Chicago Housing Trust Fund Facing Budget Shortfall

One of Chicago’s largest rental subsidy programs is running out of financial wiggle room.

The Chicago Low-Income Housing Trust Fund is facing a $10 million gap in its $14.1 million budget for this year, the Chicago Tribune reported. The shortfall raises questions about the stability of a pillar of Chicago’s housing safety net.

The nonprofit provides subsidies for more than 3,000 rental units across Chicago, targeting households making up to 30 percent of the area’s median income, including seniors, people with disabilities and low-income migrants. The program allows tenants to rent units on the private market at steeply reduced rates, with landlords receiving monthly payments directly from the fund.

The fund has cash reserves of almost $57 million, and leaders say they have enough to cover the gap this year, but a long-term solution is needed.

The deficit stems from a sharp decline in two major revenue sources: the city’s Affordable Housing Opportunity Fund, fed by in-lieu fees from developers, and state recordation fees charged during property sales. The first revenue stream, which builders feed into instead of building required affordable housing, has significantly dried since the state started granting property tax abatements for on-site affordable housing construction in 2021.

To manage the shortfall, the fund has paused subsidies for units that become vacant starting next January, with limited exceptions for high-need tenants. Leaders say they have already reclaimed 37 subsidies this year from underused units.

The fund’s leadership has undergone significant turnover. Its longtime executive director stepped down in March, and Mayor Brandon Johnson appointed a mostly new board in April. Interim executive director Monica Watson said the fund is “doing everything we can to make sure there is no displacement.”

The nonprofit is now exploring additional fundraising, cost-cutting and potential legislative support, despite building its reserves up to $70 million by last year. The city contributes $5 million annually to the program but city and state officials say broader fiscal pressures limit additional support.

Housing advocates warn that further erosion of the trust fund could be devastating. The vast majority of subsidies support tenants on the South and West Sides, in communities long underserved by affordable housing investment.

— Judah Duke