Land Reform, Chicago Style
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LAND REFORM, CHICAGO STYLE Gail Schechter Interfaith Housing Center of the Northern Suburbs Scott Bernstein Center for Neighborhood Technology Stephen A. Perkins, Ph.D. Center for Neighborhood Technology A Discussion Paper Prepared for The Brookings Institution Center on Urban and Metropolitan Policy & CEOs for Cities November 2004 ________________________________________________________________________________ TABLE OF CONTENTS INTRODUCTION…………………………………………………………………………………….………………….1 CHICAGO: SETTING THE CONTEXT-ESCALATING HOUSING ABANDONMENT………………………………………2 TRUST, INC…………………………………………………………………………………………………………..5 HOUSING ABANDONMENT TASK FORCE (HATF)………………………………………………….………………..11 1990S: REINVESTMENT…AND DISPLACEMENT…………………………………………...………………………..19 TALE OF TWO COMMUNITIES…………………………………………………………………………………………22 LESSONS LEARNED…………………………………………………………………………………………………..27 NEXT STEPS…………………………………………………………………………………………………………..30 CONCLUSION……………………………………………………………………………………………………….…33 LAND REFORM, CHICAGO STYLE I. INTRODUCTION Across the country, policy makers and environmental and community development advocates are united in their interest in the reuse and recycling of land in the urban core – land that has become available because of the failure of its prior uses, resulting in abandonment and demolition. Yet this cycle of development, deterioration, abandonment, vacant land and then reuse is not inevitable. Effective intervention can conserve existing buildings and communities so that vacant land does not hamper community revitalization efforts. In Chicago, the civic, business, government and community sectors have a 30-year history of commitment to preventing building abandonment and maintaining the integrity of communities. This effort engaged this broad range of stakeholders; produced high quality research to understand the complex factors leading to abandonment; framed public and private interventions at a scale that could make a difference; and then carried out the multi-year campaigns necessary to secure their adoption and implementation. Of American cities, Chicago is unusual in the duration, breadth, and depth of this commitment to conservation. Chicago has a strong tradition of civic and community activism, from Jane Addams and the Settlement House Movement at the turn of the 20th century, to the concerted effort of business and city leaders to beautify and open up the Lake Michigan shoreline through Daniel Burnham’s sensitive designs, to the beginnings of neighborhood-based community organizing with Saul Alinsky’s work in Back of the Yards and Woodlawn. This paper describes two civic initiatives in the 1970s and 1980s and their effects up through the present, which together catalyzed this fundamental paradigm shift toward the preservation of existing housing and communities. Historical in character, this paper does not cover all current programs dealing with tax policy and land reform in Chicago but rather measures the impact of several citizen initiatives. The central thesis posited in this study of two land reform movements is that lowering abandonment and demolition rates is at least as important an indicator of well being as new home building, especially in the “hollowed-out” cores of this nation’s cities. Chicago’s multi-decade public and private experience has lessons to learn for other cities around the country and suggests contemporary policies that can move forward this commitment to existing places. 1 II. CHICAGO: SETTING THE CONTEXT- ESCALATING HOUSING ABANDONMENT Starting in the early 1960s, Chicago began to experience a cycle of economic decline, racial transition, soaring energy prices, exorbitant tax increases, and a withdrawal of city and financial services. Many buildings were subjected to deferred maintenance and even arson. In the hardest hit neighborhoods, thousands of low- and moderate-income property owners and their tenants were forced to leave their Chicago homes; others had no choice but to move into substandard housing. The culmination of this cycle was first abandoned buildings and then vacant land. By the 1970s, housing abandonment in the City of Chicago was a phenomenon similar to that of other large cities in the nation; de-industrialization and “white flight” from low- and moderate- income neighborhoods to the suburbs accompanied disinvestment and decline in city neighborhoods. This in turn contracted the community’s employment base. Few resources remained to buttress an already aged housing stock.1 More than one in four housing units (306,800) in Chicago was either dilapidated or tending towards dilapidation in 1970.2 At the same time, the number of demolitions was steadily rising. The following is a snapshot of the housing market in late-1970s