Barack Obama's housing policy: Who benefits? Hint...not the poor

Chicago's grand experiment.  What went wrong?  Maybe someone should ask Barack Obama.  He's intimately familiar with most of the players.  Public housing limbo.  All emphasis mine:

Chicago's grand experiment to transform public housing is lagging nearly a decade after Mayor Richard Daley's administration turned to private developers to shape the future of housing for the city's poor.

Conceived amid a rising housing market, the city's Plan for Transformation used hundreds of millions in taxpayer dollars and virtual giveaways of public land to reverse decades of neglect that confined the city's poorest residents to racially segregated ghettos.

Demolition of Chicago's reviled high-rises became a national symbol of change and hope, but little attention has been focused on what happened next as rhetoric collided with realities.

A Tribune investigation found that almost nine years into what was billed as a 10-year program, the city has completed only 30 percent of the plan's most ambitious element tearing down entire housing projects and replacing them with new neighborhoods where poor, working-class and wealthier families would live side by side.

The problems with Chicago's public housing have been well documented.  What seems to be missing in all the excellent reporting is accountability.  I guess that's because there is none.  While so many of Chicago's poor have been displaced, more than a few Chicago insiders are making out quite well.  On taxpayer money.  Consider Allison S. Davis, Barack Obama's former boss:

As the largest redevelopment of public housing ever undertaken in the country, Chicago's effort mirrors the ambition of other Daley efforts to reshape the city. It also parallels major Daley endeavors in featuring a roster of high-profile allies and friends.

At what once was Stateway Gardens, part of the most infamous wall of public housing in the world, construction is being overseen by a team that includes Allison Davis, a powerful developer with close ties to City Hall. The new Park Boulevard on South State Street sits not far from U.S. Cellular Field, home of the White Sox, on what has become prime real estate. It also stands as the most dramatic example of troubles with the city's strategy.

As of the end of March, Davis' team had managed to complete just 53 of the 439 public housing units planned the lowest number of any CHA development. Another member of the development team has filed for bankruptcy in the wake of the national housing slump.

Although there is a bright spot:

Amid all this, one aspect seems to be prospering: On the site's northeast corner, a Starbucks, Jimmy John's and FedEx Kinko's have moved into one of Park Boulevard's new storefronts.

Guess who controls that property?

Those who control the commercial strip would be familiar to anyone wise to the ways of Chicago: Davis himself and Robert Vanecko, a nephew of the mayor.

How very cozy.  The mayor's nephew. 

In 1993 Obama was hired as an associate attorney with Davis' Chicago law firm, Davis Miner Barnhill & Galland.  That same year, Obama began serving on the board of the Woods Fund of Chicago.  In 1996 Davis quit the law firm to become a developer but his former law firm represented him.  When Davis needed a little money, he knew where to turn:

Seven years ago, Sen. Barack Obama was on the board of a Chicago charity when his former boss, Allison S. Davis, came looking for money.

At the time, Davis was a developer represented by the law firm where Obama worked, as well as a small contributor to Obama's political campaign funds. He wanted the charity to help fund his plans to build housing for low-income Chicagoans.

Obama agreed. He voted with other directors of the Woods Fund of Chicago to invest $1 million with Neighborhood Rejuvenation Partners L.P., a $17 million partnership that Davis still operates.

As an Illinois state Senator Obama also proved helpful to Davis and his business partner Tony Rezko:

...1998, then-state Sen. Obama wrote to state and city officials urging them to provide funding for New Kenwood LLC, a company formed by Rezko and Allison Davis. Obama wrote the letters, first reported by the Chicago Sun-Times, on Illinois Senate stationery, saying: "This project will provide much needed housing for 4th Ward citizens".

Davis and Rezko made out pretty well on that deal:

The deal included $855,000 in development fees for Rezko and his partner, Allison S. Davis, Obama's former boss, according to records from the project, which was four blocks outside Obama's state Senate district.

