Land Reform Chicago Style by benbenzhou


									                         LAND REFORM, CHICAGO STYLE

                                       Gail Schechter
                     Interfaith Housing Center of the Northern Suburbs

                                      Scott Bernstein
                           Center for Neighborhood Technology

                               Stephen A. Perkins, Ph.D.
                           Center for Neighborhood Technology

                             A Discussion Paper Prepared for
             The Brookings Institution Center on Urban and Metropolitan Policy
                                       CEOs for Cities

                                  November 2004
                             TABLE OF CONTENTS



TRUST, INC…………………………………………………………………………………………………………..5

HOUSING ABANDONMENT TASK FORCE (HATF)………………………………………………….………………..11

1990S: REINVESTMENT…AND DISPLACEMENT…………………………………………...………………………..19

TALE OF TWO COMMUNITIES…………………………………………………………………………………………22

LESSONS LEARNED…………………………………………………………………………………………………..27

NEXT STEPS…………………………………………………………………………………………………………..30

                                  LAND REFORM, CHICAGO STYLE

                                           I. INTRODUCTION

         Across the country, policy makers and environmental and community development
advocates are united in their interest in the reuse and recycling of land in the urban core – land that
has become available because of the failure of its prior uses, resulting in abandonment and
demolition. Yet this cycle of development, deterioration, abandonment, vacant land and then reuse
is not inevitable. Effective intervention can conserve existing buildings and communities so that
vacant land does not hamper community revitalization efforts.

         In Chicago, the civic, business, government and community sectors have a 30-year history of
commitment to preventing building abandonment and maintaining the integrity of communities. This
effort engaged this broad range of stakeholders; produced high quality research to understand the
complex factors leading to abandonment; framed public and private interventions at a scale that
could make a difference; and then carried out the multi-year campaigns necessary to secure their
adoption and implementation.

         Of American cities, Chicago is unusual in the duration, breadth, and depth of this
commitment to conservation. Chicago has a strong tradition of civic and community activism, from
Jane Addams and the Settlement House Movement at the turn of the 20th century, to the concerted
effort of business and city leaders to beautify and open up the Lake Michigan shoreline through
Daniel Burnham’s sensitive designs, to the beginnings of neighborhood-based community organizing
with Saul Alinsky’s work in Back of the Yards and Woodlawn.

        This paper describes two civic initiatives in the 1970s and 1980s and their effects up through
the present, which together catalyzed this fundamental paradigm shift toward the preservation of
existing housing and communities. Historical in character, this paper does not cover all current
programs dealing with tax policy and land reform in Chicago but rather measures the impact of
several citizen initiatives. The central thesis posited in this study of two land reform movements is
that lowering abandonment and demolition rates is at least as important an indicator of well being as
new home building, especially in the “hollowed-out” cores of this nation’s cities.

        Chicago’s multi-decade public and private experience has lessons to learn for other cities
around the country and suggests contemporary policies that can move forward this commitment to
existing places.

                              II. CHICAGO: SETTING THE CONTEXT-
                              ESCALATING HOUSING ABANDONMENT

         Starting in the early 1960s, Chicago began to experience a cycle of economic decline, racial
transition, soaring energy prices, exorbitant tax increases, and a withdrawal of city and financial
services. Many buildings were subjected to deferred maintenance and even arson. In the hardest
hit neighborhoods, thousands of low- and moderate-income property owners and their tenants were
forced to leave their Chicago homes; others had no choice but to move into substandard housing.
The culmination of this cycle was first abandoned buildings and then vacant land.

         By the 1970s, housing abandonment in the City of Chicago was a phenomenon similar to
that of other large cities in the nation; de-industrialization and “white flight” from low- and moderate-
income neighborhoods to the suburbs accompanied disinvestment and decline in city
neighborhoods. This in turn contracted the community’s employment base. Few resources remained
to buttress an already aged housing stock.1

       More than one in four housing units (306,800) in Chicago was either dilapidated or tending
towards dilapidation in 1970.2 At the same time, the number of demolitions was steadily rising.

        The following is a snapshot of the housing market in late-1970s Chicago:

    •   Of the City of Chicago’s 3 million residents, at least 1 million people lived in about 300,000
        housing units in large multi-family buildings (seven or more units).3

    •   In 1960, only 143 structures were demolished. This rose to 1,400 in 1970 and 2,675 in
        1975.4 A total of 22,175 buildings were demolished between 1960 and 1976, with an
        estimated 271,000 persons displaced – 9 percent of the population.5

    •   Abandonment rose from 2,500 structures in 1975 to 3,100 in 1977.6

    •   New construction was low: during the first two months of 1977, only 80 building permits were
        issued in the city of Chicago (58 single-family and 22 multi-family).7

    •   Utility costs and property taxes became a burden on multi-family property owners. The cost
        of utilities grew from only 11.2% of total rent receipts in 1968 to 22.9% in 1975, and property
        taxes grew from 13.6% of rent receipts in 1968 to 21.6% in 1975. Total net income of the
        typical building had fallen from $100,000 in 1968 to $6,000 in 1975. Owners faced a serious
        dilemma: the market demand in this lower income African-American neighborhood was such
        that the rent could not be increased.8

    •   Tax delinquency in the City of Chicago rose 14% from 1970 to 1974, the highest in the
        nation, according to Moody’s Investment Manual.9

    •   In 1970, 55,000 parcels in Chicago were tax-delinquent. By 1973, this figure rose to 92,000,
        amounting to more than $73 million in lost tax revenue. At the same time, an increasing
        number of properties were not purchased (“forfeited”) at the annual tax sale: from 18,102 in
        1971 in Cook County (of which the City of Chicago is a part), to 34,871 in 1973. The lowest
        income townships bore the highest number of forfeitures; tax purchasers were uninterested
        in these properties, thus “redlining huge sections of Chicago,” according to attorney John

         More than twenty-five years ago, neighborhood and city-wide advocates for households most
at risk of losing their homes and rental properties – largely older persons, single women with
children, veterans, people with disabilities, and low-wage workers – began to coalesce around a
single goal: to protect and improve the multi-family rental housing stock of the City of Chicago.

          TRUST, Inc. and the Housing Abandonment Task Force (HATF) were broad-based initiatives
that fundamentally changed the policy and market context for housing and land. These two
initiatives are notable in several respects. Their approaches shared several characteristics:

    •   Multi-Stakeholder – Many different constituencies with varied interests and perspectives –
        neighborhood activists, business leaders, urban and environmental policy researchers, non-
        profit developers, civil rights advocates, academics and government officials – came together
        to effect reforms at different levels of government;
   •    Holistic – They approached housing abandonment in a holistic manner, examining a variety
        of causes and proposing appropriate solutions;
   •    Neighborhood-Oriented – While recognizing the connection between neighborhood
        conditions and the broader economy, these initiatives focused on place-based solutions that
        permitted greater opportunity for local control and ownership;
   •    Focused on Resources – They linked abandonment with (a) an inefficient property tax
        collection system, (b) inadequate resources from both the public and private sectors for land
        and housing acquisition and rehabilitation in poor neighborhoods, and (c) disincentives for
        neighborhood reinvestment; and
   •    Citizen-Friendly – They demystified the tax collection process and other government roles
        by advocating for reforms that permitted public access to information, and used the media to
        educate the public about rehab programs and tax reforms.

Ultimately, these initiatives permitted revitalization in once severely disinvested neighborhoods.

                                          III. TRUST, INC.

        TRUST (To Reshape Urban Systems Together) brought together business and civic leaders
to address Chicago’s stagnating economy. For staff members of neighborhood and downtown
organizations, these mid-day gatherings were an opportunity to orient themselves to the issues and
people working to improve Chicago. In March 1977, as a result of a study, Managing Chicago’s
Urban Dollar11, TRUST decided to form a Housing Conservation Study Committee to analyze issues
as they pertained to five types of housing conservation: normal maintenance, rehabilitation,
remodeling, preservation, and restoration. TRUST chose to focus on housing conservation as a
bellwether for urban health. In a meeting in June 1977, co-chair Bill Brown of RESCORP (Chicago
Area Renewal Effort Services Corporation), a service corporation mutually owned by fifty-seven
savings and loan institutions, summarized the reasons as follows12:

   •   “Housing rehabilitation is a key factor in stabilizing and, in many instances, increasing the
       city’s residential tax base.
   •   “Housing rehabilitation minimizes the fear of neighborhood residents that their community is
       deteriorating and that they will be left physically and financially isolated.
   •   “Rehabilitated housing is a key incentive in the effort to encourage suburbanites and new
       arrivals in the region to make the city their home.
   •   “Housing rehabilitation-related activity, such as construction, maintenance and management,
       can generate additional jobs, particularly second and third jobs, that are essential for some
   •   “Housing rehabilitation efforts may focus attention on our careless attitude toward conserving
       housing and neighborhoods.”

        This committee met twice monthly for the next year, hearing more than 30 speakers:
lawyers, neighborhood and for-profit developers, bankers, and government representatives,
including staff of HUD, the Illinois Housing Development Authority (IHDA) and the Cook County
Treasurer. Its minutes were regularly mailed out to over 600 stakeholders, including state legislators.

       TRUST decided early in the committee’s process to focus on “the impact of tax
delinquencies and tax assessment practices on the management and rehabilitation of multi-family
housing” because: (1) it was an area in which “the public had not been adequately informed and
where public policy could benefit from informed public input”; (2) there were few “if any”
organizations looking at multi-family housing; (3) research and analysis had already been
undertaken on the subject; and (4) the issue was narrow enough to effect change in a short period of

        The critical turning point for TRUST, Inc., which had begun with a fairly open-ended, broad
look at housing rehabilitation, was the realization that the property tax delinquency rate was not only
an indicator of a declining housing market, but that the accumulation of tax liens was in itself a
stumbling block to the rehabilitation of properties and neighborhoods.13 This important insight by
John Lawlor formed the basis of TRUST’s policy agenda and, indeed, the agenda of future housing

A.      Housing Abandonment and the Cook County Property Tax Collection System

        What was the nature of the property tax collection system in Cook County? How did it
contribute to multi-family housing abandonment?

