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Cover Story: Aldermen seek CHA Oversight

Wed, Feb 5, 2014

Alderman Joann Thompson talks City’s 5-year Affordable Housing Plan

Alderman Joann Thompson (16th ward) at a press conference before Wednesday Jan. 15 City Council Meeting where the City’s 5-year Affordable Housing Plan was introduced. Photo: Suzanne Hanney

The Chicago Housing Authority has built up reserves of $660 million, even as it has left thousands of apartments unoccupied, failed to meet the construction goals of its Plan for Transformation and withheld 13,000 to 15,000 funded housing vouchers annually, says a low-income housing coalition calling for City oversight of the CHA.
Roughly 15 aldermen joined the Chicago Housing Initiative (CHI) in a press conference before the January 15 Chicago City Council meeting to urge Mayor Rahm Emanuel to extend oversight to the CHA. In addition, the aldermen and CHI sought an amendment to the City’s 2014-18 Five-Year Affordable Housing Plan (see story page 9) to require one-for-one replacement of public housing units redeveloped with City funds.

“We must include oversight. Oversight over the CHA has been removed,” said Ald. Joann Thompson (16th ward), a member of the City Council Committee on Housing and Real Estate and of the Black Caucus. “Tracking the city dollars needs to become permanent. In the midst of the housing crisis, together we must take a stand for those who are suffering. The public deserves to know how public dollars are being used.”

Ald. Scott Waguespack (32nd ward) is also a member of the Committee on Housing and Real Estate and of the Progressive Reform Caucus. His ward includes a small portion of the CHA’s Lathrop Homes, whose draft master plan was presented in July and has been hotly debated (see related story, page 12).

“The CHA has provided only half the affordable housing they were supposed to supply,” Waguespack said. “They can’t go unaccountable, the way they act and work with developers. CHA needs to be accountable for what it spent in the last five years. The Mayor needs to control CHA.”

Ald. Walter Burnett Jr. (27th ward) is a member of City Council Black Caucus and represents Henry Horner Homes and Cabrini-Green, where he said he grew up nearly 50 years ago. A federal court decision will not allow CHA to build new public housing in segregated African-American communities, but Burnett said CHI research showed there is still available vacant land in nonminority areas of Chicago.
“So many people are displaced, living in communities where people don’t want them to live, waiting to come home,” Burnett said. “CHA has money in place but it appears from all this research it is not being utilized. We need to make sure it is being utilized.”

Vacancies 1999 - 2012

Source: Chicago Housing Initiative Study from CHA MTW Reports

Burnett also said that new CHA CEO Michael Merchant seemed willing to work with them. “Give him a chance. Let everyone know we need housing for our people, money spent in our communities.”

Appointed last October 16, Merchant had been Chicago Building Commissioner, where he worked to streamline applications for city building permits, according to the Chicago Tribune. He also sought to clean up vacant buildings and facilitate compliance with high-rise fire safety codes.

ABC7 political reporter Charles Thomas confronted Burnett and asked how he could have been so misled by the CHA regarding the Plan for Transformation, given that he had been around since its inception.

“I wasn’t misled,” Burnett responded. “It was due to the bureaucracy, with the dynamic of trying to make it happen. Market rate housing put the challenges there. There is still no excuse for all the money not being used. I think the CHA is moving in that direction.”

Voucher Underuse 2002 - 2012

Source: Chicago Housing Initiative Study from CHA MTW Reports

Further pushed by Thomas, Burnett said all the money available to CHA had not been utilized and the public housing authority slowed down its construction and rehab. The deregulation of CHA by people in Washington, D.C. in 2000 “means us here in Chicago have to put their feet to the fire.”

“When you’re relying on data from the CHA you can only trust it as much as you trust the CHA,” said Janet Smith co-director of the Nathalie P. Voorhees Center at the University of Illinois at Chicago. “Historically, people have not been comfortable with their numbers and I am one of those people.”

Smith recently worked with the CHA’s Central Advisory Council – its resident leaders – as a consultant for their 2.0 Plan to complete the Plan for Transformation. The CHA later came out with its own version, “Plan Forward.”

Smith has been tracking the Plan for Transformation since it began in 2000. At the time, CHA had 38,000 units, only 25,000 of which were occupied, she said. The Plan was supposed to tear down and replace those 25,000 units through new construction or rehab.

Lathrop Homes was a question mark in the first Plan, she said. “We did the math and were not sure if they were going to stay, if they might not be needed to count in the 25,000 units. During the annual review CHA has to submit to HUD [the U.S. Department of Housing and Urban Development] every fall I would go through Lathrop and Cabrini Green. Their status would change every year. They were slated for demolition at different times and at others for rehab.”

CHA’s numbers became more complicated in 2008, she said. Some years the authority reported numbers completed, other years numbers that were planned. “You were never sure how much they completed up to that point and only had estimates of what they would do in the future. When you would go to the next year to look, you couldn’t tell if they actually built them or not.”