Public housing is supposed to benefit low-income families.  In Obama's Chicago it's the "insiders" who benefit at the expense of low-income families:

Mixing apartments for the poor with upscale homes was supposed to do more than create diverse neighborhoods. Those expensive homes, city officials argued, also would help pay for the public housing.

Stateway's developers have agreed to use a share of what they earn from home sales for upkeep of the public units. That amount was expected to total about $2 million for the first on-site construction phase, covering 311 public and private dwellings, according to a court filing by Habitat.

But developers are getting something as well: millions of dollars worth of public subsidies to build condos and town homes.

The CHA practically gave away 7 acres at Stateway, paid to clean up the property and picked up the tab to tear down the old high-rises. The city paid millions more for new roads, water pipes and sewers.

Developers say the cheap land - $1 per year for 99 years - and other benefits are needed so they can compete with projects that don't include public housing. Building costs are high at the new communities because of government construction requirements for subsidized properties. The public units also are expensive to build because, from the outside, they're supposed to look the same as the private homes.

Commercial space presented another way for developers at Stateway to make money.

The development team, including Allison Davis, leased that land from the CHA for 99 years in exchange for a one-time payment of about $200,000. It then built the storefronts that were later sold to a firm controlled by Davis and Vanecko, the mayor's nephew, which used money from city employee pension funds to purchase the space for $4.2 million.

The pension funds, in turn, are paying Davis and Vanecko fees to manage their investment in the property.

What say you, Mr. Obama?  From the Boston Globe article:

As a state senator, the presumptive Democratic presidential nominee coauthored an Illinois law creating a new pool of tax credits for developers. As a US senator, he pressed for increased federal subsidies. And as a presidential candidate, he has campaigned on a promise to create an Affordable Housing Trust Fund that could give developers an estimated $500 million a year.

But a Globe review found that thousands of apartments across Chicago that had been built with local, state, and federal subsidies - including several hundred in Obama's former district - deteriorated so completely that they were no longer habitable.

Grove Parc and several other prominent failures were developed and managed by Obama's close friends and political supporters. Those people profited from the subsidies even as many of Obama's constituents suffered. Tenants lost their homes; surrounding neighborhoods were blighted.

[...]

Among those tied to Obama politically, personally, or professionally are:

Valerie Jarrett, a senior adviser to Obama's presidential campaign and a member of his finance committee. Jarrett is the chief executive of Habitat Co., which managed Grove Parc Plaza from 2001 until this winter and co-managed an even larger subsidized complex in Chicago that was seized by the federal government in 2006, after city inspectors found widespread problems.

Allison Davis, a major fund-raiser for Obama's US Senate campaign and a former lead partner at Obama's former law firm. Davis, a developer, was involved in the creation of Grove Parc and has used government subsidies to rehabilitate more than 1,500 units in Chicago, including a North Side building cited by city inspectors last year after chronic plumbing failures resulted in raw sewage spilling into several apartments.

Antoin "Tony" Rezko, perhaps the most important fund-raiser for Obama's early political campaigns and a friend who helped the Obamas buy a home in 2005. Rezko's company used subsidies to rehabilitate more than 1,000 apartments, mostly in and around Obama's district, then refused to manage the units, leaving the buildings to decay to the point where many no longer were habitable.

Campaign finance records show that six prominent developers - including Jarrett, Davis, and Rezko - collectively contributed more than $175,000 to Obama's campaigns over the last decade and raised hundreds of thousands more from other donors. Rezko alone raised at least $200,000, by Obama's own accounting.

One of those contributors, Cecil Butler, controlled Lawndale Restoration, the largest subsidized complex in Chicago, which was seized by the government in 2006 after city inspectors found more than 1,800 code violations.

Is this what Obama means when he says he helped lift neighborhoods stung by job loss?   

Comments

[Cris]

Funny, Obama's name is absent from today's Tribune story. Jarrett is mentioned, but not her major role in the Obama campaign.

[Julie]

Good point. It was the Tribune story that used the words "change and hope". Obama didn't bring much of that to his constituents. He talks a lot about his time in Chicago, as a community organizer and state Senator. I don't remember hearing him mention he coauthored the bill creating tax credits for developers. He didn't mention it in this ad. Maybe the Republicans can give him some free advertising and mention it in one of theirs.

