Stimulating Whose Economy?

The city's long-standing relationship with Mercy Housing, Inc. isn't the only partnership that will prosper from stimulus money. The proposed individual tax credits are connected to the same networks that have been engaged with the city since the beginning but are skittish about risking their own money without the additional safeguards provided by public funds. Another component of the Find Your Place Program, for instance, is the TaxSmart Mortgage Credit Certificate, which is offered by the city in partnership with local lenders to give an individual a federal income tax credit of up to 20 percent of the interest they pay on their mortgage. Some of these banks are listed as municipal depositories for the City of Chicago; however, there are no requirements as of yet for any of these banks to assist with the provision of affordable housing. More than that, these incentives are offered only to first-time homebuyers, or individuals who have not owned a home in the past three years, which means that a person or a family that has lost a home due to the recent private housing market meltdown is not included in the city's proposal. At this time, there are no publicly accessible records that show which banks are accumulating the majority of the foreclosed properties.34

The recent past has shown that the city's espousal to support affordable housing, even for first-time buyers, has invariably served to protect private interests at the expense of public good. Prior to the new programs, affordable housing units were frequently purchased by people who did not necessarily need housing for themselves, but wanted to take advantage of the city and other tools to purchase lower-cost housing and resell it at a higher value later on. These housing "flips" have eaten up a substantial amount of the affordable housing stock in many neighborhoods-the UIC/Halsted area being one example. The old Maxwell Street area was similarly turned into a TIF district to encourage residential and commercial development in support of the expansion of the University of Illinois in Chicago. The city mandated that 21 percent of housing in these developments be affordable for families, amounting to a total of 187 units being subsidized by the city. However, of these units, 67 percent of the homes set aside for families ended up going to individuals working for the city, state, or university administrations who made an average income of $44, 419, 50 of those homes were resold for an average profit of $63,710; and 6 homes were sold for a more than $100,000 profit.35

In response to these developments, the city implemented revisions to limit the profits an individual can make on the resale of a subsidized home. Additionally, someone who already owns a home cannot purchase an affordable housing unit, and the unit can only be sold to someone meeting certain income requirements.36 The Daley administration also created a nonprofit "land trust"-the Chicago Community Land Trust - to help preserve affordable housing units by taking control of the housing stock and making sure that they are "permanently affordable"; buyers sign 99-year leases promising to live in the homes or sell them to qualified buyers in exchange for subsidies and lower property taxes. The trust controls 31 of the 4,354 units created since Daley took office. At the same time, the city currently has no procedure for keeping track of its affordable housing stock and monitoring how many units have already been lost as a result of "flips".