The Blago Trial

“In 1987, U.S. District Judge Marvin Aspen had appointed Habitat to oversee construction of all public housing in Chicago as part of the historic Gautreaux case, which found that the CHA had failed for decades to integrate housing.  At first, Habitat’s job was to desegregate housing by building “scattered site” units in more affluent white neighborhoods across the city. But the effort had little impact. The company built about 1,800 units, mostly in lower-income Hispanic neighborhoods before the program ended.”

They were eventually able to convince Judge Aspen to allow development where “CHA and Habitat could show that the neighborhood would become ‘revitalized’ through large public and private investments that would lead to racial integration.” This came as a result of CHA’s and Habitat’s desire to tear down the Henry Horner Homes, across the street from the United Center, where the 1996 Democratic Convention was to be held.  It led to the implementation of the “Plan for Transformation” that would replace existing public housing with developments that included public housing, affordable housing and market housing.  This began in 2000.  As of July of last year “under the Plan for Transformation, the city ha[d] lost more than 13,000 housing units for the poor at a time when low-income families face one of the worse housing crises in recent history.

After years of neglect and abandonment, many residents doubt that Jarrett and CHA officials have their interests at heart. ‘They was going to do what they was going to do,’ said Carmen Hart, who moved to Stateway Gardens [public housing] in 1960 and has been waiting three years to go back.” Only about one in three residents was able to return to redeveloped projects.

Meanwhile, “Habitat has earned $6.8 million in fees and $10.8 million in administrative expenses since the plan started in 2000, according to the U.S. Department of Housing and Urban Development. The company also earns millions as a property manager for the CHA,” while Jarrett has lived very comfortably at her lakefront apartment, while pulling in a six-figure base salary plus hundreds of thousands of dollars in compensation for serving on boards.

Jarrett Allowed Grove Parc to Become Uninhabitable

One of the most glaring of the examples of neglect was Grove Parc Plaza.  It was managed by the Habitat Company and is located in the district that Obama represented for 8 years in the Illinois legislature.  “About 99 of the units are vacant, many rendered uninhabitable by unfixed problems, such as collapsed roofs and fire damage. Mice scamper through the halls. Battered mailboxes hang open. Sewage backs up into kitchen sinks.”  Residents have been complaining for years to little avail.  “As late as 2003, a routine federal inspection still gave conditions at Grove Parc a score of 82 on a 100-point scale.”  By 2005 that had dropped to 56.  Finally in 2006 Grove Parc received 11 out of 100.  Jarrett’s only comment about this gross mismanagement under her leadership was about how hard it is to manage something you don’t own.

The squat brick buildings of Grove Parc Plaza, in a dense neighborhood that Barack Obama represented for eight years as a state senator, hold 504 apartments subsidized by the federal government for people who can’t afford to live anywhere else.

But it’s not safe to live here.

About 99 of the units are vacant, many rendered uninhabitable by unfixed problems, such as collapsed roofs and fire damage. Mice scamper through the halls. Battered mailboxes hang open. Sewage backs up into kitchen sinks. In 2006, federal inspectors graded the condition of the complex an 11 on a 100-point scale – a score so bad the buildings now face demolition.

Grove Parc has become a symbol for some in Chicago of the broader failures of giving public subsidies to private companies to build and manage affordable housing – an approach strongly backed by Obama as the best replacement for public housing.

. . .

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.

Some of the residents of Grove Parc say they are angry that Obama did not notice their plight. The development straddles the boundary of Obama’s state Senate district. Many of the tenants have been his constituents for more than a decade.

“No one should have to live like this, and no one did anything about it,” said Cynthia Ashley, who has lived at Grove Parc since 1994.

. . .

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.

. . .

Jarrett, a powerful figure in the Chicago development community, agreed to be interviewed but declined to answer questions about Grove Parc, citing what she called a continuing duty to Habitat’s former business partners. She did, however, defend Obama’s position that public-private partnerships are superior to public housing.

“Government is just not as good at owning and managing as the private sector because the incentives are not there,” said Jarrett, whose company manages more than 23,000 apartments. “I would argue that someone living in a poor neighborhood that isn’t 100 percent public housing is by definition better off.”

. . .

One of the earliest public-private partnerships of the type supported by Daley and Obama took place in the Woodlawn neighborhood, a checkerboard of battered apartment buildings and vacant lots just south of the University of Chicago.

Grove Parc Plaza opened there in 1990 as a redevelopment of an older housing complex. The buildings had a new owner and a major renovation funded by the federal government. Even the name Grove Parc Plaza was new.

The owner, a local nonprofit company called Woodlawn Preservation and Investment Corp., was led by two of the neighborhood’s most powerful ministers, Arthur Brazier and Leon Finney. Obama had relationships with both men. In 1999, he donated $500 of his campaign funds to another of their community groups, The Woodlawn Organization.

Woodlawn Preservation hired a private management firm, William Moorehead and Associates, to oversee the complex. In 2001, the company lost that contract and a contract to manage several public housing projects for allegedly failing to do its job. The company’s head, William Moorehead, was subsequently convicted of embezzling almost $1 million in management fees.

Woodlawn Preservation hired a new property manager, Habitat Co. At the time, the company was headed by its founder, Daniel Levin, also a major contributor to Obama’s campaigns. Valerie Jarrett was executive vice president.

Residents say the complex deteriorated under Moorehead’s management and continued to decline after Habitat took over. A maintenance worker at the complex says money often wasn’t even available for steel wool to plug rat holes. But as late as 2003, a routine federal inspection still gave conditions at Grove Parc a score of 82 on a 100-point scale.

When inspectors returned in 2005, they found conditions were significantly worse. Inspectors gave the complex a score of 56 and warned that improvements were necessary. They returned the following year and found things had reached a new low. Grove Parc got a score of 11 and a final warning. Three months later, inspectors found there had been insufficient improvements and moved to seize the complex from Woodlawn Preservation.

After negotiations with tenants, the government agreed to allow a new company, Preservation of Affordable Housing, a Boston-based firm, to replace Habitat as the manager of Grove Parc. The company is negotiating to buy the development, which would then be demolished and replaced with new housing.

Officials at Woodlawn Preservation say the government didn’t give them enough money to properly maintain Grove Parc. Habitat’s Jarrett declined to comment on Grove Parc in particular but said it is hard to manage something you don’t own.

But other Chicago developers and housing activists say federal subsidies can be adequate if managed properly. They say Grove Parc stands apart for how badly it fell into disrepair.

Preservation of Affordable Housing has assumed responsibility for numerous subsidized complexes across the country.

“Grove Parc is quite an exception to what we’ve normally done because it’s in such bad shape,” said the nonprofit’s chief executive, Amy Anthony. “These complexes are often tired, they’re always denser than today’s philosophy, but they’re not usually anywhere near as deteriorated.”

(The Boston Globe 6/27/08)