Thanks for the comment!
Julie

[Mike Volpe]

Don't forget that Obama also received a "VIP" loan of his own from Northern Trust. In reality, Barack Obama is everything he claims to be against with regards to housing. While he stumps by giving speeches in which he mentions stories of poor folks being taken advantage of, and proclaims with righteous indignation that the close relationship between banks and politicians created this problem, he is in fact as close to banks as any other politician. He has been corrupted as much as any other politician. Too bad the MSM for the most part is not covering this. Here is how I summarized it...

http://theeprovocateur.blogspot.com/2008/07/updated-summary-of-corruption-and.html

[Julie]

Great post, Mike. There's got to be a GOP ad in there somewhere, if McCain will use it. Obama is a hypocrite, no doubt whatsoever.

Here is something I read this morning about Obama and Northern Trust, the bank Obama supposedly had no prior relationship with:

Barack Obama served on the board of directors of Woods Fund of Chicago from 1993 to 2001.
[...]
The fund also used Northern Trust for financial services, which is the same company that provided Obama his 2005 mortgage.
[...]
As reported previously, the Obamas' financed their upscale Hyde Park home in 2005 through a mortgage with Northern Trust and obtained a better than average mortgage rate. Coincidentally, Woods Fund had started using Northern Trust investment services a couple of years earlier. The 2005 Woods Fund 990-PF tax filing shows that the fund paid $105,583 in fees and also participated in a Northern Trust private equity fund. Ayers and Stanback were still on the board of directors at that time so it is possible that one of them was somehow involved in helping Obama choose Northern Trust.

Here's the link.

[Grove Parc Tenants Association]

GROVE PARC RESPONDS TO ARTICLE ON OBAMA HOUSING POLICY
Tenants call on all candidates to support Human Right to Housing

In recent days, leading news organizations around the country have reported on the housing policies of Senator Barack Obama, following a feature article published in the Boston Globe which highlighted the example of the Grove Parc Plaza Apartments, a subsidized housing complex in Chicago’s Woodlawn neighborhood that we call home.

The Globe Article, while rightly raising concerns about the failure of the private sector to adequately provide for the housing needs of the poor, unfortunately leaves out half of the story. Grove Parc is not just an example of the failures of past policies, but a beacon of hope for the way forward. Tenants have not only stopped foreclosure and the displacement of some 500 low income families, but also brought in new management committed to working with the tenants to rebuild affordable and quality housing for all residents. In so doing, we have highlighted two fundamental principles that both presidential candidates would do well to heed as they finalize their housing policy platforms,-- first, the full participation of tenants, who have the biggest stake in housing policy, and second, the guarantee of quality housing for all as a human right and social responsibility.

In the wake of massive housing cuts, privatization, and foreclosures that have left millions without a stable home – problems for which both major political parties must take responsibility - it is time for both candidates to tell the American people how they will ensure quality housing as a human right and reality for every American family. In short, the new administration must ensure a roof over the head of all American families.

Never has it been clearer that government has to play an active role in ensuring that America’s families have safe, decent housing. Millions of home-owners are facing foreclosure. Gas, food and utility prices are sky-rocketing. Thousands of units of public housing are being torn down from New Orleans to Miami to Chicago and close to 500,000 families - including many elderly and disabled - may soon be put out on the streets due to Congress under-funding HUD’s subsidized housing program by $2.8 billion this year. Homelessness and poverty will continue to rise until we treat housing as a human right rather than a source of profit for speculators and developers. In Chicago, for example, a recent study published in the Chicago Tribune shows that a minimum wage worker would have to work 97 hours a week, 52 weeks a year to afford a modest two-bedroom apartment. Low-income communities of color, in particular, are being ravaged by this crisis, which extends far beyond housing. Displacement weakens our communities and in so doing makes problems like youth violence and unstable schools even worse. The promise of “mixed-income” communities has been a smoke screen for a set of policies that have involved tearing down lots of housing and replacing very little of it. The people affected by these policies are never at the table when they are created.

