It’s no secret that Chicago, like a number of American cities, has a housing problem. Well, a number of them. But the one we’re talking about right now is affordability. Especially at the very low end of the rent range.
For generations, the solution to low-end affordable housing was S.R.O.’s — modest one-room apartments for working people of modest means. But the city has lost thousands of S.R.O. units over the last decade. Some were gentrified. Some were knocked down to build pricey high-rise apartment buildings. And some were simply condemned as they deteriorated from S.R.O. to flophouse to hellhole.
Recently we received word that one of the few remaining downtown S.R.O.’s is not only going to be saved, it’s going to be rehabilitated. The building in question is the Mark Twain Hotel (111 West Division) at the intersection of LaSalle and Division.
LaSalle and Division has been the focus of quite a lot of rehabilitation lately. The CTA recently splashed out $87 million on a new Red Line subway station underfoot. And across the street, Fifield Companies is putting up the 35-story Sinclair, designed by friends-of-the-blog, SCB.
In the very very early days of its creation, the Sinclair was going to be part of an adopt-a-landmark deal with the city to preserve the Mark Twain. We’re not sure what ever happened to that. We received conflicting information from several people all claiming to be involved with the project, making various overlapping claims.
That appears to be in the past now.
The NHP Foundation, an organization that advocates for, builds, and preserves affordable housing across the nation, now owns the building, and plans a $15 million renovation. It’s going to keep all 152 apartments in the Mark Twain, and somehow manage to do the renovation without displacing anyone.
As recently as January of this year the 1932 building’s low-income residents were in danger of being displaced. An application was filed with the city requesting permission to convert the Harry Glube-designed building into 151 hotel rooms. That application went nowhere, and eventually the building was sold to the non-profit NHP Foundation thanks to changes in city ordinances that make it more attractive for developers to preserve S.R.O.’s.
You can read more about it in the press release below.
Pembrook Finances Preservation of Affordable Housing in Chicago’s Gold Coast Historic District
Provides $16.6 Million Loan to NHP Foundation for Acquisition of Mark Twain Hotel, Helping City Maintain Supply of Well-Located Affordable Apartments in Accordance with 2014 SRO Preservation Ordinance
Pembrook Capital Management LLC (“Pembrook”), through its third commercial real estate debt fund, provided a $16.6 million loan to finance a transaction that preserves 152 units of affordable housing in the Gold Coast neighborhood of Chicago. Pembrook, a commercial real estate investment manager and balance-sheet lender, funded the acquisition by The NHP Foundation of the Mark Twain Hotel, a Single-Room Occupancy (“SRO”) property at the intersection of North Clark and West Division Streets, directly above the Red Line CTA station. The NHP Foundation will maintain the property as affordable apartments pursuant to Chicago’s new Single-Room Occupancy Preservation Ordinance.
“The issue of affordability is very real for residents of American cities as rents and property values rise,” said Stuart J. Boesky, CEO of Pembrook. “After losing 2,200 SRO units between 2011 and 2014, Chicago has taken action to preserve this essential housing resource for the working poor in valuable locations throughout the City. Pembrook is proud to participate in this historic transaction, which is among the first to close under the City’s new SRO rules. The deal brought together public, private, and not-for -profit parties – including Mayor Emanuel, Alderman Burnett and the city government, The NHP Foundation, and our local investment partner BMO Harris – to achieve a positive outcome.” The Chicago Community Loan Fund, Bellwether Enterprise Real Estate Capital, US Bank, and the City of Chicago Department of Planning and Development also contributed financial resources to the acquisition of the property.
“Since 1932, the Mark Twain Hotel has been a landmark of the Gold Coast neighborhood. The acquisition and renovation of the property by The NHP Foundation is an incredibly exciting project for all parties involved,” NHPF’s President and CEO Richard Burns, said. “We are proud to be a part of Chicago’s efforts to preserve its affordable housing and we are delighted with the opportunity to significantly improve the property while providing a better quality of life for the residents.”
“Our relationship with Pembrook provided an opportunity for us to help preserve affordable rental housing options, while working with an experienced commercial real estate investment management company that has a strong track record of success,” added Carl Jenkins, Managing Director, Community Investments, BMO Harris Bank. “We are pleased that the well-located property will continue to provide local residents with access to affordable apartment units.”
Mark Twain Hotel is located at 111 West Division Street. Originally built in 1932, the approximately 58,000 square foot building has 152 SRO units and over 9,000 square feet of retail space on the ground floor. The Red Line station beneath the building underwent a complete $50MM renovation in September 2015, including installation of elevators and escalators, a new entrance at LaSalle & Division, and a new 8,000 square foot mezzanine. The property is well-located in a mixed use neighborhood and is across from The Sinclair, a residential tower and Jewel/Osco supermarket project that will be completed in 2017.
The NHP Foundation is working on the redevelopment phase for the project, with plans to add kitchens to each unit and community space to the property. Construction is anticipated to begin in 2017 with the goal of limiting displacement for existing residents. The property will be included in the National Register’s Proposed Residential Hotels in Chicago, 1900–1930 group designation, which recognizes this class of accommodation from this era as historically significant.