The Chicago Housing Authority (CHA) has been at the vanguard of public housing redevelopment, with its ambitious Plan for Transformation now in its 13th year.
The gist of the plan was to redevelop sites such as the notorious Cabrini-Green—which concentrated poverty into specific parts of the city—and replace them with mixed-income communities. Private developers partnered with the CHA and received HUD funding to build a mix of public housing units, affordable rental and for-sale housing, and market-rate condos, while reducing density. The goal was to demolish or rehab 25,000 units in a decade, and the CHA is more than 80 percent there.
But the Authority has hit some speed bumps along the way. And it’s now “recalibrating” its vision, and asking for input from stakeholders on how to improve the next generation of redevelopment, the Plan for Transformation 2.0.
Arguably, one of the biggest mistakes the CHA made was in relying on market-rate for-sale housing to offset the cost of building rental affordable housing. Since the Plan was drafted before the single-family housing meltdown, the approach made financial sense, on paper anyway. But the idea replicated some of the philosophical problems that the Plan was trying to solve.
“It’s a different kind of segregation,” says Richard Baron, founder and CEO of St. Louis-based developer McCormack Baron Salazar. “They tried to satisfy the market-rate component by building for-sale housing for higher income people, and then put all the tax credit and public housing people into apartments. Put a hedge down the middle, and it’s the same stigma, and it absolutely undercuts the very thing you’re trying to accomplish.”
Baron knows a thing or two about revitalizing distressed communities. After graduating from law school, Baron became a legal aid lawyer representing public housing tenants on a major rent strike in St. Louis. Forty years later, his firm is the nation’s preeminent developer of mixed-income housing, a pioneer in community development, with more than 16,000 affordable housing units under its belt.
McCormack Baron Salazar’s early developments served as a model for the HOPE VI program—in fact, the company developed the first HOPE VI pilot project, Centennial Place in Atlanta, in the mid-1990s. To Baron, the CHA’s heavy reliance on market-rate for-sale housing also had significant financial implications. Many of these houses came on line just as the single-family housing meltdown began, and some remain empty, or never built, to this day.
“They got caught in Chicago, big time,” says Baron. “They have plenty of developments under Transformation that are underwater and never sold out the for-sale component. In many of those sites, they’ve got empty holes where they were going to build more for-sale housing.”
Many public housing advocates, such as the National Low-Income Housing Coalition, also question the CHA’s involvement in market-rate housing. The Plan for Transformation was crafted by the Daley administration and the Department of Housing and Urban Development (HUD), which awarded Chicago the largest amount of HOPE VI funds of any metro in the nation.
“The notion that a housing authority should be involved in higher-end, single-family homeownership should have been a nonstarter,” says Linda Couch, senior vice president for policy and research at the Washington, D.C.-based National Low-Income Housing Coalition. “People were making money hand over fist in the real estate market and to jump on the bandwagon must’ve been really attractive. But if it’s public money being used, it should be focused on extremely low-income households.”
As the CHA collects public input in crafting a way forward, it’s unclear how it will respond to the continued problems in the for-sale market. Was the CHA short-sighted in its heavy reliance on the for-sale market? Should taxpayer money be used to build housing for the middle class? What do you think? Tell us below, or tell the CHA directly here.