While the Globe article raises important points about the problems in both public and subsidized housing, it fails to highlight the role played by massive budget cuts to HUD, which has created a lack of oversight over all HUD programs. These cuts have been carried forth by both parties, and their effects have been made even worse by rampant corruption in the last HUD administration, whose Bush-appointed National Secretary, Alphonso Jackson, recently stepped down amidst allegations of contract steering.

But there is another way forward. Our nation needs to guarantee the Human Right to Housing for all of its citizens, regardless of income and race, and to ensure that the people affected by policies are active participants in creating them. As a start we call on both candidates to commit to:

• Fully fund HUD
The 2008 HUD subsidized housing budget was under-funded by $2.8 billion dollars, threatening to triple the rents of 500,000 families overnight (40% of whom are the elderly and disabled) unless Congress acts fast.

• Support tenant empowerment and oversight
Grove Parc is turning around because as tenants we are taking control of our housing. We chose a new management company, stopped HUD from foreclosing on our complex, and have won awards around the country for our efforts. Grove Parc is proving that when the people who live in housing finally have a voice in how it is run another future for subsidized housing is possible.

• Declare a moratorium on demolition of public housing and foreclosures
Most of the public sees housing subsidies as hand-outs to the poor, not realizing that the vast majority of HUD subsidies go to first time home buyers. Ironically, now both groups are in the same boat, unsure of where to look for housing as banks are bailed out but homeowners are left hanging while the few safety nets that exist continue to be decimated by the current administration.

• Create a comprehensive plan to ensure the human right to housing for all
We hope that the both campaigns will see this as an opportunity to take a strong stand for Housing as a Human Right and to take a critical look at the failure of privatizing housing and the need for strong public oversight and tenant control. Some will undoubtedly use the stories of wasted money and failed housing in the Globe article as justification to further cut these programs. Cutting badly needed subsidies in any housing program, especially in economic times like we are in, is irresponsible, unethical and inefficient, creating many unforeseen costs to society. With better oversight and regulation, an expansion of all housing programs and tenant inclusion in policy-making, the Human Right to decent and safe housing can become a reality for all.

GROVE PARC TENANTS ASSOCIATION
“Housing is a Human Right – We won’t go without a fight!”

FOR MORE INFORMATION:
www.stopchicago.org
www.saveourhomes.org
www.economichumanrights.org
www.righttothecity.org

[The Facts]

The response to Grove Parc's response above says "Some of the tenants are angry that Obama didn't notice their plight" and say that those "some" are right and we are wrong. Actually the only tenants the reporter talked to were the same tenants who wrote this response... Did you ever consider that maybe the reporter might be distorting tenants' words? Notice the quote... it says "nobody noticed"... not "Obama didn't notice."

In fact the problems at Grove Parc extended WAY back to before he represented the district. And it was HUD's failure cause somehow they managed not to notice the deterioration until suddenly the land was valuable to a nearby expanding institution - the university of chicago - at which point they took action to displace residents, and residents had to fight HUD as well as the owners to get to the point we're at today.

[Julie]

Are you saying HUD was in collusion with the University of Chicago? I can well imagine HUD might want to sell the property (I'm no fan of HUD), but they could not have pulled it off if the property had passed inspection. I've seen nothing that would convince me the property was in good enough shape to pass inspection. Please correct me if I'm wrong.

Regardless, the fact of the matter is Obama's friends and supporters were in charge of managing the property. They were paid handsomely to do so. They did not. But somehow they are not to blame. Oh, and if Obama did notice, what did he do about it? Did he force his friends and contributors to do what they were paid to do? Did he stand up for his constituents? Whose side was he on, anyway?

[StewartIII]

Malkin -- No peace in Chicago’s Altgeld Gardens: What Obama and Jarrett left behind
http://michellemalkin.com/2009/10/12/no-peace-in-chicagos-altgeld-gardens/