The Chicago Reporter: Home evasion

By Angelo Caputo

Photo by Marc Monaghan

One recent spring morning, Cynthia Scott leaned in on a bush that blooms at the entrance of the brick walk-up she calls home and slowly inhaled. Scott just tops 5 feet and looks as if she could barely tip the scale at 100 pounds. But the 51-year-old seemed especially petite standing in the foreground of scores of vacant, boarded-up apartments that stretch down her block.

Scott’s narrow street is lined with five buildings identical to hers. All of them are empty. Hundreds of more units in walk-ups and row houses sit vacant just across the street in a stretch of the Julia C. Lathrop Homes that some residents have called the suburbs because the lawns are wide and the neighborhood peaceful.

“This whole place was packed,” Scott said, scanning the block of fenced-off buildings where plywood has replaced the curtains that once covered the windows. “People could live in these. Instead, they’re deteriorating.”

With each passing year, Lathrop—a public housing development that sits on a prime piece of land along a bank of the North Branch of the Chicago River—empties out a little more. This year, the occupancy rate fell to 18 percent. When families move out or are evicted, the Chicago Housing Authority declines to lease out the units even though there are roughly 40,000 families queued up on a waiting list for an apartment.

Lathrop has more vacancies than any other public housing development in Chicago, but the number of empty units isn’t an anomaly. Nearly one in five of the CHA’s 21,204 units is unoccupied, the bulk for planning purposes, and that puts the agency at odds with written federal rules, The Chicago Reporter found.

CHA officials justify keeping a majority of the units “offline” because they’ve fallen into disrepair and could end up in litigation if they’re leased out. The officials maintain that they’re eligible to continue collecting millions in operating subsidies even though the units are vacant.

But some housing advocates point out that the disrepair is the result of the CHA’s own doing. “The issue is not just vacancies,” said Carol Steele, a tenant leader representing residents from the North Side’s Frances Cabrini Rowhouses, where the occupancy rate slid to 21 percent this year. “The issue is that the CHA is trying to get out of the public housing business.”

Last year, the U.S. Department of Housing and Urban Development issued a notice reminding public housing agencies that they need to get permission before taking units offline for court litigation or any other circumstance. But the Reporter found that CHA officials haven’t provided any evidence to HUD that legal action is, or could be, imminent. They also failed to receive a letter of approval—though it’s a requirement spelled out by written HUD rules.

Yet HUD officials have let them slide. Bob Whitfield, former chief operating officer of the CHA, is among a group of local housing attorneys crying foul over the way HUD has let the CHA circumvent the guidelines.

“The only units that they have in that [court litigation] category [are ones] they have deliberately kept vacant,” said Whitfield, an attorney who represents an advisory council of public housing tenants. “There is no way possible that that qualifies.”

Richard Wheelock, director of advocacy at the Legal Assistance Foundation of Metropolitan Chicago, points out that disrepair was “self-inflicted” by the agency.

“Now, [the CHA] can hide behind this HUD notice to both say, ‘We cannot fill these units, but at the same time, we are going to collect money from HUD for them,’” he said.

* * *

During the past decade, the CHA has stopped leasing units at Lathrop and a handful of other developments to bide time as its officials grapple with how to revamp the communities under the Plan for Transformation.

That plan, to overhaul the city’s deteriorating public housing stock, was supposed to wrap up in 10 years. With the plan now in its 12th year, CEO Charles Woodyard announced in the spring that his agency will recalibrate the struggling plan to factor in the slumping housing market.

In the meantime, vacancies continue to pile up in some of Chicago’s last-standing developments. Apartments in Lathrop, hundreds of row houses that sit on coveted land in the former Cabrini Green community and a section of the Altgeld Gardens and Phillip Murray Homes on the Far South Side account for 40 percent of the 3,423 units that the CHA has decided to stop leasing. But the low occupancy rates aren’t exclusive to the traditional housing stock.

Nearly a third of all family units—in both traditional public housing and smaller buildings scattered throughout the city—were also empty last year.

The Reporter review of city building-code records found that scores of the empty homes were in good repair. Last year, Lathrop, the row houses at Cabrini and Murray Homes passed federal inspections, though each did fail repeatedly in the past decade.

“Who’s responsible for them not being up to code? The owner,” said Janet Smith, an associate professor of urban planning and policy at the University of Illinois at Chicago. Smith said that CHA officials have failed to rehab hundreds of units that passed the agency’s own viability tests.

Whether the units are filled or not, the CHA keeps collecting a full operating subsidy. Financial records show that expenses have held steady in developments with some of the lowest occupancy levels. Take Lathrop, for example. The CHA spent roughly $2.5 million in operating expenses each in 2009 and 2010, despite the fact that the number of occupied apartments slid by 17 percent.

The Reporter found that roughly 50 cents of every $1 spent at Lathrop was used to cover administrative expenses during 2009 and 2010, according to the agency’s audited financial reports. The CHA hasn’t released the same report for 2011.