         The State of Illinois relies heavily on the local property tax system to purchase municipal
services ranging from public school education to park maintenance to mosquito abatement. While it
is beyond the scope of this research to analyze the impact of Cook County’s reliance on the property
tax system on the wide disparities between rich and poor neighborhoods and suburbs, it is
nonetheless a fact that taxing bodies have demanded property tax increases far in excess of
inflation, which no collection system can remedy. In addition, taxing an owner based on a
determination of value that can only be realized when the property is sold seems unfair to a long-
term or low-income property owner, particularly in an appreciating or gentrifying neighborhood. That
said, to the extent that the tax delinquency process caused housing abandonment, reform was

         The Cook County Assessor’s Office assessed market values for properties every four years
on a staggered basis. (Currently, re-assessments occur on a triennial basis.) The Assessor’s
Office would use copies of all real estate transfer declarations, building and wrecking permits, and
the results of field visits, sales dates, and other community information to determine the value at
which “a willing buyer would pay a willing seller.”14 The assessment rate differed depending on the
number of units in the property. Buildings with six or fewer units were assessed at 17% or 22% of
market value, and those with seven or more units at 33%. The County Board set the classification

         When a property owner failed to pay taxes, the County sold the tax liens at an annual tax
sale. According to John Lawlor, “The sale... places actual responsibility for collection in the hands of
a profit-seeking private party, the tax lien purchaser. By paying off the tax lien to the local
government, the tax purchaser subsequently is entitled to earn as much as 12% interest from the
owner of the property should the owner exercise his constitutional right to redemption.”16 In
essence, as Lawlor described it to the TRUST study group, the County “is essentially factoring the
debts owed to it. [Emphasis in text.] This is analogous to a private business selling its accounts
payable to a collection agency.”17

         Since investors sought to earn collection fees, not, contrary to common belief, to
purchase urban land (in 1973, for example, only 4% of parcels sold at the tax sale resulted in
new titles18), they bid only on good quality properties in competitive locations. But what was
the effect of the system in areas with decreasing property values? What happened when a
property was “forfeited,” which occurred in Chicago’s “redlined” low-income neighborhoods?
Nothing, in essence, for ten years, during which time the owner could continue to collect
rents and the property could continue to deteriorate. This meant that “growing portions of the
City remain[ed] in the hands of property owners who [did] not pay their share of the cost of
municipal services,” according to Lawlor.

        After ten years, the County would subject the property to a “Scavenger Sale,” at which point
the property could be purchased for less than the amount of accrued taxes. As with the tax sale, an
owner had two years in which to redeem the property.

         What amounted to a twelve-year process was frustrating not only to Chicago’s taxing bodies,
but to those interested in maintaining or creating decent and sound multi-family housing. Before
rehabilitation could occur, tax liens would have to be cleared. According to Saul Klibanow, President
of RESCORP and the first guest speaker for the TRUST study group, “A developer of any type many
times cannot afford to rehab a potentially good property because of the burden of paying back
taxes.”19 Martin Tuchow, Cook County Board Commissioner and Chair of the Tax Delinquency
Committee, agreed that “the burden of accrued taxes and penalties was one of the major reasons
that in his two years on the committee he has yet to see anyone come forward and purchase a piece
of delinquent property from the City of Chicago.”20

        The tax assessment appeals process was particularly burdensome to unsophisticated
property owners. According to Phillip Krone, an attorney who advised TRUST, at a meeting on July
22, 1977:

       What we basically have is the “Ouch” system. The assessor goes about his
       business and if an injustice has been done, it is up to the property owner to bring this
       to the assessor’s attention. Unfortunately, there are some people who don’t know
       how to say “Ouch.”

TRUST, Inc. concluded that the current system was flawed for the following reasons:

   •   Permitting a time frame of ten years before a tax delinquent property could be sold at the
       scavenger sale only furthered irremediable deterioration. The additional two-year
       redemption period only added to the burden on vulnerable multi-family buildings. Combined
       with poor record-keeping on ownership and inability to hold secret land trusts accountable for
       delinquent taxes, some “slumlords” would continue to collect rents, neglect the building, and
       then repurchase their own properties for less than the value of their back taxes. This was not
       allowed under the law, but was easily circumvented by use of secret land trusts.
   •   Reluctance of the State to foreclose on the property through an In Rem procedure similar to
       that undertaken since 1977 in New York City,21 to appoint receivers, or to institute In
       Personam suits against secret land trust owners, frustrated the efforts of responsible
       developers to take control of the property.

     •   Unwillingness on the part of government entities to compromise on back taxes (or provide
         tax relief for rehabbed multi-family properties, similar to the “home improvement exemption”
         for small buildings) seemed understandable on the one hand, but unrealistic in
         neighborhoods where property values suffered from a weak market.
     •   Lack of readily accessible data, fragmented among several offices (i.e., County Assessor,
         Treasurer, City of Chicago), made it impossible for responsible owners, neighborhood
         activists, and even the City itself to implement an “early warning” system to monitor activity.
     •   Quadrennial assessments worked to the detriment of declining neighborhoods, whose
         owners were paying higher taxes in the intervening years than those in appreciating
     •   Tax appeals processes were cumbersome and expensive.

         One reason this counter-productive system was able to proceed was that the City of Chicago
was able to compensate for the lost tax revenues. A study released by the City of Chicago in 1985
posits that Chicago had decreased its reliance on the property tax by closing the gap with federal
funds. (By contrast, most large cities used these federal dollars to expand services.) According to
the Chicago Reader weekly, “When these federal dollars slowed in the late 1970s, Chicago held
down its property tax (unlike most Rust Belt cities) and compensated with one-time revenues, like
the selling of city properties, and increased fees and ‘nuisance’ taxes, like the utility tax.” These
taxes fall harder on low-income residents.22

B.       Recommended and Implemented Reforms

        After more than nine months of meetings, the Housing Conservation Study Committee of
TRUST, Inc. released its findings and recommendations in April 1978. TRUST was careful to
respect the needs of taxing districts; maintain the integrity of the tax collection system; ensure that
delinquent property owners could not benefit from failure to pay taxes; and assist both for-profit and
not-for-profit owners to be able to rehab and maintain properties into the future.

        Interestingly, TRUST early on raised the issue of the unintended consequences of reform.
Without using the term “gentrification,” the committee debated at length as to “who are the
beneficiaries of what the urban pioneer and market place bring.” In other words, how could
individuals be encouraged to “take risks” and invest in improving dilapidated housing in poor
neighborhoods without risking the displacement of those very people once market forces push prices
up? Could one create an atmosphere of “controlled speculation”? How can low-income neighbors
themselves share in the wealth? Some members of the committee were reluctant to impose their
vision of the city on others. It was concluded that, at the very least, advocates could push for “tools”
⎯ policies, programs, and publicly available data ⎯ to allow neighborhood residents to shape their
own visions.

       As one committee member summarized, “We cannot possibly anticipate all the abuses that
can be perpetrated on communities in the guise of rehabilitation/conservation. But this does not
mean that we shouldn’t ask the fundamental question which is how to get reinvestment money
flowing into our neighborhoods.”23

         After releasing its report, TRUST formed a committee for the implementation phase. The
implementation committee also continued interviewing key government officials, community and
faith-based groups for their advice and support. Sub-committees were formed on the basis of which
governmental entity could implement the reform (i.e., Cook County Assessor’s office, State
legislature, and City of Chicago/County Clerk/Housing Court, etc. as a third committee ⎯ see
Appendix (1): Implementation Strategy Sheet).

        Several TRUST members (including Janet Malone, Executive Director of TRUST, and an
attorney for the Legal Assistance Foundation of Chicago) testified in Springfield in favor of a bill to
reduce the period of the scavenger sale from ten to five years. The governor signed it into law
in August 1978. In introducing the bill, Senator Hynes commended TRUST “for its work on behalf of
this excellent piece of legislation.” The bill passed 56-0.24 This legislative success was the first of
several reforms of the tax scavenger sale over a 12-year period. This major reform was
accomplished by a unique coalition of actors including several former governors, the County
Treasurer and Assessor, City officials, the Illinois Realtors Association, and most labor unions.25

        TRUST also pushed a state bill to create a Multi-Family Improvement Exemption. TRUST
staff and committee members obtained the endorsement of key organizations such as Chicago
United, an interracial group of business leaders, and worked with the Metropolitan Housing and
Planning Council to create a centralized data bank of the number, location and ownership of multi-
family units, their tax status, and the number of years of delinquency. This data system would not
only incorporate the City’s own PRISM system (which was not easily accessible to the public), but
data from the County Assessor, Treasurer, and other relevant city, county, and state agencies.26
TRUST committee members also urged Cook County Treasurer Edward Rosewell to hold public
education seminars well in advance of the next scavenger sale and to list delinquent parcels in local
newspaper announcements by street address as well as parcel (PIN) number.

       In addition, TRUST committee members and staff used the report and recommendations to
generate TV and radio coverage of the issues and ensure that these became campaign issues that

        TRUST held a Housing Conference on October 28, 1978 at the South Shore Country Club.
A panel of state and countywide legislators generally endorsed the TRUST recommendations,
including the creation of a Land Reutilization Commission, one of the more creative solutions. Such
a commission authorized by the County and under City control, would include representatives of
community and civic groups, governmental agencies, developers, lenders, real estate professionals,
and architects. It would oversee the disposition of tax delinquent property. The commission’s charge
could be expanded to include land banking, property management, and related responsibilities.

         While TRUST moved on to study other issues and eventually disbanded in the early 1980s,
TRUST’s report influenced the creation of an informal Tax Reactivation Working Group, primarily
staffed by many of the same actors involved in the TRUST housing conservation committee,
including the Center for Neighborhood Technology, the Woodstock Institute and the Lawyer’s
Committee for Better Housing, and government officials from the City of Chicago and Cook County.
This group of thirty not-for-profit housing, legal and community organizations designed a new Tax
Reactivation Program, which was established by Cook County in 1983. The program allowed not-
for-profit groups to acquire multi-family properties for a nominal fee by using the County’s ability to
make non-cash bids on their behalf at the Scavenger Sale. If the owner failed to redeem, the
housing group acquired the property. The Chicago Rehab Network, a coalition of community-based
not-for-profit developers, screened all proposals. By 1986, 23 properties went through the Tax
Reactivation Program, resulting in the ownership transfer of 17 properties to 6 not-for-profits, many
of which were rehabbed with funds from the Chicago Housing Partnership, an association of housing
stakeholders involved with the development and preservation of the LIHTC portfolio. With virtually no
acquisition costs, the developers were able to offer rents in the $350-450 range.27

        In spite of the efforts of the reformers in TRUST and the Tax Reactivation Working Group,
tax delinquency rose to “epidemic proportions” by the mid-1980s.

       The property tax collection system has become a kind of “Bermuda Triangle” for
       much of the city’s low-income housing: good buildings literally disappear, emerging
       as vacant land at the end of the process.28

       The additional reforms advocated by TRUST had yet to be adopted.


