Valerie F.

Leonard
4111 West 21st Place
Chicago, IL 60623
Phone: 773-521-3137 Fax: 773-521-3137
E-mail: valeriefleonard@msn.com

November 20, 2008

Ms. Grace Hou

Assistant Secretary for Programs, DHS
401 S. Clinton Street
Chicago, IL 60607

Re: Public Comment-Neighborhood Stabilization Program State Action Plan

Dear Ms. Hou:

It gives me great pleasure to provide public comment for the State of Illinois Consolidated Plan -
Substantial Amendment to the 2008 Action Plan for the Neighborhood Stabilization Program (“Plan
Amendment”). Please find my comments below.

Interagency NSP Steering Committee

The Plan Amendment indicates that an Interagency NSP Steering Committee will be comprised of
representatives from the partner agencies who will provide overarching policy direction and general
monitoring of progress. I recommend that this steering committee be expanded to include representation
from TEAM Illinois and a broad base of community-based stakeholders from the target areas. The
operations of this Committee should be transparent, with public meetings and reports of the proceedings
through links on the State’s website, as well as the pages for the partner agencies. Other means of
communication could include newsletters, press releases and guest appearances on television and radio
talk shows.

Community Participation

The excerpt from the State Code has language that seems similar, if not verbatim to the enabling
legislation that created TIFs in the State of Illinois. If one of the implicit uses of the NSP is to leverage
TIF dollars, I recommend that a local TIF oversight panel comprised of a broad cross-section of
community stakeholders to provide advice into the use of the NSP funds. This body should include local
residents, business leaders, community based organizations, representatives from the public sector and
philanthropic community. Ideally, there should be a clear separation between the planning, development,
investment and advisory functions, with no conflicts of interest between the members of this body, local
planners and developers.

If such bodies do not exist in the NSP target area, then the community advisory committee that provides
advice into the use of the State’s CDBG funds should perform this function. The advantage is the
statewide advisory group would not be closely tied to the local politics of the local community, and can
be more objective in its advice. This advantage could also be a weakness, as the statewide body may not
be as familiar with the nuances that are specific to an individual community.
Partners and Roles

The State of Illinois is to be commended for drawing on the resources of the Department of Human
Services, Illinois Housing Development Authority and the Department of Commerce and Economic
Opportunity. The Plan Amendment provides an overview of what each agency does, and indicates that
each agency will have a role in administration of the program. The proposed plan budget allocates all the
administration dollars with the Department of Human Services. It would be helpful to outline the specific
role each agency will have in administration of the program, and how this administration will be
coordinated across agency lines. I recognize that the NSP Steering Committee would be charged with
ironing out many of these details.

Bulk Sales

The Plan Amendment may assist localities by negotiating bulk sales of properties either directly or
through a third party; acquiring and holding property directly for later disposition; and/or developing an
Real Estate Owned (REO) inventory of information and resources. While I understand that it is in the
State’s interest to negotiate with as few owners/managers, as possible, I would strongly recommend that
every effort be made to diversify ownership of these properties among a broad base of investors. I have
seen situations in the past where ownership of a large concentration of public housing units or project
based section 8 housing has proven to be unmanageable over time. One such example is the Chicago
Housing Authority, which had over 250,000 units of public housing at its peak. As a result of years of
delayed maintenance and high crime, the CHA decided to reinvent public housing under its Plan for
Transformation. Another example is the Habitat Boulevard Lawndale Restoration project comprised of
over 1,500 units of project-based Section 8 rental units. Years of delayed maintenance and building code
violations resulted in the seizure of the properties by the federal government. These units have been sold
to several developers who have rehabbed them for mixed income for-sale and rental units.

Wherever possible, the State should encourage churches, local community based organizations and
entrepreneurs to purchase properties. To the extent that capacity is an issue, I recommend that NSP funds
be leveraged with other programs such as HOME, and others, to build the capacity of churches and other
community based entrepreneurs and nonprofits to take advantage of the program. This provides win-win
solutions for the State, the local municipalities and the local community based organizations.

Use of Funds

The Plan Amendment indicates that one of the NSP eligible uses is to establish financing mechanisms for
purchase and redevelopment of foreclosed upon homes and residential properties, including such
mechanisms as soft-seconds, loan loss reserves, and shared-equity loans for low- and moderate-income
homeowners. Another eligible use of the funds is for counseling services in connection with the purchase
of homes. However, there is no provision to work with homeowners who are in danger of losing their
homes.

If one of the criteria for targeting an area for NSP is the prevalence of subprime lending, then it makes
sense to use some of the funds to assist homeowners to refinance their homes at more favorable rates.
Another option would be to create a fund to purchase homes from persons who are in danger of
foreclosure, and allowing them to rent them, with an option to repurchase the homes at a later date. The
accumulated rents could be used for a down payment. Hopefully, this would help to stem the tide of
displacement of local residents, while ensuring cash flow for the buyer.
Marketing Considerations

I had an opportunity to attend a housing symposium sponsored by the City of Chicago’s Mayor’s Office
for People with Disabilities on November 17,2008. One of the developers in attendance lamented that he
built a development financed by New Homes for Chicago, and complied with the requirement to make
25% of the units accessible for people with disabilities. He has been unsuccessful in selling the units, and
program guidelines won’t allow him to rent them. Apparently there is a significant gap between the price
of the homes which were reportedly selling in the $250,000 range and the ability of low income people
with disabilities to purchase them.

To the best of my recollection, the moderator indicated that many people with disabilities are living below
the poverty line. Many of the housing options have issues with accessibility, affordability, and crime.
These issues should be addressed as the program is developed more fully.

Also, this program could create opportunities to address the growing need for affordable, accessible
senior housing in the State of Illinois by retrofitting units for seniors who would like to “age in place”, as
opposed to moving to senior living facilities or nursing homes.

In closing, I would like to thank you for your time and consideration of my comments. It is my sincerest
hope that you might be able to incorporate some of these ideas into the final NSP design. If you have any
questions, please feel free to call me at 773-521-3137, or e-mail me at valeriefleonard@msn.com.

Sincerely,

Valerie F. Leonard