59

their future. Whether residents choose to return to live in their original neighborhoods or
move to other parts of the cities, they will be living in town homes or low-rise apartments, a
dramatic change from the mammoth high-rises they have come to know. In Chicago and
other cities across the country, HUD is providing life skills counseling to public housing
residents to help them successfully transition from isolated, high-rises to new opportunities.

4. Increasing residents’ participation in the decisions that affect their lives.

. ‘Met with residents from every CHA development since creation of the Local-
“federal partnership on May 31st.

+ As part of the effort to keep the public informed of our activities, hosted
regular meetings with residents, weekly meetings with elected officials, and
maimained ongoing dialogue with the media.

. ‘Started the process of bringing in a management team to nun resident clections.

+ Co-hosted Chicago Inner City Games with the Chicago Park District, the
Chicago Board of Education, Chicago Public Library, and other non-profit
organizations,

5. Strearptining CHA’s administration and restoring confidence in the Housing
‘Authority.

+ Released audits and management reparts of the CHA thus providing full public
‘disclosure of the financial and management situation at the Authority.

+ Presented a new ethics policy that defines the standards of conduct for
Procurement, management information systems, pension funds, motor vehicles,
warehousing, financial management, and the billing of outside counsels and
comracts.

+ Issued a Request for Proposal (RFP) for the private management of the Section
8 rental assistance program.

+ Issued an RFP for new management of the CHA pension fund, which lost $15
million due to mismanagement.

+ * Reconciled the FY 1995 budget to include a 15 percent staff reduction.

+ Worked with Mayor Daley to create the CHA Advisory Committee, which

includes a resident, the Mayor's representative, a community leader, and a
strong business leader.

6. Engaging the Community Leadership in improving the CHA. Edwin Eisendrath
has met with many leading Chicago public organizations to discuss their potential role
in hheimprovement of the CHA, such as the City Club of Chicago, the YMCA, the
‘Metropolitan Planning Council, the Chicago Equity Fund, the Union League Club,

3


123

TESTIMONY BEFORE THE U.S. HOUSE OF REPRESENTATIVES
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
SUBCOMMITTEE ON HUMAN RESOURCES AND
INTERGOVERNMENTAL AFFAIRS

BY JEFFREY K. LINES, PRESID'NT OF TAG ASSOCIATES, INC.
AND
RECEIVER FOR THE HOUSING AUTHORITY OF
KANSAS CITY, MISSOURI

SEPTEMBER 5, 1995


CABRINI GREEN

Chicago has had $50 million in HOPE VI funds reserved for 20 months to redevelop
Cabrini Green. ‘The process was stalled by two obstacles: the inability of residents to come
together, and the submission by CHA of what we viewed as a financially unworkable plan
that failed to include a satisfactory number of low-income residents. Since the HUD
intervention, substantial progress has been made. Residents and community leaders have
agreed on a process where private entities will submit proposals to redevelop a portion of
Cabrini Green. This will inject the creativity of the private marketplace into the process. It
will also enhance the probability that more market-rate ill be interspersed among units
dedicated for working families eligible for public housing. The agreement on this format has
spurred the City of Chicago to negotiate seriously with the CHA on city-owned property
needed to facilitate development.

I want to stress that residents will serve on the committee to decide which plan is
approved.

Because of these positive steps, previously approved demolition of three vacant high-
rises, 398 units, will occur in September. Two partially occupied highrises, totaling 262
units, have been approved for demolition as well. Demolition, however, will not commence
until the 174 families living there are relocated.

Even though an approved redevelopment plan is not yet in place, HUD did not want
to delay any longer the release of the resident services component of the HOPE VI
agreement, A total of $5.3 million has been granted to various nonprofit and resident
organizations to implement 13 separate economic development, social service, and other
human needs programs, This funding will be used by the resident councis pursuant to a
plan they helped to develop.

‘At Cabrini, we can change the dynamic of public housing by creating one of the most
ambitious mixed-income communities in the nation. If things fall into place, public housing
residents will become part of a thriving middle-to-upper-income neighborhood on the near-
North side of Chicago. ‘The value in terms of increased security, employment and
educational opportunities for low-income families is incalculable. This development should
rival the tremendous successes enjoyed by families who participated in the successful and
celebrated Gautreaux relocations,

LAKEFRONT PROPERTIES

With respect to the Lakefront properties, again HUD's active intervention has
accelerated the process. Currently four vacant high-rises containing 609 apartments stand
adjacent to a model of public housing success -- Lake Parc Place, two mixed-income high
rises located on Chicago’s scenic lakefront. HUD and the designated resident organization
are close to reaching an agreement on the demolition of the four high-rises, and the
development of new townhomes and duplexes in the surrounding area. The agreement is
contingent upon the acquisition of land, much of which is city-owned.



154

house those people who deserve to be housed as renters, and thus
give them the benefit, and give it to them directly, for helping us
create new communities of both public housing people, low income
people, middle income People, and upper income people.

I simply urge HUD and CHA to examine its mission today and
to examine it yesterday, for history is the focus of teaching. Exam-
ine their mission today and look to tomorrow; establish a mission
that will move people from the public housing roles, that will work
HUD out of business and cause you not to have to come to Chicago
again for this very purpose. I will answer questions after this.

[The prepared statement of Mr. Wallace follows:]


149

In summation, as chief of the CHA Police, I feel that the overall
HUD intervention has been extremely positive, and that we are
moving in the right direction, and that in a relatively short amount
of time the residents that we serve will see a major difference in
how services are delivered.

Mr. SoupDER. Thank you very much. Mr. Wallace.

[The information referred to follows:]


COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
WILLIAM F. CLINGER, JR., Pennsylvania, Chairman

BENJAMIN A. GILMAN, New York CARDISS COLLINS, Illinois

DAN BURTON, Indiana HENRY A. WAXMAN, California

J. DENNIS HASTERT, Illinois TOM LANTOS, California
CONSTANCE A. MORELLA, Maryland ROBERT E. WISE, JR., West Virginia
CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, New York
STEVEN SCHIFF, New Mexico EDOLPHUS TOWNS, New York
ILEANA ROS-LEHTINEN, Florida JOHN M. SPRATT, Jr., South Carolina

WILLIAM H. ZELIFF, Jr, New Hampshire © LOUISE McINTOSH SLAUGHTER, New

JOHN M. McHUGH, New York York
STEPHEN HORN, California PAUL E. KANJORSKI, Pennsylvania
JOHN L. MICA, Florida GARY A. CONDIT, Califor
PETER BLUTE, Massachusetts COLLIN C. PETERSON, Minnesota
THOMAS M. DAVIS, Virgini KAREN L. THURMAN, Florida
DAVID M. McINTOSH, Indiana CAROLYN B. MALONEY, New York
JON D. FOX, Pennsylvania THOMAS M. BARRETT, Wisconsin
RANDY TATE, Washington GENE TAYLOR, Mississippi
DICK CHRYSLER, Michigan BARBARA-ROSE COLLINS, Michigan
GIL GUTKNECHT, Minnesota ELEANOR HOLMES NORTON, District of
MARK E. SOUDER, Indiana Columbia
WILLIAM J. MARTINI, New Jersey JAMES P. MORAN, Virginia
JOE SCARBOROUGH, Florida GENE GREEN, Texas
JOHN B. SHADEGG, Arizon: CARRIE P. MEEK, Florida
MICHAEL PATRICK FLANAGAN, Illinois. CHAKA FATTAH, Pennsylvania
CHARLES F. BASS, New Hampshire BILL BREWSTER, Oklahoma
STEVEN C. LATOURETTE, Ohio TIM HOLDEN, Pennsylvania
MARSHALL “MARK” SANFORD, South

Carolina BERNARD SANDERS, Vermont
ROBERT L. EHRLICH, Jr., Maryland (Independent)

James L. CLARKE, Staff Director
Kevin SaBo, General Counsel
JupitH McCoy, Chief Clerk
Bup Myers, Minority Staff Director

SUBCOMMITTEE ON HUMAN RESOURCES AND INTERGOVERNMENTAL RELATIONS
CHRISTOPHER SHAYS, Connecticut, Chairman

MARK E. SHOUDER, Indiana EDOLPHUS TOWNS, New York
STEVEN SCHIFF, New Mexico TOM LANTOS, California
CONSTANCE A. MORELLA, Maryland BERNARD SANDERS, Vermont (Ind.)
THOMAS M. DAVIS, Virginia THOMAS M. BARRETT, Wisconsin
DICK CHRYSLER, Michigan GENE GREEN, Texas
WILLIAM J. MARTINI, New Jersey CHAKA FATTAH, Pennsylvania
JOE SCARBOROUGH, Florida HENRY A. WAXMAN, California
MARSHALL “MARK” SANFORD, South

Carolina

Ex OFFICIO

WILLIAM F. CLINGER, JR., Pennsylvania CARDISS COLLINS, Illinois
LAWRENCE J. HALLORAN, Staff Director and Counsel
DEMI GREATOREX, Professional Staff Member
Txomas M. Costa, Clerk
CHERYL PHELPS, Minority Professional Staff

(i)


119

needs for the whole Chicago area. Developing such a pian will not
be an easy task.

Creating sustained community commitment can be a time-
consuming, multistep process that involves many stakeholders.
Although results may not be visible for many years, involving the
CHA in existing community development activities such as the
Empowerment Zone® would be beneficial. Although this zone includes
many CHA public housing developments, it will be years before these
neighborhoods realize significant economic development .

Despite outreach efforts by the city’s planning department and
the importance of community involvement, residents generally have
little confidence in CHA’s ability to manage its properties. As a
result, residents will likely continue to be apathetic and
skeptical about community development efforts until their basic
housing needs are met satisfactorily. Similarly, business and
community leaders have been hesitant to commit to new initiatives
without a clear understanding of how CHA will effectively manage
its responsibilities. Thus, HUD's success in implementing its
short-term recovery plans plays a critical role in building the
necessary bridges to the community for long-term development that
will link public housing to the broader community.

Although HUD's plan outlines initiatives to involve the
community, including various corporate, community, religious, and
academic leaders, we found little progress in this area because
these stakeholders are not yet convinced of CHA's effectiveness.
This skepticism is compounded by the absence of an executive
director or a permanent management team. Without commitment from

The Empowerment Zone and Enterprise Community program promotes the
comprehensive revitalization of distressed communities by funding
broad, community-based strategic plans. Chicago was designated as
one of six Empowerment Zones in December 1994.

9


68

Mr. CisNEROS. No, this is as a result of our experience in Chi-
cago. This is emerging now.

Mr. Suays. OK. Mr. Weller.

Mr. WELLER. Thank you, Mr. Chairman. And Mr. Secretary, if
my history and limited knowledge of history of course serves me
correctly, I believe in 1987 Department of Housing and Urban De-
velopment indicated a desire to take over the Chicago Housing Au-
thority at that time, and I believe that was when Secretary Pierce,
I believe, was the Secretary of HUD. And then-mayor Harold
Washington I believe fought vehemently in the effort for a take-
over. So I believe there has been an attempt previously, and now
8 years later you have taken on that tough job.

And of course, like all of us here, we are committed to working
with you in a bipartisan fashion. We want to see you succeed, be-
cause clearly, as you pointed out, particularly the children who are
half the residents of the CHA, are the victims; just like in Chicago
Public Schools, the atmosphere of Cook County politics, they em-
phasize patronage and—and contracts and accumulation of per-
sonal power, has forgotten the real needs of the people that are
supposed to be served in the CHA. And we are certainly committed
to working with you in a bipartisan fashion.

I believe, if I recall correctly, in June 6 at the previous hearing
that the housing subcommittee had, shortly after the CHA take-
over, you had indicated at that time—and I believe if the figures
I have are correct, they are staff figures—and as of August 1 there
were about I believe $12 billion in HUD funds that were not obli-

ated or basically that are currently unspent within HUD, and that

600 million are allocated for the CHA. And I was wondering if you
could tell us the status of that $600 million and what your plans
are to use them?

Mr. CisNEROS. Let me get Mr. Shuldiner to speak to those specif-
ics, if I may, because I am not familiar with the details of it. I can
say it is my understanding, from a briefing that I received from
Mr. Shuldiner last week, that those funds do exist; that they are
largely targeted to specific developments that are in the pipeline
for development or for modernization. They are not available for
general operations. So there is a—those are different accounts. But
on the whole those funds do exist.

I do have another one page that I would like to submit for the
record, and that is an impact on the housing authority of the
recisions that we have just come through, and anticipating the
1996 HUD cuts from the House version. We have no way to know
what the Senate will do. But those will give you some idea of the
impact of those recisions.

Mr. Suays. We will submit that for the record.

Mr. WELLER. Mr. Secretary, it is my understanding, though, that
there is $12 billion that is unspent currently within your current
budget. And of the $600 million for—that would be—that is allo-
cated to the CHA, there is $327 million in unexpended funds for
modernization, and an estimated $172 million in unexpended funds
for development which of course could be used for new—for replace-
ment construction. Mr. Shuldiner.

Mr. SHays. You know, unfortunately I did not swear you in, Mr.
Shuldiner. And if we could just wait for your testimony when you


152

‘The coordination efforts will further empower the CHAPD and provide much needed support
for the security of the residents In the community.

® Conducting coordination meetings with command level officers from both CPD’s Public
Housing Unit and District Commanders

‘These meetings will overall enhance the system of safety already in place and will provide a
dispatch protocol which will improve the command and control between the CHA and CPD,
‘The officers will also be able to discuss and agree upon unified assessments that will ensure
future cooperation and understanding between the two departments.

© Assessing the construction of Min! Police Stations for the developments

CHAPTUD ie cuenty euesing the poet of conatrucid Mini Police Seon droghout
the developments, They hope to begin in the developments already targeied as part ofthe initial
Communi Folcng prog. Thee raion ere vital component of Community Plein as

they provide greater accessibility, heightened communication, and crucial visibility to the
surrounding community.


79

Fourth, our field officers still lack equipment and material to
complete work orders. What is the Department of Housing and
Urban Development’s plan for resolving this problem?

Fifth, we seem to be losing some of our better staff. Why would
HUD fire staff who were and are doing a good job? The Depart-
ment of Housing and Urban Development should answer that ques-
tion. We continue to see all new staff faces downtown who we do
not know, nor in our judgment would better understand CHA and
its residents. Where do these people come from? Is HUD hiring ad-
ministrative people at the expense of service to the residents?

Sixth, if the Chicago Housing Authority has mismanaged as the
Department of Housing and Development has stated, why did HUD
not take corrective action then? Who will hold the Department of
Housing and Urban Development responsible and accountable for
their past failures? All we hear is promise, yet see no results.

In closing, the Central Advisory Council wants a strong working
relationship with the new management at CHA if they are serious
about improving living conditions in public housing, and yet we see
the handwriting on the wall; that is, poor people losing their place
to stay. We will have no part in destruction of public housing, nor
sit back and let it happen. However, we understand a need for
change. But residents must have a voice in those changes. We must
have a vital role in the new Chicago Housing Authority, for without
resident support the Department of Housing and Urban Develop-
ment is doomed to failure.

We urge our friends, supporters, allies to watch what HUD does
very closely, for it may be us today and you tomorrow. Thank you
for listening.

Mr. Suays. Thank you very much. Hattie Calvin. The mike that
amplifies is the one to your left, but it will pick up your voice pret-
ty well.

Ms. CALVIN. Good afternoon. I am not going to read off of my
statement that I wrote, I would just like to add a couple of things
to it. Everything that is in my statement is true.

Our biggest problems is drugs and gangs, besides management
and maintenance. We need to do something about that. If we can
deal with the drugs and the gang, maybe we can do something
about the conditions of the building. Until we get rid of that, there
is no solution to it.

I have a great communication with HUD, I had a great commu-
nication with Vince. Our problem with Vince was he did not want
to listen to us. And we have that problem with some people in
HUD, especially with the security issue. The other issues I can
deal, but my biggest problem is security. If you move security off
my ground floors you are leaving me wide open for gangs and
drugs, worse than what I have now. That is what I need to deal
with, along with the other problem. That is it.

Mr. Suays. Well, it is—it is kind of like the Gettysburg Address,
it gets right to it. And we will have some questions and discussions
about what you had to say.

[The prepared statement of Ms. Calvin follows:]


15

the fact that it was already down the road. It had been held up for
rears. We have been able to shake the system to move forward on
ienry Horner. At Cabrini Green, as you may well have noted this
morning, we have begun the asbestos removal which allow us to
bring two of those buildings down this fall and replace them with
townhouses on the site.

And Robert Taylor Homes and Stateway Gardens are our next
priority. I cannot give you details—they simply do not exist—of
precisely what we will do at Robert Taylor and Stateway Gardens.

jut there is a reason for that, and that is that we have committed
to the residents that we will work with them and they will have
pencil and paper in hand and help draft the direction that we take
there. So it would be the worst of presumptuousness for me to
bring you a top-down design of what we intend to do there, when
we have promised that the residents this fall will be the ones to
design the direction there.

Fourth, we have increased residents’ participation in the deci-
sions that affect their lives. I will not go into it, but simply stated,
we have met with the residents at every CHA development, every
single CHA development, since June 1st.

And the mayor, of course, appointed the new advisory board
which includes Joe Shuldiner as chair; a member of the mayor's
cabinet, Rosanna Marquez; a resident elected by the resident lead-
ers, Mrs. Artensia Randolph, who you will hear from today; a busi-
nessman from the community; and a civic leader, a minister. So a
five-member executive committee that the mayor and I jointly ap-
pointed to include resident participation.

It is very important to note, item 5, some of the CHA administra-
tion and confidence-inspiring measures. We have released all au-
dits and management reports which had been held up for years, in
order to demonstrate full disclosure.

A new ethics policy was propounded so that we could address is-
sues of procurement and some of the breakdowns that had resulted
in corruption. We put out a request for Pigbosal to privatize the
Section 8 Rental Assistance Program and the management of the
CHA pension fund, and reconcile the 1995 budget with a 15-per-
cent reduction.

And then finally No. 6 is engaging the larger community to break
down the isolation that for too long characterized Chicago's attitude
toward the Chicago Housing Authority.

Let me just say that what makes this housing authority so dif-
ficult and characterizes, in my words, as the most troubled in the
country is, as Chairman Shays said: the sometimes good-inten-
tioned, but frequently bad-intentioned history associated with pol-
icy here. It is not an accident that 40,000 plus people live on the
State Street Corridor on the South Side of Chicago. That was policy
in this community in the 1950’s when—when African-Americans
were first coming to the city from the South, to concentrate people
in an area bounded on the one hand by a freeway and on the other
hand by a dying industrial area where there were no jobs, con-
centrating people in a way that they would be away from the rest
of the city.

There is a court case on this matter, the famous Gautreaux case.
But it has created levels of segregation, levels of concentration of



128

September 5, 1995 ____ Testimony of Jeffrey K. Lines 5

the operations of a housing agency (beyond the limited time period necessary to convey
operations to another individual or entity). ‘The intervention in the agency by HUD needs to
include a program for developing a plan or in implementing a specific plan for remedying
distress that has already been developed prior to HUD assuming operation of a housing
agency

HUD recovery team members in Chicago have embarked upon a stabilization effort to
address many immediate problems of staff capacity. program administration problems and non
compliance which is necessary in the short term. HUD now seems to be moving in the
direction of finalizing a longer term plan for the agency which incorporates key elements of
the TAG Associates report. In furure endeavors such as this, it would be helpful to be able to

have further developed a plan and to publicize this plan before taking control of a troubled
PHA

HUD's willingness to take direct action in addressing the needs of troubled and
distressed public housing is welcomed by many but, itis also important that in pursuing this
new. more aggressive posture that HUD not become “trigger happy” by overusing this
approach except, where it is clear that there can be improvement in the operation of a public
housing agency through direct intervention in the agency's operations.

III. Need to expand range of available options for treating distressed and troubled public
housing.

There are a variety of options that HUD can pursue in addressing the needs of
distressed and troubled public housing. One approach is to look at what it is that has caused
the agency to become distressed and whether the conditions of distress relate to certain
portions of the housing agency's portfolio or whether the root cause of the problem is the

wency’s failure to operate its programs throughout most or all areas of its housing operations
Requiring that a housing development be alternatively managed or that it be designated for
redevelopment (that may include demolition, replacement, reconstruction. privatization or
some combination of these forms of treatment) could be what is required along with certain
‘management changes at the housing agency in order to remedy distress. Public housing
agencies need to be viewed as asset managers rather than as whole organizations that manage a
monolithic housing stock. In viewing housing authorities as owners and managers of different
types of property, the primary or most severe causes of distress can often be identified as
relating fo conditions at one or more housing developments. By taking a housing development
based approach to intervening in a housing agency's operations HUD can minimize its risk and
focus efforts in ways that have a greater likelihood of success

Clearly, there are times when housing development based approaches are not eftective
and itis appropriate and necessary to treat the entire housing agency. Direct control of an
agency is appropriate in some cases such as for Washington, D.C. and Kansas City where


134

September 5, 1995 Testimony of Leffrey K. Lines u

The agency must transfer these properties to another entity or organization

Second a new entity or organization must assume responsibility for the large, troubled
housing developments. This responsibility will include transferring treatable developments to
private or other forms of non-public development entities and overseeing the operation of these
Hope VI style programs.

