Grim proving ground for Obama's housing policy

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Information provided by Boston Globe who has endorsed Senator Obama for President


The candidate endorsed subsidies for private entrepreneurs to build low-income units. But, while he garnered support from developers, many projects in his former district have fallen into disrepair.

Presidential hopeful, residents' complaints(Boston Globe) At a dilapidated Chicago housing project, some see problems with Obama's favored housing policy.
Produced by Scott LaPierre / Globe staff

By Binyamin Appelbaum
Globe Staff / June 27, 2008
CHICAGO - The squat brick buildings of Grove Parc Plaza, in a dense neighborhood that Barack Obama represented for eight years as a state senator, hold 504 apartments subsidized by the federal government for people who can't afford to live anywhere else.
But it's not safe to live here.
About 99 of the units are vacant, many rendered uninhabitable by unfixed problems, such as collapsed roofs and fire damage. Mice scamper through the halls. Battered mailboxes hang open. Sewage backs up into kitchen sinks. In 2006, federal inspectors graded the condition of the complex an 11 on a 100-point scale - a score so bad the buildings now face demolition.
Grove Parc has become a symbol for some in Chicago of the broader failures of giving public subsidies to private companies to build and manage affordable housing - an approach strongly backed by Obama as the best replacement for public housing.
As a state senator, the presumptive Democratic presidential nominee coauthored an Illinois law creating a new pool of tax credits for developers. As a US senator, he pressed for increased federal subsidies. And as a presidential candidate, he has campaigned on a promise to create an Affordable Housing Trust Fund that could give developers an estimated $500 million a year.
But a Globe review found that thousands of apartments across Chicago that had been built with local, state, and federal subsidies - including several hundred in Obama's former district - deteriorated so completely that they were no longer habitable.
Grove Parc and several other prominent failures were developed and managed by Obama's close friends and political supporters. Those people profited from the subsidies even as many of Obama's constituents suffered. Tenants lost their homes; surrounding neighborhoods were blighted.
Some of the residents of Grove Parc say they are angry that Obama did not notice their plight. The development straddles the boundary of Obama's state Senate district. Many of the tenants have been his constituents for more than a decade.
"No one should have to live like this, and no one did anything about it," said Cynthia Ashley, who has lived at Grove Parc since 1994.
Obama's campaign, in a written response to Globe questions, affirmed the candidate's support of public-private partnerships as an alternative to public housing, saying that Obama has "consistently fought to make livable, affordable housing in mixed-income neighborhoods available to all."The campaign did not respond to questions about whether Obama was aware of the problems with buildings in his district during his time as a state senator, nor did it comment on the roles played by people connected to the senator.