HUD spokeswoman Donna White said that the scope of the vacancies “concerns” agency officials. HUD officials turned up the heat on the CHA in the past year to lease out more unoccupied units, she said, and occupancy rates have shown improvement since.

In 2009, the average occupancy rate for family units was at a low of 45 percent, shows the analysis of CHA data. At the end of 2011, it reached 63 percent.

“This is not something that we’re taking lightly,” White added. “We are working with the CHA to get some of these units back online.”

The fact that federal money flows to the agency regardless of the number of occupied units gives CHA officials the power to drag their heels, said Leah Levinger, a low-income housing advocate at the Chicago Housing Initiative.

“Ultimately, they can wait us all out,” she said. “They can go through a 10-year planning process. Financially, it doesn’t hurt them to leave the units unoccupied.”

* * *

Last year, HUD officials released a set of guidelines that spell out acceptable reasons that housing agencies can cite for keeping units vacant while still collecting federal subsidies for them.

Whitfield, who also served as the chief lawyer for the CHA in the 1980s, said the notice has two purposes: to clarify HUD’s offline policy and to send a message to housing agencies that they’re not free to keep units offline indefinitely.

The regulations spell out six conditions—from natural disaster and pending demolition to court litigation and modernization—that housing authorities can cite. Each of the conditions has a three-year time limit except unfavorable market conditions, which can only be invoked for one year.

As of this year, a quarter of the CHA’s offline units are undergoing modernization. The bulk—2,196 of 3,423 offline units, or 64 percent—is tied up in the “court litigation” category, despite the fact that at least 60 percent of these units are not named in a court case.

HUD regulations don’t define what “court litigation” means, but they leave the door open for agencies to cite the rule to prevent lawsuits. The guidelines note that the rationale should be “infrequent.” Agencies are required to submit court orders, settlement agreements or other litigation-related documents to the local HUD office to back up their decisions.

Open records requests filed by the Reporter reveal that HUD’s local public housing office, which is overseen by Director Steven Meiss, signed off on keeping the units offline without reviewing any of the requisite litigation-related documents. No approval letter was ever inked.

“They may want to use discretion, but that’s not what HUD’s rules say,” Whitfield said. “If the regulations are impractical, then HUD needs to change the” regulations.

HUD officials have no plans to push the CHA to lease out more offline units in the developments. Instead, HUD backs the agency’s decision to keep units offline until there is a clear strategy for filling them.

Catherine Bishop, a senior staff attorney with the National Housing Law Project, said that begs the question: “How long can you keep these units offline?”

* * *

The CHA is one of only 35 agencies participating in a national program called Moving to Work, which is intended to drive innovation by giving high-performing agencies flexibility to comingle operating and capital funds to experiment with new housing strategies. Traditional agencies are paid based on how much it costs to run public housing, on a per-unit basis. Moving to Work agencies are given lump-sum grants. Last year alone, the deregulated agencies were funded to the tune of $3.3 billion, which accounts for more than $1 in every $10 that HUD spent on housing.

Red flags were raised about deregulating the CHA from the beginning. Control over the agency had just been returned to the city after it was taken over by federal officials because of mismanagement. But after intense lobbying, then-Mayor Richard M. Daley won approval for his proposal to revamp public housing.

“From the perspective of what a public housing agency is supposed to do, its primary mission is to provide public housing,” Smith said. Joining Moving to Work allowed the CHA to “reframe” its mission as “a facilitator” of developing housing for people across the income scale, she said.

Smith said that Chicago officials have repeatedly used the deregulation as a cover for eliminating decent low-income housing. With occupancy rates drifting toward the single digits, it won’t be long before many of the buildings with the highest vacancy rates fit the federal criteria for becoming physically obsolete. That would free up the CHA to justify demolishing the buildings.

“I’ve never met people who were thrilled with high-rise public housing,” said U.S. Rep. Danny Davis. But as far as Davis is concerned, CHA officials need to keep their priorities straight as they continue overhauling public housing. “The first line of defense should be for those who are low-income and homeless,” he said. “Anything other than that usurps the intent of the Public Housing Act.”

Meiss’ office said that it’s working with the CHA to make sure new housing continues to come online. It’s up to the CHA to decide where and to report annually on its progress.

Oversight continues to be a weakness, according to the U.S. Government Accountability Office. This spring, the office audited the Moving to Work program and found “key weaknesses” in the way HUD monitors the agencies. Among them is the fact that HUD “does not have policies or procedures in place to verify the accuracy” of this self-reported data that agencies submit in their annual reports.

Ultimately, it’s up to HUD to monitor compliance. Until federal officials demand that the CHA follow agency rules, there’s no reason to expect accountability, Whitfield said.

“They continue to allow the CHA to escape what they’re supposed to be doing: Rehabbing those units and putting them online,” he said. “Who’s watching the shop?”