‘Third, the CHA without the responsibility for the problems associated with large.
troubled housing developments must undergo a comprehensive management and operational
improvement program in order to allow it to be re-organized as a well functioning public
housing agency. Without the larger, troubled housing developments it can be in a better
position to achieve management changes and to increase its operating effectiveness (and
efficiency).

‘The above strategy and approach is intended to offer a program for making major
changes in the operations of the Chicago public housing agency on a scale never before
attempted or achieved. It is the approach to identifying programs and actions that relate to
addressing the most troubled housing developments in Chicago (and in the country). whi
HUD needs to give careful attention to as it proceeds with its assuming direct operational
control of the agency.

Further, comments offered above regarding turnaround strategies for distressed large
urban PHAS need to be given careful consideration by the Congress Also. Congress needs to
consider giving receivers more statutory powers to carry out their programs for remedying
distress in public housing. Finally, greater attention to providing a consistent level of funding.
offering regulatory relief and granting 6() financial support for troubled public housing 1s,
needed

Thank you for the opportunity to speak to you and to participate with the many
distinguished members of this panel


74

But we will take the work that we have done in these first 3
months and extend them into a plan that sets priorities, that works
with the residents. And we are going to shoot to have that about
October 1. So we can at least answer some of the questions that
would look at the period for the next year or couple of years ahead
and give us some sense of prioritization of resources and so forth.

But many of the questions are simply ponderable. We just do not
know until we get underway. When one compounds that by ac-
knowledging that HUD hopes to be out of this posture at the end
of the year and have a new executive director team in place, obvi-
ously we cannot bind them in perpetuity. We stand behind them
as partners with resources, but it is not our plan, it is Chicago's
plan.

So I will work on all of these things and try to get as close to
a plan. I am intimately familiar, as you know, with the problems—
the special problems of the Latino community and the housing au-
thority in Chicago. And there has been a lawsuit on the subject
which has reached a level of resolution. We have an obligation to
do a better job in that area.

Mr. GUTIERREZ. Mr. Chairman, may I have just 15 seconds?

Mr. SHAYS. You sure may.

Mr. GUTIERREZ. Thank you very much.

Mr. Secretary, I have come and spoken to you——

Mr. CISNEROS. Sure.

Mr. GUTIERREZ [continuing]. And you have taken action in the
past. But it is important that the people of the city of Chicago
know, and that the seniors particularly in this city know about

what is going in the beginning because they have been made a
promise.

Mr. CISNEROS. Right.

Mr. GUTIERREZ. See, because you are going to have a lot of prob-
lems, because if the promises that we all know about are not kept,
as this process goes, you are going to continue to cripple it.

Mr. CISNEROS. Right.

Mr. GUTIERREZ. If the seniors felt there was a commitment a
year ago and it is not being carried out, it is going to cripple. If
the Latino community feels that hundreds of units of housing are
being built right now and that they are not going to—that there
is going to be a change in their access to them——

Mr. CISNEROS. Sure.

Mr. GUTIERREZ (continuing). You are going to cripple. And I wish
you and all of your staff the best of success here in Chicago.

Mr. CisNEROS. Thank you, sir.

Mr. SHAyYs. Mr. Secretary, we are just going to keep you here for
a second more, and I am going to say to the other witnesses that
obviously this is a long day. Some of you may want to go and get
something to eat. We are going to call our second panel in just a
second. Cardiss Collins has a followup question, and I did not ask
my question and I have two questions I want to ask.

Mrs. COLLINS. Thank you.

Mr. Secretary, let me just ask a question that deals with—and
you hit on it slightly, that deals with the rescission bill that was
in the House, and its impact on the CHA; and also the impact of
the appropriations bill for the fiscal year 1996 on CHA.


32

the problems facing the CHA, HUD needs to be confident that a new team can handle the
new challenges ahead of us. These will be exacerbated by the severe cuts being
contemplated by Congress in public housing. While management reforms will certainly
produce savings -- and wiser expenditures will produce better results -- the capital and
redevelopment demands, as well as the social needs of the residents, exceed the supply of
existing resources. Dramatically smaller budgets in the future will compound these needs.
Tough choices will have to be made, both by HUD and the future managers

However difficult the challenge is, we are determined to stay the course and build
upon the successes we have achieved thus far. lt would be an awful disservice to the
residents of Chicago's public housing to do otherwise.

Mr. Chairman, 1 would like to thank you and the Committee for this opportunity to
testify before you today, and now I would be happy to answer your questions.


103

You seem to be making some headway in having a high rise
where you have kids. Why do you think you are making a dif-
ference?

Ms. Moore. Well, one reason, we have activity for the youths.
We have over 150 youths in our building and we have recreation,
a counselor, we have a social service director who on a weekly basis
come out with recreation for all ages in our building. We normally
have monthly meetings with the adults. And then we have meet-
ings, through Bertha Gilkey, with all the relatives and the youths.

Mr. Suays. Before I leave this topic, I was struck by the number
of young mothers with their kids, and I was also fascinated by this.
I ended up staying with a young man who had a place at the Row,
but took me to one of the red buildings. There was fairly nice fur-
niture in there and his explanation—and this is not a criticism—
was that he had bought the furniture for his woman. He said he
basically had four places that he had in Cabrini Green. And he de-
scribed to me a situation where guys basically take care of certain
women, and these young mothers are basically protected and taken
care of by these guys. Is that an uncommon kind of comment to be
made to me?

Ms. Moore. I let Ms. Calvin answer that question.

Ms. CALVIN. It is not uncommon. He say he has four houses that
he take care of, right? He probably have babies by all four of them
women.

Mr. Suays. Yes.

Ms. CALVIN. Or it is a drug house or it is a gang hangout. So
that is not uncommon in public housing.

Mr. Suays. The problem is, the reason I did that is I would not
have learned that today if I had gone around in a tour, you know.
And Brother Bill, who is a gentleman who is out there in—in his
robe, went working with the gangs in the parks. Is that a person
you know?

Ms. Moore. What was that name?

Mr. Suays. Brother Bill.

Ms. Moore. Oh, Brother Bill, yes.

Mr. Suays. OK. It was interesting interacting with him as well.
The bottom line to my conversation is that you had to—Ms. Moore,
you had to push HUD to have tenant involvement. And I hope
that—that we are waking up to the fact that the only salvation is
tenant involvement. And you may have come across a formula that
can save some high rises from even needing to be taken down.

If your formula works, the last question I want to ask you is:
Under your formula, though, do we have to pay every tenant who
works there and contributes, or can we expect that some tenants
will contribute to the upkeep and the maintenance and the security
by just being a tenant and caring?

Ms. Moore. Yes, sir.

Mr. Suays. Do some of the tenants who help, are they helping
voluntarily or are they all paid?

Ms. Moore. Well, a lot of them working voluntary. A lot of them
working voluntary. When we first started 3 years ago the only paid
staff was me because I was working for the Chicago Housing Au-
thority. Everything—everybody else was volunteer. And we had 24
hour security, and the security was volunteers that was not getting


39

Chicago Transformation Blueprint and 3 Month Start-up Plan

‘THE INTERVENTION MISSION

HUD's bottom line for intervening at the Chicago Housing Authority (CHA) is to bring about
measureable, positive change in the lives and environment of residents who are subjected to
unsafe, unsanitary and indecent conditions of this City's public housing. For such an effort to
sueceed, the Department has forged a committment with Mayor Daley's administration, is
working to organize resident leadership for unprecedented involvement, and has begun
restructuring CHA's organization, operations and resources to more efficiently address CHA's
basie mission

The May 31, 1995 voluntarily transfer of legal assets and liabilities, accompanied by the
resignation of CHA Commissioners, compelled the Department to act swifily. Yet what lies
ahead is a challenge of daunting magnitude, requiring careful, decisive, and long-standing action
in order to be accomplished. HUD views this challenge to entail a fundamental transformation in
how the needs of Chicago public housing residents can be better addressed, so as to end their
isolation within the civic, economic and social life of the City.

Within CHA, HUD's intervention must do two things. First, it must repair the foundation of a
badly broken agency that is not capable of delivering even the most basic services to its residents
in a timely or effective manner. Second, it must make sure that the foundation is strong enough
to support moving the agency forward in a new direction, That direction must be guided not
only by the Department's reinvention of public housing, but also by the question of what is
doable and practicable, given diminishing resources and the tools we have to work with. At the
beginning stages and over the long haul, HUD must also prevail upon the City, private industry,
community businesses and non-profits, philanthropic sources, and public housing residents
thernselves, to take responsibility for problemsolving.

‘The CHA and its developments are so far beneath the baseline of acceptability that we cannot
‘expect it to respond to “whiz-bang" solutions. HUD intervention can, however, restructure the
agency so that CHA can provide safe and decent housing to its residents.

Ata minimum, saftey, security and sanitation of Chicago's public housing must be restored, so
that residents can seek to improve themselves, obtain economic opportunities and exercise
‘greater responsibility to contribute as citizens in the City's productive life, Public housing should
‘ot be islands for the poor, it should be home to families of mixed incomes, and it should be
sited in economically diverse and growing neighborhoods. Homes and buildings must be
serviced by the City and commerce for basic utilities, commodities, goods and services that
maintain, secure and protect the resident community. Public housing residents cannot be viewed
as second and third class citizens due to their living environments, but given access to job
opportunities, good schools, and the most essential public services.

Looking ahead from now, the physical transformation (rehabbing, demolishing, rebuilding and


164

Mr. Suays. Do you not think that the contract guards are one
way to involve tenants that would be less expensive than CHA offi-
cers?

Mr. Murray. If a particular guard firm that significantly hired
residents, if it were being administered properly you are right, as
far as dollars and cents, 8. However, the problem consistently is
that 30 and 40 percent of the time the contract security guards do
not even show up for their post.

Mr. SHays. You know it might be interesting, and maybe you
have done this, if the CHA Police Department developed a program
with more tenant involvement such as the program Cora Moore
and others have been involved in. I mean, I just think anytime you
can involve a tenant and make sure—and I want to say this, make
sure that they are putting their time in, and view it as a wonderful
opportunity to excel and to grow, I think it would be a wonderful
kind of marriage. Maybe I am just missing the point here, but

Mr. Murray. No, sir, you are correct. Those plans are currently
in rogress. Several weeks ago Senator Carol Moseley-Braun vis-
i the Chicago Housing Authority, and at that time Mr.
Marchman and I had a discussion with the Senator reference im-
proving the number of residents that are hired as CHA police offi-
cers and CHA security force personnel. We are in the process of de-
veloping a plan which will—we hope will significantly increase the
number of residents that are hired in these capacities.

In addition to that, I have had the internal inspections team of
the CHA Police meet with the resident groups and the—in assisting
them in developing their own company, providing information as to
how they should proceed.

Mr. Suays. OK. I mean, so what I am hearing you say, right
now, though, you do not have a category of security people other
than officers, or do you have this kind of program now?

Mr. Murray. The program is being implemented as we speak.
We are developing it.

Mr. SHays. OK. So the bottom line is, you are receptive and
thinking about it. I would love to just be able to pursue my ques-
tions and—is that all right, Mrs. Collins?

Mrs. COLLINS. That is fine.

Mr. SHays. So why do not you just flip that light off there a sec-
ond. [Laughter.]

Mr. SHAYS. I want to be clear on this. Is it conceivable that you
would have an apprentice kind of program with tenants who would
be paid less, providing you with a little more bang for your dollar?
Are you contemplating or in actual fact implementing such a pro-
gram?

Mr. Murray. Sir, the way I see it is this. First of all, the author-
ity and HUD are working to strengthen and improve the current
tenant patrol that we have. I see a—a stronger, much better orga-
nized tenant patrol providing a lot of the walking, vertical patrols,
and lobby control work that is currently being done by security. I
envision ——

Mr. SHays. Working under CHA?

Mr. Murray. Yes, working under CHA resident programs.

Mr. Suays. OK, let me speak later on. I would like to talk with
the mayor’s representative.


64

think that we are just anxious, very anxious and very frustrated
because people have come here, as you have said, and looked at the
situation, and made promises that were not kept.

It is not a matter of trying to denigrate anyone, but we want to
see to it—we want to be helpful, we want to work with whomever
you send here to make sure that when all is said and done the resi-
dents of the Chicago Housing Authority have a better way of life
than they had before. Thank you, Mr. Secretary, for coming; thank
you, Mr. Chairman, for your time.

Mr. Suays. Mr. Souder.

Mr. SoupDER. I want to reinforce that last comment as well, be-
cause nothing is a more~makes somebody more angry than to
watch the people who have ripped off and lied to the poorest of our
citizens of this country, regardless of party. HUD has been rife
with this through its history, and I commend anybody who is really
committed, and everything in your plans and everything that we
see here sounds good. But we also have an oversight function ——

Mr. CISNEROS. Sure, absolutely.

Mr. SOuDER [continuing]. To ask tough questions. Not being from
Chicago, I do not have a lot of stake in—in worrying about feelings
one way or the other, and have no particular stake in the politics.
But as I have read through the documents in the last few days and
listened to your testimony, some questions do come up. Because it
seems that it was kind of a congenial transfer of power on the sur-
face, and at the same time you have used “near meltdown,” “lied
to,” there was no way to know—suggested, at least, that authority
could not function, really condemning words for the previous hous-
ing authority.

Are those—are you saying that—I mean, how can you say that
while they were doing a reasonably good job or——

I know Mr. Lane. I have heard him testify several times; has
been highly commended in his field. Are you saying that when you
went in and saying they did not have any budgeting procedures,
they did not have any reporting, that funds were missing, that is
pretty condemning language of somebody who is supposed to be
running.

Mr. CISNEROS. Congressman, those are—are simple reflections of
the public record. Those kinds of things have been reported in the
local newspapers, so I am not putting my own characterization on
the conditions.

I have great respect for Mr. Lane. I believe he knows that. I have
tried to characterize the different skills that people have. And Mr.
Lane’s vision of the macro questions, the big picture for the Chi-
cago Housing Authority, in my view, was a correct one. To begin
to decentralize these massive concentrations, to bring investors into
the mix, to deal with security questions, to build townhouses on
those sites and create communities that are more integrated in the
larger fabric. But he was not the executive director, the COO, he
was the CEO.

Mr. SOUDER. One of the jobs of the Chicago Housing Authority
and the CEO is to pick people who implement the policies, not just
to—to go and lecture and talk.


148

Subsequent to that, in working with Mr. Shuldiner and Mr.
Marchman and members of the HUD team, we made certain other
basic decisions which I feel eventually will make a major difference
in how police and security functions are administered, a difference
for the better. First, we have decided exactly what it is that we are
going to be. And we decided that the old reactive model reference
responding and showing up after someone had been shot or a crime
had been committed was not as effective as it could be, and that
we needed to go to a community policing model with much more
emphasis on preventing crime, interacting more—much more with
the residents in trying to prevent crime before it started and initi-
ated. That is in place.

Also we immediately changed our deployment. We went from
about 30 percent of each watch being spent on foot, to our current
situation in which 75 percent of each and every watch of the CHA
police and security force personnel is spent on foot. And this new
deployment came in extremely handy, was very viable during the
heat wave which took place in our city weeks ago. The CHA re-
ceived praise from Mayor Daley on a number of occasions, and the
CHA police in particular, in that we were ready. We had our people
out on foot, knocking on the doors, and talking with the residents.

Subsequent to that we made a number of additional changes. We
have made them. Which I feel will make a major difference. I will
not go into too much detail because the testimony is before you.
But just in brief, we have initiated a new bicycle patrol unit whi
is much anticipated and is going to be very popular. We have i
ated an elevator vandalism unit which we anticipate over a period
of time will save millions of dollars and also save lives. This is
much anticipated and also is in effect right now, along with the bi-
cycle team. We have initiated resident—monthly resident meetings
with the site commanders. Prior to that, the vast majority of the
interaction in—with the resident leaders had been between myself,
as chief, and my deputies, and not nearly enough with the site
commanders. That has changed.

In addition to that, plans are being made reference the imple-
mentation of many stations in addition to the main police stations
that we have in effect.

But perhaps the major change which has taken place in this
short 120 days, in my opinion, is that the HUD team, working with
myself as chief of police, has finally confronted the issue of the con-
tract security guards. The reality is, is that everyone has been say-
ing for years that the contract Guards were a waste of money, that
we were spending millions of dollars, the authority was, unneces-
sarily, and getting relatively little production for the millions of
dollars spent. The fact is that in 1987 the cost for police and secu-
rity functions was about $7 million. Currently it was—it has in-
creased to the point of that we are spending about $75 million. Ob-
viously that has to end sometime, somewhere. The money is not
there, and even as a career police officer I can say that some of
that money could be better spent on plumbing, fixing doors, and
dealing with the physical environment. Because similar to one of—
what one of the several of the distinguished panelists have said,
the physical environment must be dealt with in addition to the po-
lice and the security matters.



GOALS:
Security

Goal:
@
@
a

1}
6)
©
o

®

Inerease the love! of safety in and around Chicago's publio housing developments
Hire 60 additional police officers
‘Restructure and strengthen the tenant patrol program

Use the Buracker report as a guide to reorganize the Chicago Housing Authority Police
Force ‘

‘Address leadership lesues with current CHA Police Force
Consolidate el) police, security and crime prevention efforts

Establish on-site min! stations/lobby stations at all CHA family developments
Create specialized units to focus on:

Maintenance

Goal:

Q
@)
®

®
@)
©

Improve the effectivencss of CHA's maintenance program and increase the
‘baseline cleanliness and appearance of CHA buildings and open spaces

‘Overhaul CHA maintenance operations
Implement a preventive maintenance and management program

‘Standardize and centralize the CHA's balkanized work order system (will result in vast
reduction in back workorders)

Replace the leadership of the operations staff
Establish a summertime cleanup/painting program
Accelerate vacancy reduction program, continue STEP UP program


67

that is not even the question. I think the question is that if there
is somebody out there that has knowledge, that has information
that could be tapped, I think that you, as Secretary, should sort of
tap that. And I will be honest with you, that in terms that you
have Shuldiner there who has a great reputation throughout the
Nation, you know; people in New York are still talking about him
and, would like to get him back. I think that if anybody is going
to be annoyed or be angry I think it should be me and not some-
body else. [Laughter.]

TI think that this is the kind of thing that we need to talk about,
though, is where we have expertise, to be able to tap into it. And
I think that is what you have done here.

And I want to let you know that this member here supports that,
and whatever we can do to sort of be able to shake the bushes to
be able to get additional resources in, not only in terms of HUD,
period, I think that is the issue that we should be talking about
more than anything else, is that how we should be able to get the
resources in to make certain that there is not other situations that
develop like what has happened here in Chicago. And resources are
needed to be able to turn some of these things around, there is no
doubt about that.

Mr. CISNEROS. Congressman, if I may, let me direct my com-
ments to the committee as a whole and to the chairman, because
you have put your finger on a problem that is a national problem.
There is a tendency in cities across America to think that running
a housing authority is something that anybody can do. And so may-
ors across the country have used housing authorities as a kind of
patronage dump traditionally, where their best fundraiser or politi-
cal friend went to the housing authority in some job. And so the
talent level is thin across America generally in housing authorities.

What we have is people running the procurement operation who
do not know anything about procurement, or running the—the op-
erations system, which is maintenance and repairs and capital
scheduling, who do not know anything about those subjects. Some-
one who had a small real estate company, it is assumed because
they supported the mayor in a given city, would become an excel-
lent public housing authority executive director. Well, there is just
no connection. These are huge operations. It is like running a small
city. You need city-management type skills.

We are going to create a HUD academy for public housing talent
because we needed a deeper assemblage of skills across the country
as executive directors, as property managers, as procurement/main-
tenance specialists, et cetera. That will take some money.

But this committee, if it wants to put its stamp on the quality
of these housing conditions across America, could do few things
that would have more impact than to help us create that kind of
human resource talent base which frankly just does not exist in the
country today. It is very thin, and we need to beef up that talent

ase.
b Mr. Towns. Thank you very much, Mr. Secretary, and I yield
ack.

Mr. SHays. Thank you. Just before I ask Mr. Weller—Mr. Sec-
retary, have you gone before the Appropriations Committee with
the suggestion to do this?


104

paid. And I was one of the volunteer officers before I coordinated
the program throughout Cabrini Green.

