Private Aid for Public Problems: Revitalizing Woodlawn

 /  May 3, 2015, 1:05 p.m.


While most UChicago students would see nothing unusual about walking up to 53rd Street or renting an apartment north of the university campus, the idea of venturing much further south than 61st Street is often met with concerns about safety. Forums such as College Confidential are riddled with threads with titles like “UChicago/Hyde Park = Dangerous” or “Is the University of Chicago Safe” that have garnered pages upon pages of responses. A typical comment goes something like this: “Hyde Park itself is pretty safe—there are UCPD patrols all over the area. Rule of thumb, do not go below 60th street or west of Cottage Grove on foot, especially at night, or you will be in danger. The neighborhoods to the south and west are some of the roughest in Chicago and thus America.”

All hyperbole aside, the need for neighborhood revitalization across the city’s South and West sides, including the areas surrounding the University of Chicago, is a crucial issue facing the City of Chicago. Entrenched poverty in these areas, coupled with the financial crisis of the mid-2000s, have left neighborhoods scarred with empty homes and vacant lots, which have become magnets for crime and disorder, further damaging surrounding property values and minimizing the area’s chances of economic resurgence. Woodlawn, a community area just south of the University of Chicago, was hit particularly hard by the financial crisis, with many families falling victim to mortgage fraud and obtaining subprime loans from predatory lenders. As of 2014, 7.6 percent of homes in Woodlawn had been vacant for more than two years.

Consequently, a number of institutions have focused on trying to revitalize Woodlawn, including the city, the federal government, and the University of Chicago. Examining revitalization efforts in the Woodlawn neighborhood sheds light on the limitations of government-led action in Chicago, and the city’s growing reliance on the private sector to aid in solving public issues.

The City of Chicago: The Micro-Market Recovery Program

Chicago launched its Micro-Market Recovery Program (MMRP) in August of 2011. The program seeks to foster the reoccupation of foreclosed and vacant properties in thirteen target neighborhoods, including Woodlawn. However, although the MMRP is run by the city, it is misleading to call it an entirely public program. Instead, the city serves as the coordinating agent for nonprofit housing groups such as Neighborhood Housing Services and the Community Investment Corporation, and partners with private lenders to obtain loan products. A major private player in the MMRP is the John T. and Catherine D. MacArthur Foundation: according to the press release announcing the MMRP, the foundation “will provide between $15 and $20 million through loan programs that should leverage additional private capital for a total of up to $50 million. The MacArthur Foundation will work with the Chicago Department of Housing and Economic Development (HED) to design loan products that specifically address the need to stabilize the targeted communities.” While there are many individual success stories from the MMRP––a contractor who was able to secure funds to rehab and rent out a vacant three-flat building in Marquette Park, a seventeen-unit walk-up saved from foreclosure in North Central Park––large-scale data on the program’s effectiveness is not readily available, so the degree of its success is unclear.

The MMRP, which was implemented early in Mayor Rahm Emanuel’s tenure, is an example of the private-public partnerships that have come to define the Emanuel administration. Chicago’s budget problems are well-documented, and do not need to be repeated here, but they have prompted an intriguing trend in urban policy: directing private dollars toward public goals. From the use of social impact bonds to fund a pre-k expansion to the creation of the Chicago Infrastructure Trust, a $7 billion private-public plan to modernize city infrastructure, Chicago is increasingly reliant on the private sector to fund initiatives that fall outside of the bare necessities needed for normal city operation. In general, the effect of Chicago’s budget problems seems to be that the city will not take action except when supported by private or federal funds.

The Federal Government: The Neighborhood Stabilization Program/Choice Neighborhood Initiative

The federal government has also had a major hand in the stabilization effort. Starting in 2009, Chicago has been awarded $169 million in funding to buy and rehabilitate foreclosed properties as part of the federal Neighborhood Stabilization Program. However, Chicago’s administration of these funds garnered mixed reviews, with the primary problem being that the individuals who were willing to buy these renovated properties in neighborhoods that still faced large foreclosure problems were unable to obtain mortgages, and those who were in a position to purchase a home opted to do so in more financially stable neighborhoods. As of 2015, the NSP has managed to sell 106 homes (this figure includes both single-family and multi-unit buildings) in Chicago, according to the program’s website. An additional 860 units in 196 buildings had either been acquired by the city or were under contract as of December 31, 2014; however, these have not yet been sold or rented out.

