RedEye Chicago

Uptown FLATS: Gentrifier or ‘Brooklynizer’?

It feels like you can’t turn a corner in Uptown without seeing a FLATS property.

The buildings—eight so far, three of which are open for tenants—meticulously designed to appeal to stylish 20-somethings, are the brainchild of Jay Michael, a 33-year-old real estate mogul, reality TV star and self-described “lifestyle architect.”

“Not to be arrogant, but I think to some degree, what I think I try to design is a way to live,” said Michael, co-founder of Cedar Street Co., which owns FLATS. “We’ll do something different … really making more of these really small spaces and making them really relevant today and not dilapidated slums. Really making them work in this market.”

Depending on whom you ask, Michael either is that market’s savior or a symbol of its destructive gentrification.

“First of all, I don’t think gentrification is a bad thing,” Michael said, adding that he stands by his statement last year that “we’re not gentrifiers as much as we are Brooklynizers.”

“We didn’t come to Uptown and do anything to Uptown except try to add some value to the buildings that we acquired,” he said.

Uptown has been touted for decades as the next neighborhood to break through and gentrify. FLATS targets buildings euphemistically called “distressed”—properties left untouched for years, some with histories of safety code violations and court receiverships. Last year, Michael took on the biggest FLATS project yet: buying and renovating the massive structure at 1020 W. Lawrence Ave., formerly known as Lawrence House.

“I think a lot of the developers are really fearful to come do [anything],” he said. “Why was Lawrence House left that way for 10 years? Why didn’t any other developer buy it? Because they had all been fearful of what the social repercussions were.”

Brian Packard lived in Lawrence House from 2007 until this summer. He experienced the kind of conditions that got Michael talking about “dilapidated slums.”

“From bed bugs to mice problems, roach problems, stuff like that,” said Packard, 54. “Plumbing wasn’t great in the building, all kinds of problems.”

Michael plans to restore the onetime hotel to its former glory, complete with an intricately tiled basement swimming pool he calls “the sex appeal” of the building. His $18 million restoration will bring the property in line with other FLATS assets, with a gym, displays by local artists and in-unit laundry. FLATS units start at around $850 per month for a studio.

But before that transformation could happen for Lawrence House, 183 low-income tenants had to move out.

The building represented a quickly vanishing type of housing: a building full of small units that would rent to low-income tenants without some of the barriers traditional housing requires. Without these buildings, tenants who can’t put down a security deposit, pass a background check or afford monthly rent could become homeless, said Jennifer Ritter, executive director of advocacy group ONE Northside.

“There’s not many places left to move people,” she said. “Unless they’re going to give up some of their units for affordable housing, then it becomes difficult to move people around in an already shrinking market.”

ONE invited Michael to a meeting asking him to keep his buildings affordable. When he did not attend, members of the group met outside his house. Ritter called it a “prayer vigil” and said the event was respectful; Michael said the group crossed a line and has refused to meet with them ever since.

“The minute we closed on [the Lawrence House], we had ONE breathing down our back like we were the devil,” said Sherri Kranz, who handles tenant transitions for Michael’s properties.

Kranz heads up a team in charge of helping residents of FLATS’ newly acquired buildings find new homes. For the Lawrence House, she said, they did everything from paying security deposits to driving people to see new apartments. In some cases, the transition team found housing that’s cheaper than what displaced tenants originally were paying.

“We looked at this as almost a mission and a calling,” Kranz said. “I would say it’s the most satisfying thing I’ve ever done. Certainly the hardest thing I’ve ever done.”

Michael said he told Kranz not to send tenants to any buildings FLATS might consider acquiring—which, Michael admits, shrinks the pool of affordable options even further.

“The question is, am I responsible for maintaining the pool?” he said. “I’ve been made to be responsible publicly, and that’s what the organizers want, is for me to be responsible for creating the affordable housing in these buildings we acquire. I think that’s unfair.”

Packard, the former Lawrence House tenant, found a unit near Sheridan Road and Wilson Avenue, where conditions are about the same as his old place.

“I mean, we’re angry, but what’s there to do about it?” he said. “You fight them all you want, but it seems like in the end, they easily end up winning. You’ve just got to hope that things work out.”

Mark and Annette Anderson aren’t angry. After FLATS bought their building at 1325 W. Wilson Ave., they moved to Lawrence House—and when FLATS bought that, they were scared at the prospect of finding a new place.

But, they said, Kranz and the FLATS team worked with them for months, and ultimately paid moving expenses and a security deposit at their new Edgewater Beach building. FLATS even surprised them by telling them they were eligible for a governmental housing subsidy. Now they pay far less than the $540 per month they paid at Lawrence House.

Even his detractors acknowledge that Michael is paying more attention to the needs of low-income tenants than most developers. A deal with the city’s Low-Income Housing Trust Fund eventually will set aside 58 units in FLATS buildings for those who make $15,200 per year or less. At the moment, only 13 trust fund units are in buildings that have completed renovation, and despite a mandatory $500 move-in fee, they were snapped up shortly after becoming available.

“The majority of private developers who acquire a new property will often take a ‘you’re evicted, we’re redeveloping the project, good luck’ approach,” said Sid Mohn, president of anti-poverty group the Heartland Alliance. “And that’s where I would say if you’re measuring FLATS against most private developers, FLATS stands head and shoulders above the others.”

Ritter said area nonprofits had been working for years to buy Lawrence House and keep it affordable, but in the end, only a private developer could afford the building. Meanwhile, the feud between FLATS and ONE Northside shows no sign of subsiding.

“Do I think I’m a figure of controversy? Of course,” Michael said. “If I was developing all affordable housing, do you think everyone would love me then? They wouldn’t. … No matter what, not everybody’s going to be happy with what I’m doing. Everyone’s got their own motives and everyone’s got their own hands in their own pot, and I’m comfortable with what we’re doing.”

RedEye Chicago | Megan Crepeau