CEAC-2019-10-October

NEWS
Clean-Energy Affordable Housing Effort
Launches in Chicago By Kari Lydersen of Energy News Network
CHICAGO (AP) — Robert “A.J.” Patton and Erica Johnson
were childhood friends growing up in public housing in
Terre Haute, Indiana. Patton now lives in the upscale Chicago
neighborhood that was once home to the Cabrini-Green
public housing projects, and Johnson lives in Harlem, which
in recent years has changed from a low-income African
American neighborhood to a hip, expensive enclave. So
they’ve both experienced living in low-income communities,
and in gentrified neighborhoods where longtime residents
were displaced.
Now the two are launching a company that they hope will
provide quality housing to lower-income residents in Chicago,
and avoid gentrification, by harnessing the potential of
energy efficiency and solar. At the same time, they plan to
provide jobs for low-income and minority residents who are
disproportionately left out of the clean energy economy.
In 2016, Patton quit his job as vice president of domestic
investments for Equities First LLC, an investment fund, to
found 548 Capital LLC, named for the unit number in the
projects where he grew up. Johnson owns a construction risk
management firm in New York that works with New York
City’s public housing authority; she plans to ultimately move
to Chicago to concentrate on 548 full time.
Patton said they are in the process of buying several multiunit
residential buildings, which they will own and rent to
tenants, after doing energy efficiency retrofits, installing
rooftop solar and generally improving the building quality.
They want to be sure that their work does not contribute to
displacement, so they will keep rents low and prioritize the
tenants who were in the building when they purchased it,
Patton said.
The young entrepreneurs plan to keep the rents affordable
and still make a profit thanks largely to energy efficiency
and solar. In buildings where 548 includes the utilities in
monthly rental bills, they will pass savings on to residents.
And in some buildings, residents might pay their own utility
bills, in which case the efficiency upgrades would lower their
overall costs. Solar and energy efficiency would also help
The Englewood neighborhood in Chicago is one of the areas to which Robert “A.J.” Patton and Erica Johnson hope to provide quality housing through
the harnessing of renewable energy. (Credit: Wikimedia Commons/MrHarmon)
lower the cost of utilities for buildings’ common areas, which
landlords pay.
“The uniqueness is adding on the solar and commitment
to energy efficiency,” said Patton, who studied finance and
served as student government president at Indiana State University
before working for a decade in investment banking.
vouchers from the federal government.
The sector is known to attract bad actors, including absentee
landlords who let buildings deteriorate while collecting rent
and those that demand exorbitant security deposits or other
fees from residents who are unlikely to object since they
have few other options.
“We want to showcase that you can invest in a community
without gentrifying. You buy the building, rehab it, lease
it out to the exact same people who were there, providing
high-quality living. Energy costs are a big cost to the building
owner. If I can lower that by a third, that’s a big number.
That could subsidize your capital improvements on the front
end, and you can really do something special for those folks
in terms of the living experience.”
Affordable housing has long been seen as a lucrative market
for some property ownership companies in Chicago, with
holdings concentrated on the city’s struggling South and
West sides where buying a home is often not an option for
tenants, and many have rent subsidized by Section 8
Patton said 548 will purchase buildings in marginalized,
mostly minority neighborhoods on the South and West sides
that have been deemed Opportunity Zones under the federal
program meant to stimulate investment. That means if someone
invests capital gains in projects in the zone, a portion of
federal taxes is deferred or forgiven.
548’s website says the company has “secured a multimillion-dollar
investment” by working with Chicago-based A&O
Advisors, “a new age boutique investment advisory firm
owned by a minority and women team” offering wealth
management targeted at “high net worth individuals and
(Continued on page 12)
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