Neighborhood revitalization seems to be the most successful when private, local organizations are involved. Woodlawn was also the recipient of federal funding in 2011, when the US Department of Housing and Urban Development (HUD) granted the city $30.5 million to redevelop the neighborhood under its Choice Neighborhood Initiative. Similar to the MMRP, this initiative involved partnering with a nonprofit; in this case, the city partnered with the Preservation of Affordable Housing (POAH) organization to redevelop Grove Parc Plaza, a HUD-assisted housing complex owned by the organization. The Choice plan also made major investments in refurbishing Woodlawn’s other vacant buildings and lots; as of 2013, the POAH, with federal funding, had built or renovated 325 mixed-income units, and was working to develop new commercial properties in the area. In contrast, the City of Chicago’s use of the federal Neighborhood Stabilization funds only managed to sell twenty-seven homes after a similar period of operation.

The University of Chicago: The Employer-Assisted Housing Program

Due to its proximity to Woodlawn, the University of Chicago has been the primary actor in Woodlawn’s revitalization process. The university’s Employer-Assisted Housing program, started in 2003, offers financial assistance to employees who buy homes or rent in nearby neighborhoods. In a 2014 program relaunch, the university elected to focus primarily on Woodlawn, according to William Towns, the assistant vice president of  neighborhood initiatives with the University of Chicago Office of Civic Engagement. Towns described the university’s decision to focus on Woodlawn as motivated by the degree of impact possible: “Seeing an opportunity to have a substantive impact in Woodlawn, which has been the second most popular community for participating employees, the university increased incentives to locate in the area immediately adjacent to campus.”

While there are certain income caps for assistance in most neighborhoods, the university does not impose any limitations on employees who purchase in the Woodlawn focus area, which extends from 61st Street to 67th Street between Cottage Grove and Stony Island Avenues. Similarly, rental assistance, as well as down payment assistance, is available in Woodlawn, but not in other neighborhoods. The university will provide up to $10,000 in forgivable loans for purchases in the Woodlawn focus area, and assistance ranging from $2,500 in Hyde Park or South Kenwood to $5,000 in neighborhoods such as Douglas and Washington Park. Demand for the program remains strong: Towns noted that “more than 240 university and University of Chicago Medicine employees have participated in the program since it began in 2003...Since the relaunch, more than two hundred employees have inquired about the program. Now that the weather is improving and people begin to think about moving, we expect a rise in participation.”

The university only requires that employees be able to put down a 3.5 percent downpayment to participate in the EAH program. While this seems low––mortgage loan rates tend to range from 5 to 20 percent––it is possible that employees with incomes low enough to qualify for the EAH program may not be able to afford a larger sum, and would otherwise be vulnerable to predatory mortgages or ones with higher interest rates, which would compound Woodlawn’s problems rather than resolve them. While participation in the EAH program did experience a slowdown during the financial crisis and ensuing decline in the housing market, according to Towns, the program nevertheless continued to operate through the recession. In contrast, the MMRP and the Choice Neighborhoods Initiative were only founded in 2011, and the NSP in 2009, as the worst of the recession came to a close.

These public programs were founded as a reaction to the housing crisis, while UChicago’s EAH program was a proactive push for neighborhood revitalization. Ultimately, examination of the revitalization efforts of the City of Chicago, the federal government, and the University of Chicago reveals a key point about the differences in the way these stakeholders operate. Likely due to the slower pace and tighter budget of the public sector relative to the private sector, city or federal government action tends to react to a problem, rather than work to mitigate it in the absence of a dire need. Consequently, private programs like the University of Chicago’s are crucial to Chicago’s renewal and growth as a city, because they have more flexibility in terms of funding and decision-making, and can thus be a greater force for change and improvement than the public sector alone.

The image featured in this article was taken by Eric Allix Rogers. The original image can be found here.

Ava Henriksen