Obama's housing record, part three – A story about what did not happen

The Boston Globe on June 27, 2008 published an article by Binyamin Appelbaum about Obama’s state senate record on public housing. As a follow-up, Mr. Appelbaum was interviewed on July 1, 2008 by National Public Radio’s Farai Chideya along with Illinois state representative Julie Hamos. Ms. Hamos spoke in defense of private developers getting tax dollars to rehab public houing and Mr. Appelbaum elaborated on his report.
You can listen to the entire interview at the link above or here. I am going to highlight a few excerpts.

Farai: So, Binyamin let me start with you. Your article focuses on Grove Parc Plaza – it’s a development located in the district that Obama represented for eight years when he was a state senator. So, uh, tell us why you zeroed in on this development.
Binyamin: We were interested in Obama’s years as a state senator because it’s sort of his largest body of work as a politician. And so we thought it would be instructive to look at how he did, and the issue of affordable housing was a signature issue for him; it was one of his major focuses both before becoming an elected official and during his time as an elected official. And what we found was that the policies that he supported in many cases, produced developments that failed. And furthermore, many of the major beneficiaries of those policies have been his friends and supporters. And many of the people who have suffered were his constituents, people who lived in his state senate district. Grove Parc is one of the outstanding examples of this problem. It sits on the border of Obama’s district, its 504 apartments of subsidized housing of fully renovated in the early 1990’s, uh, that have fallen in to such disrepair that the plan now is to demolish them and start all over again. It was built by a non-profit, led by a number of Obama supporters. It was managed during the period of its greatest decline by a company called The Habitat Company, which is led by Valerie Jarrett, who is a senior advisor to Obama’s presidential campaign. And it’s, it’s as I said, in his district. So it struck us as sort of emblematic of the issue we wanted to write about.

Mr. Appelbaum provides a very reasonable to explore Obama’s career as a state senator – “his largest body of work as a politician.” Focusing on Tony Rezko’s illegal activities obscures that Mr. Obama was largely ineffective in making changes or fighting the status quo. As Appelbaum noted, he maintains advisors who were with him in Chicago. For instance, former Habitat head, Valerie Jarrett is touted as a top administration pick.
Appelbaum says the Obama campaign did not address his questions completely.

Farai: You did reach out to Senator Obama, what did he tell you about his perception of the issues that you raised?
Binyamin: The Obama Campaign affirmed Senator Obama’s support, uh, for the policy of subsidizing private developers and managers of affordable housing. It did not respond to questions about whether the Senator was aware of problems in his district.

Rep. Hamos still stuck up for private-public partnerships.

Farai: Now Julie, let me go to you. From your perspective, as someone who is a state representative, what did you think of the article? Um, what do you think of the entire issue of, um, privatizing public housing, whether or not it’s worked, and whether or not there is a hint of perhaps too much leeway being given to developers linked to the Senator?
Julie: Well, first of all, I thought the article was unclear in the way that it focused on some projects, and in this particular case, Grove Parc is a great example. Grove Parc was built in 1970 under, really under a failed policy of the federal government. It was called Project Base-Section 8– it was built as a project-base-section-eight program. And these projects, typically, did not have enough money put into them by the federal government, for the kind of maintenance we really need long term to make sure they succeed. This is exactly the kind or programs that we’re not really building anymore. And Grove Park is an example of that. Those have been replaced now by more innovative and successful policies, and those policies are in fact the privatize-public partnerships that we should be really applauding. They are the partnerships used in tax credits that have now created thousands of units of much smaller developments out of mixed-income developments, and really been revitalizing neighborhoods. So, I fully support, as a public policy maker, what we are trying to do now, which is to bring in private developers using market based incentives to get them to build affordable housing. This is still a very big issue in most communities. It certainly is here in Illinois. But it is the model that is working. Grove Parc is an old model that didn’t work, and we replaced it.

Reporter Appelbaum came to the conclusion that Obama did not help his people when he could have done so.

