CRE Daily reported this week, citing city records obtained by Bisnow, that only 2 of the 13 projects awarded Low Income Housing Tax Credits in Chicago’s 2023 round have closed and started construction. Both are rehabs. The awards were announced in March 2024. Thirty months later, the new construction from that round still has not broken ground.

What happened

Per CRE Daily, five more projects are expected to close by the end of 2026, four are not expected to close before 2027, one has no closing date, and one is withdrawn or inactive. In March 2024 the city estimated total development costs for the 13 projects at $562 million, a figure the report says rising construction costs have likely pushed higher.

The per unit numbers tell the story. Hub 32, a 51 unit project in Garfield Park, went from about $732,000 per unit in 2023 to nearly $796,000 by February 2026, according to A City That Works data cited in the report. From 2019 to 2023, state allocated LIHTC deals in Chicago averaged about $454,000 per unit, roughly 15% below the $519,000 average for city allocated deals.

Rachel Rhodes of the National Equity Fund pointed to the core reason: more layers of approval. Chicago is one of only two cities, along with New York, with its own federal LIHTC allocation, so the city and the Illinois Housing Development Authority each allocate credits under separate guidelines, and soft money comes from multiple City Hall departments.

Where we see opportunity

The two deals that closed were rehabs. That is not an accident. According to A City That Works, rehab and preservation cost hundreds of thousands of dollars less per unit than new construction, and they carry far less entitlement risk. Sponsors who can buy aging affordable and workforce buildings, recapitalize them, and keep them affordable are going to reach a closing faster than ground up deals in this environment.

The cost gap between state and city allocated deals is also a signal. Same city, same labor market, materially different cost per unit. That gap is process, not bricks. Any reform that collapses approvals into one track would unlock more units from the same pool of credits than a new funding announcement would.

Employer anchored housing fits here too. The need is not in question. Housing Action Illinois counts 31 affordable and available homes for every 100 extremely low income renters in the Chicago metro. Employers who contribute land or sign long term master leases can take risk out of a capital stack that the public side keeps loading with delay.

Where we see the downfalls

Time is the most expensive line item in any development budget, and here it compounds. A deal awarded in 2024 and closing in 2027 is underwritten at one cost of capital and built at another. CRE Daily’s market snapshot had the 10 year Treasury at 5.227% at the October 8 close, and its reporting on Green Street’s index this week warned that persistently higher yields could push commercial property values lower again. Every month of delay pushes these projects deeper into that environment, and tax credit pricing and gap funding do not adjust on their own.

There is also a credibility risk. Mayor Brandon Johnson’s Cut the Tape initiative and the Department of Housing’s changes to building codes and award procedures are the right instinct, but CRE Daily notes it is too early to know whether they work, and some in the industry say they have not gone far enough. If the 2023 round drags past its projected March 2027 end date, equity partners will price Chicago risk higher in the next round, and cost per unit will rise again.

The bigger miss in the headline is that this is not only a Chicago problem. Most high cost cities run layered approvals and multi agency soft financing. Chicago just has the records showing what that costs.

What we are watching

Whether the five deals expected to close by year end actually do. Whether city and state allocators move toward a shared underwriting standard. And whether Chicago shifts more of its next allocation toward preservation, where the dollars go further and the timelines are shorter.

If you are a sponsor, landowner, or employer working through a stalled affordable or workforce deal, this is the kind of feasibility and capital structure review we do at Kaufman Real Estate & Consulting: https://www.kaufmanrealestateandconsulting.com.

About the Author

I’m the founder and CEO of Kaufman & Company, a private investment and holding firm working across real estate development, venture investment, and infrastructure. My focus is workforce housing and employer-anchored development, including mountain resort communities through Oldivai.

Reach me at Daniel@kaufmanredev.com or find more at danielkaufmanre.com.

Sources

Only 2 of 13 Chicago LIHTC Projects Have Closed Since 2024, CRE Daily, October 9, 2026, https://www.credaily.com/briefs/only-2-of-13-chicago-lihtc-projects-have-closed-since-2024/

CRE Price Recovery Stalls as Higher Yields Threaten Further Declines, CRE Daily, October 9, 2026, https://www.credaily.com/newsletters/national/issue/cre-price-recovery-stalls-as-higher-yields-threaten-further-declines/