HUD Secretary voices 'continuing concern' over $440 million CHA surplus

U.S. Housing and Urban Development Secretary Julian Castro on Wednesday voiced “continuing concern” over the Chicago Housing Authority’s $440 million surplus and said Mayor Rahm Emanuel has assured him there’s a plan to spend it to build sorely needed housing.

“The level of reserves were higher than ought to be the case. What we’re looking for is a strong plan to invest those reserves in more housing opportunities. In my conversations with the mayor, I’m convinced there is that plan and that resolve. We’ll be looking for progress that I’m confident will happen. . . . The proof will be in the pudding,” Castro said.

“I’m pleased that CHA has come up with a plan to address that and will look forward to working with CHA so they can invest those reserves reasonably and make sure there is more opportunity for families to get good-quality housing. It was a concern and it is a continuing concern.”

Castro made the comments after joining Emanuel and acting CHA CEO Eugene Jones Jr. at a ribbon-cutting for the second phase of Park Boulevard. The 475-unit, mixed-income development was built on a Bronzeville site that once housed the CHA’s Stateway Gardens.

The former San Antonio mayor said he has not seen the mayor’s plan to spend down the reserves, but he and his staff have spoken to Emanuel and his staff about it.

Pressed to explain why CHA accumulated such a massive surplus, Castro said, “I’m focused on the future and making sure there are wise investments in greater housing opportunity. I believe this is a priority of Mayor Emanuel’s and the new leadership at the housing authority and that it will happen.”

Jones, the CHA’s fifth CEO in four years, added, “I’m committed to providing better housing, a lot more housing. . . . I can’t explain what happened in the past. The only thing I can do is explain what I’m gonna do in the future to get more units out there and provide more great housing for people with mixed incomes and choices. . . . I’m gonna work hard. I’m gonna work harder.”

Leah Levinger, executive director of the Chicago Housing Initiative, could not be reached for comment on the assurances from Castro and Jones.

Last month, she argued that the CHA’s revolving door under Emanuel and a lack of clear direction from the mayor’s office allowed the public housing agency to stockpile the massive surplus at a time of unprecedented need.

Jones replaced Michael Merchant, who was preceded by Charles Woodyard, Carlos Ponce and Lewis Jordan.

Woodyard resigned after the CHA agreed to a $99,000 settlement with a former staffer who had accused Woodyard of sexual harassment. Jordan was forced out amid questions about his credit card spending on lavish meals and employee gifts.

“The constant churning of senior leadership is disruptive to progress. It also scapegoats agency heads for, what we believe is a lack of direction from the Emanuel administration,” Levinger said previously.

“The CHA isn’t moving forward and the lack of progress is pinned on each successive CEO. In that vacuum, senior leadership has not felt clear they have a mandate to act or what that mandate is, so they don’t act at all.”

Levinger has noted that the CHA was building an average of 800 housing units a year during the decade before Emanuel took office. Under Emanuel, those rates plummeted from 400 units in 2011 to just 49 last year.

Meanwhile, the need for housing has only gotten greater. When the CHA opened its waiting list last fall, 282,000 families applied. Roughly 15,900 of those families identified themselves as homeless.

“It’s unconscionable that they have all that money just laying around. The need is tremendous,” Levinger said.

The Sun-Times reported last month that Jones left the Toronto Community Housing Corp. under a cloud after a scathing report by the city ombudsman there.

Jones resigned last year “by mutual agreement” — with a $200,000 severance package — after being accused of exercising an “abject failure of leadership” and creating a “climate of fear” at an agency that had shelled out $1.6 million in severance in 2013.

Toronto City Ombudsman Fiona Crean said Jones and his leadership team flouted rules governing hiring and firing, ignored conflicts of interest, gave managers sudden and unjustified raises and “recklessly” fired underlings.

On Wednesday, Jones refused to discuss the circumstances surrounding his departure from Toronto.

“I can’t comment on it. Sorry. I can’t comment. I have a confidentiality agreement,” he said, apparently referring to the $200,000 severance package.

During the mayoral campaign, vanquished challenger Jesus “Chuy” Garcia joined housing activists and their City Council allies in turning up the heat on the CHA to spend the $440 million surplus.

They argued that the CHA’s bureaucratic inertia underscored the need for a stalled “Keeping the Promise” ordinance that would tighten the reins on the CHA.

The ordinance would require the CHA to file quarterly reports on its “vacant and offline housing ward by ward” that would include the voucher utilization rate and progress on building replacement public housing.

The stalled ordinance also would make future City Council funding for CHA projects contingent on the CHA using 97 percent of the funding it receives for its voucher program; require “one-for-one replacement” of low-income housing units; and put the brakes on city land swaps or planned development applications involving CHA land unless the CHA produces a replacement plan.

Castro came to Chicago, one of the nation’s most segregated big cities, to announce a “final rule” aimed at arming communities that receive HUD funding with a “data set like no other” to comply with the 47-year-old Fair Housing Act.

“Ten years from now, 20 years from now, you’re gonna see more families that have the chance to move into higher-opportunity areas. And you’ll see greater investment in many of those neighborhoods that, too oftentimes, have been abandoned in the urban core of cities,” Castro said.

What happens to those cities and towns that don’t comply, even after they get the tools? Will a stick follow the carrot?

“We’re approaching this very aspirationally looking to collaborate with communities. . . . At the same time, we know that throughout HUD’s life-cycle, there are times when we do use enforcement. When communities don’t make any effort or completely flout the law then, of course, enforcement is something we have as a tool,” he said.