        The TRUST process set the stage for the Housing Abandonment Task Force (HATF), a
broader, and more comprehensive study-and-action housing initiative. Conceived by Dr. Stephen A.
Perkins in response to the failure of a multifamily housing rehabilitation project in South Shore, it
went beyond the limited issue of the tax system with a structural analysis of the many causes of
housing abandonment, seeking nothing less than a paradigm shift toward the conservation of the
existing housing stock. It viewed vacant urban land as the outcome of a prior failure to conserve the
housing stock and argued that investment needed to be focused on the prevention of abandonment.

          Where the TRUST task force led to state county or municipal reform, HATF did much more:
it led directly to creative investment in local private and public/private programs. For example, it
crafted a housing finance and public policy scenario in which low-income housing tax credits could
be pooled and syndicated through an “equity fund.” This was followed by the building of a coalition
of corporations and activists which convinced the chairman of the U.S. House Ways and Means
Committee, U.S. Rep. Dan Rostenkowski, to include the proposal in the 1986 Tax Reform Act.

        The HATF coalesced in 1982. It explored the multi-faceted causes of housing abandonment
in Chicago and put forth its recommendations at the same time that the new Tax Reactivation
Program, a partnership between neighborhood-based groups and Cook County, was launched.

        The HATF tracked in detail the physical condition, financial health and regulatory status of
multi-family buildings in target areas, and developed a comprehensive set of recommendations that
would permit the rehabilitation of buildings already experiencing, or in danger of, abandonment
throughout the City.

A. Methods and Structure

        The HATF combined both public policy work, and the buttressing of local, place-based
actions, to address – systemically and systematically – the full range of key concerns. By
networking interests, this complexity could be specified in addressable, understandable, and
organizable terms. By choosing to handle the main issues simultaneously, a stronger coalition
resulted – an approach that is counterintuitive to those who look for narrow, single issues and go for
short-term victories.

        The HATF was intentionally founded to include both neighborhood-based and citywide
housing groups. It was a broad collaboration involving six citywide organizations with technical
assistance and policy expertise and four community groups. The steering committee included:

   •   The Housing Agenda (Prime Sponsor, a coalition of 200 Chicago housing organizations)
   •   Center for Neighborhood Technology (City-Wide; Energy Panel Coordinator)

   •   Chicago Council of Lawyers, then Lawyers’ Committee for Better Housing (City-Wide;
       Government Regulations Panel Coordinator)
   •   Community Renewal Society (City-Wide; Ownership and Management Panel Coordinator)
   •   Leadership Council for Metropolitan Open Communities (City-Wide; Finance Panel
   •   Northwest Community Organization (Community-Based)
   •   Organization of the North East (Community-Based)
   •   South Austin Coalition Community Council (Community-Based)
   •   South Side Organizing Committee (composed of four organizations: South Shore
       Commission, The Neighborhood Institute, Grand Boulevard Community 76 Organization,
       Long Grove Tenants Council) (Community-Based)
   •   Woodstock Institute (City-Wide; Data Base Group Coordinator)

        Dr. S. Garry Oniki, associate executive director of the Community Renewal Society and the
director of its Center for Community Research and Assistance, was the initial chair, followed by Dr.
Stephen A. Perkins, associate director of the Center for Neighborhood Technology.

       The ten groups that steered HATF supervised the following activities:

   1. Four Policy Panels: Government Regulation, Energy, Ownership and Management, and
      Financing. The purpose of these panels was to create detailed solutions, and also permit
      government and private sector leaders to participate actively in the process.

   2. Data Base Group: This group, with representation from all ten partners, surveyed a
      sampling of multi-family properties and analyzed the factors that led them to be at risk of
      abandonment, including operating expenses, tax delinquency status, and physical condition.
      This analysis would assist in the design of an “early warning” centralized database of City

   3. Implementation Group: This group was chaired on a rotating basis by the neighborhood
      organization co-sponsors.

         The HATF project was to span about four years, with a report of recommendations issued in
July 1984. It was divided into four phases. Phase I consisted of establishing the structure and
staffing of the project, and defining target areas in four neighborhoods to establish the project’s
database. Phase II consisted of selecting 20 buildings in each of the four neighborhoods as case
studies and “packaging” five in each neighborhood for rehabilitation financing.29 The four policy
panels also began their work under this phase. Phase III was the development of the project report,
which was released in July 1984, and the initiation of a Campaign for Responsible Ownership,
moving from research and policy analysis to community-based action. Phase IV was the Campaign
itself. From 1986 to 1992, the Campaign for Responsible Ownership was to become the venue by
which County and City officials implemented administrative reforms.
      The HATF also gained the support of Chicago’s largest foundations – which also,
subsequently, increased their funding to neighborhood groups and to “spin-offs” of the HATF.30
Among the foundations that supported the work of the HATF were the Amoco Foundation, Chicago
Community Trust, Harris Bank Foundation, Joyce Foundation, John D. and Catherine T. MacArthur
Foundation, Northern Trust Company Charitable Trust, Woods Charitable Fund, Wieboldt
Foundation, and member companies of Chicago United.

B.       Key Concerns

         The regional economic conditions (the movement of jobs out of Chicago, increases in energy
and tax costs, an aging housing stock) that abetted housing abandonment beginning in the late
1960s did not abate with the close of the 1970s. According to the HATF, 61,000 housing units were
demolished in Chicago during the 1970s, “more than the total number of housing units in some
medium-size communities.”31 The HATF estimated that more than $21 million in tax revenues was
lost to the City each year as a result of the demolition of multi-family buildings during that decade.32
Some of the reasons for abandonment had already been cited by TRUST, Inc.:

     •   Code Enforcement: Housing court was largely ineffective in forcing owners to repair their
     •   Energy: The rising cost of energy outstripped rent increases. Between 1971 and 1983,
         natural gas prices increased almost 400%, or a rate of increase of 19% per year
         compounded. In 1976, Peoples Gas, Chicago’s gas major utility, had 16,000 delinquent
         accounts totaling $4 million. In 1982, these figures rose to 49,000 delinquencies, or $14.8
     •   Financing: Energy, repair, rehabilitation, and debt service costs were especially onerous for
         owners of large multi-family buildings with long histories of neglect, a major finding of the
         Woodstock Institute’s 1984 study for HATF, Housing in Crisis. There were few grants and
         low-interest loans available to either the public or private sectors for the major investments
         needed to both rehab and maintain these properties.
     •   Information: Information about property ownership, finances, or code enforcement –
         information that would be critical for neighborhood groups to intervene on behalf of tenants,
         or to find help for financially strapped landlords, or to permit new responsible owners to
         purchase the properties from those who “milked” the buildings – was still widely dispersed
         and difficult to access.
     •   Homeownership: The lack of wealth-producing ownership opportunities for renters was
         increasingly viewed as contributing to housing neglect by irresponsible or absentee owners.

C.     Key Accomplishments

       Reflecting its comprehensive scope, HATF generated recommendations in a number of
arenas, many of which were implemented.

•      Financing:

       Perhaps the most significant accomplishment of the HATF was the invention of the Chicago
       Equity Fund and the Community Equity Assistance Corp., which began as a $5.5 million
       equity pool, provided by Chicago corporations, to help finance low-income housing
       developed by community-based not-for-profit housing corporations. The Equity Fund was
       enabled by the new national Low Income Housing Tax Credit. The City of Chicago made
       $50 million available for second mortgage financing at a low interest rate over five years. It
       grew into the National Equity Fund, one element of the financing system now used nation-
       wide for non-profit rehabilitation of multi-family buildings.

       As a result of a serious threat of a Community Reinvestment Act (CRA) challenge by HATF
       members, several major Chicago banks (First National Bank, Harris, and Northern Trust)
       established the Neighborhood Lending Program. This initiative, intended to address
       needs identified through the HATF process and the result of intense negotiations, made
       $100 million available to low-income neighborhoods. These loans were packaged through
       the Chicago Rehab Network, a consortium of not-for-profit community-based developers
       from throughout the Chicago area.

•      Information:

       Chicago’s Department of Housing entered into a contract with the Center for Neighborhood
       Technology in 1986 to create a Neighborhood Early Warning System (NEWS) to makes
       property data available from several City and County departments. This information is now
       easily available on the web through the Center for Neighborhood Technology’s web site
       ( Nationally recognized, NEWS was replicated in Los
       Angeles ( Similar programs have been created in
       Minneapolis, Cleveland, New Haven, Providence and Boston.34

•      Government Regulations:

       The legislature could shorten the period required to place a property on the Scavenger
       Sale without constitutional amendment, which it did from 10 years to five years in 1978
       (TRUST), and again from five years to two years in 1988 (Campaign) - along with a
       package of other reforms. The only piece that didn't happen in 1988 was the constitutional
       amendment. The post-sale redemption period, however, is specified in the Illinois
       Constitution, requiring an amendment. In 1988, the Campaign for Responsible
       Ownership/Ownership Transfer Project, in partnership with Chicago United and a broad
    coalition, mounted a campaign to reduce – by statewide ballot – the redemption period from
    two years (for non-single family properties) to six months. This initiative failed, falling just
    short of the 60% plurality required. A second statewide campaign mounted in 1990 was the
    successful. It reduced the redemption period on vacant, non-farm land, multi-family,
    commercial and industrial properties from two years to six months.

    The Housing Division of the City’s Corporation Counsel created a panel of receivers to
    accept appointments wherever necessary, particularly during the heating season. This was
    also linked to the Housing Abandonment Prevention Program (described below).

    The Lawyers Committee for Better Housing pushed for legislation that would clarify for the
    first time property ownership through registration. This became a provision of the
    Residential Landlord and Tenant Ordinance, adopted by the City of Chicago in 1985.

    The Corporation Counsel also instituted a “collection call” to enforce the collection of fines
    assessed against owners, with a priority given to owners of multi-family buildings.

•   Ownership and Management:

    Chicago’s Department of Housing used federal Community Development Block Grant
    (CDBG) funds to launch a Housing Abandonment Prevention Program, a $4 million, two-
    year pilot program that funded twelve community groups to track and intervene in situations
    of abandonment. This included owner counseling, tenant organizing, management
    assistance and legal services intervention. The conceptual framework for HAPP was to view
    maintenance of the precious (i.e. affordable) multi-family housing stock as a continuum using
    the various tools at their disposal to arrest the deterioration process at the earliest stage

    In 1986, the Center for Neighborhood Technology convened the Ownership Transfer
    Working Group to explore converting existing multi-family housing to tenant ownership,
    particularly using the Scavenger Sale and the Tax Reactivation Program as acquisition tools.
     The group also researched a variety of tenant ownership mechanisms, from limited equity
    cooperatives to mutual housing associations. Although tenant ownership is not a panacea
    for housing abandonment (for instance, ownership form is powerless in controlling energy,
    debt service, or property tax costs), it can serve as a barrier to speculation and create wealth
    for low-income former renters.35 This project evolved into the Chicago Mutual Housing
    Network, which has facilitated the conversion of over 2,000 units of existing housing into
    cooperative ownership.