Revenue vs. Adjusted Expenditures

Source: Chicago Initiative Study from CHA MTW Reports

Smith saw a slowing in CHA construction starting in 2006 and a complete halt in 2008 because of the recession. During the downturn, CHA worked to add units to its portfolio, but more through vouchers than construction, she said.

The Plan for Transformation was only structured for 10 years. However, in its 13th year, CHA is still 3,600 apartments short of its 25,000 units, according to the CHI report.

Smith says the reason for CHA’s complicated reporting to the feds and the public is that since its deregulation in 2000, CHA has been part of a “Moving to Work” (MTW) demonstration project. According to the HUD website, MTW allows local public housing authorities greater flexibility in moving funds around potentially innovative local projects as well as exemptions from public housing and voucher rules.

Two years ago, Smith heard from a Washington think tank that CHA was underutilizing its vouchers. The Center for Budget and Policy Priorities says the national average wait for a voucher is one to two years, compared to 10 years in Chicago.

Financing Snapshot

Source: Chicago Initiative Study Analysis of DHED Quarterly Housing Reports, Sources and Uses of Funding for 41 Mixed Finance CHA Developments

Smith says she is not surprised that 13,000 to 15,000 vouchers were not released, because while public money was available for construction, private money for market rate units was not. The technique for funding mixed income housing is called “lasagna” or “layer cake” financing; a building with both types of units can’t proceed until all its money is in place.

Smith says HUD – not the City – would likely have authority over the vouchers. “Federal oversight is needed because the money can be moved around but we are not clear what they are doing with it,” she said.

Leah Levinger is executive director of the Chicago Housing Initiative, a city-wide coalition that seeks to preserve and increase affordable housing for families making under $40,000. Its eight member organizations include the Jane Addams Senior Caucus, Metropolitan Tenants Organization, ONE: Northside and Logan Square Neighborhood Association.

Levinger says lack of federal regulation and City oversight is the “enabling factor” behind the CHA’s $660 million surplus (as seen in its 2012 financial report) and the withholding of up to 15,000 housing vouchers annually.

Lack of oversight is also the reason CHA leaves thousands of completed units vacant each year, Levinger said. The CHA was 61 percent occupied in 2000, 57 percent in 2006, 73 percent in 2010 when CHI’s “lease up campaign” began and now 84 percent.

The 97-page CHI PowerPoint shared with aldermen showed pictures of 17 different boarded up sites, from Englewood and South Chicago to Rogers Park, Uptown, Humboldt Park and Belmont Cragin.

Every year, Levinger said, CHA receives $30 million to $40 million in addition to special grants to complete the Plan for Transformation. Following an inquiry by the Sargent Shriver National Center on Poverty Law she learned that “the CHA receives the same amount of federal funding for any standing apartment, whether occupied or not.”

City oversight is needed, Levinger said, because HUD has relinquished it under MTW until 2018. In the meantime, “the driving force is the privatization of public housing. Theoretically, privatization should provide the same level of public benefit but with less public money required,” according to the PowerPoint.

CHI’s research says the opposite is true. Between 2009 and 2013, the City invested $172 million and paid $15.9 million in developer fees for a net loss of 1,100 affordable units but a net gain of 160 market rate rentals, according to CHI analysis of Chicago Department of Housing and Economic Development quarterly reports. Private owners have leased 637 acres of CHA land, with affordability restrictions of only 15 to 40 years. Private financing ranges from two percent to 14 percent, public money the remainder.

CHA Spokesman Matt Aguilar responded that that CHA continues to collaborate with the City of Chicago, elected officials, residents and community leaders to meet housing needs.

“For the past 15 years, CHA has utilized the flexibility of the Moving To Work agreement to test innovative, locally-designed strategies that use federal dollars to more efficiently help residents become self-sufficient and to increase the housing choices for low-income families.

“As a result, CHA families are more successful than ever before,” Aguilar said. “At the start of the original Plan for Transformation, 15 percent of work-eligible heads-of-household were employed. That number is now more than 58 percent. Also, the annual income of employed heads of household has doubled to more than $19,000 a year. And, of families affected by the Plan for Transformation, just 7 percent were still waiting to satisfy their Right of Return at the end of 2013.”

The Plan for Transformation is 87 percent complete and CHA is committed to finish the 25,000 units by 2015, Aguilar said. “This past April, CHA introduced its new strategic initiative, ‘Plan Forward: Communities that Work,’ along with Mayor Rahm Emanuel, as a means to accomplish its goals against the backdrop of today’s economic realities. By reimagining the final phase of the original blueprint, Plan Forward looks to coordinate public and private investments to develop vibrant communities, increase the number of affordable housing opportunities, ensure the safety and sustainability of each unit and to expand services to more residents.”

Suzanne Hanney
StreetWise Editor-In-Chief

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