Horner Residents Negotiate Housing Redevelopment Plans

A committee of Henry Horner public housing residents has successfully negotiated a plan for the complete revitalization of the entire development.

At press time, the parties are putting the final touches on the “Horner Revitalization Plan” for Phase II for the approval of the U.S. Department of Housing and Urban Development, or HUD. After both Phase I and Phase II, the completely revitalized Horner, which originally contained 1,775 public housing units, will now consist of 848 public housing units (63 percent of the total new or rehabilitated on-site and neighborhood units), 132 “affordable” units for higher-income, nonpublic housing families, and 361 market-rate units.

Since these numbers of public housing units are a higher percentage of such units than in any other Chicago Housing Authority, or CHA, development to be “revitalized,” the Horner residents’ committee, through the persistence of its members and its attorneys over the past two years, has achieved its two primary objectives. First, the committee made sure that Horner families would be provided their choice of replacement housing, including housing in midrise buildings. Second, the committee obtained the maximum number of newly constructed public housing units when the legal and political landscape had changed to encourage the building of only a small fraction of the number of public housing units that could be successfully developed.

The committee had been trying to compel the CHA’s Horner management agent, PM One Ltd., to comply with the 1995 consent decree in the case of Henry Horner Mothers Guild v. Chicago Housing Authority. (The National Center on Poverty Law is class counsel for the residents of Horner and for the committee in this litigation.) The committee, consisting of seven elected building presidents or building, block, or area representatives, is a resident organization created by the consent decree to monitor and enforce the decree’s provisions.

In 1990, when the case was filed, Horner, by CHA’s own admission, was one of the worst public housing developments in the country. Almost half of the 1,775 units were vacant, and most of the remaining units, as well as the common areas of the eight 16-story high rises and eleven 7-story midrise buildings, were uninhabitable and located in a Chicago near west side area with high instances of crime and gang activity.

After four years of litigation, the parties reached agreement, which U.S. District Court Judge James B. Zagel approved as a consent decree in 1995. Under the consent decree, the Horner public housing development and the surrounding community would be revitalized by demolishing the Horner high rises and some of the midrises, rehabilitating other midrises, and providing Horner residents with replacement housing in newly constructed units in the community or in existing units outside the community.

In Phase I of the redevelopment, two high rises and three midrises consisting of 466 units were demolished, and 466 new replacement units were to be built on site and in the surrounding community. CHA and HUD provided over $50 million for Phase I new construction. The Henry Horner annex, a 90-unit midrise complex near the United Center a few blocks south of the main Horner development, was completely rehabilitated at a cost of $10 million.

One-half (233) of the newly constructed units were reserved for existing Horner families, and the other half for low-income working families. Some 230 Horner families elected to leave the community and receive replacement housing under the Section 8 program or in public housing units scattered throughout the Chicago area. The Horner consent decree provided that families residing in the high rises in the Horner extension and Horner Homes sections of the development were to be given first choice for the replacement units, and each family had its choice of replacement housing type and location.

Under the federal housing law at the time, whenever a unit of public housing was demolished, HUD had to provide funding for and the housing authority had to build or otherwise provide another unit, so that there would be no net loss of units. Congress suspended this requirement, known as the “one-for-one replacement rule,” in 1996 and repealed it in 1998.

To guard against loss of replacement units in Phase I due to this expected change in federal law, attorneys for the residents’ committee had negotiated a provision in the Horner consent decree that any buildings demolished in Phase I had to be replaced on a one-for-one basis even if federal law changed to eliminate the one-for-one requirement. However, at the conclusion of Phase I (after the construction of the 466 new units for Horner and higher-income non-Horner residents and the provision of the 233 other replacement units for Horner residents), the consent decree provided that the parties would have to negotiate the number of replacement units if the one-for-one replacement requirement had been repealed.

Since Congress repealed the requirement during Phase I of the decree, the residents’ committee and its attorneys were required to negotiate the number of public housing replacement units that would be built in Phase II. Since all the residents residing in the Horner high rises and the Horner annex had been provided with replacement housing in Phase I, those affected by the Phase II negotiations were all residing in seven midrises of the Henry Horner Homes section of the development. Approximately 220 families resided there at the start of the negotiations.

By the fall of 1999, when Phase I would likely be completed within a year, the parties to the decree (CHA, HUD, and the Horner plaintiffs through the residents’ committee and their counsel) began the Phase II negotiations. Also involved in the negotiations were the Habitat Company, a private real estate company appointed receiver by the court in the Gautreaux v. CHA desegregation case to build all-new family public housing in Chicago; counsel for the Gautreaux plaintiffs; the Chicago Department of Housing; the Chicago Department of Planning and Development; and representatives of the Near West Side Community Development Corporation, a local community organization headed by Earnest Gates (a community activist and later member of the CHA board of commissioners).

