For more than a year, the tenement at 4354 W. Lexington St. has stood vacant and untended. Its windows are shattered and its doors gape open.
”It is nothing but a hotel for hookers and dope sellers,” said Arealue Terrell, 73, who lives next door. ”Every day after school kids run up in there to play. One of these days, one of them is going to get killed.”
The 21-unit West Side building should stand today as a testament to an ambitious effort to expand affordable housing in some of the city`s neediest neighborhoods.
Instead, it is in ruins, the outcome of mismanagement and apparent fraud in a government-run venture.
The Tax Reactivation Program, run jointly by the city and Cook County, takes tax-delinquent properties from the county`s ”scavenger sale” auctions and gives them to developers to create low- and moderate-income housing.
In some of Chicago`s poorest areas, the program has spun sound dwellings out of sagging, abandoned buildings.
But dozens of properties were sponsored for development by former Ald. William Henry (24th), and those buildings could stand for years as crumbling monuments to his clout. (Henry was voted out of office in April after being indicted on unrelated corruption charges.)
For surrounding residents, the results have been devastating. In four years, developers sponsored by Henry produced 29 vacant lots and 10 empty buildings. Eight of the buildings are unsecured and in serious disrepair. Two parcels were taken over by the city and these are currently under development. ”Nobody wants to buy near an abandoned building,” says Charman Williams, 19, whose family lives next door to a hulking shell on South Central Park Avenue.
Under the program, Henry asked city and county officials to remove 296 parcels from the 1987 scavenger sale and turn them over to favored developers in his ward.
The officials balked at the size of Henry`s request, which was three times larger than any other alderman`s, and included lots outside his ward. Eventually, 41 parcels were set aside for developers he had selected.
Foremost among those developers was Lawndale Revitalization, a not-for-profit group that Henry said would take some parcels itself, and oversee the development of the rest.
What Henry didn`t say was that Lawndale Revitalization`s president, Dorothy Hamilton, worked for his political organization, and its secretary, Sandra Taylor, was the treasurer of the alderman`s campaign fund.
With Henry`s backing, the city allocated Lawndale Revitalization $118,458 in development funds. But in a matter of months, officials stopped payments, Housing Department spokeswoman Arla Hightower said, because the group didn`t fully account for how it spent the money. Of the $46,114 the group did receive, $25,000 went to pay Hamilton.
But Lawndale Revitalization did not develop one unit of housing on the properties Henry got for them. Hamilton blames her problems on a lack of funds.
”You`ve got to have money to get money,” she said.
Despite its financial difficulties, Lawndale Revitalization contributed $1,500 to Henry`s campaign coffers in September 1987, only days before the alderman`s tax reactivation ordinance went through.
That may have been the organization`s last contribution to life on the West Side.
Because the group failed to develop any of its properties, title to most of the land has reverted to the original tax-delinquent owners under the laws governing the 1987 scavenger sale, and their unpaid property taxes through 1985 have been wiped clean.
That proved a boon to some: The original owners of 22 slum properties have received windfall tax breaks totalling $976,378.
Among the beneficiaries are political allies of Henry`s. One, 24th Ward precinct captain Charlie Allen, owned the Lexington Street building, a 21-unit tenement that, before Lawndale Revitalization took it over, housed 11 families.
Through Henry`s intervention, the building was pledged to Lawndale Revitalization in the Tax Reactivation Program.
But the organization never took title to the property, so it reverted to Allen-with his $132,027 tax bill wiped clean.
Allen, in an interview, said he had no connection with Lawndale Revitalization at the time. But state records show he was a director of the organization, a violation of state laws prohibiting scavenger-sale recipients from having even an indirect interest in the properties they acquire.
A second beneficiary of Henry`s intervention was David Rhodes Sr., a former 24th Ward alderman and campaign contributor to Henry.
Because of Lawndale Revitalization`s failure to take title on a building Rhodes acquired at 1857 S. Pulaski Rd., $142,400 in back taxes was forgiven.
Rhodes, a city building inspector, said he is unaware that the building`s back taxes were eliminated.
He said he planned to develop the building in a ”joint venture” with Lawndale Revitalization.
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”The money wasn`t forthcoming, so I just got away from it,” he said.
”I know little or nothing about Lawndale Revitalization,” he added.
However, records show that in 1987 he sat on the board of directors of the Greater West Side Development Corporation, an agency that shared offices with Lawndale Revitalization and was listed in city records as a joint agency with it.
Rhodes said he has since deeded the building to another developer, but the deed is not on record with the county.
Along with Lawndale Revitalization, Henry`s tax reactivation legislation also favored Vernon Ford Jr., an attorney who handled legal work for Lawndale Revitalization. Fourteen properties were set aside for Ford under Henry`s proposal but, like Lawndale`s, none has been developed.
Meanwhile, Ford has been feuding bitterly with the city. He had already received interest-free city housing loans worth $436,500 to develop West Side properties. He defaulted on those loans. Then, last year, he was sued by Citizens National Bank of Chicago for defaulting on another $60,000 loan.
In response to the bank`s suit, Ford has sued the city, saying his inability to develop his property and repay his debts was due to fraud, conspiracy and ”uncoordination” on the part of city housing officials.
Ford is asking for $3.1 million in damages.
Ford said he still intends to develop some of the parcels Henry set aside for him but would not say how that would be financed.
Thomas McNulty, an attorney who advised the city on the tax reactivation program, said action designed to engineer tax breaks for the building owners would be tax sale fraud.
On the other hand, ”This could be extreme negligence on behalf of the alderman and the developer,” he added.
But Henry said he believed the properties would be developed and never intended to absolve back taxes for former owners.
”Nobody that I can recall came to me and said, `I own this building and I`m back on my taxes and I need you to help wipe them off.` ” Henry said.
”That`s illegal. If taxes were wiped, the state`s attorney should investigate.”
Henry added he had little involvement with the developers who, when the program was announced, flocked to his office with ambitious plans for dozens of distressed properties.
”A lot of people came to us, people from all the wards,” he said. ”How can I remember all of them? You take people at face value and try to assist them as fast as you can. You might not have all the facts. . . . The county is supposed to check this stuff. Once it left my hands, I was through with it.” But Jack Hart, former assistant housing commissioner, said when city officials needed to contact Lawndale Revitalization, they met ”directly with Bill Henry or with him and (president) Dorothy Hamilton.”
Hart said many of the problems could have been averted if Housing Department officials had stepped in to take title to the buildings when it became clear that Henry`s designated developers would not.
”There`s no reason why any of these properties should have gone back to the original owners because there were plenty of groups that would have taken these on,” Hart said. ”To let them go back is inexcusable.”
City housing commissioner Michael Schubert said he held back because the city is short on demolition funds and he was uncertain about locating new developers and reluctant to assume the insurance liability of owning vacant tenements.
Since Henry`s intervention, state law governing scavenger sales and the city`s tax reactivation ordinance have been changed to require more accounting from developers and allow less interference from aldermen.
But that is small comfort to Arealue Terrell and her neighbors, who mow the lawn and sweep up the broken glass in front of the crumbling structure on Lexington Street.
”It smells to my back door,” she said.