We believe we are able to secure ourself to make it safe for our
kids. And money is not in vain. Like I said, like we have the 900
tenant patrol, they are not staff, they are volunteering. The only
thing they get off—a stipend off on their rent. We do not mind
staying up all night long making sure our building is secure where
we live at because we have concern where we live at. And we want
a decent and secure place to live and raise our kids.

Mr. Suays. Speaking of the children—would you be offended if
I said to you I do not blame some kids for joining gangs?

Ms. CaLvin. I would.

Ms. Moore. But I would be offended if you did not have another
avenue for the kids. I mean, Cabrini in the past, after 1978, has
no kind of program for kids, period. No kind of program. And I do
not think—that the U.S. Congress will bring some of those pro-
grams to Cabrini.

Mr. Suays. Ms. Calvin, you would be offended. But let me ask
you this. If you were a young kid and you were convinced that the
gang was your best form of protection because you could not get
protected by a parent or by the police, would you be offended if I
said that?

Ms. CaLvin, I would leave.

Mr. SHAYS. You would what?

Ms. CaLvin. I would leave.

Mr. Suays. If you were a young kid?

Ms. CALVIN. Uh-huh,

Mr. Suays. You know, you are——

Ms. CALVIN. If I could not get love and——

Mr. Suays [continuing]. If you are 12 years old where do you go?

Ms. CALVIN. I would find someplace to go. I am being honest
with you, I would find some——

Mr. SHays. I appreciate your honesty. The nice thing is we can
be honest with each other.

Ms. CALVIN. Because there is a better venture out there besides
drugs and gangs.

Mr. Suays. Yes.

Ms. CALVIN. Some of those kids cannot help themselves, and this
is why they stay at other peoples’ houses. And that is why you saw
some of them young girls out in the streets with their babies, be-
cause they go from house to house. They have no place to go. Some
of their parents are on drugs, some of those kids are reaching out
for help and we cannot help them because we have no way of help-
ing them.

r. SHAYS. Well, what I am hearing you say is that while you
do not think a gang is an alternative, you understand why they feel
that they may need to go somewhere. But you think it would be
futile for them to go to a gang. I am not advocating gangs, I just—
I have a little more sensitivity to sense why somebody may feel
that there are very few alternatives in their lives.

Mr. Souder, do you have a question?

Mr. SoupDER. Yes, I wanted to follow with Ms. Randolph for just
a minute. In some of the calls that you are getting and you are say-
ing you are not able to answer those, is some of the fear that the


167

science. And if you break it down, it is doable, we will help you.
Go to it.

Mrs. CoLLins. Let me ask you one final question. I know my
time is up, but it is something I am personally interested in. I want
to address it to both you, Ms. Marquez, and to you, Mr. Marchman.
And that is: What consideration has been given to linking CHA de-
velopments or those redevelopment plans to the Empowerment.
Zone activities and CTA Green Line? Ms. Marquez, you know
Green Line is my thing.

Ms. Marquez. I do. I do. And actually I did not tell yeu this, but
the empowerment zone stuff is—is in my lap, as well. I am also
serving as the mayor’s——

Mrs. COLLINS. Green Line is the el-subway transportation system
linking up the west side of Chicago with downtown and the south
side of C i . Right now what has happened, Mr. Chairman, is
that part of that line has been demolished from the west side. It
is going to be rebuilt, but we have got to make sure the money is
there. And I want it to be all hooked up, because when you are
talking about Henry Horner and Cabrini Green and Stateway Gar-
dens, et cetera, you are talking about Green Line passengers.

Ms. MARQUEZ. And, yes; Congressman Collins is absolutely right.
I will start with the Green Line. The Green Line is one particular
segment of the CTA transit system that has been completely shut
down for a complete overhaul.

Green Line runs—if you know anything about Chicago, one
branch of it runs pretty much straight up west, up the middle of
the city, and another branch runs straight down south.

Mrs. Co.uins. Exactly.

Ms. MARQUEZ. Much of the city’s empowerment zone revolves
around this Green Line.

Mrs. Couns. Exactly.

Ms. MARQUEZ. It serves as a backbone with two key ideas. One
is transportation is clearly a way to link some of the residents of
these areas to jobs perhaps elsewhere in the city. But the other key
link was that the rehabilitation of some of these stations could
themselves serve as economic magnets. There is an idea that we
have all been in discussions at the Chicago Transit Authority
about, about creatin; superstations; places where onsite there are
da care, commercial, other services, et cetera. So that is one way
to link it.

Bringing in the empowerment zone and the CHA residents to-
gether; as I said, stretches of the State Street Corridor are in-
cluded in the south portion of the city’s empowerment zone. To ac-
tually make the plans work for C! residents as well as other
residents of these areas, there are a couple of things that we will
be doing. One is, we are currently in the process of appointing a

manent coordinating council, people who will oversee the spend-
ing of the money, et cetera, and we clearly want representation
from among the CHA and CHA residents. In a sense, I serve ex-
actly that role.

wing served on the interim coordinating council for the city’s
empowerment zone, and now serving as a member of the CHA Ex-
ecutive Committee, it is in part my responsibility to help ensure
that those links occur. So we actually are. And we also intend, as


126

September 5, 1995 ____ Testimony of Jeffrey K. Lines ______3

CHA has not effectively implemented planning processes for seeking solutions
{o the problems of its troubled public housing developments.

6. The agency is, in many cases unable to sustain operational improvements it has
made in the medium and long term because it has not effectively undertaken
certain critical activities required to improve its administrative systems.

However, itis critical to view CHA's problems in the context of the scale and complexity of
the challenges it faces. As indicated above, CHA owns and manages some of the largest. most
troubled public housing communities in the country. Several of the communities meet every
definition of distress developed by the National Commission on Severely Distressed Public
Housing (NCSDPH). The scale of the physical, social and security problems confronting
these communities and CHA is truly daunting,

Many of the problems with the CHA’s organization and operation are present to some
degree at other housing authorities but, the severe conditions of distress at CHA are not
always found at these other housing agencies. The size and level of difficulty in managing
CHA housing is what distinguishes it from other public housing agencies and requires an
extraordinary and different approach to addressing the needs of this agency

‘While the CHA’s problems are not related to just funding, the level of funding and
consistency with which public housing is funded has a significant affect on both the ability of
CHA and other troubled PHA's to operate as well as to plan to improve operations in the
future, The capacity of troubled PHAS can be enhanced through a rational and predictable
level of funding and rules. The lack of consistency in financial support and regulatory
procedures governing public housing continues to contribute to an unstable and uncertain
environment for public housing agencies which has an adverse affect on troubled public
housing agencies in particular

Addressing the need for regulatory reform and providing stable funding for public
housing agencies is critical to support PHAS in effectively planning for the turure. There 1s a
special need for 6) funding to support public housing turnaround efforts and receiverships.
Further, receivers should be given first priority for this funding to support their etforts in
addressing the needs of distressed public housing agencies

II. Movement toward direct intervention in the operation of distressed and troubled
public housing.

In the past year or two there has been a movement (by HUD) toward taking a more
direct role in the operation of distressed and troubled public housing. Two areas of note are
that troubled public housing agencies were required to designate alternative administrators for
Hope VI Urban Revitalization Demonstration housing developments as a condition for


45

(5) Establish a summertime cleanup/painting/minor repair (?) program

POLICY OPTION: insteaad of doing this we could focu all are effort on PM and use the
PM process in lieu of « summertime prograam

~ Subtasks

Identi k items that are feasible to do is the inerog of buildin me task
en rae eel a th SR eS
roar painted overaz:

Estat forcchbidng nit cope of on to items that are
foatie fiveh the ume and JIE of tse workers and fend

Establish r/cle to work the interior of buil on a scheduled basis, thi: ld
Bee ar end sedi hal con be tad to launcha PM prog occ above MU

Initiate program
Time frame: 30 days to start-up

Person responsible: Director of Field Operations

Pertormance indicator: # of buildings and sites that receive repair/clean-up

(©) Accelerate vacancy reduction program

~ Subtasks

Review vacancy reduction achieved so far, review quality of work, cost, and person hours;
Determine’ whether to use force account, contract for work, or both;

Examine feasibility of establishing JOC program for vacancy reduction

Initiate JOC procurement process

Select JOC contractors

Issue notice to proceed

~- Time frame: 120 days to start-up

-~- Person responsible: Director Maintenance Support Services

por efermance indicator: # of units placed on fine # of units result in net gain of available units
for

AREA OF PRIORITY: CAPITAL PROGRAMS (PLANNING/DESIGN, BUILDING
CONSTRUCTION AND REDEVELOPME!

SPECIFIC GOALS:
Redevelopment

Goal: Demolish obsolete high-rise buildings and replace them with less dense,
‘smaller buildings

Henry Horner Demelish ive buildings within te complex, relocate daycare
gperations and begin eonsmeton and plement housing a he
Cabrini Green Demotish the cnine buildings within the complex, complete relocatic Qf
‘and begin construction of replacement housing onsite”
Lakefront Demolish five buildings and begin construction of replacement housing
Washington Park Work with city officials ‘to identify land and begin the replacement program


Dear Reprasentativi

The recent takeover of the Chicago Housing Authority by the
officials at the Department of Housing and Urban Development brings
to light their resistance to meaningful resident participation
through Tenant Management, poor resource Management ekille, and
fdnally thedr never ending list of rules and regulations whose only
Purpose seems to prevent anything from ever happening.

Ten years ago ten African American women at 1230 North Burling
building were tired of the filthy and deplorable conditions of the
dnterior and exterior of the building. They began meeting among
themselves to decide what to do. They began by boarding up vacant
apartments and cleaning up the building

Initial investment by the parents at 1230 was poor. The children
of 1230 participated and began to encourage their parents to join
in. The residents contacted various Poundationa to bring in a
Resident Management 6pecialist. Urban Women, inc., Principal
Consultant, Bertha Gilkey, was brought in to train us. After the
initial funds ran cut 1230 north Burling convinced Urban Women,
Ino. that we wanted to control our destiny and that we had hop
dreams, aspirations, and most importantly a vision of better things
to come.

We only needed someone to show us how to make our dreams @ reality.
Urban Women, Inc. trained us on the lease and what reaponsibilitie:

the Chicago Housing Authority had to the residents of 1230.

Once we understood that wa did not have to live the way we lived it
was only a matter of enforcing the 1

Urban Women, Inc. told us that the Chicago Housing Authority
received funds to correct the physical condition of 1230 such
frequently inoperative elevators, broken windows, no lights, r
roaches, trash, and graffitt-covered surfac We were

Anformed, through our training, that the CHA, through our le:
have a level of responsibility they must live up to or try to
achieve, However the CHA resiated but we successfully demonstrated
a willingness to challenge their system of waste and mis-
managemant.

1230 bad begun to change gradually by cleaning up the building, but
also we dealt with residente that did not understand the process or
whet their mission was. The strong reaction we received from
negative (criminal) factions in the complex both physical and
emotional was challenging but we were determined to change our
lives and control our destiny. Resident training made us aware of
not only our rights according to our lease but alao our rights to
manage our building.

1230 Reaident Management Corporation currently operates on only 40%
of the budget officially allocated to us because the Housing
Authority chooses to keep 60% of our budget to effectively offset
their wasteful spending.



8

to fight the gangs and the CHA bureaucracy, and that they are tes-
tifying today; Hattie Calvin and Cora Moore, I am particularly glad
they are here.

I am also happy to see that HUD, under the direction of Sec-
retary Cisneros, has dedicated numerous hours over the last 3
months in assessing the situation at CHA and beginning to imple-
ment a strategic plan to turn CHA around. However, I remain con-
cerned that redevelopment plans are taking shape at the most high
profile sites, such as the Henry Horner Homes which is near the
United Center, the site of next year’s Democratic Convention. Now,
if the convention is the motive for the broad-scale change needed
at CHA, I am all for it. Yet as one of those in the Chicago delega-
tion, I must insist that changes reach beyond Henry Horner and
Cabrini Green to every 1 of the over 20,000 units, almost 58 per-
cent of CHA’s units that Secretary Cisneros has already character-
ized as not fit to live in.

The plan that HUD has laid out at this point is very ambitious,
seeking to address three broad areas of security, maintenance, and
administration, and for that the Secretary is to be commended.
However, at this stage the focus of the pen only covers three devel-
opments. I do not fault the people at 'D for beginning with the
developments that already had redevelopment plans in place, but
I believe that more extensive preliminary plans for the unfit units
on other sites should have been addressed in readily quantifiable
terms. Right now that means at least 14,000 units previously char-
acterized as unfit to live—live in by Secretary Cisneros are not cov-
ered by HUD’s detailed plans.

Icommend the Secretary’s effort to address the security problems
of CHA by scaling back private security forces, increasing the Chi-
cago police field presence, utilizing internal affairs to crackdown on
the bad apples that terrorize residents, and placin the entire secu-
rity operation under the one office of the chief of police. Yet I re-
main skeptical that these important changes will be effective un-
less we address the structural deficiencies, such as an open air
walkways and stairwells and external elevators that lend them-
selves to criminal enterprises, and that keep CHA residents
trapped in their own homes.

is leads us to the issue of administration and management.
Here again I commend the Secretary and his assistants for their
ambitious efforts, yet I cannot dismiss the criticisms of Susan
Gaffney, the inspector general of the Department of Housing and
Urban Development. Testimony before the housing subcommittee
in June, Ms. Gaffney argued that HUD was never designed to man-
age public housing, let alone a troubled housing authority of this
magnitude, especially when HUD, as a troubled agency itself, has
been downsized from 13,000 employees to 11,000, expecting to
downsize further.

I am left with the question that the inspector general raised 3
months ago: Why did HUD not request a court-appointed receiver
to run CHA? According to the inspector general, such a move would
have insulated CHA’s new management from political influences
that have crippled the authorities for the last several decades. Ab-
sence these pressures, I wonder if HUD or anyone else can root out
the corruption that has become CHA. Ms. Gaffney correctly pointed


HUD’S TAKEOVER OF THE CHICAGO HOUSING
AUTHORITY

TUESDAY, SEPTEMBER 5, 1995

HOusE OF REPRESENTATIVES,
SUBCOMMITTEE ON HUMAN RESOURCES AND
INTERGOVERNMENTAL RELATIONS,
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT,
Chicago, IL.

The subcommittee met, pursuant to notice, at 11 a.m., in the
Ceremonial Room, room 2525, Federal Building, 219 South Dear-
born Street, Chicago, IL, Hon. Christopher Shays (chairman of the
subcommittee) presiding.

Present: Representatives Shays, Souder, Towns, and Collins.
Rake present: Representatives Weller, Gutierrez, Fawell, and

uush.

Staff present: Lawrence J. Halloran, staff director and counsel;
Doris F. Jacobs, associate counsel; Demi Greatorex, professional
staff member; Thomas M. Costa, clerk; Bud Myers, minority staff
director; and Cheryl Phelps, minority professional staff.

Mr. SHays. We would like to open our hearing, and for the record
I would like to note that a quorum is present. I would like to wel-
come all our Members, the witnesses, and our guests at this hear-
ing.
As chairman, I am required to read my testimony for the record.
Other Members who would like to read their statements for the
record will be doing so. So, we are going to keep the Secretary and
the witnesses waiting just a little bit. We will be here all day, and
we look forward to this hearing.

I would ask for unanimous consent that all members of the sub-
committee be permitted to place any opening statements in the
record, and that the record remain open for 3 days for that pur-
pose. Without objection, so ordered.

I also ask unanimous consent that all our witnesses be permitted
to include their written statement in the record. Without objection,
so ordered.

Many voices called us to Chicago today. First was the stron,
voice of our colleague, ranking member of the full committee an
an ex-officio member of the subcommittee, Congresswoman Cardiss
Collins. She and her staff have given the subcommittee invaluable
support in preparation for this hearing, and we are very grateful
to her and her staff.

We also are drawn here by the voices of those living in Chicago,
Indiana, Pennsylvania, New York, Connecticut, and all the places
where people are asking for new solutions to old, seemingly intrac-

(Db


150

OPERATIONAL HIGHLIGHTS

© Restructured the Department's Top Leadership and Reorganized Management of the
Chicago Housing Authority Pollce Department (CHAPD)

Under the new HUD administration, several key supervisory positions have been filled with
Promotions resulting In five new lieutenants and 15 new sergeants to the Chicago Housing
Authority Police Department (CHAPD). The CHAPD, prior to the actions taken by HUD, had
4 dangerously low number of supervisory staff for approximately eight months. In addition, the
position of full-time CHA Chief of Police will soon be posted and will have under its command
all CHA safety arms. These arms: the Chicago Housing Authority Police Department (CHAPD)
and the Chicago Housing Authority Security Force (CHASF), under stabilized leadership, will
be moving towards extensive Community Policing strategies.

320 employees from each safety arm will participate in a three-day Community Oriented Police
Training Session conducted by the Chicago Police Department. The Community Policing Effort
will be a combined effort on the part of CHAPD, CHASF, and CHA Tenant Patrol. All forces
combined are necessary to the success of community policing and will best be achieved through
‘@ partnership beginning with taining. Along with the restructuring already in place, the CHA
is expecting an additional 60 officers to graduate from the Academy in September.

© Creation of a Police Bicycle Unit and an Elevator Vandalism Unit

During the month of August, CHA will invite four trainers from the New York Housing Police
‘Department to work in coordination with the CHAPD and CPD to train and provide tactical and
technical expertise for the newly created Police Bicycle Unit which will consist of 21 officers
and the newly created Elevator Vandalism Unit which will consist of 10 officers.

‘The patrol officers assigned to these units will patrol year-round and will be extremely visible
and accessible to the community. ‘The equipment purchased for these newly created units will
be paid for out of drug forfeiture money seized by law enforcement agencies.

© Redeployment of the entire police force, which places 75 percent of all patrol officers on
foot in the housing development communities, and reprioritizes specialized units.

To phase in a Community Policing Strategy, in CHA communities, CHA/HUD has developed
1a new deployment plan for the CHA Police Department and the CHA Security Force, The new
plan puts 75 percent of the police officers on the street, including those assigned to the bicycle
patrols. Four developments are initially targeted in this Community Policing effort and will
Coordinate the efforts of CHA's in-house security under one leadership. Foot patrols will be a

‘key part to the Community Policing Effort, security forces will be more visible and accessible
to the residents.



42

Lead Responsibility: Ana Varges & Addrienne Archia Earl

Subtask: Meet with department directors to discuss current vacancies and alternatives to

accomplish lish budget I ye ‘AEarl
ity: A Vargas, A Earl

‘Time Frames one toate
Performance measure: Meetings with all departments completed.

‘Subtask : Make recommendations to ED or designated person regarding alternatives to
accom lish balance b

esponsibility: A Vargas & A. Earl
‘Hime Frame:

UL. Begin Reorganization of the legal department

Subtask: Review Report and make recommendations to ED
Lead Person: Marylin Johnson ; Greg Russ & Ana Vargas

‘Time Frame: one month

Performance measure: Recommendations presented to ED

1V.Prepare and release RFP for private management of senior housing developments

Subtagk: Prepare draft RFP ‘
Lead Pers

‘Time Frame: 60 days

Performance measure: Draft prepared

‘Subtask Review of REP by other departments including legal and management

°30 day:
Performance measure: REP approved for issuance

“V. Prepare and release RFP for MIS

yz current system to prepare RFI
‘Bhrectot! Ana Vabgal, J Neon, MIS consultant

Performance measure: Task Completed
Subtask: Prepare draft RFP
Lead

Hime Frame: 30 days
Performance measure: Draft prepared

Subtask: Review RFP

Performance meavure: REP in final form

VI. Prepare and release Section 8 RFP

Subtagk: Issue RFP

‘Hime frame: two weeks

VII. Implement corrective action plan to address procurement and contracting issues
Subtask: Meet with Acting Director Procurement, HUD contract person,CHA 1G Budget
& finance and users to prepare plan

Lead Person: A Vargas , Al Rutyna, Frank Slezak
‘Time Frame: two weeks’
Performance measure: Plan prepared

Subtask: Implementation of Plan
Lead Person: A Vargas , Al Rutyna


161

“Paired Unit” development with benefits being provided for pervoas in middie
income and above income brackets that move into developing and mised income
areas,

Providing incentives for development and atilization of innovative technologies.
Land cost write down through direct grants or loans on deferred pay back basis,
Use of seized assets to provide credit enhancement for pervons moving
developing and mixed income areas.

Funding of Community policing units ka redeveloping mixed income area.
Emphaaiziag of home ownership of small multi-unit (2 to 4 du) buildings with
more liberal mortgage insurance terats,

Partnering with private sector companies and professionals to develop more
creative financing methods.

Sell of public units that offer redevelopment potential for mixed income
occupancy while retaining equity in subsequent development and building
replacement housing for tenants with proceeds from sale accompanied by
allocated maintenaace and security budget dollars for the wnits sold.
Consideration of uegotiated bidding to meet established budgets. ( It has been
established that competitive bidding does not always yield the best cost.)