    The concern about gentrification was addressed in the Tax Reactivation Program by
    placing a restrictive covenant on the title transfer to new owners requiring that the property
    remain affordable to low and moderate income residents for a specified period of time.
•      Energy:

       The City of Chicago and The Peoples Gas Light and Coke Company created a Chicago
       Energy Savers Fund, a $15 million residential energy conservation program that provided
       “one stop” services from eight Community Energy Centers. By May 1988, the program
       provided energy retrofits to more than 12,000 housing units, two-thirds of which were low- or
       moderate-income, with an average multi-family energy savings of 18%.

       A broad-based city-wide effort spearheaded by the South Austin Community Coalition
       Council and other HATF participants led to the establishment of the Illinois Residential
       Affordable Payment Plan (IRAPP) under the authority of the Illinois Commerce
       Commission. Under this plan, low-income tenants were required to pay only a maximum of
       12% of their income per month for heat.36 Groups in South Austin and Rogers Park also
       pushed for early warning systems for tenants in the case of heat or water shut-offs.

D.     Impact

        The HATF’s recommendations and the advocacy of some of its members to implement them
resulted in cooperation from the Chicago city government, beginning with the administration of the
newly-elected (in 1983) Mayor Harold Washington, which was highly sympathetic to the task force’s
agenda, and a similarly interested County government. Both needed to deal with multi-million-dollar
property tax revenue shortfalls. They depended, however, on advocates to push for legislative
changes, particularly in the state house. According to Cook County Deputy Treasurer Grace Neville,
who worked with community and citywide groups to computerize data, “All we can do is what the law
permits us, and there are a lot of big corporations and other interests who are fighting against us.”37

        In 1986, the Campaign for Responsible Ownership (CRO) convened an administrative
reform group, staffed by Barbara Shaw of the Center for Neighborhood Technology and Margaret
Blanford of Chicago United, which drew in several City and County agencies, including then States
Attorney (now Mayor) Richard M. Daley and Cook County Treasurer Ed Rosewell. The Campaign,
chaired by Thomas McNulty of Keck, Mahin & Cate, also included civic and government
representatives from the Civic Federation, the Lawyers’ Committee for Better Housing,
Neighborhood Housing Services, Amoco, First Chicago Bank, Chicago Rehab Network, Rodriguez
and Villalobos, CANDO, and the Chicago Rehab Network.

          CRO framed and implemented a wide range of operational changes that made the tax
scavenger system more efficient and effective. This included advocating for a shorter period of tax
delinquency (from five down to two years) before a large multi-family property could be sold to a
responsible owner. This change was ultimately successful as a result of a 1990 statewide ballot
initiative to change the Illinois Constitution.

        From 1987 until 1992, the Campaign for Responsible Ownership (which had a broad-based
Task Force on Tax Delinquent Properties) and the Ownership Transfer Working Group, housed at
the Center for Neighborhood Technology, continued to push for full disclosure of property ownership
and reforms in the property tax system to give community groups and tenants the information and
tools they needed to acquire, rehab, and maintain multi-family buildings. This included the
development of the NEWS (Neighborhood Early Warning System) database, in cooperation with city
and county agencies. Several additional reforms to the state laws surrounding the Scavenger Sale
included making “tax sale fraud” a criminal offense, and establishing a minimum bid of $250 (up from

        That HATF was able to effect a wide variety of reforms, and spin off campaigns and even
new institutions in just a decade, is both daunting and encouraging. Daunting, because it is hard to
maintain the necessary interest over a long period of time (key leaders change jobs or lose office;
and sustained grant funding is needed while the philanthropic community tends to lose interest after
three years). Encouraging, because once adopted, the agendas set forth in the initial reform period
became part of the permanent agendas of the sponsoring organizations and the relevant units of
government, and in effect became part of the local development culture.38

       Despite the continued, frustrating escalation of housing abandonment and tax delinquency
(by 1985, more than 31,000 parcels were on the Scavenger Sale, a 381% increase since 1977, with
taxes and penalties owed exceeding $110 million, increasing to $287 million in 1987), some
communities such as South Shore began to see increasing investment.

         By the 1990s, land, which earlier could not be given away, became valuable and fueled
Chicago’s redevelopment from the center out. With the upswing of urban economies following the
1987 recession, investors, developers, and businesses began “creaming” relatively stable, diverse,
low-income neighborhoods for vacant land and “underutilized” or abandoned property. The City of
Chicago encouraged this reinvestment with incentives such as designating Tax Increment Financing
(TIF) districts in commercial and industrial areas as well as in residential neighborhoods, providing
infrastructure improvements and real estate tax write-downs in exchange.

        Did the efforts of TRUST and HATF contribute to this decline in abandonment and
delinquency? Or was this the result of an inevitable tide of market forces? It is the authors’
contention that the reforms described in this paper forged communication lines and relationships
between the public, private, and community-based sectors that made it easier to “manage” the
reinvestment of the 1990s by attempting to mitigate gentrification, for example, with property tax
reforms. Nonetheless HATF’s reforms, while not changing the tide of investment, had a significant
impact in neighborhoods that have remain largely isolated and lack private investment, including the
southern Cook County suburbs, where County Assessor James Houlihan recently instituted a South
Suburban Tax Reactivation Program. These neighborhoods have had to rely more on the limited
capacities of the not-for-profit housing development sector than other communities.

         This dual housing market (one in poor neighborhoods and one in “desirable” communities)
has exacerbated economic segregation in the City of Chicago and the metropolitan region.
According to the Chicago Tribune’s analysis of the 2000 Census data, “The economic boom of the
1990s bypassed poor minority communities in the city, as many predominantly black neighborhoods
on the South and West Sides remained mired in poverty as deeply entrenched as a decade

         Ironically, the solutions advocated twenty-five years ago to save low-income homeowners
and renters have been inverted today in now prospering communities – instead of pushing
government policies that prevent the private market from abandoning communities and properties,
community advocates are seeking public policies that make sure that poor people are included in
their revitalization plans, such as through inclusionary zoning. In the next section, some of the
housing dynamics and solutions advocated since HATF are described briefly, setting the context for
the case study in Park VI of two communities, Woodlawn and South Shore.

                        V. 1990S: REINVESTMENT…AND DISPLACEMENT

         The work of the Housing Abandonment Task Force enabled a flourishing of activity by local
not-for-profit community development corporations (CDCs), particularly in the Chicago’s low-income,
minority and racially-mixed communities. The Low Income Housing Tax Credit (LIHTC), established
by the federal government in 1986 with primary input from Chicago’s HATF members and local
legislators, fueled the creation of more than 16,000 units by 1998 in the City of Chicago, according to
the Chicago Rehab Network (CRN). In the private market, following the 1992 recession, housing
construction revived at a pace not seen in the prior two decades.

        Low-income multi-family tenants and “mom and pop” property owners, however, were
vulnerable once more to displacement, this time due to the effects of reinvestment: escalating
property taxes (“the single greatest operating expense in an apartment building’s budget,” according
to CRN40) and energy costs, inadequate reserves, and incomes that could not keep pace. The
conversion of rental units to condominiums was frequently the only financially viable option for many
owners. In fact, the biggest threat to rental housing today comes not from the threat of
abandonment, but from condo conversion.

        According to the Regional Rental Market Study conducted by the University of Illinois-
Chicago for the Metropolitan Planning Council, released in November 1999, the Chicago region lost
52,000 rental units in the 1990s, largely due to condo conversion, and experiences a deficit of more
than 150,000 housing units affordable to families earning $20,000 per year.41 With the
transformation of Chicago’s public housing added to the mix (more than 15,000 families are
expected to relocate when their units are demolished in the next ten years) and new welfare reforms
that restricted aid, affordable housing emerged as a major public concern.

        Tenants of the LIHTC buildings were not immune. In fact, by the mid 1990s, several large
developments began to fail. A surprising number of CDCs went out of business or sold off their
stock, such as Peoples Housing (Rogers Park), PRIDE (Austin), TNI (South Shore), Covenant
(Woodlawn), and Ahkenaten (Grand Boulevard). RESCORP, a private developer, also declined.
The Chicago Equity Fund, the Community Investment Corp., and HUD were forced to re-purchase
units. Despite these losses, there are still many CDCs thriving in Chicago, including The
Resurrection Project (Pilsen), Bickerdike (West Town), Voice of the People (Uptown), Hispanic
Housing, and the single-room-occupancy developer, Lakefront SRO. Nonetheless, advocates were
concerned about the future of the multi-family rental stock for low-income residents.

        This prompted the Chicago Housing Partnership, an association of housing professionals
involved in the LIHTC portfolio, to commission CRN to conduct an analysis of the LIHTC properties.
The findings were published as a report, Present Realities, Future Prospects: Chicago’s Low Income
Housing Tax Credit Properties.42 The goal of this study was to find out how to make the LIHTC work
in “both ensuring sustainable housing, and creating housing that expands housing choice and meets

the needs of low- and very low-income Chicago residents,” especially as many fifteen-year
affordability agreements expire in 2002.

        In a study reminiscent of the Woodstock Institute’s 1984 Housing in Crisis study, under the
auspices of the HATF, CRN audited about half the total LIHTC portfolio as of 1998, or 8,700 units, to
determine the causes of the failure of many of these large multi-family rental projects. The study
found the following:

   •   The vast majority of projects are in minority or racially mixed neighborhoods where median
       incomes fall between 40% to 80% of the area median income – in other words, the projects
       do not serve the poorest populations, and are not pro-integrative.
   •   Debt service costs are particularly high in family projects, averaging 36% of effective gross
       incomes. With average debt service costs of $179 per unit, on top of average operating
       costs of $351 per unit, providing housing affordable to families at the poverty level is
   •   Utilities and property taxes follow maintenance and administrative costs as the largest
       operating expenses, and are especially onerous in “troubled” properties.
   •   More than half of the projects (56%) are operating at a deficit, with inadequate income to
       cover expenses and debt service. 81% of family housing projects had no operating reserves
       and 47% had no replacement reserves. These most troubled projects have vacancy rates
       averaging 25%.