Farai: Binyamin, let me bring this back into a larger framework, which is Democratic politics. Um, the issue made headlines during the democratic primary. Let’s listen to Senator Clinton in South Carolina:
Senator Clinton: I was fighting against those ideas when you were practicing law and representing your contributor Rezko in his slum land-lord business in inner-city Chicago.
Farai: That’s Senator Clinton attacking Senator Barak Obama for his connection to Antonin Rezko and Rezko was a major Obama fundraiser. Give us a little more of a context, Binyamin, on what exactly the connection is between Rezko and Obama.
Binyamin: Rezko is a really interesting example. Rezko, who was one of Obama’s primary fundraisers, particularly for his earlier political campaigns, he was a friend of the Senator’s, he was involved in Obama’s purchase of a home in 2005, but what is really interesting about Tony Rezko is that he was a developer on the model that, uh, (Ms. Ramos) was just describing. In that he built mixed used, mixed income housing, mixed income communities, scattered across Chicago, small numbers of developments. The model that was both/built to replace Grove Parc. And that also failed spectacularly. And it failed for the same reason, which is the private managers, private developers, were not equity supervised by the government. They all say that they didn’t get enough money to manage these projects. Perhaps that’s true, although some of them succeed, and some of them fail – those that succeed said they do have enough money and those that fail said that they don’t have enough money. But whether or not that’s the issue, the fact of the matter is this new, new model, this third generation of subsidized development so far it doesn’t have a better track record than the generation that included Grove Park. Which incidentally, was most recently redone after the administration of Harold Washington. One broader note here, which is as much as this is a story about what happened in Chicago, it’s also a story about what did not happen. And specifically, it’s not, we’re not in any way finding that Barak Obama directed money to these developers, that he was directly responsible for the suffering of his constituents. What’s interesting here is that Obama did not stand up and point his finger at the problems, and he did not participate, as best we can tell, in an effort to correct the problems. That, that to me is as much the issue as what went wrong.

The interviewer asks Ms. Hamos about Obama’s performance and in my view, she does not answer the question. She says in part:

We understand that these affordable housing developers don’t have a lot of cash going though them. They’re for very low-income people. And it’s a challenge to manage these well, and it’s a challenge to get enough money to have good on-site management operations. So we understand this – that some developments do better than other developments. And yet we don’t stand up an accuse and blame the people that we’re trying to bring into the process. It is one of the challenges for building housing for very low income people that continues to today.

I think she is saying Obama should not have confronted mismanagement because he needed the developers (“the people that we’re trying to bring into the process”). I am not sure really, but it sounds like enabling poor outcomes.
Other posts in this series:
Part One: Obama’s housing policies: Is past prologue?
Part Two: Obama’s housing policies: Cold constituents
Part Four: Obama’s housing policies: Obama’s housing advisors

Obama's housing policies, part two – Cold constituents

In April, 2007, Tim Novak of the Chicago Sun-Times did an in-depth report regarding the relationship of Barack Obama and Tony Rezko. The article begins with the cold facts:

For more than five weeks during the brutal winter of 1997, tenants shivered without heat in a government-subsidized apartment building on Chicago’s South Side.
It was just four years after the landlords — Antoin “Tony” Rezko and his partner Daniel Mahru — had rehabbed the 31-unit building in Englewood with a loan from Chicago taxpayers.
Rezko and Mahru couldn’t find money to get the heat back on.
But their company, Rezmar Corp., did come up with $1,000 to give to the political campaign fund of Barack Obama, the newly elected state senator whose district included the unheated building.
Obama has been friends with Rezko for 17 years. Rezko has been a political patron to Obama and many others, helping to raise millions of dollars for them through his own contributions and by hosting fund-raisers in his home.

When asked why Obama did nothing, his campaign replied:

“Senator Obama does not remember having conversations with Tony Rezko about properties that he owned” — Obama’s campaign staff on Sunday.

I am not trusting enough to believe this but even if I did believe it, the question remains: why didn’t Obama have a conversation with Rezko? He should have had more than one conversation with him. Obama supporters reading this, please help me understand why this does not give you pause. Obama’s signature issue is housing and public-private partnerships. He wants to continue this course in his administration, giving private developers funding to create public housing. Some of the same people who advised him on housing then are advising him now. If he does for the nation what he did for the South Side of Chicago, we are in for massive spending with little to show for it. Given how poorly it worked in Chicago, why does Obama promote the concept? What am I missing?
I understand Obama had just entered office but one of his primary fundraisers was sued to turn on the heat to people in his senate district and he says he was not aware of the issue. Rezko gave him $1000 when Rezko said he could not pay a heating bill. I bet that sum of money could have triggered the utility to turn the heat back on. If not, then how about giving the money to the residents for blankets? If you were a change agent, it seems you would stage a march or organize tenants for social change. Perhaps you would go the press and shame Rezko and others into giving up the housing game. Instead, Obama used his clout as a state Senator to support additional projects for Rezko.
kids freezing
It is cold in Chicago in January.
The Obama campaign had little to say when queried by the Sun-Times:

For five weeks, the Sun-Times sought to interview Obama about Rezko and the housing deals. His staff wanted written questions. It responded Sunday but left many questions unanswered. Other answers didn’t directly address the question.
Among these: When did Obama learn of Rezmar’s financial problems? “The senator had no special knowledge of any financial problems,” Gibbs wrote.
Did the senator ever complain to anyone — government officials, Rezmar or Rezko — about the conditions of Rezmar’s buildings? “Senator Obama did follow up on constituency complaints about housing as [a] matter of routine,” Gibbs wrote.
Did the senator ever discuss Rezmar’s financial problems with anyone at his law firm? “The firm advises us that it [is] unaware of any such conversations,” Gibbs wrote.