The negotiations brought into sharp focus the tensions involved in revitalizing Chicago’s public housing stock. On one hand, CHA, the Gautreaux parties, and the Near West Side Community Development Corporation, now freed by Congress from having to replace demolished public housing units on a one-for-one basis, argued that only 25 percent of the new Phase II units should be reserved for public housing residents, that all the remaining Horner midrises should be demolished, and that the remainder of the new units should be reserved for higher-income and market-rate families. They argued that private developers would be reluctant to bid on Phase II if more than 30 percent or even more than 25 percent of public housing units were on site.

The residents’ committee strongly disagreed with this approach for these reasons:

• Twenty-five percent of the new units, depending on the number built, may not accommodate all of the 220 Horner Phase II families entitled to their choice of replacement housing under the Horner consent decree.
• Forty percent of the Phase II Horner families who elected to remain in the Horner community had selected a rehabilitated midrise as their replacement housing choice, so if all the midrises were demolished, a large portion of the plaintiff class would be denied their choice of replacement housing.
• No one could know what the developers would actually be willing to provide unless they were given an opportunity to do so.
• The goal of the Phase II redevelopment should be to provide as much housing as possible for public housing residents, consistent with a viable community.

CHA was just beginning to implement its so-called plan for transformation, which will result in a net loss of over 14,000 public housing units citywide. More new public housing units provided on site in revitalizing communities would help benefit the victims—namely, the current public housing residents—of CHA’s ill-conceived policies regarding segregation, lack of maintenance, and lack of security. Since the Gautreaux parties had approved 100 percent public housing replacement for Phase I as promoting integration and fostering a viable community, the residents’ committee was puzzled why, four years later, only 25 percent public housing was now seen as the “tipping point” that would work against integration and viability. The committee demanded that 290 units of public housing be provided in Phase II.

After months of arduous negotiations, the parties and the other negotiators reached an impasse. They turned to a mediator, former U.S. Department of Justice attorney, John R. Schmidt, who had recently become involved in public housing issues. Schmidt forged a compromise solution:

• All the midrises could be demolished, but, if so, the developer selected for Phase II would be required to construct at least two midrise buildings to accommodate Horner families who selected a rehabilitated midrise as their replacement housing choice.
• The total number of units to be built back on site would be left to the developer selected by the parties; however, the developer would be required to provide, at a minimum, 220 public housing units for very low-income families, or 32.5 percent of the total units built on site, whichever number was greater.

Families in this category would have income below 50 percent of the area median income and would include all of the current Horner residents. Another 2.5 percent of the total units would be reserved for families with incomes between 50 percent and 60 percent of the area median income. Thus, under this agreement, all existing Horner families would be housed, and at least 35 percent of the new units would be reserved for public housing families. Judge Zagel approved this agreement in an order dated February 1, 2000.

The parties then negotiated for six months over the precise language of a request for qualification to solicit developers to bid on the Phase II work. The request, issued on November 15, 2000, drew responses from four developers. Regarding the number of public housing units, the preliminary responses of the developers were as follows:

• From a joint venture between a Boston developer and Near West Side Community Development Corporation: 238 units, or 32.5 percent of the total.
• From a Boston developer: 259 units, or 34 percent of the total.
• From a Chicago developer: 280 units, or 35 percent of the total.
• From a joint venture of Illinois and New Jersey developers: 292 units, or 43 percent of the total.

The request for qualification established the Horner working group to select the developer and oversee implementation of Phase II. The seven voting members of the Horner working group are CHA, the Habitat Co., the Horner residents’ committee, counsel for the Horner plaintiffs and the residents’ committee, counsel for the Gautreaux plaintiffs, the Chicago Department of Housing, and the Chicago Department of Planning and Development.

The working group voted to eliminate the proposal from Near West Side Community Development Corporation due to the conflict of interest of CHA Commissioner Gates, who was also president of the corporation. After hearing oral presentations from the three remaining developers, the working group selected the Brinshore-Michaels team, which had proposed the greatest number of public housing units for Phase II.

The next hurdle that the Horner residents’ committee had to get over was to negotiate with the working group the precise numbers of units to be built in Phase II. What soon became clear was that CHA and the Gautreaux parties viewed the February 1, 2000, order as setting a ceiling on the number of public housing units and put tremendous pressure on the developer to keep the number of public housing units to an absolute minimum, even though the developer initially proposed to provide up to 292 public housing units, or 43 percent of the total.

The developer’s initial proposal contained a portion of the units off site, in an area in the Lawndale part of Chicago. However, the Gautreaux parties determined that construction of the off-site units was not feasible under the Gautreaux criteria for revitalization, so that part of the plan was taken off the table.

Due to the loss of the off-site component, the parties eventually agreed to build back on site 271 public housing units, or about 36 percent of the total. But, in an effort to implement the developer’s preliminary proposal of 292 public housing units, the parties agreed that 21 additional public housing units would be built off site, much in the same manner that off-site public housing units were constructed in the Horner neighborhood in Phase I. Thus a total of 292 units would ultimately be provided to Horner and other public housing families.

For more information, contact William Wilen, National Center on Poverty Law, 312.263.3830 ext. 251.