For those of you unfamiliar with the world of philanthropy, the MacArthur Foundation is an international foundation headquartered here in Chicago.  The Foundation awards approximately $200 million each year in grants and program-related investments, of which about $65 million goes to efforts to address social problems in the United States.  Some of that investment supports efforts to develop and preserve affordable housing, and to improve conditions in low-income communities. 

Here in Chicago, the Foundation is investing $150 million over ten years in 16 low-income neighborhoods, many of which are affected by the Plan for Transformation.  This includes $50 million in grants and loans related to public housing redevelopment.  

Foundation investments have helped the Chicago Housing Authority create an information management system capable of supporting the Plan; guaranteed the financing for some of the mixed-income developments; enabled the provision of technical assistance to resident leaders; led to improvements in social services and quality assurance efforts; and funded research, especially research that could produce results quickly enough to be used for program planning and policy development.

Why?  Because in the Plan, the Foundation saw an historic opportunity, not only to deal with some of the city’s worst housing, but also the chance to leverage federal funds in such as way as to revitalize some of the city’s most distressed neighborhoods and, in the process, improve the life circumstances of thousands of low-income Chicagoans, public housing and neighborhood residents alike.

This morning you’ve heard various perspectives about the Plan and its impact, but I’m not sure that any one of us could really convey the need for radical change that was present in 1999, when the Plan was adopted.  In 1999, the Chicago Housing Authority was:

• In receivership and saddled with obsolete properties – 15,000 of its apartments were vacant, and another 19,000 had failed a federally mandated viability test, meaning that the City of Chicago and the CHA had no choice but to demolish them.

• The CHA ran a “shadow system” of social services that not only failed to meet basic performance standards, but served to isolate residents from the social and economic mainstream. 

• And the Authority itself had a long and troubled history of mismanagement, failed promises, and bad faith.

You’ve heard the particulars of the Plan:

• $1.6 billion in federal funding

• A commitment to build or rehab 25,000 units of public housing

• The promise to end the isolation of public housing properties and residents

• The plans to privatize property management and social services. 

Indeed, the Plan turns out to be one of the most extensive urban redevelopment programs in the nation’s history – one that is being watched closely by policymakers, practitioners, advocates, and residents, not only here in Chicago but across the nation.

The Plan places a big bet on the mixed-income housing model – and the jury is still out.  Thirty years of community development practice has shown that the model can work, given the right unit mix, the right sequence of development, the right design and amenities, the right financing on the right schedule. 

At the same time, mixed-income development has not been demonstrated locally, for the purpose of converting public housing, with enough critical mass, to convince skeptics that it can, in fact, be the basis for transforming the city’s stock of subsidized housing.

Nevertheless, midway through the Plan’s implementation, there are signs of solid progress.

• The CHA has demolished more than 11,000 units of obsolete housing

• Built and rehabbed some 14,320 apartments, including over 90% of its senior housing and all of its scattered-site housing

• Fully two-thirds of the families who have been relocated report that their apartments are much better than their former units; and

• More than half of those who have moved rate their new neighborhoods as better than their former neighborhoods – and those who moved with vouchers are twice as likely to say they live in better circumstances now. 

• Indeed, relocation turns out to be the major HOPE VI intervention to benefit families.  Residents are living in better apartments, in safer neighborhoods, and self-report as more satisfied.

• We’ve learned that the type of replacement housing matters: voucher holders do better than those who relocate to other public housing.

Yet, there are serious challenges ahead. 

• The timetable for the Plan is aggressive, given the scale and complexity of what remains to be accomplished. 

• Federal funding for operating, capital, and Section 8 expenses keeps being cut. 

• Contrary to expectation, it turns out not to be that difficult to attract market-rate buyers and renters to the new housing.  

• The challenge, instead, is to persuade public housing residents to return – and, as others have mentioned, to help them meet the requirements of tenants, and move toward greater self-reliance.

Not a simple task, when 63% of those in family housing and 70% of vouchers holders are unemployed, when only 57% have completed high school or earned a GED, when their mental and physical health is dramatically worse than citywide or national averages. 

To my mind, the biggest challenge going forward is what to do about the public housing leaseholders who are not likely to make it in the newly developed properties, or in the private market. 

Of Terry, I ask whether city agencies and the CHA are capable of meeting the challenge, whether they have the expertise and the resources.

Of Alex, I would ask whether litigation can do much more than slow the process of dealing with the problem.

Of Steve, I ask, how prepared are developers to assist public housing residents?

And of Earnest, I would ask what should give us hope that, at the end of the day, the Plan for Transformation will have been a social experiment worth undertaking.

Housing, Chicago, Housing