Pioneer Arcade receives city, state support to be developed into affordable housing

Plans to construct affordable housing units in the historic Pioneer Arcade building in Humboldt Park can officially move forward.

Gov. J.B. Pritzker and the Illinois Housing Development Authority announced the 2024 low-income housing tax credit awardees Tuesday, and the Hispanic Housing Development Corp.’s plan to construct 61 affordable housing units for older adults at the former bowling and billiards hall was one of 16 projects statewide to receive funds.

Without the city support needed to receive the low-income housing tax credits, the Hispanic Housing Development Corp. would have left a $6 million grant from the U.S. Department of Housing and Urban Development on the table, as well as the potential for an additional $24 million in federal rental subsidies to help the developer maintain affordability for the proposed building over a period of 40 years.

Last year, the project was in jeopardy as Chicago’s Department of Housing had twice rejected the Hispanic Housing Development Corp.’s request for a financial letter of support, a letter which is needed to be able to receive low-income housing tax credits from the Illinois Housing Development Authority. The development corporation requested around $1.5 million each year for 10 years in tax credits from the authority.

“For about nine years now, we have been wanting to complete the project,” said Hipolito “Paul” Roldan, president and CEO of the Hispanic Housing Development Corp. “We have come a long way.”

The redevelopment project — which will preserve the original ivory-colored, terra-cotta facade of the two-story 17th- and 18th-century Spanish Baroque-style building  — will cost around $30.5 million in total, according to Roldan.

Roldan expects to break ground in fall 2026, with the apartments opening about a year after construction begins. There will be 58 one-bedroom units and three two-bedroom units. Twelve units will be available to those who make 30% of the area median income, 46 units for those who make 50% and the three two-bedrooms will be for those who make 60%.

As of April 1, for a household of two, 30% of the area median income in Chicago is $26,910, 50% is $44,850 and 60% is $53,820, according to Chicago’s Department of Housing.

The $6 million grant came from HUD’s Section 202 funding, money that is earmarked for supportive housing for low-income elderly residents. For HUD’s fiscal year 2020 funding round, 37 projects out of 132 applicants were selected for grants totaling around $150 million, with the Hispanic Housing Development Corp.’s project being the only one in Illinois.

The grant came with a five-year time limit, and HUD extended the deadline by which the development corporation had to break ground on the project.

The Hispanic Housing Development Corp.— a Chicago-based affordable housing developer focused on Latino neighborhoods — bought the Pioneer Arcade building in 2005 and received the HUD grant in 2021, with Chicago’s Department of Planning and Development pledging its support in a letter to HUD.

The development corporation needed low-income housing tax credit funds — tax credits set aside for developers of affordable housing — to help raise the bulk of the capital required for the project in the private market, as “it’s virtually impossible” to do so without it, Roldan told the Tribune last year .

Located at 1535 N. Pulaski Road, the Pioneer Arcade development began in 1924 with a price tag of $350,000 on what was then called Crawford Avenue.

A Tribune article from June 22, 1924, states that plans for the Pioneer Arcade building from architect Jens J. Jensen say the building “will be one of the most elaborate recreation buildings in the city.” The writer reported that the Pioneer Arcade would have four shops on the ground floor, with a main floor lobby leading into a billiard room with 35 tables and an elaborate staircase leading to a lounge area abutted with 20 bowling lanes and room for 600 spectators.

It was last a bowling alley, Pioneer Lanes, under ownership of “entrepreneur and champion bowler Luis Gonzalez” before it was sold to the Hispanic Housing Development Corp., according to the building’s final landmark designation report from December 2022.

The development corporation ran into problems renovating the building from the start, with the 2008 financial crisis hitting shortly after the purchase of the property, which the company initially intended to develop as affordable housing units for purchase. The project still wasn’t off the ground by the time the pandemic hit, which further delayed its progress, Roldan said last year .

With its hard-to-miss grandiose facade that has long been coupled with boarded-up storefront windows at the site that once housed Two Pals Lunch and the Arcade Barber Shop, the Pioneer Arcade will soon get the facelift it needs.

“The 1535 N. Pulaski development will allow seniors who have raised their families and significantly contributed to the cultural impact of Humboldt Park to remain in the community they have known and loved,” said state Rep. Lilian Jiménez, D-Chicago, in the state’s news release. “Our seniors bring life and history to Humboldt Park, and they deserve to stay in the community they have nurtured for generations. Securing the funding was a challenge, but with their advocacy, they got it done and secured a great investment for our community.”

ekane@chicagotribune.com