by hilzoy
While I was away, the Boston Globe had a story on Obama and some Chicago affordable housing projects that sound pretty bad. If you read the article carefully, the actual story seems to come down to this:
First:
“As a state senator, the presumptive Democratic presidential nominee coauthored an Illinois law creating a new pool of tax credits for developers. As a US senator, he pressed for increased federal subsidies. And as a presidential candidate, he has campaigned on a promise to create an Affordable Housing Trust Fund that could give developers an estimated $500 million a year.
But a Globe review found that thousands of apartments across Chicago that had been built with local, state, and federal subsidies – including several hundred in Obama’s former district – deteriorated so completely that they were no longer habitable.”
Second, some of these failed projects were developed by Obama associates, supporters, and contributors. Third, some of them are in Obama’s old State Senate district, and he doesn’t seem to have done much about them.
I have no interest in defending Obama on the second and third points. I don’t know much about them. Some blog coverage of this story is wrong: contrary to some summaries of this article, Obama did not “run” these projects, and Grove Parc, the development the Globe story focusses on, was redeveloped by a public-private partnership in 1990, while Obama was still in law school. After citing a description of this project, Rick Moran writes: ” Obama pushed hard to finance these projects back in the 1990’s.” Projects with this legal structure, yes. This project, no.
The story here, to my mind, is not: Obama got support for the projects the article describes. It’s: Valerie Jarrett, one of his close advisors, let this continue after her group took over management of the project in 2001. It’s worth noting, though, that Jarrett and the company she now heads, Habitat, did not need Obama’s help to get into this business: when the Chicago Housing Authority was put into receivership in 1987 (before Obama went to law school), they were appointed its receivers. When Jarrett met Obama, and for quite a while afterwards, he would have been the one needing her help, not the other way around. That in no way excuses her allowing this property to deteriorate, or Obama’s not doing anything about it. I mention it only because when I read the blog coverage, a lot of people seemed to think that this story was about Obama getting contracts for his buddies. And I really don’t think that’s accurate. When a lot of the contracts mentioned in the story were given out, Obama was not in a position to do any such thing, nor were some of the buddies in question in need of his help.
But I do know a little about housing stuff, enough to find the idea that there’s something suspect about supporting public/private partnerships for low-income housing development a little odd. To get a hint of what bugged me about the Globe story’s presentation of this point, consider this quote:
“Under Mayor Richard M. Daley, who was elected in 1989, the city launched a massive plan to let private companies tear down the projects and build mixed-income communities on the same land.
The city also hired private companies to manage the remaining public housing. And it subsidized private companies to create and manage new affordable housing, some of which was used to accommodate tenants displaced from public housing.
Chicago’s plans drew critics from the start. They asked why the government should pay developers to perform a basic public service – one successfully performed by governments in other cities. And they noted that privately managed projects had a history of deteriorating because guaranteed government rent subsidies left companies with little incentive to spend money on maintenance.”
Chicago’s public housing had been, for decades, a symbol of nightmarish dysfunction:
“Planned for 11,000 inhabitants, the Robert Taylor Homes housed up to a peak of 27,000 people. Six of the poorest US census areas with populations above three people were found there. Including children who are not of working age, at one point 95 percent of the housing development’s 27,000 residents were unemployed and listed public assistance as their only income source, and 40 percent of the households were single-parent, female-headed households earning less than $5,000 per year. About 99.9 percent were African-American. The 28 drab, 16-story concrete high-rises, many blackened with the scars of arson fire, sat in a narrow two-block by 2.5-mile (300 m by 3 km) stretch of slum. The city’s neglect was evident in littered streets, poorly enforced building codes, and scant commercial or civic amenities.
Police intelligence sources say that elevated number of homicides was the result of gang “turf wars,” as gang members and drug dealers fought over control of given Chicago neighborhoods. Its landlord, the Chicago Housing Authority (CHA), has estimated that $45,000 in drug deals took place daily. Former residents of the Robert Taylor Homes have said that the drug dealers fought for control of the buildings. In one weekend, more than 300 separate shooting incidents were reported in the vicinity of the Robert Taylor Homes. Twenty-eight people were killed during the same weekend, with 26 of the 28 incidents believed to be gang-related.”
I do not know much about the Chicago Housing Authority. For all I know, every single person who ever worked for it was as wise as Solon and a saint to boot, and all its problems were the result of disastrous coincidences that were utterly beyond its control. But given the actual history of government-run housing in Chicago, when I read the Globe article citing “critics” who “asked why the government should pay developers to perform a basic public service – one successfully performed by governments in other cities”, I thought: who are these critics? And why isn’t the answer to their question obvious? Namely: whatever works or doesn’t work in other cities, letting the CHA manage public housing in Chicago seems like a really, really bad idea. Maybe it would be less bad now — for all I know, the CHA might have improved a lot. But back in 1990 or so, the question “why not let the government run public housing in Chicago?” would have been like asking “why not let Michael Brown run FEMA?” right after Hurricane Katrina. Maybe Brownie was a great guy, but the appearances were certainly against him.
So if straight public housing was out, what were the alternatives to public-private partnerships?