Use of project management with guaranteed maximum price, to contract asd
build housing.


3

Mr. GUTIERREZ. To revert it to senior only and to take back that
particular housing. And so Henry Horner is important, and there
are going to be many competing demands on—on whether we are
going to Cabrini Green and where the resources and the energy are
going to go. And then I see the seniors and I say to myself they
were also made a promise and they were basically told everything
is OK, we have worked this out. That obviously did not happen.
And so we—we need to know where those seniors are at that—
within a plan because I think they are very important and should
be put to the top of the plan within the kinds of steps that we are
going to take.

I think we need to know about the whole plan because in the
past what the Chicago Housing Authority has done and what Habi-
tat has done, for all of the accolades they have been given, is that
they have not taken replacement housing and put it throughout the
city of Chicago, they have taken replacement housing and put it in
the Latino community, the very community that has been denied

resources or access to the Chicago Housing Authority.

o as I read your letter to the ident and your comments
today that we are going to distribute 700 more units. In the past
the Chicago Housing Authority—in the past before your adminis-
tration—and HUD have met secretly, without any kind of commu-
nity involvement, in order to designate where those units have
gone: And given the fact that the Latino community has the oldest

jousing stock and the largest families in the city of Chicago, we
need to know the whole plan or there will not be any confidence
in the plan and there will be obstruction to what occurs because
there needs to be that kind of confidence.

So we have the seniors and we have this, because I got a visit
from someone last week who said, “I got a letter says Henry
Horner is first now. Said Congressmen thought we had an agree-
ment, thought everything was going to be OK. Said the units were
going to people in the community. Well, I got this letter, it says,
you know, Henry Horner residents are first, the people in our com-
munity, after the community had reached an agreement with HUD
and the CHA.” See, that kind—then I want to be responsive, I
want to be helpful.

Mr. CISNEROS. Sure.

Mr. GUTIERREZ. But, you know, it is like, “Burn me once, shame
on me.” But it cannot continue to happen because the history of the
city of Chicago is one of secrecy, is one of back doors.

And it continues to occur even at the present time. And I want
nothing but the best, and I will work hard, Mr. Secretary, to make
sure that everyone in the city of Chicago has decent, affordable
housing available to them.

Mr. CISNEROS. Well, Congressman, let me just say first of all,
and I have known you for a long time and I have deep respect for
you. And I do not want to be disappointing. But I do not know that
we will ever have a plan that can answer all of the questions. Be-
cause, as you said, we are seeking to get to the finish line; there
is no finish line. This is a very dynamic process that is going to
go on in perpetuity, so there really never will be a freeze-frame mo-
ment where we can say, “This is the plan that will get us to this
point.” You understand that.


82

Qccupancy

The process time should be shortened for applicants seeking public
housing. Tt takes from 1 to 3 years for a person to be approved
for houging. I have a solution that could work for Cabrini.

The entire CEA nee
down to the Janito:
ataff.

is to make a lot of change:
, Starting with drug t

from Administration
8 for the entire CHA

Security is an iesue that also needs to be deal
contrac security is relieved of thelr duties what are th
residents of public housing to do. We are already in a war zone,
we will really be in a war none if security is removed.

with, If the

Realistically, if you have not lived in my shoes or house do not
judge me because I am not guilty by association.

The following is an outline of probleme that need to be dealt with
in the building:

SURVEILLANCE CAMERA:

To activate cameras, that ure located on the roof and on
the sides of the building, will help security.

LANDSCAPING:

1. Replace the top layer of woil on the lawns.
2. Replacement of sod/grass, shrubs, trees and flowers.

BUTLDING GROUNDS/SIDEWALKS AND DRIVEWAY:

1. Front walkway needs to be completed.

2. Parking lots needs to be repaved. In several areas
there are pot boli

3. Parking lote have huge pita that needs to be filled
immediately, it is a hazard.

BUILDING APPEARANCE:

1. Tuckpointing

2. Caulking and glazing of windows,

2. Window screens and shades plac

4. Boards breed roache:

5. Wrought iron fence:
the lawn.

in each window.

(post) moved out of the edge of

INTERNAL PROBLEMS:

Plumbing:

- Rodding cut/epening and unclogging of drains.

- Repairing leaks and breaks in system before winter.

- Water pressure corrected allowing water to be
asseszable in each unit.

> Exterminating (from the top down) for rats and insects
in the building and the grounds.



HUD’S TAKEOVER OF THE CHICAGO HOUSING
AUTHORITY

HEARING

BEFORE THE

SUBCOMMITTEE ON HUMAN RESOURCES
AND INTERGOVERNMENTAL RELATIONS

OF THE

COMMITTEE ON GOVERNMENT
REFORM AND OVERSIGHT
HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS
FIRST SESSION

SEPTEMBER 5, 1995

Printed for the use of the Committee on Government Reform and Oversight

ee

U.S. GOVERNMENT PRINTING OFFICE
39-948 WASHINGTON : 1997

; For sale by the U.S. Government Printing Office
‘Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

ISBN 0-16-054358-4
ghoe -97-1



108

we are offering to work with residents to produce their own plan
and their own sense of community that—that hopefully in the fu-
ture we can identify funds to support. That is why we cannot an-
swer and should not be able to answer the question of which devel-
opment is slated next. We have no next. We came in working on
three, Cabrini, Horner, and the Lakefront.

Residents in Clarence Darrow have come to us, and so at some
time in the near future we hope to start talking to them. But after
that it is really a question of, you know, let us sit down and have
a joint planning process where you control the planning in the be-
ginning. So, and we think that in the long run that will be more
successful. With that I just await your further questions. Thank
you.

Mr. SoupERr. Thank you. Ms. England-Joseph.

Ms. ENGLAND-JOSEPH. Good afternoon. I appreciate the oppor-
tunity to discuss the recent events at the Chicago Housing Author-
ity related primarily to the May 30, 1995, takeover by the Depart-
ment of Housing and Urban Development.

HUD’s takeover was necessary because of the poor physical con-
dition of CHA’s extensive housing stock and the troubled manage-
ment of the housing authority, among other longstanding problems.
And many of these were problems that were making the improve-
ments at CHA practically impossible.

Now, in preparing for this hearing we attempted to try to answer
three questions for the subcommittee. The first was: From among
several intervention alternatives, did HUD choose the most appro-
priate one by using temporary staff from HUD and other housing
authorities and industry groups? Two: What obstacles will HUD
face as it tries to plan for the rebuilding of the CHA? And three:
What has HUD accomplished in the past 3 months, and what addi-
tional steps can HUD take to ensure not only the recovery, but the
sustained revitalization of Chicago’s public housing?

Our testimony is based on ongoing work that we are doing in the
low-income housing area, as well as recent work in the community
development area. In fact, we just testified before the subcommittee
a few weeks ago on that community development work. What I
would like to do is summarize our answers to those three questions
and submit our entire statement for the record.

For the first question—did HUD choose the right or most appro-
priate intervention strategy—once HUD decided to intervene into
the management of CHA there were several strategies that were
available to them, a couple of which have already been discussed.
Specifically, seeking a third party or a court-appointed receiver to
manage the housing authority; replacing CHA management with a
professional housing manager; or assigning HUD staff to manage

Because CHA’s executive director, the board of directors, and
other key staff resigned, and Chicago's mayor did not support re-
ceivership, HUD’s decision to take over CHA with its own and bor-
rowed staff appeared to be the best option available.

In answer to the second question—what obstacles will HUD face
as it tries to rebuild the CHA—it will face significant obstacles, in-
cluding the deteriorated condition of much of Chicago’s 40,000
housing units; the CHA’s cumbersome organizatio! structure;


131

September 5, 1995 _____ Testimony of Jeffrey K. Lines ____&

do this in an environment that typically yields limited public resources to support services to
low income public housing

Very large public housing agencies in most every respect are some of the largest real
estate operations in the areas of the country where they are located. For example. the
accounting and other financial requirements of large public housing authorities can be
enormous as well as the reporting and regulatory requirements of these agencies. The level of
regulation of public housing program activities has served to stifle management at the most
complex housing agencies and given “cause to inaction” due to a mind set that exists in which
there are too many rules affecting what can and can not be done in public housing. Rules
governing admissions and occupancy of households. the income mix of households. the use of
Capital improvement funding, the setting of rents and so on have contributed to an environment
where public housing agencies find it difficult to administer large programs in a flexible and
effective manner. Unless there can be greater flexibility in operating public housing and these
larger organizations can be operated in ways that are more decentralized, it will be difficult to
make the progress required in remedying distress at the larger, more high profile public
housing agencies.

The above is illustrative of the Chicago Housing Authority which it is important to note
has taken a number of steps over the past several years to improve conditions in its public
housing. It is the lack of overall success resulting from improvement actions which tend to
lead to the problems at CHA being viewed as systemic in nature and relating more directly to
its size and operational structure. The CHA has been severely troubled for many years and
the recent administration of CHA resulted from steps taken in 1988 by the Metropolitan
Planning Council, the former Mayor, and HUD to stabilize the agency by appointing a
Chairman and Chief Operating Officer. The agency at that time was in a severe crisis
situation and was having difficulty undertaking even some of the most basic functions of a
public housing agency. For the past six years or so the agency has sought to define critical
goals and objectives and has taken steps to accomplish those goals, Some of the more
significant goals of the organization and related accomplishments are presented below

L. instituting Private Management at CHA - CHA’s accomplishments have included
implementing private management in its scattered site portfolio in a demonstration using
private management in revitalized high-rise buildings (e.g. Lake Park Place’.

2. Instituting Resident Involvement in the Operations of the CHA ~ CHA has supported
resident involvement, which has resulted in increasing the number of Resident Management
Corporations (RMCs) and the overall level of resident participation in the agency.

3. Establishing Programs to Better Control the Environment at Lurge Distressed Public
Housing Developments - This includes a range of innovative programs such as Operation
Clean Sweep.


159

This period of redefinition that promises a new mission philosophy for H.U.D. Le.
CBA presents 2 massive Opportunity. It, offers potential demand that could
Justify the establishment of one, or several, housing production plants that could
employ low income housing residents in the production and erection of replacement
housing. Such a production plant could also service private market needs for
residential, commercial and institutional construction.

Today this nation has mastered technology that dispatches men into space as if om
suburban commuter runs, but ases dated technology, methods and materials that
lower quality and impacts heavily on our environment, We should aow gather our
inmovative abilities in a comprebensive effort to develops and apply technology,
utilizing current steel based industrialized techaclogy for the economical delivery of
affordable built environment.

Per my experience with industrialized techaology, I strongly urge the establishment

of a production plant designed to produce light gauge stee! framed components.

‘These factories can’t

© Provide and alternative housing source to satisfy housing needs generated by the
HUD/CHA rebousing program.

© Provide and economical and affordable source of housing for federal, city, and
private sector needs for all income levels,




109

residents’ distrust of proposed changes; substantial security and
crime problems; geographic and social isolation from the rest of the
Chicago community; Federal laws and regulations; and finally, in-
sufficient funding. Because of the severity of these problems the re-
covery of the CHA will at best take us into the next century.

In answering the third question—what has HUD accomplished in
the past 3 months and what additional steps can HUD take to en-
sure not only recovery but sustained long-term revitalization—dur-
ing the past 3 months HUD has reorganized the CHA’s manage-
ment; taken steps to privatize selected functions; and developed
short-term plans to improve maintenance and security, rehabilitate
the physical stock, and foster community development.

However, HUD has not selected a new executive director nor
hired some key upper level managers. In addition, HUD has not
committed to a long-term plan for phasing itself out of CHA and
installing a permanent management team. Committing to and
making progress toward such a plan is necessary if CHA is to gain
the trust and cooperation of the residents, the CHA staff, and fi-
nally the city.

In summary, Mr. Chairman, we believe that HUD officials had
little choice in taking over CHA, and we also believe that it was
long overdue. Even if the Progress that HUD has made in stabiliz-
ing CHA to date continues, will not solve CHA’s problems in
the near future. Because of the magnitude and persistence of these
problems, improvements at the authority will take years to accom-
plish, and short-term gains will be difficult to achieve or sustain.

Thus, it is important that HUD officials do not raise expectations
of tenants or of the public for immediate solutions to these difficult
and chronic problems. Although HUD has established and already
met some short-term goals, preparing a comprehensive, long-term
recovery plan will be critical to ensuring sustained success.

Mr. Chairman, that concludes my statement. I would be happy
to answer any questions you or Members of Congress may have.

Mr. SOUDER. k you very much. Mr. Lines.

[The prepared statement of Ms. England-Joseph follows:]


30

iL

‘The accounting records are in such disarray that we have asked the external auditors,
Delloitte & Touche, to help us determine the cash and reserves balances by program, which
was nonexistent in CHA budgets. The reserves for the low-rent program estimated by staff
as of December 31, 1994, are $8.2 million. Based on HUD standards, this reserve should
be at least $38.9 million. In 1994, CHA used half of the $16 million balance in the reserves
to cover an operational deficit bringing the reserves at the end of the year to the $8.2 million
balance. Given that CHA is self-insured and that we believe the insurance reserves are
inadequate, without aggressive action there is the potential for the Authority to become
insolvent. ‘Therefore, we will be reviewing an actuarial report currently being prepared by
the respected accounting firm of Ernst & Young to better assess the potential liabilities.

CHA has not had an unqualified opinion in over ten years. For the past several years, the
auditors have issued a disclaimer which means that they are unable to certify the Financial
Statements. We are addressing the multiple issues that need to be resolved in order to obtain
a clean opinion in the areas of management information systems, internal controls, and
enforcement of policies and procedures

An issue which has generated a great deal of interest, both here in Chicago and across
the country, is the designation of seniors-only buildings. The law currently allows housing
agencies to mix the elderly and disabled populations. The law requires that recovering drug
and alcohol abusers be included in the definition of disabled. The law also permits PHAs to
designate certain senior buildings as "seniors only," Prior to the HUD intervention, the
CHA submitted a designated housing plan which was deficient in that it did not adequately
address the relocation of disabled individuals who would be displaced. ‘The new proposal,
being written to comply with HUD requirements, will enable 20 of the 58 senior
developments in Chicago to be designated as “seniors only.” Implementation will occur upon
completion of the required public comment period and final approval from HUD.

Thave said from the beginning that HUD cannot transform the Chicago Housing
Authority alone. The entire community must join us. Integral to HUD's success is ensuring
that we all find a "Chicago solution," not one dictated from Washington. At the same time,
it is incumbent upon HUD to convince the community that the recovery of the CHA is
instrumental to the viability of the City as a whole. In that regard, regular meetings with the
City and local elected officiais, as well as local business and community groups are taking
place. Organizations such as Windows of Opportunity, US Equities, the Greater State Street
Council, Operation Push, the City Club of Chicago, the YMCA, the Metropolitan Planning
Council, LISC, the Chicago Equity Fund, the Union League Club, and the Corporation for

Supportive Housing have all been solicited to participate or are participating in CHA’s
recovery.

During the next two months, 1 will address various business and foundation leaders to
solicit outside support for the CHA, especially for resident programs that will be more
difficult to fund in light of the already approved and anticipated budget cutbacks.

This community outreach effort will come together through the appointment of an


89

For five yoars Urban Wonen, Inc., principal trainer, Bertha Gilkey
provided pro bono technical a
boon

‘stance training to 1230. Thay have
mntial in changing the knowledge, behavior, and attitude:
idente of 1230. We deal with real esues of managonen
maintenance, rent collection, building security,
social services, public transportation, police protection, and
trash collection all of which would take from 1 to 3 months for a
Fesponse and not solution from the CHA.

Not only did the reoidente of 1230 have to fight the tenants who
were scared of change but also wa had to take on the CHA who were
afraid of us when they realized our potential.

In cloaing the real iasue io about empowerment of residents to be
given the opportunity to control their own destiny and the CHA
refusal to share or relinquish evan at their own deni: The
residents of 1230 had very high voters registration in the Novenbs

1993 election, we had 100% voter turnout. We provided absente
ballots to cur seniors. We encourage our people to be self-
sufficient.

Home ownership 1s our ultimate goal therefore, our dream is to buy
the building and the surrounding land. Inspiring home ownership
for other Cabrini-Green buildings is also important. The resident
management program can expand and improve with the right technical
agsiatance to assist then in training in CHA management kill and
maintenance skill

Thank you for giving me the opportunity to speak ay opinica
regarding resident participation.



APARTMENTS!

Repair damaged screen doors and locks
Weather stripping for the main doors
Threshold molding replaced

Closets replaced or installed
Curtain Rods/Mini Blinds

Paint jobs to be done professianally (not by tenants)
only

using off whites or beige
Blectrical outlets repaired or replaced
Closet replaced or installed

+ rods

+ shelves

+ bifolds/eliding doors
- electrical outlets

+ light fixtures

ALl bedrooms and bathrooms should have doors
Floor tiles to be replaced as needed

Repair electrical outlete and fixtures
Correct plumbing problems

Shower heads installed

Drains in tubs and sinks opened or unclogged
Towel racks installed or replaced

Air vents cleaned

Toilet Bowls and seats replaced where needed
Provide adequate water pressure

Medicine cabinets replaced

Cabinets replaced

Sinks faucets and fixtures replaced with fixturea that

bave spray nozsle

Appliances replaced (refrigerator:
needed

Smoke detectors replaced with make censored detectors

Thoroughly checked and given a complete overhaul.
Replace floors, walle, ceilings, doors and all broken

parte
Keep clean and disinfected.

ateves etc.) where


12

(Witness sworn.]
Mr. SHays. I would also note for the record that we are going to
allow you to make your statement, because we are starting. But we

have been joined by Mr. Gutierrez. And it is wonderful to have you
ere.

Mr. GUTIERREZ. Thank you, Mr. Chairman.

Mr. Suays. And during the course of—before you ask your first
questions we will invite you to make a statement, if you would like.

Mr. GUTIERREZ. Thank you, Mr. Chairman.

Mr. Suays. It is great to have you here. Mr. Cisneros.

STATEMENT OF HENRY CISNEROS, SECRETARY, DEPARTMENT
OF HOUSING AND URBAN DEVELOPMENT, ACCOMPANIED BY

JOSEPH SHULDINER, CHAIRMAN, CHA EXECUTIVE COMMIT-
TEE

Mr. CISNEROS. Thank you, Mr. Chairman, members of the com-
mittee. I would be happy to defer to Mr. Gutierrez if he would like
to make an opening statement.

Mr. GUTIERREZ. No, Mr. Secretary, I would never do that.

Mr. CISNEROS. Mr. Chairman, in the interest of your time—
knowing that you want to get to questions as well as to hear from
residents and others who we would not want to keep waiting—I
will submit my testimony to you, and instead take a few moments
to just walk you through some of the logic of what preceded the de-
cision to take over the housing authority and some of what has
been accomplished since.

Let me say at the outset that Congresswoman Collins said it well
when she said that this was an extraordinary action. It is extraor-
dinary because we have not acted to take over another housing au-
thority during my tenure as Secretary, now 2¥2 years. We have dif-
ferent relationships with housing, authorities that have been in
emergency circumstances, as in Philadelphia, as in Washington,
DC, but never have we acted to, “take over.” So this was major.

The truth of the matter is that we found, in the spring of this
year, Chicago Housing Authority at what I might call near a melt
down situation. They had repeatedly failed to submit an operating
budget in a timely fashion that had been due in last November,
and we still did not have it as the spring went on. For 2 years, we
had no independent accountants’ review that was able to express
an opinion on CHA financial operations. The newspapers were full
of accounts of the loss of some $15 million from the pension fund.
CHA discovered the employees’ deferred compensation plan had
been looted. An audit noted that some $5 million in the account
was unaccounted for.

An independent auditor noted in July of last year that 9 new
legal contracts had been signed, for a total of something like 30 re-
lationships with different law firms in the city, with no sense of
just exactly why it was necessary to have 30 different law firms as
well as $1.5 million in legal retainers. That is before the law firms
even started charging for their time.

The authority had failed to administer admissions and evictions
procedures, to the detriment of the residents. Experts will tell us
that is one of the most critical things that a housing authority can
do is manage screening of people who come in, and act with


54

Deliverable
* Data base of existing and potential internal partnership
opportunities
Identify potential local partnering entities
Lead:
White, with CHA Office of Extemal Affairs (HUD Special Actions)
ime
frame
30-85 d
Deliverable
List of potential CHA partners
Identify potential national partnering entities
Lead: .
White, with CHA Office of Extemal Affairs (HUD Special Actions)
rime
30-45
Deliverable
List of potential CHA partners
Contact and engage potential partners regarding sponsorships and partnerships

Lead:
Schuldiner/Marchman (HUD Special Actions)

‘Active partnerships with outside entities


171

have thick skin. I mean, I admire mayors tremendously, and I ad-
mire this mayor, your boss.

