Cashing in on Housing the Poor

Photo of Part of the Chicago Housing Authority's Cabrini-Green public housing complex in January 2005.

Tim Boyle/Getty Images

A recent report published in the Chicago Sun-Times and produced in collaboration with the Better Government Association (BGA), details some of the problems bedeviling Chicago’s public housing program.

Sixteen years ago, the Chicago Housing Authority (CHA) began demolishing the notorious Cabrini-Green and other high-rise projects with the stated aim of helping people find better housing options. As one of the central elements of this “Plan for Transformation” the CHA is providing housing vouchers to more than 107,000 people in nearly 45,000 households in Chicago, most of them African-American. As a result, the report found, “providing housing for poor people has become a growth industry for private landlords that lap up government funding by catering to the need for low-income housing.”

Since 2000, there has been a 40 percent drop in the number of people living in housing owned by the CHA and a 40 percent increase in the number of poor people living in privately owned apartments and houses leased with the help of government subsidies in the form of vouchers. Most of this housing is located in the same high-crime, poverty-riddled neighborhoods as the former high-rise projects. Many of the buildings have been cited by City Hall inspectors over the past five years for code violations such as lack of heat, rodents, and structural defects. According to the report, the Chicago Department of Buildings does not routinely inform the CHA when code violations are discovered. According to a CHA spokeswoman, “CHA receives notification from the city when violations are so serious that they require … tenants to be vacated.”

The sums of money involved are considerable. Private landlords take in more than $560 million a year in rental payments from households with vouchers. More than 76 percent of this — $430 million – is covered by the CHA using money provided by the federal Department of Housing and Urban Development (HUD). In addition to channeling money to private landlords, the CHA has hired two private contractors to administer the voucher program and handle tenants’ complaints. Last year, these two firms billed the city a total of $27 million. Last fall, a third

company was awarded a three-year contract, worth 2.4 million, to screen credit histories and run background checks.

The CHA has also paid some landlords extravagant rents – as high as $57,600 a year – to lease property in what the agency calls “opportunity areas,” low-poverty neighborhoods where less than five percent of the population lives in subsidized housing. After this program came under fire from HUD, the CHA said it will phase out the costliest of these deals by the spring of 2018.

The Sun-Times reporters detail the property holdings of several firms and individuals who provide housing for the voucher program. The largest landlord in the program rents 1,200 apartments to voucher-holders for nearly $1.1 million a month, 77 percent of which is paid by the CHA. In the past five years, city building inspectors have found 3,597 code violations at 300 addresses leased to voucher tenants. The owner told the Sun-Times: “We don’t buy bad buildings here and there. We buy an entire block.”

Issues |Civil Rights|Housing

Region |Washington DC

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