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An Ordinance Authorizing the Execution of a Development Agreement between the Village of Oak Park and Interfaith Housing Development Corporation
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Introduction
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The purpose of this agenda item is to authorize the Village to enter into a Development Agreement to support the Keystone Apartment project at 1106 Madison Street (P.I.Ns. 16-07-322-024-0000, 16-07-322-025-0000, and 16-07-322-02-0000).
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Recommended Action
Staff recommends the Board of Trustees approve the Ordinance.
Prior Board Action
The Board has taken the following prior action(s):
• On October 15, 2025, the Village Board passed ORD 25-171 (An Ordinance Granting an Extension of a Special Use Permit for a Major Planned Development at the Property Located at 1106 Madison Street)
• On January 8, 2025, the Village Board passed RES 25-111 (Concur with the Housing Programs Advisory Committee's Recommendations and Adopt a Resolution Authorizing the Provision of Conditional Commitment Letters)
• On July 30, 2024, the Village Board passed ORD 24-142 (Concur with the Plan Commission and Adopt an Ordinance Granting a Special Use Permit for a Major Planned Development Containing a Five-Story Residential Building Consisting of 36 Dwelling Units at the Property Located at 1106 Madison Street)
Background
Interfaith Housing Development Corporation has been working with the Village to develop Keystone Apartments at 1106 Madison St over the last two years. They entered into a purchase and sale agreement with Fellowship Christian Church to acquire the site in early 2024. The Board approved the Special Use Permit for this 36-unit affordable housing development at a meeting in July 2024 and renewed that approval in October 2025. All units will be affordable for 50 years to households with incomes lower than 60% of the area median income (AMI). In February 2025, the Board approved the issuance of a conditional commitment letter in support of the project and the use of $1,260,527 in grant funds from the Housing Trust Fund to support the development. Interfaith’s option to purchase the site expired in the summer of 2025.
Since that time, staff have worked with both Interfaith and the Church to understand how we can help the project move forward while Interfaith worked to secure funding. Those discussions identified the benefits of supporting Interfaith’s acquisition of the development site from the Church. The proposed approach has the Village purchasing the property from the Church and then transferring ownership of the property to Interfaith. That process has many benefits. It provides the Church with certainty in closing. It provides Interfaith certainty of site control and the ability to access Illinois Affordable Housing Tax Credits to support the development. It reduces the Village’s investment in the project to $1,000,000 while increasing the likelihood that the project proceeds.
Timing Considerations
Interfaith is seeking 9% Low Income Housing Tax Credits (LIHTC) as the primary funding to support this development. The application for tax credits is due on February 25, 2026. As part of that application, Interfaith must show that it has site control. The Village entering the purchase and sale agreement in conjunction with entering into the development agreement with Interfaith will allow Interfaith to show that it has a path to site control.
Budget Impact
Staff propose that the $1,000,000 purchase price of this property come from the Village’s fund balance. That funding taken from the fund balance will be repaid from the Housing Trust Fund (fund 2077) if the property receives its LIHTC allocation in summer 2026. That fund has maintained an encumbrance of more than $1,000,000 for this project since the Board approved the original conditional commitment letter in February 2025.
Operating Impact
There is no operating impact associated with this item. The item aligns with the Department’s core service delivery.
DEI Impact
The Keystone project would increase the supply of rental housing affordable to households earning below 60% of AMI, thereby supporting economic inclusion.
Community Input
In fall/winter 2024, the Housing Programs Advisory Committee (HPAC) considered Interfaith’s initial application for assistance from the Housing Trust Fund. It recommended that the Board enter a conditional commitment letter to support an application to IHDA in winter 2025. Upon the expiration of that conditional commitment letter, HPAC heard a new proposal from Interfaith to support purchasing the property in late summer 2025. HPAC declined to make a recommendation to the Board at that time regarding that request due to uncertainty about what funding sources would allow the Village to support a potential purchase. Since that time, Interfaith has focused on LIHTC as the main source of funding.
Staff Recommendation
Pass the Ordinance, authorizing staff to enter into the Development Agreement.
Advantages:
• Ensures that the site is transferred to Interfaith and site control is secured.
• Allows Interfaith to access Illinois Affordable Housing Tax Credits since the Village would be donating the site to Interfaith for the proposed project.
• This action reduces the amount of assistance provided by the Village to the project.
• Potentially creates 36 new units of housing affordable to households with incomes lower than 60% of AMI.
Disadvantages:
• If the development does not receive LIHTCs and Interfaith does not pursue additional funding, the Village would need to reclaim the site and find an alternative use.
Alternatives
Provide staff feedback/ direction on the Development Agreement.
Advantages:
• Allows for adjustment by staff based on Board feedback.
Disadvantages:
• Threatens the ability of Interfaith to submit a complete LIHTC application by February 25, 2026, and thereby the viability of the project.
Anticipated Future Actions
Staff will proceed with the terms of the Development Agreement.
Prepared By: Jonathan Burch, Assistant Village Manager/ Neighborhood Services Director
Reviewed By: Jack Malec, Assistant to the Village Manager
Approved By: Kevin J. Jackson, Village Manager
Attachment(s):
1. Ordinance
2. Development Agreement