In my discussion with him, he said something that I would like
said for public record because I am sure he said it publicly before.
He basically said he wants the chips to fall where they may. Al-
though this hearing has not focused in on who is at fault.

And who is at fault can go—it can—it can be the Congress of the
United States, it can be HUD, it can be the mayor’s office and to
it can be the people who are directly involved with running the au-
thority. There are a lot of people who saw this in action for many,
many years.

Now, we have not focused in on that because we just did not
think it was an appropriate focus right now. I am making an as-
sumption, Mr. Marchman, that any criminal activity is being inves-
tigated. And I do not even care to get into it. But I am making that
assumption. If I am inaccurate on this, and if anyone else here is
aware of criminal activity and does not feel it is being looked at
I would like to know that. Because my committee feels very strong-
ly that if there is criminal misdeeds, that those who are involved
should be held accountable. And the fact that we have not focused
on it in the hearing does not mean that we are indifferent to it,
it is just not the issue today.

With regard to Mr. Wallace's comment about CHA getting, itself
out of business, I am not sure that I agree with you. And I do not
want to spend a lot of time because some of this is more theoretical
than practice. But let me just tell you what I believe.

I believe you always have to have some kind of rental units that
are available for the most disadvantaged. Ideally we like to think
of public housing as transitionary. But it is not. One of the prob-
Jems that I have is the 30 percent rule that basically says you get
30 percent of your income, and even if you have two people in the
household earning money, 30 percent could be double the market
rate. That gets people out.

Now, I do not want anyone offended by this, but as a general
tule I think we have moved away from the working person in pub-
lic housing. I know there are working people in public housing, but
not as much as there used to be. And when I was with these kids
last night I was trying to think of who was their—who did they
want to aspire to. They could be sports figures.

Last night one of the gang members said to me “There is a lot
of money in this housing authority.” And I said, “What do you
mean a lot of money?” And then I said, “Do you mean a lot of tal-
ent?” And—and he said, “Yeah.” He was making reference to rap
singing. He said, “There are a lot of very talented rap singers in
the authority in Chicago.” I thought this was interesting, in a way.

Because they have seen athletes leave the housing authority and
succeed and they have seen rap singers succeed. I am not sure they
see a lawyer living in public housing. They may have seen someone
grow up and become a lawyer, but then he is not there. They have
not seen a lawyer every day come back to the public housing and
live there and work there and talk with the kids and so on. I mean,
that is in my own mind, that is kind of my impression.

My bottom line is: what I would like to see out in public housing,
I would like to see some of those professions back in public hous-


96

not have much crime and there was a lot more security as resi-
dents have been taking on some of that responsibility. Is that not
correct?

Ms. Moore. Yeah, the resident have taken on that responsibility
and we do have monthly meetings with the police department. We
have a meeting with the CHA police, and along with security offi-
cers, and to try to establish a partnership with all three groups
combined.

Right now I am the captain of my own beat at 1822 with the
camp programs for the Chicago Police Department, to start a shift
here where we will try to maintain Cabrini to stop the crime and
to make it more safer and secure for the residents. In doing this,
this is the way we have these monthly meetings with the three
parties, to curtail this.

Mr. SoupDeERr. One of the things that—it seems like when you get
an area that starts to become demoralized, it just gets more demor-
alized. And that is why safety and crime are so critical. Because
if you have—if you do not feel safe, you wonder whether or not it
is worthwhile to paint and to fix up and whether—I notice that
the—the basketball hoops were not bent at your particular build-
ing, which often they are and which is a sign. And that I would
like to followup, if I can, to see how widespread this movement is
in Chicago to give more local control and to see whether there has
been efforts in other areas too, and I will followup later. I see
my——

Mr. Suays. Thank you. Mr. Towns.

Mr. Towns. Thank you very much, Mr. Chairman.

Let me sort of pick up on—I had heard you, Ms. Randolph. You
said that nothing had improved. Let me ask you, are you optimis-
tic?

Ms. RANDOLPH. No. I live there. And as big a city or a develop-
ment is—but I would just like to—the young man that just got
through speaking, I would like to tell him how I feel. I do not feel
like Tlive in a project.

Mr. Suays. If you would just turn the mike a little toward you.
Thank you, sir.

Ms. RANDOLPH. I do not feel that I live in a project. I live in a
housing development. Each of us have a name. My development is
Washington Park Home. When the buildings was put up, being
built, they were projects. Now we are in them, that is our home.
And my home has a name, Washington Park. Thank you.

Mr. Souper. I apologize for any inadvertent offense.

Ms. RANDOLPH. Because we are trying to uplift ourselves. And I
am not going to sit and let nobody denominate me, say I live in
a project. I do not. Thank you very much.

Now, can you restate your question, please.

Mr. Towns. I think you sort of answered it. In fact, you gave me
more than an answer.

Mr. Suays. He does not want to ask anymore questions. (Laugh-
ter.

Mr. Towns. Let me move on to—I guess to—to Ms. Calvin and
a question to Ms. Moore. You know, this tenant manager is sort of
new to me, coming from—from New York. I think it is a concept
that I am very interested in. Now that the housing authority has


170

call. And 911 would certainly be easier if you—is there going to be
some kind of cooperative link of who residents call, a number?

Mr. Murray. Yes, sir. Ms. Sonja Vergos and myself are in discus-
sions with the top commander of the Chicago Police Department.
In fact, we have a meeting tomorrow to address those issues. The
question was asked earlier about what happens if a CHA police
and a Chicago police officer are on the scene. We have found that
the two departments work well together, and normally they work
it out as if the State police or the FBI or another agency would
show up. There is cooperation and few problems.

The problem is that because we are on two different radio fre-
quencies, oftentimes you have two squad cars showing up for the
same somewhat routine call, redundant and a waste. And our ne;
tiations and discussions that are ongoing we are hopeful will solve
that problem.

Mr. SoupER. Chairman Shays.

Mr. SHays. Thank you. Mr. Marchman, you have basically two
functions. One—and your office is a new office, correct?

Mr. MARCHMAN. Yes, sir.

Mr. Suays. So you oversee all troubled housing in the United
States, but you are here physically running the Chicago Housing
Authority; is that correct?

Mr. MARCHMAN. Yes, sir.

Mr. SHays. How much time are you able to spend focusing on
other troubled housing authorities?

Mr. MARCHMAN. Well, fortunately I have a fine staff in Washing-
ton and we have appointed an acting deputy assistant secretary to
run that office. I typically spend 6 days in Chicago, 1 day in Wash-
ington.

ir. SHaYS. I appreciate the fact that HUD has created the Office
of Distressed and Troubled Public Housing. And I think it makes
a lot of sense. Also the more I have focused attention on Chicago’s
housing authority, the more convinced I am that HUD did the right
thing in taking it over. The question mark and the jury is still out
as to how good the transition will be from HUD’s operation of CHA
to a new permanent CHA leadership.

Ms. Marquez, I just want to make sure that we are real clear on
this because what I heard you saying is that the mayor does not
want to micromanage the housing authority, but he does want to

ive some macro guidance to the authority. In other words, he is
looking at some big picture issues and saying, “I want these re-
solved,” but he does not want to have to run the housing authority
on a day-to-day basis; is that correct?

Ms. Marquez. Yes. And I would say, again, that it was never an
option. He was not approached or as! to run the public housing
authority.

Mr. SHays. I thought that, believe me. And I would add, no of-
fense to your mayor or any other mayor, but any mayor who wants
to run a city like Chicago, Los Angeles, or New York has to have
something a little wrong with them to start with. [Laughter.]

The tasks are so daunting and sometimes the resources are so
limited that you have to be a special kind of person. Plus, you
know, there are many political lenges. People want your job
and people do not think you are doing a good job. You have got to


15

Now, as I understand it, there are going to be no new section 8
certificates issued. That means about 500 lower income families are
going to be denied rental assistance; drug elimination, the city was
going to receive about $10 million to combat drugs and crimes, and
next year CHA will be receiving zero funding from the appropria-
tions bill; for development for HOPE, no new projects. That’s
HOPE VI. No new projects are going to be there. There is going
to be increases in the minimum amounts that section 8 recipients
are going to have to pay, et cetera.

With all these impact, negative impact on the budget for HUD,
how can we expect for you and HUD to create a better quality of
life for the people in CHA? And that is my final question, Mr.
Chairman.

Mr. CISNEROS. This is—this is, no doubt—I mean, this is heart-
breaking for us to have to be in this role and then deal with fewer
resources. But at the time we were undertaking this there was no
way to know last spring what the effect of the appropriations proc-
ess would be. We only got in June and July the Appropriations
Committee’s marks and so forth, and they went on through to the
action, as you know, in July and August. So the decisionmaking
context we had was one before all of this.

But even in that, let us assume that the Appropriations Commit-
tees would have done exactly the same thing and the Senate does
the same thing and so forth, whether it is with us as managers or
the previous administration as managers, the cuts would have hit.
We think we can do a better job than—than what existed before.
That is why we acted to take over. As heartbreaking as it is to
have to do it with less money—and it is, it is very difficult—we still
think we can touch people’s lives marginally better than what they
would have had to endure beforehand.

Mrs. COLLINS. With less money?

Mr. CISNEROS. With—with less money in either case. Because the
fact that we took over or did not take over was not going to affect
what the Appropriations Committees did.

Mrs. CoLLins. All right. Thank you, Mr. Chairman, for your leni-
ency.

Mr. Towns. Mr. Chairman, would you just yield just for unani-
mous consent?

Mr. SHAYs. Yes.

Mr. Towns. Local 73, SCIU, has a statement I would like to sub-
mit for the record.

Mr. SHays. Without objection, so ordered.

And Mr. Secretary, I just have two very fairly general questions,
and I'll preface those questions by a comment that I think that the
takeover of CHA was long overdue, and that you were either going
to do it under the Philadelphia model or you were going to do it
under your model. And as I have had time to think about this, I
think your only course was to do it under the model you have.

I am comforted to know that you will be moving out, as you hope,
by the end of the year. But there needs to be a large wake-up call
for the city of Chicago. You have been very gracious in your com-
ments about various people. The bottom line is that the housing
authority for years had become an extraordinary misuser of funds,


Redevelopment

Goal: Demolish obsolete high-rise buildings and replace them with less dense, smaller
buildings

Henry Horner Demolish five buildings within the complex, relocate daycare operations
and begin construction and replacement housing in the spring

Cabrini Green Demolish three buildings within the complex, complete relocation of
residents and begin construction of replacement housing on-site

Lakefront Demolish five buildings and begin construction of replacement housing

Washingion Park — Work with city officials to identify land and begin the replacement
program on- and off-site

Suburban Demonstration Program: With the cooperation of the receiver, initiate the Suburban
Demonstration Program to give residents more choice in housing

Resident Programs

Goal: Increase residents’ participation in the decisions that affect their lives

(1) Establish a system-wide resident planning process und give residents unprecedented
involvement in planning the redevelopment of their communities

(2) Follow through with the CHARISMA program which joins CHA, the religious
community and businesses to serve CHA developments

(3) Follow through with the State and The Woodlawn Organization to open up a transition
facility for CHA families in crisis. This would mean a reuse of CHA spariments as a
temporary safe haven for troubled individuals and families

(4) Provide an ongoing support system to residents participating in Resident Management
Councils. Encourage resident ownership programs through homesteading and the "My
Own Home Program”


48

(LO) Re;examine Private security Guard Contracts to assure accountability

Start

Goimptetion de: Sept t

(11) Develop Intermediate and long-term plan for Technical Assistance program

Start date: June 15
‘Completion date: Sept.15

AREA OF PRIORITY: RESIDENT SERVICES
SPECIFIC GOALS:
Increase residents’ participation in the decisions that affect their lives
Baan a system. wide esident planing proces ad pve residens unprecedented involvement
iden cong conan wo the Local Advisory Counels ACS) aed Resident Management
Corporations (RMC's)
Completion Timeframe: 30 days
Lead Responsibility: CHA Director of Resident Programs
Performance measure: Deploymentof Staff to Properties

ask: Dei 4 HUDIPIH staf from CR for a period of up 1 six months 1o provide TA t
duster of 4 to's developuseats tat have each Bech sSigued a CHA wesdentconcems constant

Completion Timeframe: 30 days
‘Lead Responsibility : PIH A/S and Office Director for CRI

Tests Wark with LACS and RMCsin establishing working groups todeal with specifi site
planning issues, eg. securit

Performance measure: Group List/Meetings schedule

‘Completion Timeframe: 60 days

Lead Responsibility: CHA Kesident Concerns Consultants, along with
TUDICR detaiees, ee

‘Task- Schedule and facilitate vari ings of the work with rsponsible CHA staff.
Tes z and facilitate various meetings ofthe working groups with sponsible

Completion timeframe: 60 days (as needed)
Lead responsibility: Resident Concerns Consultants

Task- Ps a document that would certify that both the LACs and the RMCs were involved in.
the planning process for a specific site

Comy’tion timeframe: One month as needed
Lead Responsibility: Resident Concems Consultants

17 Develop and Conduct Resident S each development. 9f Services, needed
proverb, Secu, Pansy sues Mechel developanen and seston opportunity needs

‘Completion timeframe: 90 to 120 days


ut

HUD Has Not Developed a Long-Term Plan

HUD has yet to develop a long-term plan describing the
direction it will be leading CHA and its residents after the goals
in the 120-day plan have been met. HUD officials recognize the
need for a long term plan. A long-term plan would help address
such issues as comprehensive rehabilitation of the housing stock
resident satisfaction, quality of resident services, progress
toward community enhancement and development, and the quality of
the relationship between the housing authority and the other key
parts of the broader community. The long-term plan also might help
determine how HUD would extricate itself from the day-to-day
management of CHA and to whom HUD will turn over responsibility for
managing the authority in the future. The plan could also set
forth the objectives and milestones that need to be met before HUD
withdraws from CHA and HUD‘s role after the transition
Furthermore, including tenant, city, and community organizations in
developing the plan would foster their support of the changes that
must be made to solve the problems of Chicago's public housing

An important element of the long-term recovery plan is an
ongoing assessment of progress. HUD officials are attempting to
establish accurate baseline data for maintenance, finances
inventories, and other areas to measure the success of their
efforts at CHA. According to public housing experts and others
familiar with CHA's conditions, additional indicators of
improvement should include vacancy rates, rent collections, unit
turnaround time, and modernization. Such indicators, however, are
only useful for evaluating trends in a housing authority's
performance over an extended period. In the near term, HUD expects
that CHA vacancy rates and unit turnaround times may actually
increase as new occupancy and tenant screening policies are put
into effect.


Lead:
Schldine/Marehman (Cousar/White, ct. al)
ime

frame

30 + days (Ong
aa one)

Long-term strategic outline and tactical plan

Organize regular media briefings, conferences, and events
Lead: .

White, with CHA Office of External Affairs

fe

Oneoiny
a verable

Regular media contact,
Organize regular residents meetings

Lead:

‘Schuidiner/Marchman (ORI)

Time

frame

14 days

Deliverable

Regular resident contact

Organize regular labor organization meetings
Lead: .
Schuidiner/Marchman (White)

Time

frame

14 days

Deliverable

Computerized data bas

4
Engage foundations, universities and the business sector in active partnerships with the



138

Mr. SHULDINER. OK, I—I think you have identified the intention
correctly, which is to stay long enough to create a path that will
be followed when we leave, and yet not stay too long because it—
at least at this point it is an unusual situation for the Federal Gov-
ernment to be directly in control of a local agency. That is—that
is the balance that we—that we have to get to.

Again, let me just say that right now of the 40,000 or so units
in Chicago, 6,000 are managed by private entities. So we are not
looking to put all of them under private management, but we are
looking to expand that number again as part of the capacity build-
ing for—for the housing authority. We still have 4 months to go,
and the issue will be: To what extent can we create a path and a
plan and move it far enough along so that we can in fact say with
confidence that after we leave the plan will be carried out by the
people who are put in charge? That is—that is—I guess if there is
any finish line—and the Secretary said it keeps moving—I guess
that is it.

Mr. SoupeR. I thank you. Congressman Rush.

Mr. Rusu. Yes. Mr. Shuldiner, earlier today the Secretary al-
luded to the fact that CHA had begun to purchase single family
homes and duplexes throughout the city. Let me ask you this: How
many CHA single family and duplexes have been purchased out-
side areas other than where they are presently located at?

Mr. SHULDINER. I—with all due deference to the Secretary,
please understand that development is really handled outside of
CHA. Under the control agreement, Habitat does all the develop-
ment. They are the ones who would identify sites to be—to meet
with the control decree. So they are in fact building scatter-sites.
I would certainly suggest that purchasing existing buildings is an-
other way to go. I would have to get back to you in terms of wheth-
er it has actually been done and where.

Mr. Rusu. OK. I just want to say that it is absolutely critical to
any type of reformation in public housing in the city of Chicago. I
mean, to me that is a linchpin issue that—I guess both the other
panelists here have testified that some of the buildings are in such
a deteriorating condition at this point that it is almost impossible
to turn the housing stock itself around. Plus you have got the real
problem of a concentration into one smaller geographic area. And
T would think that you would have as one of your priorities to real-
ly promote the expansion of housing opportunities to public housing
residents throughout the city of Chicago. I mean——

Mr. SHULDINER. Yeah, I could not agree with you more, Mr. Con-
gressman. And—and again you—you have raised an issue which
is—is one of those where it is difficult for us to properly transmit
it to the residents. As Mr. Lines says, they have to go through the
experience themselves; that is why I am pushing for them to
have—you know, acquire an urban planner, ask themselves these
questions, go through the process.

For example, buildings that residents believe are viable, whether
they are viable or not, when you are faced with the exterior ele-
vators, when you are faced with the stand pipes being on the out-
side of the buildings, when you are faced with the exterior walkway
on a single stack building, so much money would have to be spent
to address those problems, as well as asbestos and lead, before you


49
Lead ibility: th HUD/CRI detailees and
cad Responsibility: (Same as above, along wi lees

Q chick 7 .
low through with the CHARI which the reli and
Follow though withthe CHARISMA program which joins CHA, th religious community

= briefing of the CHARISMA to the CHA Citywide Advi: Council
eR eee Bae ar we Feu the Programe monte to be eaplemented wathin CHA

Completion timeframe: 90 days (2)
Lead Responsibility: Resident Concems Consultants

Task- If CHARISMA js recommended, schedule briefings with all developments
who wish to participate

‘Completion timeframe: 90 to 120 days (7)
eax, esponsibility: resident Concerns Consultants

develop specific implementation schedules and milestones for each new participating
development ‘

Completion timeframe: 120 to 150 days (7)
Lead Responsibility: (Same as above)

Task- Submit monthly program progress resports to the CHA Executive Director
Completion timeframe: 120 to 150 days

Lead responsibility: (same as above)

®,

‘ollow through with the State and ‘The Woodlawn Organization to open up a transition facility
for CHA familics in cnsis. This would mean a reuse of CHA apartments as.a temporary safe

haven for troubled individuals and families ° se 7 sate

‘Task: Follow the described in #2 above (Note: Both
propranss Could betbandiea coocuneany

On , i men
a support system to residents participating in Residen Councils.
Encourage SCEGERE ORCL proprans tough homeeteading and the *Mty Oka Home
ogra

Task- Attend monthly meetings of LAC’s and RMCs to provide information on Resident
Granerahup propean ad fete ical teaidens fo pee stall response or oem
homeownership programs.

Completion timeframe: 90 days

Lead Responsibility: (Same as above)

Task- Maintain case file on each referral and keep resident concerns consultants informed of
status of each referral

‘Completion timeframe: 30 days and on-going

Lead Responsibility: (Same as above)

‘Task- Arrange for homeownership-interested residents to visit prospective purchase sites and talk
to new homeowners

‘Completion timeframe: 30 to 90 days


78

ing authority of Chicago in 19 family housing and communities, 56
senior citizen buildings. Therefore it is the name of the Central Ad-
visory Council that I speak.

We wish to commend you for your concerns over the fate of pub-
lic housing residents since takeover by the Department of Housing
and Urban Development, and we thank Congresswoman Cardiss
Collins and Congressman Bobby Rush and Senator Moseley-Braun
for their consistent interest in the lives of public housing residents.

We are often asked by concerned citizens and community organi-
zations if this living condition at Chicago Housing Authority has
changed for the better since the Federal Government Department
of Housing and Urban Development took over. Our candid and hon-
est answer would be no.

If we were to grade the Department of Housing and Urban De-
velopment from A to F, HUD would receive a “F” for the following
reasons. First, communication is a grade “F” for the Department of
Housing and Urban Development. It appears that HUD, in the per-
son of Joseph Shuldiner, is resistant to residents’ input and feed-
back regarding various issues of concern, and moreover the assist-
ant secretary would rather not communicate with me or the
Central Advisory Council Board of Directors. This is a negative
change. With previous administrations there was always a strong
line of communication. The question is: How can the Department
of Housing and Urban Development be effective without direct
communication with the resident leadership?