        Since the late 1990s, advocates seeking to prevent multi-family rental housing abandonment
(or conversion) in the City of Chicago have focused on the following reforms:

   1. Create deeper government subsidies to reduce debt service costs and serve the
      lowest income populations. This includes the re-financing of thousands of project-
      based Section 8 units. One of the key findings of CRN’s study is that debt service costs,
      well above the 20% threshold, are simply too high. This led CRN to conclude that “statewide
      leadership should call for the passage of the National Affordable Housing Trust Fund to
      replace private debt and offer a source for gap financing.” In other words, there are limits to
      the ability of private financing in preserving multi-family buildings for low-income families.

   2. Further reduce property tax burdens of multi-family owners, both for-profit and not-
      for-profit. On April 10, 2002, the Cook County Board amended its property tax
      classifications and lowered the assessment level of large multi-family buildings (7 or
      more units) from 33% to 26%. “These classification changes will encourage rehabilitation
      and development of rental housing for working families,” said Cook County Board President
      John Stroger.43 In 2001, the County Board extended the Class 9 affordable housing
      property tax program to all Cook County census tracts, not just low-income areas. Class 9
      provides a tax abatement to owners who rehab at least two major systems and pledge to

       maintain affordable rents. This extension facilitates the preservation and creation of
       affordable housing in middle and upper income suburbs and neighborhoods.

   3. Promote coop housing and other forms of tenant ownership to the extent possible.
      Since 1992, the Chicago Mutual Housing Network has facilitated the creation of over 2,000
      low-income coop units, including some expiring-use properties.

        Chicago’s experience over the past decade again underscores the importance of all actors –
public, private, and the grassroots neighborhood groups – not only in preserving the bricks-and-
mortar housing stock, but in ensuring that even the lowest income households have a home. The
following case study illustrates the benefits of such a partnership in the case of South Shore, a
neighborhood that declined, revived, and whose many stakeholders worked consciously to balance
reinvestment, affordability, and housing preservation.

                                 VI. TALE OF TWO COMMUNITIES

         An examination of demographic changes and housing activity in two adjacent neighborhoods
on the south side of Chicago, Woodlawn and South Shore, illustrates the power of a partnership
between community groups, the private market, and public subsidy in bolstering neighborhood
revitalization. Although more than a quarter of all families in both communities live below the poverty
level, South Shore turned around in the 1990s whereas Woodlawn continued to decline. South
Shore’s boost was due in large part to the presence of a community-based financial institution,
South Shore Bank (now known as ShoreBank), and the involvement of South Shore groups in the
HATF collaborative process.

         The population in both communities dropped between 1960 and 1990, Woodlawn’s drop
being especially dramatic (from more than 81,000 people in 1960 to 27,000 today), although in the
1990s the total population in each community remained stable. Both also experienced concomitant
losses in housing units through tax delinquency, abandonment, and demolition. “White flight” was
dramatic in both communities, with almost a complete changeover from white to black in Woodlawn
in the ‘50s, and in South Shore in the ‘60s. But in the 1990s, South Shore’s housing starts revived
dramatically (from 99 in the 1980s to 373 in the 1990s, a 277% increase) while the number of new
housing units constructed in Woodlawn (which showed a promising increase in the 1980s) declined
by more than half.

                        Comparison of Chicago’s Woodlawn and
                             South Shore Communities

WOODLAWN                         1940     1950      1960      1970    1980    1990    2000
Total Population                 71,685    80,699    81,279   53,814 36,323 27,473 27,086
% Minority                       17.1%     40.0%     89.6%     96.4% 96.5% 97.0% 97.2%
Total Housing Units              23,444    27,624    29,616   22,255 15,747 13,109 11,941
% Housing Units Vacant            5.6%      3.4%      6.6%     14.6% 10.6% 20.0% 14.9%
Number of Multi Family Units                         27,484   21,142 14,928 12,100
% Owner-Occupied                  7.9%     9.9%       8.8%     10.0% 12.6% 17.0%
Median Family Income                      $3,473     $4,797   $6,611 $10,546 $17,714 $18,266
% Families Below Poverty Level                                 26.5% 32.3% 32.0% 39.4%
Median School Years                 10       11.3       9.9      10.6   11.8

Median Family Income Chicago              $3,360    $6,738 $10,200 $31,469 $30,707

SOUTH SHORE                        1940     1950      1960    1970   1980    1990     2000
Total Population                 79,593   79,336    73,086 80,660 77,743 61,517 61,556
% Minority                        0.3%     0.2%     10.4% 70.1% 96.4% 97.0% 98.9%
Total Housing Units              26,415   29,930    30,001 33,359 34,162 29,686 28,946
% Housing Units Vacant            4.6%     1.3%      4.0%    3.8%    8.2% 14.0% 11.3%
Number of Multi Family Units                        24,661 29,423 30,677 26,035
% Owner-Occupied                 14.5%    21.9%     21.1% 16.9% 17.7% 23.0%
Median Family Income                      $5,298    $7,888 $10,461 $15,969 $23,690 $27,748
% Families Below Poverty Level                               7.8% 20.8% 25.0% 17.4%
Median School Years                12.1      12.3     12.2    12.3    12.6
(Source: U.S. Census)

                             Comparison of Housing Demolition
                        And Construction in Woodlawn and South Shore



               3000                                                      Units Constructed
               2500                                                      Units Constructed
                                                                         South Shore
                                                                         Units Demolished
               1500                                                      Woodlawn
                                                                         Units Demolished
                                                                         South Shore

                         1970s         1980s         1990s

       What contributed to the decline in housing abandonment and vacant land in South Shore
and the differences in outcomes?

A.     Woodlawn

        Woodlawn is located on the South Side between 60th Street and 67th Street, from King Drive
to Lake Michigan, just south of the University of Chicago. 2000 Census data indicate a total
population of 27,086. As of 1990 (the most recent year for which income data is available), 32.0%
had incomes below the poverty line; the median family income was $17,714. Virtually the entire
population is African-American. There are a total of 11,941 housing units, of which only 17% are
owner-occupied. More than 92% of all housing units are in larger multi-family buildings. 14.9% of
units are vacant.

        In 1990, when the Campaign for Responsible Ownership conducted a study of the 1987
Scavenger Sale44, Woodlawn had the 10th highest tax delinquency rate in the City of Chicago. There
were 624 parcels on the 1987 Scavenger Sale, or 15.9% of all properties in the community. Total
delinquencies at the Sale stood at $14.75 million. 504 parcels were actually offered for sale: 50%
vacant lots, 15% large residential (7 or more units), 15% commercial or industrial, and 24% small
residential. Multi-family buildings, however, contributed to the highest amount of delinquent taxes in
Woodlawn at $5.48 million. Although 72% of all Woodlawn parcels received winning bids, only 3%
(14 parcels) were redeemed by 1990 and in just 35 were titles issued to new owners. There were

just eight non-cash bids: 5 vacant lots and 3 large residential buildings. Many of these properties
sold with just a minimum bid of $95: 43 vacant lots (25% of all vacant lots) and 18 large multi-family
buildings (22% of all large multi-family buildings). Only 5.8% of the total delinquent taxes ($860,100)
were actually collected by the City as a result.

Because so few of these parcels went to deed, the Scavenger Sale in Woodlawn had no impact in
stemming the loss of wealth in the community. Woodlawn, despite the presence of several
community-based not-for-profit developers such as The Woodlawn Organization (TWO), WECAN,
Covenant Development Corp., and the Fund for Community Redevelopment and Revitalization,
simply could not reverse the tide of abandonment and depopulation.45 While Woodlawn’s decline
slowed since 1980, the community experienced a net loss of 1,415 housing units in the 1990s.

B.      South Shore

         South Shore is south of Woodlawn, also abutting Lake Michigan. 2000 Census data indicate
a total population of 61,556. As of 1990 (the most recent year for which income data is available),
25.0% had incomes below the poverty line; the median family income was $23,690. Like Woodlawn,
the community, virtually all white fifty years ago, is now solidly African-American.
There are a total of 28,946 housing units, of which only 23% are owner-occupied. 88% of the
community’s 29,000 units are in larger multi-family buildings. 11.3% of units are vacant.

         In contrast to Woodlawn, just 4.5% of parcels (412) in South Shore were tax-delinquent in
1987. 15% of these delinquent properties were large multi-family buildings, and 45% were vacant
lots (interestingly, 12%, or 48 properties, were residential condominiums, the highest number in the
entire City). By that time, it already becomes clear that, with a higher owner-occupancy rate than
Woodlawn, South Shore had a somewhat more diverse, and therefore healthier, housing mix.

         Although many neighborhood watchers in the early 1970s predicted that South Shore would
inevitably follow Woodlawn’s downward spiral – which, after all, was only the latest South Side
community to experience it – the development dynamic in South Shore changed dramatically. In
1972, RESCORP launched a large-scale multifamily housing rehabilitation project in the northeast
corner of South Shore, which had the neighborhood’s densest concentration of such housing. About
the same time, the South Shore Commission, the major community organization, intervened
successfully with the U.S. Comptroller of the Currency to keep South Shore National Bank, the
community’s main bank, from leaving the community for downtown. Its owners then sold the bank to
an investor group of foundations, religious orders, and individuals intent on turning it into the nation’s
first community economic development bank.

        South Shore Bank first focused on stabilizing the single family housing market; then moved
into “mom and pop” multi-family rehabilitation. This strategic housing lending was later supplemented
by multi-family housing rehabilitation and coop formation through the Bank’s for-profit and not-for-

profit subsidiaries. Another factor was a focus on commercial development and the commitment of
African-American entrepreneurs to the community.

        After an initial slide, South Shore had largely stabilized by 1990. It avoided first the large-
scale multi-family housing disinvestment and then the abandonment and vacant land which
inevitably follows.

                                      VII. LESSONS LEARNED

         Housing conservation and abandonment prevention is as critical today as ever due to the
fact that the production of new housing lags behind the rate of household formation. In the 1970s,
four housing units were developed in Chicago for every one new household. From 1990 to 2000, in
contrast, the growth in households in Chicago exceeded housing production by over 100%; in Cook
County by 37%; in the PMSA by 37%; in the State of Illinois by 10%, and in the United States by

        Our efforts going forward need to be based on what has been learned from these earlier
pioneering efforts. We are able to identify nine lessons relevant for the future not only of Chicago,
but also of metropolitan areas around the country:

    •   Lesson 1: Vacant land is the result of the prior failure to conserve existing housing.
        The decline and loss of housing, especially multi-family housing, is not inevitable. Rather, it
        results from complex failures of the housing system. Public policy should focus primarily on
        the conservation of the existing housing stock so as to minimize the amount of resulting
        vacant land. If successful, this priority will require the reuse of only a modest amount of
        vacant land.

    •   Lesson 2: Housing conservation is essential to meeting the growing housing gap.
        Housing conservation is increasingly important as the production of new housing lags behind
        the rate of household formation and the costs of new housing production increase.

