Pritzker-backed Chicago Prize to Fund Affordable Housing

A $10 million infusion from Penny Pritzker’s foundation will help build 125 affordable homes in Chicago Lawn and kickstart more construction down the line.

The Pritzker Traubert Foundation awarded the $10 million Chicago Prize on Tuesday to Reclaiming Chicago, a coalition of nonprofit developers with the goal to build 2,000 affordable homes in the South and West sides. The foundation is led by former U.S. Secretary of Commerce and Chicago real estate veteran Penny Pritzker and her husband, Bryan Traubert.

The grant money will fund the purchase of a 17-acre lot at 74th Street and Talman Avenue, and contribute to a $42 million revolving loan fund to finance the planned 125 affordable homes on that site along with future construction. The project will include a combination of single-family homes and two-flats.

The award is the third cycle of the Chicago Prize, an initiative launched in 2019 to spur economic development in Chicago’s South and West sides. It’s the first time the prize has funded building affordable homes in Chicago’s working-class neighborhoods.

“It’s really hard for people to create economic wealth when they’re starting at a low income level,” said Cindy Moelis, president of the Pritzker Traubert Foundation. “This project is trying to get housing built for less money, as well as getting families into affordable homes.”

The donation will help speed up the construction process for the Chicago Lawn site, said Richard Townsell, the executive director of Lawndale Christian Development Corporation, one of the groups behind Reclaiming Chicago.

“Any time you can get that amount of money that you don’t have to borrow, it makes a big difference,” he said. “I can move at a speed and at a pace that I wouldn’t if I had to go through banks and layers of bureaucracy at the city.”

The award plan requires the group to begin construction at the site within 18 months, and the group has agreed to complete 100 homes within five years of the award, Moelis said.

Reclaiming Chicago has been at work since 2021, and has already built about 90 homes on previously empty city lots elsewhere, with about 75 under construction. The large lot for the 74th and Talman development will help consolidate construction costs, said Jeff Bartow, executive director of the Southwest Organizing Project, which is leading the effort alongside The Resurrection Project.

“It provides an ability to move more efficiently and economically because of the scale,” Bartow said.

Bridging the gap

Reclaiming Chicago is confronting a challenge that makes private development for single-family homes on the South Side difficult: homes generally can’t sell for more than it costs to build them.

The group is expecting construction for each home to cost between $400,000 and $450,000, Chicago Prize senior advisor Teresa Prim said. Once constructed, they will be sold to people making between 80 to 120 percent of the area median income with a target price between $260,000 and $280,000, Prim said. The two-flats will be sold for $390,000.

“This provides opportunities for families to build equity, to build wealth, and it’s great for our neighborhoods,” Bartow said.

Reclaiming Chicago is taking advantage of state subsidies to cover those costs, and Townsell said he hopes their project can serve as an example to attract more private development in the area.

“We’re almost doing a proof of concept that this can be done, so that we can attract some of the larger national builders to come back to Chicago and build at scale,” Townsell said.

Beyond the initial project in Chicago Lawn, the Chicago Prize will add to an existing loan fund designed to recycle its capital from sales to build more homes. Reclaiming Chicago borrows from the fund to finance construction and repays the loans when homes are sold. The income from those sales will go back into the fund to finance future projects.

Bringing down costs

Reclaiming Chicago is also lobbying for policy changes that will bring down construction costs and make the affordable homes it’s building more feasible. City policies that slow down constructions are one of the major barriers to affordable homebuilding, Townsell said.

Members of the coalition have been involved in city initiatives like Cut the Tape aimed at speeding up the building process.

“The goal of (Reclaiming Chicago) is really to advocate for policy changes that are going to help not just them, but other builders and other community leaders and developers build affordable homes faster and cheaper,” Pritzker Traubert Foundation director of community investment Kareeshma Ali said.

Reclaiming Chicago is led by United Power for Action and Justice and includes the Southwest Organizing Project, The Resurrection Project, Lawndale Christian Development Corporation, Chicago Neighborhood Initiatives, the Hope Center Foundation, and Precious Blood Ministry of Reconciliation. The coalition was chosen for the Chicago Prize from among four finalists, which included proposals in North Lawndale, Pullman/Roseland and Bronzeville.