We desire and should have a vital role in HUD’s plans for the
Chicago Housing Authority, for those plans will have an immediate
impact on thousands of residents and their families. Communica-
tion does not mean agreement, necessarily, but discussion and dia-
log are necessary elements to building a relationship of trust be-
tween Chicago Housing residents and the Department of Housing
and Urban ‘Development. The failure to communicate generates
suspicions among residents.

We want to work with the Department of Housing and Urban
Development as partners who have a common interest that is the
reform of the Chicago Housing Authority in order to improve the
living conditions in public housing communities. Due to this lack
of communication we have no firm sense of HUD’s directions in
Chicago. What is the Department of Housing and Urban Develop-
ment’s overall plan and strategy? What is the role of the residents
in the new scheme of things? Which Chicago public housing com-
munities will be torn down? Will HUD commit to new resources
and dollars to improve CHA properties as well as the living condi-
tions here in Chicago? Is there a written plan? There are other
problem areas I wish to address.

Second, what problem has HUD addressed and solved since the
takeover in May? You still see lack of crafts and janitors in our
dwellings, as well as unattended resident work orders which are of
a higher volume. What is the Department of Housing and Urban
Development’s plan for resolving this problem area?

Third, our security problems under HUD are still the same.
What is Department of Housing and Urban Development’s plan for
resolving problems of public safety?


88

residents of 1230 North Burling (BMC),
ident security program which I am president of.

provided training to 200 residents certifying them
security officere which hae resulted in a 60% decrei
our community.

official
in crime in

Me leo have established a 900 member Tenant Patrol Program that

1 19 CHA D. de ing vandalien by
Bos on site. We heve opened an on undry Room Facility which
generates economic development and eve for future programs at
1230 North Burling. We have also established an Afterschool
Tutoring Program with Harlem Hospital Injury Preventative Program
who donated a $65,000 playground to the residents. Additionally,
wa have developed a marketing strategy to rent the apartments, 95%
which are cecupied.

We currently employ residents in the following positions:
Building Manager

Leasing Clerk

Financial Manager

Social Service Director
Receptionist

Maintenance Mechanic
Maintenance Superintendent
Janitors

A Clean-up Crew

Laundry Attendant

levator Monitor

Finally, ve are also hiring 35 residents to renovate all of the
apartments in our building. when the Housing Authority managed our
building, we bad graffiti, crime gangs, and no | employment
dent management training we have
managed the skills thet we were taught in a
productive way. Our training focused on utilizing the skills
within ourselves and also how to obtain money from Foundations,
private grants, and economic development.

It is because of our training and our vieion of brighter tomorrows,

women living in public housing, we have been able to
successfully run a $400,000 corporation, however, it did not happen
over night and did not have the blessings of the Chicago Hous:
Authority.

The CHA paperwork delays are the major barriers to getting things
done in a timely manner at 1230 North Burling. As manager, I felt
that the CHA did not respond in a timely manner to our supply
requests and finally the CHA shows less responsibility toward the
building because it believes that the HNC has money for the things

Before HUD took over the CHA I had the
we began to manage our on services some
employers at CHA felt that their jobs vere in jeopardy, therefor
they were reluctant to fully cooperate with 1230 BMC.



Time Fi 2 Six nth
Ferformance Measure: Plan implemented

Financial Asset Management:
‘Task: Prepare and release RFP for Pension Plan Management

Subtask: Draft RFP.
Lead Person: A Earl & A Vargas
‘Time Frame: one week

Performance Measure: draft prepared

‘Subtask: Release RFP

Lead Person : A V, Addrienne
Time Frame one week
Performance measure:REP released

Task : Outsource management of deferred comp, management

Receive & evaluate Is
‘Time Frame: two moni

(eau Person A Earl

Performance measure: contract awarded s

‘Task: Investigate procurement of third party administrator for workman's compensation
Fe ewe sda

Lead Person: A Earl, A Vargas

ce Measure : Recommendations to ED
AREA OF PRIORITY: HOUSING OPERATIONS (MAINTENANCE &
SPECIFIC GOAI
MAINTENANCE,
(1) Overhaul CHA maintenance operations
~- Subtasks:
Establish maintenance reorganization work group consisting of residents, staf, and an outside

Review deployment of existing workforce;

Estimate workloads by site (requests for repairs, vacancies, PM, custodial, grounds, other);

Discuss with bargininig unit the conept of cross-work efforts

Detemie number eee nec, ho postions wb aie be Pope
cach property develop a maintenance organization profile that: (a) identifies work and

Ieper Re Sta y Serer cr fp chaeie Size of

available/vehicles needed; (d) lists equipment avalable/equipment needed,

Determine number and type of central or specialty crews (if any) to support property-based
Iratttonance: develop cchtal or spoctay beow profes a sone bed above,

Determine which work efforts can be contracted; determine if any work can be contractedto
resident group or residnt owed business

Establish supply line sedures for use by the sites
Reseesh Supply fine procedures. fer use the sit

Reassign maintenance staff,
Provide taining and orientation for maintenance staff, maintenance supervisors, and property


129

‘September 5, 1995 __ Testimony of Jeffrey K. Lines ____6

there exist a number of systemic problems that affect the entire operation of the housing
agency. Taking control of the agency and separating the housing authority from the local
‘government and even in some cases, its normal relationship with HUD is what can be
required. HUD has options that it can pursue regarding the above which can include the
following.

1. Petition the courts to appoint a receiver which can often be accomplished by
working with existing plaintiffs in a court action seeking a remedy such as
receivership.

2. Taking control over an agency by declaring a breach of the Annual
Contributions Contract and moving to appoint a receiver.

3. Taking control over one or more housing developments and requiring the
appointment of an alternative administrator or receiver for one or more
developments (which is a practice followed in the private sector for assisted
housing developments).

4, Outlining a set of improvement and related actions on the part of the public
housing agency that if not undertaken will "trigger" steps to intervene in its
operations which can include the appointment of an alternative manager.

5. Requiring that certain distressed properties actually be assigned to a new
housing agency or entity such as a public benefit corporation as is recommended
for Chicago and being considered in New Orleans.

The above options are not mutually exclusive and provide a wide range of intervention actions
that can be taken by HUD to remedy distress in public housing.

‘The most important issue to be considered is that HUD act in a way that will result in
longer term benefits to public housing residents when an agency is found to be distressed and
not progressing in a reasonable manner toward remedying conditions of distress. In some
cases steps can be taken without having (o resort to a direct intervention in the operations of
the public housing agency. In the case of Indianapolis we have worked with this public
housing agency to establish a series of management and operational improvements and t0
implement programs to (reat its more severely distressed public housing developments. A part
of the program for remedying conditions of distress has been to create a separate city agency
for public housing and for the agency to develop its own independent and internal management
systems (i.e. financial management, capital improvements management, automated
‘management information systems, procurement and so on).

Ona larger scale, this is the program that is being pursued for Detroit's public
housing. In this case HUD must take the role of providing support for the agency's operations


118

te manage its housing stock. No action was taken on its field
office's recommendation. Subsequently, in 1989, we reported tha
CHA had long-standing management problems in virtually all
operational areas and severely distressed housing conditions.
Moreover, a 1994 evaluation by the consulting firm of TAG
Associates, Inc., found that CHA's management problems and property
deterioration had continued and recommended that significant
actions be taken to improve conditions.?

HUBS TAKEOVER QF CHA

Over the 15 years that CHA has been on HUD's troubled housing
list,’ HUD has tried several approaches--short of taking direct
control--to improve the conditions at this severely troubled
housing authority. In May of this year, HUD officials met again
with CHA management to discuss the authority's troubled status.

The subsequent resignation of CHA’s executive director and board of
directors left a substantial void in the leadership at that time.
with these resignations and the immediate need to provide day-to-
day management for the authority, HUD had few alternatives
including taking control of the CHA with its own staff. Other
alternatives included contracting with a private manager or
petitioning the courts for a receiver. These alternatives

however, required additional time to accomplish.

Receivership did not appear to be a reasonable option following
the board members' resignations. HUD had neither the time nor the

Long=Standing Problems (GAO/RCED-89-100, June 8, 1989).

‘Chicago Housing Authority: Management Capacity Assessment. TAG
Associates, Inc., (Norwood, MA: Sept. 1994).

*MUD classifies public housing authorities as "troubled" if they
score less than 60 out of 100 points against a set of 12
performance indicators. Currently, HUD rates 92 of the 3,300
authorities as “troubled.”


122

alone said that essentially CHA needed to consider divesting itself
of its most troubled portfolio, and that needed to be done after
some careful plan and study except at those at Cabrini and Ida B.
Wells and a couple of others where there have been significant
planning already.

The second thing J also indicated was that we needed to have a
different management structure and approach, which I think CHA
is now considering for the other very large, difficult high rises
which can probably be treatable through more conventional but yet
not typical means.

And that third, that the CHA needed some significant manage-
ment restructuring. The security area is important. It is very im-
portant that you focus on resident safety and health, and that you
focus on maintenance and security, which is where ‘they are now.
That is the appropriate way to go. However, at the end of Decem-
ber CHA will be better but it will be far from having its problems
cured. And what I worry about, being a receiver, being somebody
who is under constant political barrage, having been—being an ap-
pointee of a court, as to how the agency will be able to act with
sufficient authority with whomever it installs as an executive direc-
tor in order to do the right thing, make the right decisions and
manage public housing resources as well.

Fundamental issues of procurement, personnel management, and
the management of financial resources require both competence
and far-sweeping capacity either through the local political environ-
ment or through some other sorts of actions such as receivership
type powers in order to deal with something as significantly trou-
bled as the Chicago Housing Authority.

Those are my basic comments. I would rather just turn it over
to questions. You have got my written testimony. So, thank you.

[The prepared statement of Mr. Lines follows:]


127

September S, 1995. Testimony of Jeffrey K. Lines 4

participating and receiving funding under this program. TAG Associates is serving in this
capacity as a part of a team acting as the alternative administrator in Detroit and Washington,
DC. The Alternative Administrators are to serve as the “agent” or in many respects in lieu of
the housing authority in its dealings with the community, HUD and other institucional actors
engaged in these full scale revitalization programs. It is important to note that CHA did not
designate an Alternative Administrator for its Cabrini Green project.

Steps have also been taken by the federal courts in Chester and Kansas City to take
control of public housing agencies and to appoint receivers. In both of these cases the receiver
hhas been a private firm and not an individual. In Washington, D.C. a local court has finally
prevailed and taken control of the public housing agency naming an individual as the receiver
Prior to this experience a local court had only taken control of the Boston Housing Authority
and appointed a receiver (in February. 1980). In rare cases (East St. Louis and Bridgeport)
HUD has taken control of a public housing agency by declaring a breach in the Annual
Contributions Contract which is the method apparently being used to take control of the CHA.

In the cases of Kansas City and the District of Columbia the level of distress at these
public housing agencies is quite high but the approaches to correcting conditions of distress are
far more conventional than what will be required for treating distressed public housing in
Chicago, When taking control of a public housing agency 1 is important to have clear
objectives for remedying the conditions of distress and moving the agency back to a new or
longer term governance structure that does not require such extraordinary intervention.
Privately managed public housing certainly can be one of the approaches to operating a public
housing agency or housing development in the future. However, within a short period of me
a “receiver”, “alternative administrator" or other “alternative operator” of public housing
needs to have a plan and program for what direction the agency is to move in so as to no
longer be considered troubled. In the cases where I have been involved the plan 1s developed
in three to six months and lays out a program for remedying conditions of distress «ie. in
Boston and Washington, D.C. the process for developing a plan was six months and in Kansas
City it was three months).

Eatraordinary flexibility and support is needed trom HUD if outside imtervention in
public housing 1s t0 be successful. There can generally be just one “person in charge” and that
person in the case of a receiver is typically not HUD. Being hands-off while providing
resources and logistical support to an individual or tirm is generally incongruous with the way
a federal regulatory and monitoring agency such as HUD is conditioned to operate

When considering interventions in troubled public housing it is important to consider
that HUD is a regulatory and monitoring agency and not a supervisory agency (i.e. it is not
organized in a way that it has the capacity or organization to operate public housing agencies -
let alone an agency the size of CHA). Therefore, HUD needs to be clear about its objectives
and approach to intervening in the operation of public housing agencies and have a pian for
moving the agency to a form of governance that does not require HUD directly administering



151

© Employed civilians for administration positions which are currently staffed by patrol
officers

‘As part of the overall redeployment of the CHAPD, nine clvillans have been hired for
administrative desk positions within the stations currently being held by patrol officers, Three.
of the new hires CHA residents,

© Creation of an Internal Inspections Team for the Department, which will coordinate with
the Inspector General's Office / Civillan Complaint Review Board

CHA/HUD has put in place a CHAPD Intemal Inspections Unit to coordinate efforts between
the CHA's Inspectors General's Office and the Civilian Complaint Review Board. This has
already heightened accountability within the force, with the arrests of two CHA patrol officers
through routine spot checks since the unit was implemented,

‘© Restructured Tenant Patrol Operations and Implemented Training For Tenant Patrol
Members

‘The Tenant Patrol program is joining forces with the CHAPD. In this way, It can more
effectively coordinate with and support the CHAPD. 1 is alo bang revructaed sve a
Tilson berween the residen's and the CHAPD officials in their developments, Again, the New
‘York Housing Authority, which has recruited over 11,000 residents for its Tenant Patrol
Program, will conduet te ting.

© Established a Police Tenant Counell

A Police Tenant Council has been created in all four of current CHAPD sub-stations to help
ensure that the CHAPD and residents work together on keeping their communities safe.
Residents will have input into developing security measures that are communlty-specific. A
CHAPD commander will be assigned to each community area and will be responsible for
enforcing the crime prevention measures for that area.

‘The Council will meet with residents on a regular basis to inform them of the CHAPD's crime.
fighting efforts, The meetings will also provide a forum for each community to raise concems.

‘they might have. Commanders will then be responsible for working with the residents to
address their concerns.

© Coordination with the City of Chicago’s Bureau of Communications for inclusion into
the new 911 Center for Centralized Dispatching and More Efficient Command and Control.

After evaluating the current system, the CHA hopes to be put on board with the new 911 Center
for the Clty of Chicago. ‘This inclusion must be an integral part of any Community Policing
effort. This coordination with the City of Chicago's Bureau of Communications will secure the
safety of our officers, ensure prompt response to our residents, eliminate the loss of manpower
‘due to the duplication of services, and provide prompt backup to our officers.


155

Chairman Clinger
Chairman Shays

Representative Collins

‘Represeatative Towns

Members Of The Committee

My name is William T. Wallace. My profession is Architect/ Planner. ( See
Resume Attached/Attachment “A”,) Tam Managing Director of Housing
Teebnology Corporation. I have bees in independent practice since 1968 with an
emphasis on residential design and techuology development. I have been involved
in the Horner Redevelopment Program from the community side and through my
efforts in land Disposition Assessment for the Chicago Metropolitan Housing
Development Corporation, the work of which also included preliminary prototypical
design of dwelling types to afford maximum practical utilization of available vacant
parcels and abandoned viable structures within a defined area deemed suitable to

meet rehousing needs or the Horner redevelopment initiative.

‘Though I have been responsible for the design of a wide range of building types as
‘well as a varying number of physles! plans across the United States, in several
foreiga countries, and in both the publie and private sectors, my primary focus has
been in the design of HUD supported Housing and associated facilities.


CONTENTS

Page
Hearing held on September 5, 1995 ... 1
Statement of:
Cisneros, Henry, Secretary, Department of Housing and Urban Develop-
ment, accompanied by Joseph Shuldiner, chairman, CHA Executive
Committee 12

Marchman, Kevin E., interim executive director, CHA, Deputy Assistant
Secretary, Distressed and Troubled Housing Recovery, HUD; Rosanna
Marquez, Office of the Mayor, Chicago, IL; George Murray, CHA chief
of police; and William T. Wallace, managing director, Housing Tech-
nology Corp .... . 145

Randolph, Artensia, CHA executive board member, chairperson, Central
Advisory Committee; Hattie Calvin, president, Cabrini Green Local
Advisory Council; and Cora Moore, tenant manager, Cabrini Green

Shuldiner, Joseph, Assistant Secretary for Public and Indian Hou:
HUD, chairman, CHA executive committee; Judy England-Joseph, Di
rector, Housing and Community Development Issues, General Account-
ing Office; and Jeffrey Lines, president, TAG Associates ..

Letters, statements, etc., submitted for the record by:

Calvin, Hattie, president, Cabrini Green Local Advisory Council, pre-
pared statement of ...

Cisneros, Henry, Secretary, Department of Housing and Urban Develop-
ment, prepared statement of ....

Clinger, Hon. William F., Jr., a Representative in Congress from the
State of Pennsylvania, prepared statement of ...

England-Joseph, Judy, Director, Housing and Community Development
Issues, General Accounting Office, prepared statement of ....

Lines, Jeffrey, president, TAG Associates, prepared statement of .

Moore, Cora, tenant manager, Cabrini Green, prepared statement of ..

Murray, George, CHA chief of police, security operational highlights 150

Wallace, Williain T., managing director, Housing Technology Corp., pre-
pared statement of ..

7

106

(aq),


145

mitted—fortunately we had a week to go before the deadline for
the—for this year’s NOFA, and we immediately submitted a re-
quest for funds so that if the planning works, you know, we will
have a—a pot of money.

So I guess that would be—that if you are not talking about an
emergency situation, we will pursue those where we have plans.

Mr. SoupeEr. I thank the panel for their input and—and your
time in coming this long way, for some of you, for the hearing, and
appreciate that. And any other comments you want to submit for
the record—

Mrs. COLLINS. Mr. Chairman.

Mr. SouDER. Oh, excuse me.

Mrs. CoLLins. Yes. Mr. Shuldiner, I did not hear you give a spe-
cific answer to that question that was just asked. As I understand
it, the question that was asked is: If a building is to be torn down,
would it not be torn down until after the people who live in that
building have found a place to live?

Mr. SHULDINER. You know, we—well, obviously we have——

Mrs. COLLINS. That is a yes or no question, is it not?

Mr. SHULDINER [continuing]. To relocate. But absolutely. Abso-
lutely. We have to relocate them. That is—the law requires.

Mrs. COLLINS. That is all I wanted to hear. Thank you. We are
still friends, Mr. Shuldiner. Thank you, Mr. Chairman.

Mr. SoupER. Thank you. Will the fourth panel come forward. Mr.
Marchman, Ms. Rosanna Marquez, Chief Murray, and Mr. William
Wallace.

[Witnesses sworn.]

Mr. SoupEr. Note for the record that the witnesses all answered
in the affirmative.

Mr. Marchman, do you have any opening statement or words you
want to say here at the beginning?

STATEMENTS OF KEVIN E. MARCHMAN, INTERIM EXECUTIVE
DIRECTOR, CHA, DEPUTY ASSISTANT SECRETARY, DIS-
TRESSED AND TROUBLED HOUSING RECOVERY, HUD;
ROSANNA MARQUEZ, OFFICE OF THE MAYOR, CHICAGO, IL;
GEORGE MURRAY, CHA CHIEF OF POLICE; AND WILLIAM T.
CALLACE, MANAGING DIRECTOR, HOUSING TECHNOLOGY

Mr. MARCHMAN. Actually I do not. I would just like to introduce
myself. My name is Kevin Marchman. I am the Deputy Assistant
Security for Distressed and Troubled Housing Recovery, and cur-
rently the interim Executive Director of the Chicago Housing Au-
thority.

It is my responsibility, in that position, for the day-to-day man-
agement of the housing authority, in charge of both the HUD re-
covery and the CHA management staff. I would simply refer you
to my June 11 memo to the Secretary and to the Assistant Sec-
retary by way of a—of a testimony. Thank you.

Mr. SoupER. Thank you. Ms. Marquez, is that the correct-——

Ms. MARQUEZ. Marquez, that is—that is fine. That is correct.

Mr. SouDER. OK, you may go ahead.

Ms. MARQUEZ. That is going to be too close. All right, I want to
just make a couple of brief remarks and then welcome any ques-


106

OK, thank you—thank you very much for your testimony on this
panel. And could the third panel come forward. That would be Mr.
Shuldiner, who has been here already; Ms. Judy England-Joseph;
Mr. Jeffrey Lines. Thank you very much.

[Witnesses sworn.]

Mr. Souper. For the record, the witnesses answered in the af-
firmative. Well, Mr. Shuldiner, do you want to make a statement
in the beginning here or make any comments on what we have
heard on the other panels?

Mr. SHULDINER. If I could. I mean, I do not have a written state-
ment beyond what the Secretary has submitted. Just a couple of
things which would be more appropriate as part of this panel.