    •   Lesson 3: Early intervention in the housing abandonment process can pay dividends.
        Chicago’s property tax system previously had the effect not only of depriving government of
        needed revenue, but also of tying up the property so that its decline could not be arrested.
        The impact of the changes described above was to tilt the housing system towards effective
        early intervention, which increases tax revenue, conserves the housing stock, and supports
        the physical and economic integrity of neighborhoods.

    •   Lesson 4: Acknowledge the enormous complexity of housing abandonment and land
        reuse issues. Although there is an understandable desire to “solve the problem” with a
        single, decisive intervention, the economics and regulatory context of existing low- and
        moderate-income housing is very complex. There is no “silver bullet” reform to the property
        tax system that prevent the displacement that occurs both when communities are on the
        down-swing, and when prices escalate during “hot” periods. The only approach that
        ultimately will be successful is to carry out a comprehensive, structural analysis of the
        elements of the problem, and then to address them all simultaneously. This approach both
        calls for and supports the involvement of a much stronger coalition by acknowledging up
        front the interdependence of the various actors in housing – tenants, community groups,
        owners, bankers, government – and seeking ways that each can make a contribution.
    Another factor in this complexity is the local “culture” with regard to the role of government in
    correcting for market forces that displace low-income tenants and homeowners. Why do
    many of this nation’s largest states have a “Department of Housing” (New York and
    California, for example) while Illinois does not? Why do some cities, such as New York City,
    Jersey City, New Jersey, and Grand Rapids, Michigan, make tax foreclosure of the “worst”
    buildings, “homesteading,” and the appointment of receivers much easier than Chicago?46

•   Lesson 5: The full range of interested parties needs to be engaged in both the
    abandonment prevention and land use challenges. Developing an effective strategy
    requires engagement of community, civic and business communities with the various levels
    of government, each of which has responsibility for one element of the system. The opening
    up, consolidation, and user-friendly presentation of property information that ultimately
    became NEWS played an important role as well in democratizing the debate on responsible

•   Lesson 6: Community groups are often the most effective actors in the housing
    conservation process. Groups at the community level are often the appropriate conduits
    for counseling financially strapped “mom and pop” landlords and the funneling of multifamily
    rehab funds to local housing owners

•   Lesson 7: Where housing abandonment has already occurred, capture vacant land for
    redevelopment in the public interest while it is still inexpensive – or free. It is important
    to capture vacant land for the public interest in the “low” cycle of urban redevelopment when
    it is inexpensive and, once development has picked up steam, adopt new strategies to divert
    a significant portion of tax scavenger properties for affordable housing and other community

•   Lesson 8: Acknowledge differences of interest in the reuse of vacant land. There are
    and always will be conflicts in the public interest, between, say, using all land for
    redevelopment versus taking advantage of vacant land for open space, health and recreation
    purposes. The former use expands the tax base; the latter improves quality of life. The
    issues associated with these tradeoffs need to be transparent and the subject of broad public

•   Lesson 9: Increase the available land by cleaning up the 80% of brownfields that are
    only marginally contaminated. Given the ultimate scarcity of urban land, efforts need to be
    made to bring marginal land into productive use. Brownfield redevelopment is a strategy to
    expand available land that can simultaneously decrease ambient toxicity. Brownfields are a
    regional problem; over half of the brownfields in the Chicago Region are in the suburbs. It is
    possible to develop and implement mechanisms that can cost-effectively distinguish the 80%

of contaminated sites that can be cleaned up at low cost, thus dramatically expanding land
available for redevelopment.

                                       VIII. NEXT STEPS

A. Research

  (1) Inventory government practices with regard to tax delinquent properties.
      To the best of our knowledge, there is no current survey of the practices of state and local
      government in the area of tax delinquent properties or In Rem proceedings. While it is
      daunting to keep track of 88,000 units of state and local government, we suspect that a
      survey of the requirements of the states would be a good place to start, accompanied by a
      survey of the practices of the largest cities and counties. An inventory of state statutes on
      delinquent properties was a critical element of Chicago’s reform efforts. Statutory provisions
      and their associated delinquency, forfeiture, redemption, and foreclosure cycles will vary
      from state to state.

  (2) Correlate the ready availability of property ownership and related information with the
      prevention of abandoned property and vacant land.
      While several studies have looked at early warning systems such as NEWS47, further study
      to examine the impact of these databases – especially the fact that the information is readily
      available to the public and should theoretically promote accountability – could be helpful to
      cities where abandonment is a major concern.

  (3) Document case studies in which various groups interested in vacant land are able to
      As vacant land becomes more scarce – especially in built-up neighborhoods or land-locked
      suburbs – competition grows between constituencies that want to preserve the land as open
      space, develop affordable housing, or develop market-rate or mixed-use commercial
      developments. This struggle has been evident as military bases have closed, as well as
      schools and religious institutions. Others could learn from the extent to which parties have
      been able to compromise for a greater community good.

  (4) Evaluate whether a high reliance on property taxes correlates to a high risk of
      property abandonment.
      Reliance on the property tax to fund basic municipal services, including education, means
      that the residents of low-income/low-wealth communities pay a proportionately higher
      percentage of their property values in the form of taxes (because of increasing local need),
      further depleting individual wealth in a downward spiral. (This phenomenon is well
      documented in the work of Myron Orfield, University of Minnesota.) Meanwhile, wealthier
      communities can maintain higher levels of service with less of a burden on residents (as long
      as these residents have high incomes). In gentrifying neighborhoods in Chicago, long-time
      residents see their assessments quadruple or more. Has the shift to the state income tax in
      states such as Michigan or Vermont reduced housing abandonment?

B. Policy

   (1) Target development to existing places with infrastructure.
       Many communities where housing abandonment is occurring have a significant, undervalued
       asset: the existing infrastructure. If new development on the fringe were required to
       internalize the full cost of the infrastructure that it requires and if the value of existing
       infrastructure in older communities were made transparent, housing and commercial
       investment would gradually shift into disadvantaged communities.

   (2) Refocus federal housing policy toward the conservation of the existing housing stock.
       Housing law should take a page from transportation law. In 1991, the new Intermodal
       Surface Transportation Efficiency Act was passed. It declared that preservation and
       enhancement of the nation’s transportation systems was in the national interest, and tied
       future funding to this “fix it first” mandate. Funding decisions were devolved to the state and
       metropolitan level. Dedicated funding of Trust funds for highways and mass transit were
       “firewall”-protected against arbitrary earmarks and performance-based regional plans had to
       drive local budgeting. This was a logical outcome of the need to preserve what we have
       already invested in. There is a robust movement to “preserve for the long term” affordable
       housing that already is federally subsidized. However, there is no parallel robust and
       sustained movement to preserve existing housing in general.

      Federal housing law does not give priority to the maintenance and enhancement of the
      existing housing stock. There are preservation laws but they are aimed mostly at structures
      of historical significance. The U. S. Department of Housing and Urban Development (HUD)
      is mostly about people not places and so the focus on “preservation” is the preservation of
      the subsidy, not specifically of the unit, the building, the development or the community that it
      may be in. The Community Development Block Grant (CDBG) program of 1974 was the first
      act to allow use of flexible federal funds for unit preservation, but it was an enablement under
      local discretion rather than a requirement. There are a variety of potential policy options.
      Preservation could be a requirement for awarding CDBG funds. The allocation of CDBG
      funds to rehabilitation could trigger bonus funds. Density bonuses for economically
      distressed one-to-four unit properties to enable accessory apartments would have multiple
      and salutary effects. And a publicly available database on residential building operating costs
      along with best practices for efficiency would help.

   (3) Use GASB to promote regional cooperation and infrastructure transparency.
       New accounting rules from the Government Accounting Standards Board took effect in 1999,
       and are being phased in through 2007. They require state and local governments to
       demonstrate that they are budgeting adequately for maintenance and preservation of public
       investments. Unexpectedly, the debacle around Enron and Arthur Anderson has thrown a
       new light on such obscure accounting rules. The recession has already squeezed the
       budgets of at least 39 states to the point of major cutbacks. Can city and county
governments be far behind? Securing our existing housing should be the first order of

                                         IX. CONCLUSION

        In Chicago, there was an early recognition of the value of existing communities and the
structures that they contain. This value has many dimensions: as affordable homes anchoring
families for the long-term; as networks of community relationships that can solve problems and
advocate for local needs and interests; as jobs close to home especially valuable for caregivers,
senior citizens, and teenagers; and as a source of wealth creation.

        Sometimes the marketplace recognizes these values and supports a systematic
reinvestment in an existing community. Other times the marketplace fails to acknowledge these
values and, through public and private redlining, resources are systematically removed. When this
happens, housing abandonment is sure to follow.

        Each city needs to carry out a comprehensive preventative analysis of the local barriers to
the preservation of existing communities and their housing stock. When communities become
vacant lots, it is often too late.


The authors thank Bruce Katz and Jennifer Vey at the Brookings Institution Center for Urban and
Metropolitan Studies for supporting this paper, and CEO’s For Cities for this opportunity to share
Chicago’s “best practices” in housing conservation and abandonment prevention. We also thank
Jack Lawlor for assistance in locating archival material, and Michael Freedberg, Rachel Johnston,
Janet Malone, Kenneth Oliver, Erica Pascal, Gayle Peterson, and Elspeth Revere for their input and
comments. We also thank the many leaders referred to in this study who worked tirelessly for the
reforms described in this report over the years: those who participated in the TRUST Housing
Conservation Task Force, especially Janet Malone and co-chairs Bill Brown and Fidel Lopez; and
those who participated in the Housing Abandonment Task Force, the Ownership Transfer Working
Group, and the Campaign for Responsible Ownership. We also appreciate the long term support
provided to carry on these efforts over a thirteen year period by the Amoco Foundation, the Chicago
Community Trust, the Harris Bank Foundation, the Joyce Foundation, the John D. and Catherine T.
MacArthur Foundation, the Northern Trust Company Charitable Foundation, the Wieboldt
Foundation, the Woods Charitable Fund, and the member companies of Chicago United. Many of
the ideas which led to the formation of the organizations described here were the work of the late
Stanley Hallett, who never met a big system that could not be supplemented by an effective
community-based organization with a little help from a good organizing initiative and some local
leadership. His ideas led to the creation of TRUST, the Woodstock Institute, the Center for
Neighborhood Technology and many other organizations, and is carried out currently by the Asset
Based Community Development Institute at the Northwestern University Institute of Policy Research.

This paper was written by the authors, assembled from source materials. Any errors of interpretation
are our own.