What is “special knowledge?” Is it different from ordinary knowledge? Is he saying he knew something but he didn’t know details? What did he know? What complaints did he follow up on? Did they involve Rezko properties? We may never know, because no one in the media is pressing the campaign for the answers.
When a campaign does not answer the questions, you know there is something they do not want reported. Outside of a very few articles, the mainstream media have not pushed the campaign to be specific. Binyamin Appelbaum’s Boston Globe article reported a similar response to his questions.

Obama’s campaign, in a written response to Globe questions, affirmed the candidate’s support of public-private partnerships as an alternative to public housing, saying that Obama has “consistently fought to make livable, affordable housing in mixed-income neighborhoods available to all.”
The campaign did not respond to questions about whether Obama was aware of the problems with buildings in his district during his time as a state senator, nor did it comment on the roles played by people connected to the senator.

In fact, Mr. Rezko was very involved with the Obama state senate campaign as the Sun-Times article makes clear. Is it reasonable to think that Obama did not know his fundraiser was being sued by the City of Chicago because constituents in his district were without heat during sub-zero weather?
Back to the cold building, the Sun-Times reports:

The tenants there had no heat from Dec. 27, 1996, until at least Feb. 3, 1997, when the city of Chicago sued to turn the heat on. The case was settled later that month with a $100 fine.
It was during that time that the area’s new state senator, Barack Obama, got a $1,000 campaign donation from Rezmar. The date: Jan. 14, 1997.

Now what I do not understand is why Barack Obama did not pursue a class-action lawsuit representing his constituents, or at least shame the slumlord into taking care of his obligations. This would be change we could believe in. However, he did nothing at all to influence his fund-raiser to improve conditions for his own constituents.
He didn’t even have a conversation with him.
However, he did have time in 1998 to write a letter of reference for another one of Mr. Rezko’s companies, New Kenwood LLC, after the incident in 1997 where Rezko iced his constituents.
rezko obama
Why would Obama support more money to Rezko after he had failed miserably to protect his constituents? Rezko’s failures were not limited to donating money to a state Senator versus paying the heat bill. The Sun-Times reports the score:

Rezko and Mahru had no construction experience when they created Rezmar in 1989 to rehabilitate apartments for the poor under the Daley administration. Between 1989 and 1998, Rezmar made deals to rehab 30 buildings, a total of 1,025 apartments. The last 15 buildings involved Davis Miner Barnhill & Galland during Obama’s time with the firm.
Rezko and Mahru also managed the buildings, which were supposed to provide homes for poor people for 30 years. Every one of the projects ran into trouble:
• Seventeen buildings — many beset with code violations, including a lack of heat — ended up in foreclosure.
• Six buildings are currently boarded up.
• Hundreds of the apartments are vacant, in need of major repairs.
• Taxpayers have been stuck with millions in unpaid loans.
• At least a dozen times, the city of Chicago sued Rezmar for failure to heat buildings.

These results took place between 1989 and 1998. Obama wrote his letter in support of Rezko (co-owned with Obama’s law firm boss, Allison Davis) in October, 1998. With Rezko’s track record, does it show good judgment to write that letter of support?
He said the letter was not written at the request of Rezko or Davis. Even if you believe that, it side-steps the question: why write it at all?
He should have been exposing the corruption and mismanagement instead of enabling it by recommending more funding. With this record, what inspires Obama’s followers to believe he will bring us positive change?
Several other bloggers have looked into this issue in more depth. Here are some posts that have been helpful.
Doug Ross has more pictures of the apartments.
Obama’s real estate bust
Poor housing conditions have consequences – NoquarterUSA.
A more moderate view which raises unanswered questions – (h/t Legolas)
8 things to know about Obama and Rezko.
Part One: Obama’s housing policies: Is past prologue?
Part Three: Obama’s housing policies: A story about what did not happen
Part Four: Obama’s housing policies: Obama’s housing advisors