STATEMENTS OF JOSEPH SHULDINER, ASSISTANT SEC-
RETARY FOR PUBLIC AND INDIAN HOUSING, HUD, CHAIR-
MAN, CHA EXECUTIVE COMMITTEE; JUDY ENGLAND-JO-
SEPH, DIRECTOR, HOUSING AND COMMUNITY DEVELOP-
MENT ISSUES, GENERAL ACCOUNTING OFFICE; AND JEF-
FREY LINES, PRESIDENT, TAG ASSOCIATES

Mr. SHULDINER. There has been some discussion in terms of
what the role of HUD should be, and whether HUD has the capac-
ity to take over a housing authority, and whether it is moving to
take over other housing authorities. When HUD submitted its blue-
print back in December and talked about the—the reinvention of
the Department and the future of the Department, the fact of the
matter is we envisioned a much smaller Department that would
have much fewer functions; that the Department would basically
obviously be a funder; that it would be a reviewer of plans; that
each community would have to submit a consolidated plan that
HUD would review; that it would provide technical assistance; but
that it would also have an enforcement arm. And that in fact,
whether it is taking over housing authorities or individual section
8 developments privately owned or publicly owned, that that would
in fact be a function that—that HUD would have in the future.

So I think the question of yes, HUD has not done it in the past,
HUD is not—is not—up until a year or two ago HUD was not con-
stituted to have that capacity, but we are in fact migrating that
way. In this administration we have created the Office of Dis-
tressed and Troubled Housing Recovery, we have brought in peo-

le, plus have created indefinite quantities contract so that we
Rave technical consultants on contract whom we can call on specifi-
cally to have the capacity to do an intervention if it becomes nec-
essary.
in fact, if I may go further and say HUD—HUD suggested legis-
lation that—that would institute a death penalty, if you will, for
housing authorities that remained on the troubled list beyond a
certain period of time, that HUD would be enforced to intervene;
that it was not, you know, HUD deciding to intervene when the
overwhelming pressure would be not to; but in fact the reverse,
that these are conditions that are intolerable, that must in fact be
addressed, and that the—and that the result would be that HUD
would intervene in effect through an administrative receivership
action. So I just wanted to bring out that point.


66

Mr. Souper. Thank you.

Mr. Suays. Just for the record, it is fairly clear that problems
that HUD has had in Chicago have existed for more than 2 years.
This is a legacy, frankly, of corruption and mismanagement.

Mr. CISNEROS. The categories that define a housing authority as
“troubled” have existed in Chicago since 1978.

Mr. SHays. So the real question is why did we not do it even
under previous administrations. We should have ended this a long
time ago.

Now, Mr. Towns—Mrs. Collins, I get to recognize you. If you
want to yield to Mr. Towns, you may.

Mrs. COLLINS. I will be more than happy to yield to the ranking
member.

Mr. Towns. Thank you very much.

Let me just say, first of all, Mr. Secretary, I want to applaud you
for your efforts, and especially during this very difficult day and
time, to assume this kind of responsibility. 1 think that recognizing
the fact that everywhere we go we are talking about budget cuts,
and of course we are talking about budget cutting in terms of your
own budget, you know, and I must say to you that recognizing all
of that, for you to step in to say that something needs to be done
and that you are going to do something about it, I think that that
is something that should not go unnoticed.

d I also wanted to say that I think that you said it so well
at the end there, that you are not talking about something that
just happened overnight, you are talking about something that
happened over a number of years that led to the problem that we
have at this particular time here in Chicago.

Let me just sort of raise the question, though. Recognize that it
goes sort of beyond your agency, some of the problems. What has
been the response from the other agencies in terms of Justice, HHS
and all the agencies out there that would have to come in to be
able to help turn this around? What has the response been from
those agencies?

Mr. CISNEROS. Congressman, we have had support from the
other Federal agencies with specific projects. The Department of
Education, we were working with them because there are schools
adjacent to many of the developments; the Department of Labor,
because we need job training program onsites; the Department of
Health and Human Services, because Headstart and youth clinics
and other programs are necessary; the Department of Justice has
been with us in the context of Operation Safe Home, which is our
inspector general’s initiative to get at both white collar crime and—
and other kinds of violence-related crime in public housing settings.
So we have had good support.

Indeed early on, right after we moved to take it over, I ap-
proached the Domestic Policy Ceuncil Director, Carol Raskill in the
White House, to tell her that we were going to need support from
other agencies. She quickly convened a meeting and those commit-
ments of support were made, and we have seen evidence of that
kind of support.

Mr. Towns. Let me just say that—and I am going to yield back
after this, that I notice a comment was made about the fact that
could you not find them in Chicago, could you not—I think that


52

Interaction with and engagement of resident leaders

Establish Organized Labor's input regarding "important qualities" of potential contact
Lead:

Schuldiner/Marchman (White)

Time

frame

7 days

Deliverable

interaction with and engagement of labor leaders

Identify scope of responsibilities for board

Lead:
‘Schuidiner/Marchman
Time

frame

7 days

Deliverable

Board strategy and objectives
Identify meeting schedule for board
Lead: ;
Schuidiner/Marchman (White)
Time

frame

T.days

Deliverable

Regular board meetings

3

‘Create a public information forum to keep media, residents and the public at-large
informed of the ebanges at CHA.

Tasks:
Identify strategic outline for short-term goals and tactical plan

Lead:

‘Schuidiner/Marchman (Cousar)
Time

frame

Immediate

Deliverable

Short-term strategic outline and tactical plan

Identify strategic long-term goals and tactical plan


173

A lot of, you know, very positive, enthusiastic teachers. What was
not so attractive on the outside, on the inside was quite nice. .

My biggest discouragement is thinking about these young kids
who have no dreams. I mean, I cannot think of anything worse.
And the one thing that I get down on my hands and knees for, is
I had a mom and dad, admittedly, who just e: certain things
of me and made me dream. I mean, I was in third grade dreamin;
about being in public life working for the government as a civil
servant, like you may have been doing, Michael, or being in the ca-
pacity that I have right now. I had parents who taught me to
dream.

And if we could accomplish nothing else, if we could get these
kids to dream and have them think the dreams were realistic, I
cannot think of anything better.

And I will just end with this comment. The most memorable
meeting I ever had with a constituent was a young woman who
was 35 years old. She happened to be white, but that was irrele-
vant. She came from a family where her father died when she was
12. She had six younger brothers and sisters, and her mother was
a teacher. And the one thing she said was her mother expected
them to have not college degrees, but graduate degrees. She told
me every one of them had a graduate degree; doctors, lawyers, and
80 on.

That was the dream of a mother and it was not wealth. She was
an educated woman but she made a teacher's salary; and she had
seven kids and no income other than her own.

Cora, I just want you to know I would love tenants to have more
impact in public housing even, frankly, if you screw up a little bit.
Because Lord knows it would not be any worse than what has hap-
pened before. I would rather have the tenants do it and screw up,
and learn from it and grow from it, and we all could be willing to
make some mistakes in the process and be willing to forgive each
other for our mistakes.

Mr. Chairman, I know that our ranking member has a question.
Thank you.

Mrs. CoLLins. I'll tell you what it is. Thank you, Mr. Chairman.

Mr. Chairman, I would appreciate it if Mr. Marchman, for the
record, and I know we have it, but it seems to me that the creation
of employment and wage opportunities is a critical need among

ublic housing residents. I know this need has been recognized by
Fup, articularly in its section 3. So what I would like to have you
do, is for the record, because I know the time is very short, to have
Mr. Marchman provide us with how he sees these opportunities
being exercised in HUD’s RFQ’s and P’s, if possible. That would be
very helpful for the record.

Now, I want to go to Mr. Wallace, because I have known him for
a very long period of time. He has been to my office and has shown
me his design mechanism for the new construction. What Mr. Wal-
lace has not done, though, is to tell us how it would benefit Chicago
Housing Authority. I have seen the designs and happen to know
that they are cost efficient, that the buildings could be more quick-
ly constructed and could be easily duplicated. Mr. Wallace and I be-
lieve you could tell me whether, Mr. Wallace, people who are un-
skilled builders would be able to find jobs in the kind of building


101

going to go this way. You hear this, you hear that. I cannot say,
no, that is not true because Mr. Marchman told me that was not
so. But everybody is coming to me with all kind of different things.

Mr. RusH. Well, Ms. Randolph, in light of that, now, there has
been—the Secretary and others have talked about this—this over-
whelming, broad-based involvement in terms of the LAC elections
that is coming up in December. Now, given that there is no—

Ms. RANDOLPH. Yeah.

-Mr. Rusu [continuing]. Current role for the CAC——

Ms. RANDOLPH. This year, yeah, they plan now what—we have
plans to be—to get somebody to do an RFQ. But see, since then no-
body has talked to me. I heard that they say, “Well, you all are
going to—supposed to have an election, but there is nobody.” But
now, has not nobody come to me and said, “Mrs. Randolph, do not
got all upset. The election is going to be.” See what I am saying?

lobody.

Since we did all this planning it come out: Well, we do not know
whether you all are going to have an election or not because there
is no money. But I feel Mr. Kevin or Mr. Shuldiner should have
said, “Mrs. andolph, I do not know what is going on, but you will
have your election.” That is communication.

Mr. Rusu. Well—

Ms. RANDOLPH. I do not know how the residents hear all this
stuff.

Mr. Rusu. Well, now, Ms. Randolph——

Ms. RANDOLPH. They call me and——

Mr. RuSH [continuing]. Let me try to go through this. Now, what
impact your current relationship with the CHA board——

Ms. RANDOLPH. It would be good.

Mr. Rusu. Let me finish. What impact would that have on the
enthusiasm, the energy, the excitement, the interest for elections
in December if here in September the CAC is nonfunctional be-
cause it does not have a relationship with the LAC? I mean, do you
think that it would help? Do you think that that would help?

Ms. RANDOLPH. It would be—yeah, it would be a good impact just
to know—it is a good impact with the residents knowing you and
Cardiss Collins was here. It would be a good impact for us to know
that HUD’s people, the most influential ones, are talking to us and
telling us this or making plans, and then we can understand what
they are saying and what they are doing. That would make a good
impact. But this way it is no impact because there are nobody talk-
ing.

Mr. Suays. Ms. Calvin, I just want to ask you a question about
gangs, because I have a number of feelings about gangs, articu-
larly as they exist in my community of Bridgeport, CT. Some of
them are downright vicious. We have had the FBI and the mar-
shal’s office and FDA and others working pretty hard to get at the
Bridgeport gangs, and they have had some success.

When I was here last night in Cabrini Green, I met with a few
gang members. I asked them to tell me their assessment of the
gangs. They had some negative comments about it, but they had
some very positive ones. One is, in Cabrini Green there has been
kind of a peace treaty in a sense between the two gangs to allow
each to go in the other's area. Is that a fact?


26

7

While we are pleased with the tremendous progress that has been made, no discussion
of redevelopment in Chicago is complete without mention of what is undoubtedly the most
desolate strip of public housing in the nation: the State Street Corridor. Comprised of the
Robert Taylor, Stateway, Ickes, Hilliard and Dearborn projects, this four mile strip is
literally devoid of any commercial, recreational, or other amenities which form a
community. During my visit to Chicago last month, I asked Assistant Secretary Shuldiner to
begin the planning process needed to redevelop this area. He has already met with elected
officials and resident leaders to begin the process, and additional meetings are scheduled this
month. We will also try to connect our plans with the Chicago Empowerment Zone, which
encompasses part of the State Street Corridor.

In the critical area of public safety and security, where one study indicated that crime
occurs at a sate 62% higher than the rest of the City, immediate action has been taken.
Many of these actions were recommended by Carroll Buracker, an expert in the field.
Executive summaries of his reports were sent to the Committee.

Sixty additional CHA police officers were hired in our first full week, and all police,
security, and crime prevention activities were consolidated. Part of the restructuring
included the granting of long-delayed promotions to 20 CHA police officers to fill key
supervisory positions, For the first time, an Internal Affairs Division within the Department
was formed. It led immediately to the arrest of two officers who allegedly had robbed a
resident. The tenant patrol program will be overhauled, augmented through training and
technical assistance provided by the nation’s leading tenant patrol organization located in
New York City.

In order to create an environment where law-abiding residents and the police work
together to combat crime, the entire force is receiving training in community policing. One
facet of this strategy is the redeployment of the CHA police. Three-quarters of the police
will leave their cars and patrol the developments. This will include the creation of a bicycle
unit, modeled after similar, successful programs in other cities.

In late September we will convene resident leaders, key CHA resident program staff,
local HUD officials and CHA Potice for three days of training at the Illinois institute of
Technology. The purpose of this seminar will be to improve the level of trust and
communication among all parties, which will result in residents becoming true partners in
‘making their communities safer.

Specialized units are also being developed to combat crimes against the elderly and
prevent elevator vandalism. Contract security, which has proven to be of questionable value
and which is extremely expensive, will be scaled back by 25% in the initial phase, Further
reductions will follow. The newly hired officers and the patrol strategy will more than offset
this and lead to a more safe and secure environment for public housing residents.

If the funding exists, on-site police mini-stations will be constructed. These stations


22

‘The first question we had to face was "How does the housing authority run on an
interim basis until a permanent executive director, or management structure, is identified and
put into place?" I asked Assistant Secretary Joseph Shuldiner to become the acting
Chairman, and Kevin Marchman, Deputy Assistant Secretary at ODTHR, to became acting
executive director. As some of you are aware, Assistant Secretary Shuldiner ran the housing
authorities in New York and Los Angeles, and Mr. Marchman was the executive director in
Denver for a troubled housing authority that he led to recovery. Mr. Shuldiner has spent
between two and three days per week in Chicago, while Mr. Marchman is here in Chicago
on a full-time basis.

We did not seek a court-appointed receiver at the outset because judicial receivers
tend to be more successful in situations where the problems are principally management
related. This is not to say that the CHA has not been mismanaged; there is no question that
it has. But the problems in Chicago go beyond just poor management. Receivers are
generally ineffective when it comes to securing local government and political support. In
Chicago's case, we needed to engage the political forces and elected officials to build public
and private support.

Furthermore, going through the courts to put a public housing authority into
receivership is a time-consuming process. It took several years to get a receiver on board at
the District of Columbia's Department of Public and Assisted Housing. ‘The receivership in
Boston took five years. This is simply too long. Residents have suffered long enough.

As I expressed earlier, other housing professionals were also brought in to set the
foundation and begin the recovery. Greg Russ, 2 HUD employee and public housing exper
with decades of experience is serving as interim Chief of Staff. John Nelson, executive
director of Indianapolis who has had great success in turning around that city’s housing
authority, is acting director of operations. Ana Vargas, an expert in the area of public
housing finance, is heading the finance and administration departments.

‘As would have been the case for any management firm brought in to tum around a
failed business or government agency, it has taken us three months to get a grip on the
magnitude of the problems. After three months, I can report to you that the CHA is in even
worse shape than had been envisioned. Stabilizing the management and operation of the
agency has forced us to assume a crisis management mode. This has not, however,
prevented us from making solid progress in areas such as maintenance and security. We
have also begun to build a system that will efficiently use public funds to provide low-income
families with safe and decent housing, and offer residents the opportunity to live in mixed
income communities.

Our immediate plan has three components: 1) stabilize the Authority and rebuild its
infrastructure; 2) move into a full-fledged recovery effort and begin planning for the future
of the CHA in anticipation of HUD’s exit; and 3) accelerate the redevelopment that had been
stalled at the Henry Horner, Cabrini Green, and Lakefront developments.


105

highrise buildings are going to be knocked down without having an
alternative plan for the residents?

Ms. RANDOLPH. There was fear that some of the homes would be
knocked down, or we were hearing—I do not know where I heard
this—that there would be no replacements. Now I am hearing that
when they are knocked down there will be replacements. So I do
not know what to believe at this point on very few things.

Mr. SoupeER. So one of your strongest concerns that you are hear-
ing, is that you see a plan prior to the —

Ms. RANDOLPH. I have not seen the plan.

Mr. SoupDER. But your—the residents are saying to you, “We
want to see something before they are destroyed?

Ms. RANDOLPH. Right. Right.

Mr. SoupDER. That happened in—in Norfolk where an area was
removed near a new mall and they did not see the plan, and there
was a fear they were not going to get back into theirs. That has
happened in other cities. It is not—Yolanda Rivera in South Bronx,
when they said they were going to clean out the whole area, stayed
in her building until she saw a plan.

8. IDOLPH. I cannot focus on this administration because in
19—I think in 1985 or 1986 no prior place—we had six buildings.
Only two have been finished. So that is what makes residents in
other developments afraid to take the chance of demolishing some-
thing and nothing has been built. Now, we have got two build-
ings—four buildings yet to be redeveloped. So that is what makes
them upset, Because in 6—5 years only two buildings have been
finished and the other two are still standing. And, but it has been
promises, promises, promises. So I cannot say that this is going to
be HUD’s fault this time. I do not know whose fault it was.

Mr. Souper. Right. And I think everybody who has been here on
the panels agrees that this has crossed party lines and it has been
something that has gone on under multiple housing authorities in
multiple cities under multiple administrations. But it is—it is a—
not an illogical fear of somebody who has a home, as you so elo-
quently described, and sees the potential of losing that and not
knowing where to go next.

Ms. RANDOLPH. But my only concern is working closely with the
department of urban housing. You know, we could work close as a
partnership. I would not have any more problems because I would

ve some answers, right or wrong. I would be taking what they
say, going back to my residents saying, yes, I talked to Bobby
Rush, I talked to Mrs. Collins. But I cannot go back and say I
talked to anybody.

Mr. Souper. Let me ask one other question that Mr. Rush—Con-
gressman Rush raised and you answered it in the reverse form.
You said that it would help in the elections if you had information.
Is depriving you of information going to affect elections in the other
way?

Ms. RANDOLPH. Sure. Sure.

Mr. Souber. Are you suggesting that might be part of any of the
lack of communication?

Ms. RANDOLPH. I do not—after today I do not know if it will be.

Mr. Souper. Thank you very much.


162

In addition to the above, HUD should establish « techaology developmeat and
assistance program. To Foster Development of Technology that facilitates the
employment of low income and Aid recipients under contracted performance

guidelines.

T once lived on west Maypole before Henry Homer was built. My family moved
because of it's being built, and I have watched, since the demolition of the original
residents. Now is the time to right the “wreag thinking” that caused the disaster
that bs now public bousing,

‘Use this opportunity.
‘Thank You.


165

Mrs. CoL.ins. Thank you, Mr. Chairman.

Ms. Marquez, let me ask you this question. Secretary Cisneros
implied, and Ms. England-Joseph states in her testimony, “Chi-
cago’s mayor did not support receivership.” Did the mayor voice op-
position to the receivership?

Ms. MARQUEZ. Let me answer it this way. The issue actually
never came up in the initial discussions that preceded the HUD
takeover. When HUD approached us, the scenario it laid out—and
it was really the only scenario it laid out—was this administrative
receivership that it now finds itself in.

I will tell you also, though, at no time did any—any of the par-
ties contemplate that HUD would actually be in—running CHA
day-to-day. But—but that is something that eventually happened
because of the board’s voluntary resignation, as such.

Mrs. COLLINs. And so as far as you know the ——

Ms. MARQUEZ. So at the time it was not even an issue. It came
up after the takeover as a possibility down the line. And at that
time it is true that the city had some concerns about court receiver-
ship. But, as I said, by that point the administrative receivership
was in place, so it never really came to a head, if you will.

Mrs. CoLuins. Thank you.

Mr. Marchman, according to Secretary Cisneros, a critical compo-
nent of the CHA recovery is the cooperation of the city of Chicago
and the private, corporate, as well as nonprofit sectors. Now, has
this cooperation really materialized?

Mr. MARCHMAN. Yes, it has. We meet with the city, we meet with
the residents, we meet with community groups, elected officials on
a weekly basis. I am pleased to note that the cooperation has been
tremendous, inasmuch as what we have been able to do so far.

Mrs. COLLINS. Can you tell me what options are under consider-
ation to engage the support of the city administration and the local
business and community groups in breaking up the geographic con-
centration of CHA?

Mr. MarcuMan. I think the Secretary and the Assistant Sec-
retary have mentioned a portion of that. I think it runs to how we
look at the redevelopment of Henry Horner, Cabrini, and other de-
velopments, that we simply cannot have these dense concentrations
of folks on particular sites. I think you cannot do that without the
cooperation of the city and other business groups.

Mrs. COLLINS. So are you working on some kind of program to
make sure that that happens?

Mr. MARCHMAN. Yes, ma’am, we are. .

Mrs. COLLINS. Can you tell us what that is now?

Mr. MARCHMAN. Well, as I have mentioned —

Mrs. COLLINS. Or are you still in the planning stages?

Mr. MARCHMAN [continuing]. It is in the planning stages, but we
will not find ourselves in the situation that we are making plans
similarly to redevelop that which we already have. We need to be
more expansive than what we have been in the past.

