Public Housing

The city's Department of Housing development plan for 2009-2013 focused on giving more than one-third of single-family homes resources in order to make over 100 percent of the Area Median Income 24 At the same time, public housing assistance and affordable housing creation focused on "mixed-income" developments in which new affordable and public housing units are built alongside market area housing. The sale of market-rate housing was to finance the construction of affordable and public housing units.

This model has caused alarm since its inception. Many of the proposed mixed-income projects have been sidelined as developers who were supposed to move forward stepped back after finding their anticipated funding sources dried up. One of the incentives that the city offered was a series of tax credits that could be sold by the developers to their investors in order to receive up-front capital. Since the program began in 1986, these tax credits have been apportioned to various states' Housing Development Authorities based on population; the city of Chicago is unique in that it is the only municipality in the nation that has its own independent authority. As such, a developer that is slated to work on a project in Chicago is able to access tax credits through either the city or the state by applying through the respective agency's Qualified Allocation Plan (QAP) The state's QAP is a lengthy document that "weighs the pros and cons" through a competitive process that scores each candidate. The city's QAP is not scored, however, and Heslip reports that "we don't know how they figure it out; it's less definitive."25

While the tax credits were appealing during the early 2000s, the rate of return on an individual credit at times exceeded 100 percent of the purchase price. Business owners would purchase them to offset taxes incurred for their private sector dealings. When an investor purchased the credit, he did so anticipating a tax credit for ten years based on the rate of purchase, which was fixed, and hence offered at once the sum of money he anticipated receiving over the course of 10 years. Several of these individual investors were assembled into a "syndicate" that then formed the funding base.26

Many of the proposed developers of the mixed-income projects were supposed to figure into the Chicago Housing Authority's (CHA) Plan for Transformation based on financing figures of private sector investment. But as rates started to fall, the investors began withdrawing their support, and projects began to fall through.27

The problem intensifies when looking at the city's recent tendency to destroy public housing units before replacement housing is constructed. More than halfway into the Plan for Transformation, only 1,200 mixed-income homes have been built in spite of the demolition of multiple public housing facilities, resulting in a net loss of 13,629 units. In addition, as a result of work permits and drug testing, it is difficult for previous public housing residents to qualify for mixed-income communities. Ninety percent of individuals who received vouchers from the CHA end up in low rather than mixed income communities, indicating that the voucher programs re-segregate rather than resettle.28