement following news of the OPC being built in Jackson Park. In 2021 POAH joined forces with the Jonathan Rose Cos. to acquire and preserve Jackson Park Terrace, a 318-unit affordable community just north of Island Terrace. Since 2010 POAH has built or acquired 1,354 homes in Woodlawn.
“The preservation of Island Terrace means there will be more housing that’s more affordable to more families in Chicago,” said Chang Suh, CEO of the AFL-CIO Housing Investment Trust. “Together we’re getting a lot done, and more needs to be done. That’s what makes this kind of successful, collaborative project so important.”
Built in 1970, Island Terrace was once owned by George E. Johnson, founder of the famous Chicago-based cosmetic firm Johnson Products Company, which sold tens of millions of Ultra Sheen hair care products and sponsored the Chicago-based television dance show “Soul Train.” The building’s architect was John Warren Moutoussamy, whose other notable buildings in Chicago include the Johnson Publishing Building on Michigan Avenue, several campuses of the Chicago City Colleges and the 36-story Regents Park twin towers in the Hyde Park neighborhood.
POAH is a national nonprofit organization whose mission is to preserve, create and sustain affordable, healthy homes that support economic security, racial equity and access to opportunity for all. Though headquartered in Boston, POAH maintains a Midwest base of operations in Chicago