The Chicago Housing Authority`s attempts to solve its financial crisis were boosted Tuesday when federal officials said they will give the troubled agency an undetermined amount of funding and Mayor Harold Washington endorsed proposals for city participation in a CHA bailout.
However, U.S. Rep. Henry Gonzalez (D., Tex.), chairman of the influential House subcommittee on housing and community development, suggested that the best solution to the agency`s fiscal difficulties would be to put the nation`s second-largest public housing authority into receivership. He said the CHA`s chronic financial and management problems were giving public housing a bad name nationwide.
Since last week, when they detailed the authority`s dire financial situation, CHA officials have been threatening to shut down the agency`s controversial court-ordered scattered-site program unless at least $9 million was received by Thursday. Other severe cuts would soon follow, they warned.
The CHA has been seeking nearly $68 million in emergency funding from the U.S. Department of Housing and Urban Development (HUD) as well as a $25-million loan and $5.7-million grant from the city, but until now neither the mayor nor HUD officials had agreed to take part in a bailout.
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On Tuesday, Adolph Slaughter, spokesman for the regional HUD office, said, ”There`s no question they will get some monetary help, but in what form or how much has not yet been determined.”
He said a meeting to discuss the CHA`s requests was scheduled for Wednesday between regional HUD administrator Gertrude Jordan and a contingent of CHA officials led by chairman Rev. B. Herbert Martin and interim executive director Brenda Gaines. Ernest Barefield, Washington`s chief of staff, who has been functioning as the mayor`s liaison with Jordan, was also to attend the meeting.
”All of the requests submitted by the CHA are still under review, but there`s no way to resolve all of their problems within 24 hours,” Slaughter said. ”All of the issues are so complex. We understand the CHA`s in a state of emergency. Nevertheless, we must ensure that what we do to assist the authority is done within our own guidelines and rules.”
Meanwhile, at a news conference Tuesday after a meeting of the U.S. Conference of Mayors in northwest suburban Rosemont, Washington gave his full support for a CHA bailout.
”I underwrite it and support the idea,” he said. ”We should put things in motion so that we will be in a position to take care of the CHA`s needs.” A joint meeting of the Chicago City Council`s Budget and Finance Committees is scheduled for 10 a.m. Wednesday to discuss two ordinances proposed by the Washington administration for the CHA bailout.
Ald. Lawrence Bloom (5th), chairman of the Budget Committee, said one ordinance would give the mayor the power to lend $25 million to the CHA for a year, after determining that adequate security had been posted. The other would involve a grant of $5.7 million to fix vandalized or heavily damaged vacant apartments, Bloom said.
He said the first ordinance requires some security, such as guarantees, mortgages or rent assignments.
If approved as written, the ordinance would give to Washington the power to determine exactly what security would be required, Bloom said. The CHA has suggested that HUD guarantee the loan. In the past, CHA officials have discussed the possibility of seeking to mortgage their buildings to raise needed money.
Noting that at least some aldermen are leery about giving Washington such discretion, Bloom said the ordinance would ”come under very close scrutiny.” Under the second ordinance, the $5.7-million grant wouldn`t be given to the CHA unless HUD approved a similar amount for the vacancy-reduction program. Earlier this year, the CHA asked HUD for $109 million in
rehabilitation money. That money is in addition to the emergency funding requests of $67.8 million now pending.
The loan and the grant would come from the $101 million that the city has received in community development block grant money from the federal government. Administration officials said the loan would cause little or no delays in projects for which the funds had already been planned. They noted that the grant, if approved, would come from money set aside for neighborhood housing improvements.
Asked whether the CHA might have to consider selling some developments on valuable land to raise money, Washington said, ”We`ll cross that bridge when we get there. We`re not at that bridge yet, so I don`t have to make that decision now.”
The mayor again refused to blame anyone for the poor management or the CHA crisis, which came to a head only 16 days after his election to a second term.
”The CHA would be in a difficult situation, even with good management,” he said.
In a letter to HUD Secretary Samuel R. Pierce, Rep. Gonzalez, whose subcommittee helps set HUD`s budget each year, said the CHA`s ”problems and difficulties severely impact on the operations of public housing authorities throughout the country. The CHA`s problems affect not only Chicago`s public housing tenants and public housing programs nationally but importantly affect the attitudes and outlook the Congress and people throughout the country have toward our federally assisted housing efforts.”
Reminding Pierce that his subcommittee had looked into the CHA`s management and financial problems several times over the last eight years, Gonzalez complained, ”What distresses me is that the difficulties seem to be increasing, and that financial and management problems that the department has reviewed over the past eight years seem to be getting worse with no change for the better in the offing.”
He then noted that the Boston Housing Authority had been put into receivership when its problems had gotten out of hand, and said, ”This would appear to be an immediate step that could be taken to keep the (CHA)
functioning and to keep thousands of tenants from being further damaged by this mismanagement and lack of financial resources.”
Gerry McMurray, staff director of Gonzalez`s subcommittee, said a court-appointed receiver would function as a dictator of the housing authority and would be free of outside political meddling.
”The receiver would have the sole authority in the decision-making process and would make decisions in the interests of the tenants,” McMurray said.
Asked about the receivership suggestion, CHA spokeswoman Helene Colvin said, ”We don`t have a response to that right now.”
The Boston Housing Authority, the fourth-largest authority in the United States, was placed into federal receivership by a local judge on July 25, 1979. Seven months later, Harry Spence, a public housing professional, was named receiver and ran the agency until October, 1984. Now, Boston Mayor Raymond Flynn is the authority`s receiver.
William Wright, a spokesman for the Boston agency, said a 23-percent vacancy rate in public housing apartments there has been cut nearly in half since the agency went into receivership. He said state legislators have been willing to give the authority millions of dollars to rehabilitate
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deteriorating developments because they have more confidence in its leadership.
In the midst of its attempts to get emergency funding, the CHA was also trying Tuesday to save $4 million in federal funding that was endangered when the agency lost $7 million because of a missed deadline.
Colvin said the CHA placed advertisements in Wednesday newspapers seeking bids for an elevator-improvement project at Robert Taylor Homes that, she said, HUD had demanded be done by Thursday.
However, CHA and HUD are still negotiating how those improvements will be funded.