The Authors:

Gail Schechter, executive director of the Interfaith Housing Center of the Northern Suburbs since
1993, holds an M.A. in Urban and Environmental Policy from Tufts University and a B.A. in History
from Oberlin College. While at the Center for Neighborhood Technology, she assisted in the
founding of the Chicago Mutual Housing Network. She serves on the Board of Directors of the
Statewide Housing Action Coalition and was honored with a “Champion of the Public Interest” award
from Business and Professional People in the Public Interest (BPI) in 2001.

Scott Bernstein is president of the Center for Neighborhood Technology. He founded the CNT in
1978. Since that time, CNT has become a regionally-based organization that develops programs and
strategies of national significance. He holds a B. A. in political science from Northwestern University.
He has been a member of the President’s Council on Sustainable Development. He is one of the
founders and a member of the Executive Committee of the Surface Transportation Policy Project, a
major national transportation coalition.

Stephen A. Perkins, Ph.D. is Senior Vice President of the Center for Neighborhood Technology
where he has been since 1980. Before joining CNT, he was co-director of the Hyde Park-Kenwood
Community Organization in Chicago’s Hyde Park community, was assistant to the Chairman of the
Board of South Shore National Bank (now ShoreBank), the nation’s first community economic
development bank, and was Managing Partner of the Phoenix Partnership, an early commercial
revitalization effort in the South Shore community. He was the founder and convenor of the Housing
Abandonment Task Force and convenor of the Chicago Energy Savers Fund.

                              PARTICIPANTS IN TRUST, INC.,
                          HOUSING ABANDONMENT TASK FORCE,
                                AND RELATED GROUPS

                                           TRUST, Inc.
                              Housing Conservation Study Committee
                                   April 1977 – November 1978

Co-Chairs: Fidel Lopez and Bill Brown

Members and Advisors Included:
John S. Appel                       Jay Golden                          Erica Pascal
Miriam Apter                        Kay Simon Grossman                  Carol Pell
Scott Bernstein                     Deborah Haines                      Andrew Philipsborn
Dan Berry                           Joe Hanlon                          Deborah Phillips
Dave Birr                           Maureen Hellwig                     Bobbie Raymond
Peggy Blandford                     Jane Heron                          Hipolito Roldan
Bob Brehm                           Glenn Jones                         Edward Rosewell
Joel Brookman                       Larry Joseph                        Lawrence Rosser
Raymond J. Carlyle                  Bob Keeley                          Tim Scully
Thom Clark                          Saul Klibanow                       Ann Seng
Milton Cohen                        Lew Kreinberg                       Marion J. Smith
Chuck Colver                        Kate Lane                           Jim Sullivan
Denise De Belle                     Phillip Krone                       Miriam Trementozzi
Paul Dillon                         John Lawlor                         Martin Tuchow
Doug Dobmeyer                       Sara Lindholm                       Angela Turley
Clement Durkes                      Bob Lucas                           Durwin Ursery
Elinor Elam                         Dennis Marino                       Gordon Waldron
Harold Emmons                       Walt Marshall                       Betty Willhoite
Jean Ryberg Erickson                Richard Martin                      Herbert H. Williams
Bill Frederickson                   Ruth Medina                         Julius Yacker
Michele Gaspar                      Alan Novick
LaVerne Gobble                      Sharon O’Donnell

Staff: Janet Malone, Executive Director; Norman Katz; Iris Blustain; Gayle Peterson

                     HOUSING ABANDONMENT TASK FORCE (1982-1985)

Dr. S. Garry Oniki, associate executive director of the Community Renewal Society and the director
of its Center for Community Research and Assistance, was the initial chair, followed by Dr. Stephen
A. Perkins, associate director of the Center for Neighborhood Technology.

Steering Committee and Sub-Committee Leaders:

Robert Adams, Mel Skvarla, Leroy Kennedy, Jerry Altman (The Housing Agenda)
Stephen A. Perkins, Kathy Tholin, Mosi Kitwana, Stephen Basler (Center for Neighborhood
Marty Friedman, Barbara Grau, Jack Kaplan (Chicago Council of Lawyers, then Lawyers’ Committee
for Better Housing)
Garry Onicki, Eduardo Camacho, David Menafee (Community Renewal Society)
Harry Gottlieb (Leadership Council for Metropolitan Open Communities)
Chuck Prentice (Northwest Community Organization)
Joseph Bute, Rich Dieter (Organization of the North East)
Bob Vondrasek (South Austin Coalition Community Council)
Arvis Averette (South Shore Commission)
Michael Bennett (The Neighborhood Institute)
Betty Booker (Grand Boulevard Community 76 Organization)
Elspeth Revere, Larry Swift (Woodstock Institute)

More than one hundred additional people from neighborhood groups and advocacy organizations
were involved in the Task Force’s housing finance, energy, government regulations, and data study


Barbara Shaw, Chair
Michael Freedberg, Center for Neighborhood Technology, Coordinator
John Pritscher, Community Investment Corporation
Roberta Warshaw, Erica Pascal, Chicago Rehab Network


Dates           Market Changes                    Policy Initiatives               Legal & Regulatory

1970     306,800 of Chicago’s 1             None to date.                     Status quo: 10 years of
         million housing units were                                           property tax delinquency
         dilapidated or tending toward                                        before placed on Cook
         abandonment                                                          County’s Scavenger Sale;
                                                                              redemption period is 2 years
         Properties not redeemed at
         annual tax sale (1 year in
         arrears): 18,102 (1971)

1972                                        South Shore Commission, a         City of Chicago passes first
                                            community organization,           municipal depository
                                            petitions Comptroller of the      ordinance aimed at stopping
                                            Currency to deny application      redlining. Illinois General
                                            by South Shore National           Assembly quickly follows
                                            Bank to branch to the new         suit, all pursuant to
                                            Standard Oil Building             organizing by the
                                            downtown; brief by                Metropolitan Area Housing
                                            Northwestern University           Alliance.
                                            professor Allan Drebin
                                            argues that low-income
                                            neighborhoods with high
                                            densities have large
                                            purchasing power. As a
                                            result, petition granted and
                                            South Shore Bank Founded

1974                                                                          Housing and Community
                                                                              Development Act of 1974
                                                                              replaces most direct grants
                                                                              with flexible, locally
                                                                              determined “block grants.”
                                                                              Section 8 housing voucher
                                                                              program also founded.
                                                                              Grants allow for investment
                                                                              in housing preservation but
                                                                              are not required of grantees.

1976     Delinquent (10+ years)             Neighborhood advocacy,
         property taxes in Cook             research and development
         County on Scavenger Sale:          organizations founded

∗ Citations for data in text and from reports of data compiled by TRUST, Inc., the Housing Abandonment Task
Force, and the Campaign for Responsible Ownership. Policy initiatives and responses ongoing.
Dates         Market Changes                 Policy Initiatives            Legal & Regulatory
        6,500 parcels, $20.8 million    simultaneously: Center for
        (1977)                          Neighborhood Technology
                                        (1977), Chicago Rehab
                                        Network (1977), Chicago
                                        Assn. of Neighborhood
                                        Development Orgs,
                                        (CANDO) (1978), Chicago
                                        Jobs Council, Woodstock
                                        Institute (1976)

                                        TRUST, Inc. convenes
                                        Housing Conservation Study
                                        Committee (1977)

1978                                    TRUST releases                 State legislature reduces
                                        recommendations and holds      period of tax delinquency
                                        conference in South Shore      before property is placed on
                                        (1978)                         Scavenger Sale to 5 years

1980                                    Tax Reactivation Working
                                        Group founded (1980-83)

1982    Delinquent (5+ years)           Housing Abandonment Task       County inaugurates Multi-
        property taxes in Cook          Force (HATF) convenes city-    Family Tax Reactivation
        County on Scavenger Sale:       wide and community groups      Program giving non-profits
        $96 million (1983)              to identify causes of multi-   ownership of properties in
                                        family housing abandonment     tax arrears for non-cash bids
                                        (1982)                         (1983 Scavenger Sale)

                                        Woodstock Institute
                                        documents success of Tax
                                        Reactivation Program in
                                        1983 Scavenger Sale

1984    Delinquent (5+ years)           HATF releases six reports on
        property taxes in Cook          housing abandonment with
        County on Scavenger Sale:       policy agenda (1984),
        31,290 properties, $110         including: (1) Housing in
        million (1985)                  Crisis (Database Study
                                        Group, Woodstock Institute);
        Properties not redeemed at      (2) The Role of Ownership
        annual tax sale (1 year in      and Management
        arrears): 46,754 (1984,         (Ownership Management
        Chicago only); only 24%         Panel, Community Renewal
        collected at sale, with         Society).
        estimated loss to City of $56
        million                         Woodstock Institute releases
                                        report on Scavenger Sale
Dates        Market Changes                  Policy Initiatives            Legal & Regulatory

        Number of severely tax          abuses (1985)
        delinquent properties on
        Chicago’s West Side triples
        between 1983 (2,545
        properties) and 1985 (7,993

1986    Delinquent property taxes in    Campaign for Responsible       Tax Reform Act of 1986
        Cook County: 35,000             Ownership forms (1987-         creates Low Income Housing
        parcels, $278 million ($191     1989). Ownership Transfer      Tax Credit (LIHTC) program,
        million Chicago alone) (1987)   Working Group publishes        a block grant of “credits” to
                                        report showing the five-year   each state that can be
                                        delinquency period too long.   aggregated or syndicated by
                                        (1987)                         purpose to attract investment
                                                                       to meet the equity gaps in
                                                                       rental housing rehabilitation.

                                                                       The Chicago Equity Fund
                                                                       (CEF) founded to syndicate

1988                                    First attempt at a statewide   State legislature reduces
                                        referendum to reduce the       period of tax delinquency
                                        Scavenger Sale redemption      before property is placed on
                                        period loses by 9,000 votes    Scavenger Sale to 2 years
                                        (less than 1%). Must wait      (1988)
                                        two years before trying
                                        again. (1988)                  State legislature increases
                                                                       minimum bid from $50 to
                                                                       $250, establishes tax sale
                                                                       fraud as criminal offense,
                                                                       requires $50 pre-registration
                                                                       fee, and prohibits individuals
                                                                       with 2+ years of delinquent
                                                                       taxes from bidding

1990    $30.7 million collected from    Campaign for Responsible       Constitutional amendment on
        1987 Scavenger Sale, a rate     Ownership publishes report     ballot passes to reduce post-
        of 11% of the $278 million      on 1987 Scavenger Sale and     Scavenger Sale redemption
        owed on 35,000 parcels (an      advocates further reforms      period to 6 months for large
        improvement over the 1983       (1990)                         multi-family or commercial
        collection rate in Chicago’s                                   properties (1990)
        West Side when less than
        5% was collected).