Among those tied to Obama politically, personally, or professionally are:
Valerie Jarrett, a senior adviser to Obama's presidential campaign and a member of his finance committee. Jarrett is the chief executive of Habitat Co., which managed Grove Parc Plaza from 2001 until this winter and co-managed an even larger subsidized complex in Chicago that was seized by the federal government in 2006, after city inspectors found widespread problems.
Allison Davis, a major fund-raiser for Obama's US Senate campaign and a former lead partner at Obama's former law firm. Davis, a developer, was involved in the creation of Grove Parc and has used government subsidies to rehabilitate more than 1,500 units in Chicago, including a North Side building cited by city inspectors last year after chronic plumbing failures resulted in raw sewage spilling into several apartments.
Antoin "Tony" Rezko, perhaps the most important fund-raiser for Obama's early political campaigns and a friend who helped the Obamas buy a home in 2005. Rezko's company used subsidies to rehabilitate more than 1,000 apartments, mostly in and around Obama's district, then refused to manage the units, leaving the buildings to decay to the point where many no longer were habitable.
Campaign finance records show that six prominent developers - including Jarrett, Davis, and Rezko - collectively contributed more than $175,000 to Obama's campaigns over the last decade and raised hundreds of thousands more from other donors. Rezko alone raised at least $200,000, by Obama's own accounting.
One of those contributors, Cecil Butler, controlled Lawndale Restoration, the largest subsidized complex in Chicago, which was seized by the government in 2006 after city inspectors found more than 1,800 code violations.
Butler and Davis did not respond to messages. Rezko is in prison; his lawyer did not respond to inquiries.
Jarrett, a powerful figure in the Chicago development community, agreed to be interviewed but declined to answer questions about Grove Parc, citing what she called a continuing duty to Habitat's former business partners. She did, however, defend Obama's position that public-private partnerships are superior to public housing.
"Government is just not as good at owning and managing as the private sector because the incentives are not there," said Jarrett, whose company manages more than 23,000 apartments. "I would argue that someone living in a poor neighborhood that isn't 100 percent public housing is by definition better off."
In the middle of the 20th century, Chicago built some of the nation's largest public housing developments, culminating in Robert Taylor Homes: 4,415 apartments in 28 high-rise buildings stretching for 2 miles along an interstate highway.
By the late 1980s, however, Robert Taylor Homes and the rest of the Chicago developments had become American bywords for urban misery. The roughly 30 developments operated for poor families by the Chicago Housing Authority were plagued by crime and mired in poverty.
In Stateway Gardens, a large complex just north of Robert Taylor, a study of 1990 census data found the per-capita annual income was $1,650. And the projects were falling apart after decades of epic, sometimes criminal, mismanagement.
Similar problems plagued public housing in other cities, leading the federal government to greatly increase funding to address the problems. Many cities, including Boston, mostly used that money to rehabilitate their projects, maintaining public control.
Chicago chose a more dramatic approach. Under Mayor Richard M. Daley, who was elected in 1989, the city launched a massive plan to let private companies tear down the projects and build mixed-income communities on the same land.
The city also hired private companies to manage the remaining public housing. And it subsidized private companies to create and manage new affordable housing, some of which was used to accommodate tenants displaced from public housing.
Chicago's plans drew critics from the start. They asked why the government should pay developers to perform a basic public service - one successfully performed by governments in other cities. And they noted that privately managed projects had a history of deteriorating because guaranteed government rent subsidies left companies with little incentive to spend money on maintenance.
Most of all, they alleged that Chicago was interested primarily in redeveloping projects close to the Loop, the downtown area that was seeing a surge of private development activity, shunting poor families to neighborhoods farther from the city center. Only about one in three residents was able to return to the redeveloped projects.
"They are rapidly displacing poor people, and these companies are profiting from this displacement," said Matt Ginsberg-Jaeckle of Southside Together Organizing for Power, a community group that seeks to help tenants stay in the same neighborhoods.
"The same exact people who ran these places into the ground," the private companies paid to build and manage the city's affordable housing, "now are profiting by redeveloping them."
Barack Obama was among the many Chicago residents who shared Daley's conviction that private companies would make better landlords than the Chicago Housing Authority.
He had seen the failure of the public projects in the mid-1980s as a community organizer at Altgeld Gardens, a large public housing complex on the far South Side.
He once told the Chicago Tribune that he had briefly considered becoming a developer of affordable housing. But after graduating from Harvard Law School in 1991, he turned down a job with Tony Rezko's development company, Rezmar, choosing instead to work at the civil rights law firm Davis, Miner, Barnhill & Galland, then led by Allison Davis.
The firm represented a number of nonprofit companies that were partnering with private developers to build affordable housing with government subsidies.
Obama sometimes worked on their cases. In at least one instance, he represented the nonprofit company that owned Grove Parc, Woodlawn Preservation and Investment Corp., when it was sued by the city for failing to adequately heat one of its apartment complexes.Shortly after becoming a state senator in 1997, Obama told the Chicago Daily Law Bulletin that his experience working with the development industry had reinforced his belief in subsidizing private developers of affordable housing.