Chicago: • Of the City of Chicago’s 3 million residents, at least 1 million people lived in about 300,000 housing units in large multi-family buildings (seven or more units).3 • In 1960, only 143 structures were demolished. This rose to 1,400 in 1970 and 2,675 in 1975.4 A total of 22,175 buildings were demolished between 1960 and 1976, with an estimated 271,000 persons displaced – 9 percent of the population.5 • Abandonment rose from 2,500 structures in 1975 to 3,100 in 1977.6 • New construction was low: during the first two months of 1977, only 80 building permits were issued in the city of Chicago (58 single-family and 22 multi-family).7 • Utility costs and property taxes became a burden on multi-family property owners. The cost of utilities grew from only 11.2% of total rent receipts in 1968 to 22.9% in 1975, and property taxes grew from 13.6% of rent receipts in 1968 to 21.6% in 1975. Total net income of the typical building had fallen from $100,000 in 1968 to $6,000 in 1975. Owners faced a serious dilemma: the market demand in this lower income African-American neighborhood was such that the rent could not be increased.8 2 • Tax delinquency in the City of Chicago rose 14% from 1970 to 1974, the highest in the nation, according to Moody’s Investment Manual.9 • In 1970, 55,000 parcels in Chicago were tax-delinquent. By 1973, this figure rose to 92,000, amounting to more than $73 million in lost tax revenue. At the same time, an increasing number of properties were not purchased (“forfeited”) at the annual tax sale: from 18,102 in 1971 in Cook County (of which the City of Chicago is a part), to 34,871 in 1973. The lowest income townships bore the highest number of forfeitures; tax purchasers were uninterested in these properties, thus “redlining huge sections of Chicago,” according to attorney John Lawlor.10 More than twenty-five years ago, neighborhood and city-wide advocates for households most at risk of losing their homes and rental properties – largely older persons, single women with children, veterans, people with disabilities, and low-wage workers – began to coalesce around a single goal: to protect and improve the multi-family rental housing stock of the City of Chicago. TRUST, Inc. and the Housing Abandonment Task Force (HATF) were broad-based initiatives that fundamentally changed the policy and market context for housing and land. These two initiatives are notable in several respects. Their approaches shared several characteristics: • Multi-Stakeholder – Many different constituencies with varied interests and perspectives – neighborhood activists, business leaders, urban and environmental policy researchers, non- profit developers, civil rights advocates, academics and government officials – came together to effect reforms at different levels of government; • Holistic – They approached housing abandonment in a holistic manner, examining a variety of causes and proposing appropriate solutions; • Neighborhood-Oriented – While recognizing the connection between neighborhood conditions and the broader economy, these initiatives focused on place-based solutions that permitted greater opportunity for local control and ownership; • Focused on Resources – They linked abandonment with (a) an inefficient property tax collection system, (b) inadequate resources from both the public and private sectors for land and housing acquisition and rehabilitation in poor neighborhoods, and (c) disincentives for neighborhood reinvestment; and • Citizen-Friendly – They demystified the tax collection process and other government roles by advocating for reforms that permitted public access to information, and used the media to educate the public about rehab programs and tax reforms. Ultimately, these initiatives permitted revitalization in once severely disinvested neighborhoods. 3 4 III. TRUST, INC. TRUST (To Reshape Urban Systems Together) brought together business and civic leaders to address Chicago’s stagnating economy. For staff members of neighborhood and downtown organizations, these mid-day gatherings were an opportunity to orient themselves to the issues and people working to improve Chicago. In March 1977, as a result of a study, Managing Chicago’s Urban Dollar11, TRUST decided to form a Housing Conservation Study Committee to analyze issues as they pertained to five types of housing conservation: normal maintenance, rehabilitation, remodeling, preservation, and restoration. TRUST chose to focus on housing conservation as a bellwether for urban health. In a meeting in June 1977, co-chair Bill Brown of RESCORP (Chicago Area Renewal Effort Services Corporation), a service corporation mutually owned by fifty-seven savings and loan institutions, summarized the reasons as follows12: • “Housing rehabilitation is a key factor in stabilizing and, in many instances,