Illinois Program To Boost Emerging Developers Gains Steam As State Tackles Affordable Housing Shortage

Illinois is doing its part to chip away at the country’s sizable affordable housing shortage, not only by building units but also by training up-and-coming developers. 

The state’s Next Generation Capacity Building Initiative — aimed at boosting the pipeline of emerging affordable housing developers in the competitive low-income housing tax credit industry across Illinois — graduated its second cohort earlier this month. As certain federal avenues of affordable housing support become less reliable, Next Gen is helping bridge the gap.  

“Part of the shortage of units that are affordable in this country is because there is also a shortage of developers,” said Kelli Roberts, co-founder and chief operating officer of Eye Housing Solutions and member of the 2025 cohort. “What Next Gen is doing is putting into the ecosystem a fresh crop of developers every single time that they have a cohort.”

The Illinois Housing Development Authority launched the Next Gen initiative in 2023, providing an initial $5M award to the Local Initiatives Support Corp. to fund the program. Developers undergo a 160-hour curriculum with specialized training, one-on-one technical assistance and networking opportunities with industry professionals. 

The program had a variety of guest speakers, including developers, syndicators, general contractors and attorneys, who would spend hours training the cohort in group and individual settings, Roberts said. The cohort also delivered capstone presentations, reviewed by affordable housing experts who provided feedback to help prepare the developers for real development proposals.  

Those who finish the program are eligible to apply for predevelopment financing to cover costs like site control and project design.

A total of 36 people have completed the Next Gen program through two cohorts, with the third starting training in February. The predevelopment loan fund has administered $3.5M, and the training portion of the program has been supported through two grants totaling $2.5M.

“Everyone in Illinois deserves access to affordable housing, and our Next Gen program is providing key assistance for a new, diverse generation of developers across the state,” Gov. JB Pritzker said in a press release. 

Programs like Next Gen are especially critical as some forms of federal support for affordable housing operators have been inconsistent.  

Evolving challenges on the national landscape this year, including the impact of tariffs on construction costs and changing federal regulations, have led Johana Casanova, president and founder of CasaNova Developments and also a part of Next Gen’s 2025 cohort, to try to lessen reliance on federal government funding. 

“We're trying to reduce any type of rental subsidy that will come from the federal government, trying to remove those barriers where possible, and trying to secure more standard financing that's not tied to government approvals is the goal,” Casanova said. 

Earlier this month, thousands of affordable housing operators faced hundreds of millions in funding delays for Section 8 distributions. The government has since disbursed those funds, but the delay caused some housing authorities across the country to redirect funds on hand to try to keep landlords afloat until the checks cleared.

The Trump administration also used the shutdown to fire the Department of Housing and Urban Development's entire team of building inspectors, which could lead to fewer safeguards on properties receiving federal subsidies. Soon after, a judge temporarily blocked the administration from implementing many of its sweeping layoffs, but the current status of HUD's building inspector team is unclear. 

But in equal measure, the federal government also provides crucial support for affordable housing development — chiefly through LIHTC. The program is a dollar-for-dollar federal tax credit for affordable housing investments created under the Tax Reform Act of 1986. 

LIHTC accounts for about 90% of all affordable rental housing created in the U.S. today, according to IHDA. The program has served more than 260,000 low-income households in Illinois alone since its inception. 

Legislation signed this summer made two critical changes to LIHTC that could be a boon for Next Gen’s affordable housing developers, such as Roberts and Casanova. 

The One Big Beautiful Bill Act permanently funded LIHTC and reduced the private activity bond financing threshold for such projects from 50% to 25%. It also increased the 9% LIHTC allocation used for ground-up projects or significant renovations by 12% beginning in 2026. 

Given the program’s significant influence on affordable housing development and its limited financing pool, bids for tax credits are competitive. 

Roberts decided to apply for the program last fall because she wanted more hands-on experience working with LIHTC to help scale her and her husband's real estate business. Her previous work focused primarily on acquisition and rehabilitation projects of about one to four units, so new development was uncharted territory. 

Although new construction is expensive, Roberts found LIHTC funding attractive because the tax credits carry the majority of the equity needed to build out the projects. As a result, rents can remain affordable for tenants while developers can still service the project’s debts. 

“You're telling us that we can scale and we can have more units that are brand new and we can have tax credits that will help subsidize the cost of building that establishment,” Roberts said.

Casanova is in the process of securing approval for an affordable housing development at Lincoln Prairie at Briarwood, a proposed project in New Lenox that will include 45 units designed for intergenerational living. 

Through the Next Gen program, she said she was able to identify a project site with excellent schools, retail and quality of life — components that the state prioritizes when deciding between proposals in the LIHTC process.

“I've always wanted to do my own company, but given the risk and financial capacity required to undertake the real estate development projects we do, it was always a little bit of a challenge to jump into it, and the Next Gen program did help me with that last push,” Casanova said. 

Illinois isn’t the only Midwest state looking to push more emerging talent into its developer ranks.

The Greater Minnesota Housing Fund offers training, grants and access to its financing to support developers creating community-based affordable housing. In 2024, the fund’s emerging developers program provided more than 700 hours of technical assistance, awarded $595K in predevelopment grants and supported 15 housing projects. 

The Indiana Housing and Community Development Authority has an emerging developer program for underrepresented groups called the XBE Developer Initiative, which helped two first-time tax credit developers get started in Indianapolis and South Bend. 

As for Next Gen, Roberts sees the value beyond Illinois’ borders.

“We can take the skills and the connections that we've made in this program and the experience … and go to Iowa, go to Tennessee, go to California, go to any of these other locations,” Roberts said. “We can pay it forward.”