1992                                    Chicago Mutual Housing

Dates         Market Changes                 Policy Initiatives           Legal & Regulatory
                                        Network founded

1994                                    Peoples Housing, a Rogers
                                        Park CDC, shuts down.
                                        Others follow.


1998    16,000 LIHTC units              Metropolitan Planning         State passes TIF (Tax
        developed since 1986            Council releases Regional     Increment Finance) reform
                                        Rental Market Survey (1999)   legislation, mandating an
        More than 52,000 rental                                       affordable housing impact
        units lost since 1990, mostly                                 study, community input, and
        to condo conversion                                           relocation assistance when
                                                                      10 or more low-income
        In 1999, Chicago issues                                       households displaced to be
        permits for the creation of                                   displaced in a TIF district
        4,561 multi-family units,                                     (1999)
        almost double the prior year

        Chicago has more than 80
        TIF districts

2000    Chicago’s population grows      CRN launches “Valuing         Cook County extends Class
        for the first time in any 10-   Affordability” campaign,      9 property tax incentive for
        year period since the 1950s,    which includes property tax   affordable rental housing
        up to 2,896,726, a 4%           reforms to support existing   rehab to all census tracts
        increase since 1990.            rental housing                (not just low-income tracts)
        Household growth in MSA                                       (2001)
        exceeds housing growth.

        In 2001, Chicago issues
        permits for the creation of
        5,786 multi-family units, a
        record high

2002                                    CRN releases audit of more    Cook County reduces
                                        than 8,700 LIHTC units and    assessment level on rental
                                        why more than half fail       apartment buildings of 7 or
                                                                      more units from 33% to 26%


1. David Menafee, “Low and Moderate Income Housing Abandonment in Chicago: The Role of
Ownership and Management,” The Community Renewal Society, March 1984, p. 9.

2. TRUST, Inc., Report, June 17, 1977. As reported by TRUST co-chair Bill Brown in his citation of
the Chicago Housing Commission’s Chicago Housing Inventory Survey.

3. TRUST, Inc., Report, December 16, 1977.

4 TRUST, Inc., Report, June 17, 1977.

5 Chicago Department of Buildings, cited in Chicago Tribune, “Abandoned buildings: The sickness
spreads”, June 5, 1977.

6 TRUST, Inc., Report, June 17, 1977.

7 Ibid.

8 Ibid. Scott Bernstein, then at the Center for Urban Affairs at Northwestern University, cited a
study of ten multi-family buildings in the South Shore neighborhood by Bob Giloth at the University of
Illinois at Chicago at the June 17, 1977 TRUST, Inc. noontime forum. See also Scott Bernstein,
Energy and Housing: The Demolition Derby, Justice Ministries 1977 Also Robert Giloth,
"Disinvestment in South Shore's Large Rental Properties," Center for Urban Economic Development,
University of Illinois at Chicago, March 1981.

9. Presentation by John Lawlor, attorney, at a meeting of TRUST, Inc., August 5, 1977.

10. John J. Lawlor, “Real Property Tax Delinquency and the Rehabilitation of the Multi-Family
Housing Stock in Chicago, Illinois: The Role of the Collection Provisions of the Illinois Revenue Act,”
DePaul Law Review, 1976: Volume 26, Number 1, p. 3.

11 Janet Malone, et. al. Managing Chicago’s Urban Dollar. Chicago, Illinois: TRUST, Inc. (To
Reshape Urban Systems Together), 1976.

12. TRUST, Inc., Housing Conservation Committee Meeting, “Report of Committee Meeting, June
17, 1977.

13. Lawlor, p. 1. See also Lawlor, Report of Housing Conservation Study Committee, TRUST, Inc.,
August 5, 1977.

14. Don Johnson, Senior Appraiser, Real Estate Research Corp., Report of Housing Conservation
Study Committee, TRUST, Inc., July 22, 1977.

15. Twenty four years later, on April 10, 2002, the Cook County Board amended its property tax
classifications and lowered the assessment level of large multi-family buildings (7 or more units)
from 33% to 26%.

16. Lawlor, p. 2.

17. Lawlor, Report of Housing Conservation Study Committee, TRUST, Inc., August 5, 1977.

18. Lawlor, p. 4, including a citation of D. Haider’s Report to the Mayor’s Committee for Economic
and Cultural Development for the City of Chicago: Summary of the Consultant’s Report at 21, Fall,
1975 (unpublished).

19. Saul Klibanow, Report of Housing Conservation Study Committee, TRUST, Inc., April 8, 1977.

20. Martin Tuchow, Report of Housing Conservation Study Committee, TRUST, Inc., October 27,
  “In Rem” properties in New York City were those in which the owner abandoned the property and
subsequently the title vested to the City as a result of a court-ordered tax foreclosure, usually after
one year of tax arrears. See “The In Rem Housing Program,” First Annual Report, City of New York,
Department of Housing Preservation and Development, October 1979.

22 Study by Terry Clark, coordinator of the University of Chicago’s Fiscal Austerity and Urban
Innovation Project, cited in Gary Rivlin, “Property Tax Politics: The Big Lie,” Chicago Reader, Vol.
16, No. 4, November 7, 1986, p. 20.

23. TRUST, Inc., Housing Conservation Committee Meeting, “Report of Committee Meeting,” June
17, 1977.

24. Report of Housing Conservation Study Committee, TRUST, Inc., June 16, 1978.
  According to Gayle Peterson, TRUST lobbyist and project manager working on the
implementation of the housing recommendations between 1978 and 1981, by e-mail in May 2002.
  TRUST, Inc. minutes, December 16, 1977 and July 28, 1978.
27. Ownership Transfer Working Group (OTWG), New Strategies for Tax-Delinquent Properties in
Chicago: Recommendations for Change, Center for Neighborhood Technology, 1986, pp. 13-14.

28. OTWG, p. ii.

29. See “Housing in Crisis: Report of the Data Base Study Group of the Housing Abandonment Task
Force,” Prepared by Elspeth Revere, Woodstock Institute, March 1984.

30 In 1981, following an exposé in the Chicago Reporter that challenged private foundations to
invest in city neighborhoods, the funders, through their association, the Donor’s Forum, created a
“Neighborhood Funders” group.

31. “Proposal for Preventing Housing Abandonment,” Proposal Submitted by the Housing
Abandonment Task Force, Chicago, IL, December 1983 (unpublished), p. 4.

32. Housing Abandonment Task Force, “An End to Housing Abandonment: Saving Affordable
Housing in Chicago Neighborhoods: Summary and Recommendations,” July 1984, p. 2.

33. Presentation to the Housing Abandonment Task Force’s Implementation Group, July 12, 1983,
“Energy Costs and Housing Abandonment,” Center for Neighborhood Technology, Unpublished.

34 See Eric Myott, Neighborhood Planning for Community Revitalization (NPCR) at the Center for
Urban and Regional Affairs, University of Minnesota, Housing Early Warning System in the Hamline
Midway Area, March 1999, pp. 7-8. See also Dennis P. Culhane and Amy E. Hillier, “Comment on
James R. Cohen’s ‘Abandoned Housing: Exploring Lessons from Baltimore,” Housing Policy Debate,
Vol. 12, Issue 3, Fannie Mae Foundation, 2001. In a footnote on p. 451, the writers state, “Chicago’s
Neighborhood Early Warning System – the first of these integrated data systems – is a project of the
Center for Neighborhood Technology (2001). Neighborhood Knowledge Los Angeles is a project of
the Community Information Technology Center of the University of California at Los Angeles (2001).
 The Philadelphia Neighborhood Information Project is a project of the University of Pennsylvania’s
Cartographic Modeling Laboratory (2001). The Early Warning Information System for New York was
also a project of the Cartographic Modeling Laboratory, in collaboration with the Wharton School and
the New York University Center for Real Estate and Urban Policy.”

35. See Menafee, Community Renewal Society, op. cit.

36 Governor Jim Edgar ended this program in the early 90s. It has been replaced by the more
restrictive LIHEAP program. The HATF recommendations were reinforced by a civic organization,
the Chicago Energy Commission, chaired by civic leader Robert B. Wilcox and staffed by CNT and
Business and Professional People in the Public Interest. The Commission found that the local gas
distribution utility, Peoples Gas Light and Coke, had lost almost 40 percent of their customer
accounts to abandonment, demolition and moves to the suburbs outside of their service territory.
They also observed that since high energy costs were a significant driver in housing abandonment, it
was in the interests of the gas company to assist with mitigating these costs through energy
efficiency. The Commission also crafted a clever approach to the Illinois Commerce Commission,
arguing that the costs of preventing housing abandonment through energy efficiency were lower than
the long range incremental cost for “new” gas under the federal government’s deregulation strategy.

37 Patrick Barry, “County Tax System: ‘Like Something Out of a Dickens Novel,’” The Neighborhood
Works, Center for Neighborhood Technology, Chicago: Vol. 9, No. 9, November 1986, p. 19.

38 See Patricia Wright, et al., Nathalie P. Voorhees Center for Neighborhood and Community
Improvement, University of Illinois at Chicago, Development Without Displacement, for the Chicago
Rehab Network, June 1995. This publication gives a comprehensive overview of anti-displacement
strategies in Chicago, most of which derived from the HATF, including several neighborhood case
  “Rich ‘90s failed to lift all: Income disparity between races widened greatly, census analysis
shows,” Chicago Tribune, August 20, 2002.

40 Paul Reilly, Arthur Lyons, Daniel Burke, Kenneth Oliver, Assessing Government Assisted Multi-
Family Housing, Chicago Rehab Network, 2000.

41 Great Cities Institute, University of Illinois, Chicago and Metropolitan Planning Council, For Rent:
Housing Options in the Chicago Region, November 1999. For the report and sub-regional findings,

42 Chicago Rehab Network, Present Realities, Future Prospects: Chicago’s Low Income Housing
Tax Credit Properties. Chicago, 2002.

43 Mickey Ciokajlo, “Cook will reduce tax burden on large apartment buildings,” Chicago Tribune,
April 10, 2002.

44. Michael Freedberg and Barbara Shaw, “Maintaining Chicago’s Neighborhoods: A Report on Tax
Delinquent Property in Chicago and the 1987 Scavenger Sale: Volume II, Community Studies,”
Campaign for Responsible Ownership, October 17, 1990.

45 See P. Wright, Development Without Displacement, op. cit., pp. 38-42.

46 From “Residential Tax Foreclosure Survey,” New York City, 1995, as published on the following

47 See J. Cohen on Baltimore (op. cit.) and E. Myott, University of Minnesota (op. cit.)


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