Heartland Housing Collapse Puts Affordable Uptown Units at Risk

The fallout from Heartland Housing’s collapse is threatening to displace vulnerable residents in Chicago’s Uptown neighborhood.

At the heart of the crisis is the Leland, a 137-unit apartment building at 1207 West Leland Avenue, which may soon be auctioned over a $2 million mortgage default, the Chicago Tribune reported.

The six-story property, in the Uptown Square District, provides affordable housing to seniors, veterans and people with disabilities — a focal point in the struggle between preserving affordability and meeting the market’s growing appetite for luxury development.

Heartland Housing, a nonprofit developer, once managed the Leland and 13 other properties across the city. However, financial instability brought on by plummeting rent collections during the pandemic forced the organization into receivership last year.

Mercy Community Capital, the nonprofit mortgage holder for the Leland, filed for foreclosure in September, citing mounting debt.

The Leland faces significant challenges, including high vacancy rates, deferred maintenance and a tenant base requiring supportive housing.

Mercy Community Capital reached out to more than 30 potential investors but was unsuccessful in securing a buyer for the apartment building.

“Due to the extreme needs at the property, none of these potential owners have been willing to take over the property,” Brian Sample, vice president of Mercy Community Capital, stated in a court document.

Meanwhile, housing advocates fear that an auction could push the property into the hands of developers likely to convert it into market-rate or luxury apartments. Over the years, the Uptown neighborhood has grown into a hotspot for upscale development, with apartment towers catering to high-income residents.

State and city officials hope the Leland’s affordability can be preserved. It is the last of the Heartland Housing properties to be dealt with.

“To date, ownership of 13 of the 14 properties have either been transferred or are in the process of being transferred to new owners who will maintain the affordability of the properties and not evict the tenants,” said Andrew Field, deputy director of the Illinois Housing Development Authority.

— Andrew Terrell

Development

Chicago

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