A raffle for ‘the American dream’? Elk Grove’s unique solution to housing affordability crisis

Elk Grove Village residents can enter a raffle to get first crack at purchasing a new single-family home, under an unconventional public-private partnership that officials hope may be a model to ease the housing affordability crisis.

“We’re going to give the American dream to Elk Grove residents first,” Mayor Craig Johnson declared at a village board meeting Tuesday night, when he announced what’s perhaps a first-of-its-kind municipal housing initiative.

Prospective homebuyers who currently own or rent in Elk Grove Village — including seniors looking to downsize and young adults who live with their parents — can go to a website, tonnegrove.com, to fill out an interest form ahead of the July 18 raffle. That’s when names will be drawn for first dibs to purchase one of 20 houses within the new Tonne Grove development, which will be constructed on the 2.5-acre former Elk Grove Presbyterian Church property at 600 E. Elk Grove Blvd.

Johnson stylized the event as a kind of “NFL Draft.”

The houses will be “moderately priced,” officials said, at between $466,000 and $508,000.

To be eligible for the drawing, applicants must have a mortgage pre-approval letter, be able to verify their identity and provide proof of residency, and bring a $2,500 cashier’s check they will turn over if they are selected and sign a purchase agreement.

After the first name is selected, the potential buyer will have five minutes to pick from 20 available lots, of which there will be three floor plans. The process will continue until all the lots are claimed.

People can walk away if they don’t like what’s left, but any remaining home sites will then go on the open market, Johnson said.

Buyers must commit to living there for at least five years, though a village attorney could review individual cases and allow people out of their contracts for emergency situations like a death, military service or job transfer, Johnson said.

“We don’t want flippers,” he said. “We want committed Elk Grove people staying in Elk Grove.”

Rentals aren’t allowed either, he added.

Johnson hinted at the likelihood of residential housing for the former church property when the village officials purchased it for $965,000 in the fall of 2023. But the particulars of the program have been kept under wraps until now, as Johnson and village trustees worked behind the scenes to find a developer willing to build homes at below-market prices.

After talking to a half dozen homebuilders, the mayor eventually convinced Nick Papanicholas Jr., of Mount Prospect-based development firms Nicholas & Associates Inc. and Wingspan Development Group. The developer already has two other public-private partnerships underway with Elk Grove Village: The Vue mixed-use redevelopment at Arlington Heights and Higgins roads, and an indoor ice rink at Meacham and Biesterfield roads.

“When Mayor Johnson reached out to me about this project, I kind of went silent on the phone for a few minutes because I was questioning the ability to pull something like this off,” Papanicholas said. “Similar to the ice arena, nobody is getting rich with a project like this, hence why most of the large-scale homebuilders wouldn’t touch a project like this.”

But after building some 3,500 multifamily rental units across the Northwest suburbs over the last decade, Papanicholas believes there’s a need for more single-family housing stock. He said he’s talked to officials in other towns in hopes of duplicating the Elk Grove housing initiative throughout the region.

Papanicholas will pay $1 million for the property, which recoups the village’s costs to purchase the site and tear down the church. Johnson said the village could have sold the land for more — and Papanicholas could have priced the homes higher — but the developer told officials he is OK operating on a slim margin.

Johnson said no public subsidies to the developer are involved in the arrangement.

Village Attorney Michael Del Galdo has verified that the plan is in compliance with federal and state fair housing laws, the mayor said.

Plans call for three housing styles:

• The Quinn: Three single-story, 1,286-square-foot ranches with two bedrooms and two bathrooms priced at $466,000.

• The Grace: Eleven two-story, 1,713-square-foot homes with three bedrooms, a den and 2.5 bathrooms priced at $495,000.

• The Chloe: Six two-story, 2,000-square-foot homes with four bedrooms, a den and 2.5 bathrooms priced at $508,000.

All homes will have a two-car garage and no basements. The home styles — including color palette, siding and fixtures — are predetermined and can’t be altered. The prices are set and non-negotiable, Johnson said.

He said residents have long expressed a desire for new, moderately-priced residential housing stock in town, where a new single-family housing development hasn’t been built in more than two decades.

“Everyone’s dream is to own a home. Most people don’t realize, everyone’s dream is to own a home in Elk Grove Village,” Johnson said. “So we’re going to give our residents the first chance to buy these homes.”

The project is pending formal review by the plan commission next month before approval by the village board. Construction is set to begin in the fall, with first home deliveries by the summer and fall of 2027.