Mrs. CoLins. Do you have any specific cooperation in that re-
gard, regarding the city-owned land that needs to be redeveloped
or could be redeveloped?


169

city infrastructure that wants change. They are able to and have
assisted us in these last 3 months. I think you have a—a willing-
ness to recognize the importance of having a strong public housing
authority in the city of Chicago.

Mr. SoupER. And to some degree ‘vo are saying that the will
was there, but no—in the sense of the desire was there, but the
will to break the back of the existing power structure was not. And
if you can change that power structure, you believe a new power
structure will emerge that will have a changed authority?

Mr. MaRCHMAN. I am not able to talk about power structures. I
know—

Mr. SoupeER. Well, the Chicago Housing Authority power struc-
ture. You are saying vou could not—you could not work with them,
you could not make the changes. They lost the pension fund money,
they did not—were not using—I mean, they were serious allega-
tions made today, they were not just kind of casual, “Oh, well, they
are just not, you know, quite doing their job right.” Many people
could go to jail for that type of thing in—in private business. t
is to believe that, I mean, either—if there are people outside, you
clean that up. Is the system n going to come back in ‘in or are you
saying you are going to be able to find the people? And part of my
concern, whatever you say about Commissioner Lane, he was here
7 years. Is there that commitment, people really love Chicago who
are committed to changing Chicago, or is it some kind of college ex-
periment:

Mr. MARCHMAN. No, no; far from being a college experiment, we
are dealing in real people, real lives in desperate situations in
decrepid buildings. I believe as the Secretary mentioned, and the
Assistant Secretary, this is a last best chance for CHA. The city,
its residents, its community I believe is committed to having a
housing authority that works for its residents, that works for its—
its community. I think you will have that.

f Mr. SoupeRr. I think that is one measure we would be looking
for.

I also wanted to ask kind of a technical question to Chief Mur-
ray. Ms. Calvin raised the question about the 911 and knocking at
the door first, which kind of puts the residents on the spot. Do you
have any way that Ray can get anonymous tips on gangs or a way
to communicate such that you do not in effect finger who is trying
to cooperate with you?

Mr. Murray. Well, to in with, Congressman, Ms. Calvin was

ing about the Chicago Police Department, their 911 system, not
the police. We have a separate number which is the CHA cops
242-2677 number. Our particular number, the phone call is not
traced; and in addition to that, less information is inquired.

Now, reference the Chicago Police Department and that com-
plaint reference their 911 system, we have discussed the issue with
them, and that we hope that in the very near future a lot of the
communications problems between the Chi Police Department
and the CHA police will be resolved once we look into the viability
of oie mn a common radio frequency, and therefore common tele-

ne lines.

Mr. Souper. I think it would be extremely confusing if there is
a gang fight occurring or you see a drug deal, what number you


34

OUR VISION

"The transformation of public housing in America begins with the transformation of
the Chicago Housing Authority."

Our vision of public housing in Chicago is the same vision we have for America. We want
public housing to blend in with the communities in which it is located. Public housing should
not stand apart physically or architecturally; it should be woven into the fabric of our
communities. If low-rise apartments and single family homes are the rule in a neighborhood,
then public housing should be built to blend in with them.

Public housing should not be islands for the poor, it should be home to families of mixed
incomes, and it should be sited in economically diverse and growing neighborhoods. Public
housing residents cannot bo viewed as second and third class citizens due to their ving
environments, but given access to job opportunities, good schools, and public services.

Our vision is to see public housing serve its originally intended purpose as a point of transition to
1 better life for individuals and families, ur long-term vision of public housing includes ~ and
is supported by our goals -- leas and less federal regulation, increased programmatic flexibility,
and more resident and site-based decisions. We mist create environments which decentratize
administrative authority and promote resident participation. At the same time that we recognize
‘tenant rights, we must also insist upon tenant responsibilities, Thia vision is supported by HUD's
reinvention, erticulated by its leadership and can firmly be put into place in the long run.

‘The CHA is not prepared to get there, yet. In both the buildings and tho systems, we have found
very litle to keep and much to transform and restructure. So, any transformation of CHA must
follow a disciplined, rigorous approach and plan of goals designed to implement our vision.

OUR GOAL

"To strengthen the Chicago Housing Authority so itis better able to provide a
safe, decent and Uvable environment for tts residents.”

Our initial attempt at a plan of simply stated goals and obtainable achievements follow. They
express and incorporate several ideas.

First, in Chicago, HUD is not tinkering around the edges. We have made a serious, real
commitment to transforming public housing and are prepared to take risks under intense attention
ond scrutiny. Second, instead of taking the safe appronch of proclaiming public policy from
Washington and hoping it fits the desired outcome, we are on the ground and know that the
policy must fit the need in real time, Third, we can do what we say we can do.


115

Local 73 SEIU Statement Regarding
HUD Takeover of Chicago Housing Authority
at Hearing Convened by the Subcommittee on Human
Resources and Intergovernmental Relations

Sept. 5, 1995

Hello, my name is Tom Balanoff. | am the president of Local 73 of the Service
Employees Intemational Union, representing 23,000 members statewide, and more
than 600 administrative workers and exterminators at the Chicago Housing.
Authority.

Local 73 has been at CHA longer than Vince Lane, longer than Joe Shuldiner
and long before CHA made the headlines every day. Our members stand prepared to
discuss all ofthe problems at the authority, ‘Under the previous administration, our
members suffered with a revolving door of supervisors, a disorganized and
disheveled management ": ‘seen , if you can call it that, and constant changes in

and enforcement. They fed the diy fusatio of tying

frontline workers in making rapid change that would improve the lives of thousands
of people awaiting housing.

‘We're sorry to say - those offers fell on deaf ears.

While we struggle again and again to make the improvements that employees
and residents desperately need, our own contract hangs out like a carrot on a stick -
and a rotting carrot at that. While buildings are razed around us, and decisions are
made behind closed doors, we sit at a bargaining table facmg demands that our living
wage jobs be thrown to the bottom of the heap by contracting out to more desperate
workers who will make less and have no benefits.

‘To add insult to injury, CHA bas refused, after months of inquiries, to provide any

information regarding the millions of dollars pilfered from our pension funds. This

money belonged to these employees, not CHA, not HUD, and no one has shown us
the decency to tell us what will happen when our members retire, or what actions

have been taken on behalf of them.

‘We are not the problem - we are and we want to be part of the solution. No
‘one person has the answer, but our 600 people at the frontlines have some very
definite ideas. Listen to them, and you will learn. Treat them with the respect they
have eamed in their tenure at CHA and all of us, residents, employees, management
and legislators, can only stand to benefit.

‘Thank you.

me)


115

struggling to stabilize the authority, obstacles to this recovery

include

the need to demolish or rehabilitate 15,090 high-rise housing
units--at a cost estimated by CHA of $1 billion--against the
wishes of distrusting tenants and within the agreements that
CHA has with over 20 labor unions whose work rules often make
contracting for and accomplishing repairs a cumbersome and
time-consuming process;

CHA's top-heavy organizational structure and the
ineffectiveness of the authority's maintenance, finance,
accounting, and management information systems;

gangs that threaten residents, visitors, and CHA staff, even
though CHA spent $70 million last year on the security of its
public housing residents;

reduced federal funding and a public housing community that has
been historically isolated by the greater Chicago community, a
community that needs to be made part of the solution to sustain
any improvements made by HUD staff; and

federal statutes and regulations, such as rent rules that

discourage people from working and admission rules that favor
the lowest-income families to fill vacancies, thus promoting
increasing operating subsidies to offset lower rental income.

HUD HAS MADE PROGRESS, BUT LONG-TERM PLANNING Is ABSENT

During the last 3 months, HUD has made progress in achieving

the recovery goals set for CHA shortly after the takeover. Staff
from HUD and private consultants are working at CHA on both a full-

5


136

dents from the specific development would sit on the second panel
to determine the management of those. Approximately 40 compa-
nies showed up at a prebid proposal; more than 100 proposals—
more than 100 bid packages have been picked up. And I believe
that those proposals are due in September—well, we extended it to
the 15th. It was the 7th, and it has been extended to the 15th.

So at this particular time we know that there is a tremendous
amount of interest. Whether they will express desires for specific
developments we do not know. I would expect that if we are going
to ask a private manager to take on what would be considered a
troubled development, we might have to package it with another
development or two that would be easier, say a senior citizen build-
ing or something like that. But at least initially there seems to be
tremendous interest.

Mrs. COLLINS. Well, in Mr. Lines’ report, he outlined—in the
TAG report a recovery program that recommended CHA demolish
some of the worst stock, have private managers for other severel.
distressed stock, and have CHA manage the remaining stock itself.
So then my question would be that if that is the case, would you
consider receivership for the stock that you cannot unload?

Mr. SHULDINER. I think we will consider everything. Again, I
guess the only—it is—a receiver is appointed by a court, and I am
not sure we can & to court to ask for a receiver for a specific devel-
opment or two. So whether it is an administrative receiver or how
we would do it, I do not know. But I think, you know, again, your
approach is the one we are taking. I mean, let me just for exam-
ple;-the CHA itself issued a similar RFP it was—not an RFQ—

ack in November 1993 for private management for all of its senior
citizen buildings and got 23 proposals and then did not award
them. And—and we are not sure why it would contract out senior
citizen housing exclusively when in fact many of them tend to be
easier to manage than some of the—some of the family develop-
ments.

So we—our approach will be: What do we have the capacity to
do? That which we do not have the capacity to do would be our pri-
ority for contracting out, and if there are things we cannot do and
do not have the capacity to handle, yeah, then any port in the
storm; we would be happy to consider any alternative. Yes.

Mrs. COLLINS. Thank you. Thank you, Mr. Chairman.

Mr. SoupER. OK, I wanted to have a couple of kind of initial
questions here with Mr. Lines. And I think Mr. Shuldiner—and I
apologize for—did I say the name correctly that time?

Mr. SHULDINER. This past time, yes.

Mr. Souper. Yes. I apologize for the earlier. That I believe you
just partially answered this question, but Mr. Lines, you said that
certain ones had prospects, but they should divest themselves po-
tentially of the others. Do you think there would be people who
would take the State Street Corridor, or would you have to package
this with——

Mr. LinES. Well, I am not talking about—excuse me—necessarily
managing. I am talking about eliminating the stock in some cases,
or turning them over to redevelopment. We—I mean, one of the
hard, fast sort of things that we did is we said, “Look, there are
some developments we do not think you can necessarily save.


58

2 ‘Improving the maintenance and cleanliness of CHA buildings and public spaces.

+ Initiated an intensive sommertime cleanup effort at six family developments,
incloding Cabrini Green, Henry Homer Homes, and Ida B. Wells. At least
several hundred residents, commanity leaders, and the City participate in each
cleanup. Cleanups include street cleaning, garbage pick up, graffiti removal,
‘weed removal, and painting Cleanups will continne once a week.

+ Tnitiated a targeted and intensive campaign to folfill the backlog of work orders
requests from residents, ranging from leaking roofs to broken windows.

+ Announced plans to hire 400 residents in janitorial positions to assist in basic
maintenance jobs. The new “janitors” will be placed in over 100 buildings,
thereby freeing up the professional maintenance staff to concentrate on
fulfilling the backlog of requests for major repairs. Hiring anticipated
September 1, 1995,

3. Bringing down the most troubled high-rise buildings and replacing them with less
dense, town house-style units and other smaller scale buildings, HUD has
expedited plans for transforming three major developments:

. Henry Horner. On August 10, 1995, Mayor Daley and I kicked off the
demolition of two buildings at Heary Horner (a total of 466 units), Three
additional mid-rises will be torn down by next spring, pending the relocation of
ccurrent residents and asbestos removal. These five buildings will be replaced
bby 700 new townhouses and two- and three-flat homes throughout Chicago's
Near West side. On August 14th, a federal judge gave HUD the green light
and the funds to build the replacement homes on the Near West side.

. Cabrini Green. HUD has accelerated the process to revitalize the Cabrini
‘Green area through the use of $50 million in HOPE VI funds. More than $7
million of those funds has been made available to Cabrini Green residents for

high-tise developments, which we anticipate will take place by mid-September.
Asbestos removal is taking place in at Ieast ove development.

+ Robert Taylor Homes and Stateway Gardens. Last sammer, you gave a crime
bill speech at Robert Taylor Homes, a public housing community which is part
of the three-mile stretch of neglected public housing known as Chicago's "State
Street Corridor.” Along with remaking Henry Homer and Cabrini Green, T
have made it a priority to transform Robert Taylor and Stateway Gardens.
HUD met with the residents on August 16th to begin designing the plans for
replacement housing.

Itis important to note that as we demolish and rebuild these troubled public housing
developments, we work closely with the residents. It is not surprising that residents -- as they
watch the homes they grew up in come down -- express fear, anxiety, and skepticism aver

2


112

-- Second, as HUD works to rebuild CHA, it will face signif

obstacles, including the deteriorated condition of much of
CHA's 40,000 housing units, CHA‘s cumberscme organizations]
structure, residents’ distrust of proposed changes, substantial
security and crime problems, geographic

and social isolation
from the rest cf the Chicago community, federal laws and
regulations, and insufficient funding. Because of the se

rity
of these problems, the recovery of CHA will continue into the
next century.

-- Finally, during the last 3 months, HUD has reorganized CHA's
management; taken steps to privatize selected functions; and
developed short-term plans to improve maintenance and security
rehabilitate its physical stock, and foster community
development. However, HUD has not selected a new executive
director nor hired some key upper-level managers. In addition
HUD has not committed to a long-term plan for phasing itself
out of CHA and installing a permanent management team
Committing to and making progress toward such a plan is
necessary 1f CHA is to gain the trust and cooperation of
residents, CHA staff, and the city.

BACKGROUND

CHA is one of our nation’s largest public housing authorities.
After the housing authorities in New York City and Puerto Rico, the
Chicago Housing Authority ranks third in size with about 40,000
housing units. Over 15,000 of these units are in high-rise
buildings and need extensive repair. According to CHA, renovating
these buildings will cost about $1 billion, an average of over
$66,000 per unit. Compounding these deteriorated housing
conditions is CHA’s long history of mismanagement. Since 1979, HUD
has rated CHA among the poorest performing housing authorities. In
May 1987, HUD's Chicago Field Office recommended that HUD place CHA
in the hands of private management due to the authority's inability

2


76

and how people who live in public housing, to their detriment, have
suffered greatly by this.

Now, my basic question is: Are you concerned that you may have
set a precedent that you will then be asked to use this model in—
in other housing authorities?

Mr. CISNEROS. I am not concerned that we have set a precedent.
It is a total discretionary call. We can make it or not make it.

Mr. Suays. Do you think it is likely that you will be doing it in
the future in other housing authorities?

Mr. CISNEROS. I think, depending on how we exit here, it may
be that there would be another case. I cannot envision what that
is now. We have nothing in mind. But I do not want to rule out
the possibility that at some future point a housing authority would
reac the point that this was the appropriate model if it worked

ere.

Mr. Suays. I thank you for coming.

Mr. CISNEROS. Thank you.

Mr. Suays. I thank the patience of all the other witnesses who
are going to follow. And do you have any closing statement you
wish to make?

Mr. CISNEROS. Just in closing, Mr. Chairman, let me thank the
members of the committee for their—exercising their oversight re-
sponsibilities. I wanted to come because this is very important to
us. I have said that the progress we make here will give the Nation
some insight into the real problems of public housing, how difficult
they are, and allow us to work through together improvements in
public housing nationwide.

I would simply hope that as the day goes along, in addition to
the other questions that you will ask, you would ask Joe Shuldiner
or someone else what we need from the Congress. Not just money.
But what we need are things like eliminating the one-for-one re-
placement rule, or helping us strengthen eviction policies, or help-
ing us deal with questions of giving housing authorities the right
to screen tenants so that we do not have persons with active crimi-
nal activity coming into housing authorities hurting people, other
people, et cetera.

There are concrete things that we need to come out of the appro-
priations amendments or to come out of authorizing amendments—
Mr. Weller is on our Authorizing Committee—or even interventions
in the appropriations process that—the conference that is ahead, to
not only get Chicago right, but deal with the really difficult prob-
lems that are too frequently dismissed away by both sides of the
aisle, dismissed away as things that could be solved by—by snap-
ping one’s fingers. Eliminate it, saw it off, you know, all kinds of
simple answers where real people are involved in 1.4 million house-
holds across the country living in public housing. It is not all this
bad, but this is an example of how bad it can get.

Mr. SHays. We have a number of problems throughout the coun-
try, that is clear. You have triggered one last comment from me,
and that is that Speaker Gingrich, in conversations with the
mayor—and I know has the same feelings toward you, Mr. Sec-
retary—that he would welcome a list of ways that Congress could
be innovative and cut through the redtape to get rid of some of the
difficulties we see in evicting people when they should be. The


28

and current HUD employee Ron Carter has been instructing the young men who participate
in midnight basketball oi: a regular basis. ‘The curriculum centers around leadership,
economic development, and career planning

Housing Operations is the key management component of any housing agency. A
primary goal in operations is to improve the effectiveness of CHA’s maintenance program
and improve the cleanliness and appearance of CHA buildings and open spaces. In addition
to the aforementioned clean-up and work order reduction effort, a wholesale maintenance
reorganization plan is being designed. The current system is totally unworkable. We will
correct the deficiencies in distribution, availability of supplies, training, and job performance,

all of which will intertwine to produce a quality system that will better meet the needs of the
residents.

Part of this strategy will entail the redeployment of resources from headquarters to the
sites, and standardizing the work order system. In addition, more competent maintenance
workers and craftsmen will be dispatched to the sites where residents can see the difference.

‘A new ethics policy has been approved which will restore credibility to the agency by
holding employees to higher standards of conduct and reducing the incidence of conflicts of
interest. A new contract approval process has been implemented which will lower the
threshold from $1,000,000 to $100,000 for the sole-sourcing of contracts.

Vacancy reduction efforts, using previously appropriated but unspent federal funds,
have also been undertaken, This will help speed up the process by which families, many
‘whom have been on the waiting list for years, can receive decent, affordable housing

When HUD began its intervention, I made it clear that private firms and resident
management corporations would be solicited to manage some of CHA's housing stock. Now
CHA out-sources some of its scattered site developments, some of its senior developments
and a very few family developments. HUD has established a comprehensive effort to
increase private and resident management of CHA properties. To illustrate the
unprecedented level of interest by the private sector, over 100 firms have picked up bid

packages in response to a Request for Qualification, and nearly 40 participated in a pre-bid
conference late last month.

Our approach will improve upon the current method of private management by
insisting upon specific deliverables and performance measures, improving and streamlining
‘monitoring, and instituting specific penalties for non-compliance. HUD will determine which
developments to make available to private managers. Contract negotiations will be entered
into with the most qualified respondents. It is expected that the selection process will be
completed by the end of the year and the private management firms will be in place by
February, 1996. By pursuing this course, we can concentrate CHA resources on those
developments which demand the most attention, while enlisting the private sector and
resident organizations, which in many cases can provide more effective management and


94

istration and in the management staff. And that is a good effort for
me in a sense.

Mrs. COLLINS. Now, when you say in management, do you mean
in tenant management of the development?

Ms. CALVIN. CHA management staff.

Mrs. COLLINS. OK. In what way is that reflected?

Ms. CALVIN. Well, say for instance someone calls management
and complain about something, they cannot get a direct answer
from them, they will call me. I will call somebody at HUD and they
will call them, ask is there a problem with alleviating this problem.

Mrs. COLLINS. But that is certainly a positive. Ms: Ran

Ms. RANDOLPH. Yeah. No. Honestly, Li
at this point.

Mrs. COLLINS. Well, let me ask a question that is almost the
same question. In your view, Ms. Randolph, how have your respon-
sibilities and authority changed, both in your role as a CAC chair-
woman and as an executive committee member since the takeover?

Ms. RANDOLPH. It has changed because I do not get the commu-
nication that I need to disseminate to the residents. They call me
all day, all night, want to know what is going on with manage-
ment. I do not know, and I am not going to sit here and say that

lo.

Mrs. COLLIns. OK.

Ms. RANDOLPH. I am not going to let my residents down because
they call me, they get angry with me and say, “Well, why are you
on there? You do not know nothing.”

Mrs. CoLLins. Ms. Calvin, a final question. Are you aware of the
fiscal restraints that are faced by CHA? We have talked about that
some today, about some of the resources not being there that we
thought were going to be there. We have also talked today with the
Secretary about possible cuts in modernization funds and elimi-
nation of development and—and HOPE VI and drug control fund-
ing. Now, given these possibilities, what role do you see yourself
playing in limiting resources in the development of the long-term
recovery? Do you think that you can see long-term recovery when
you do not have the resources in order to put these things in place?

Ms. CALVIN. If the budget is cut like they say it is we will be
hurt tremendously, much worse than what we are now.

Mrs. COLLINS. ve do not see improvement in the area of in-
creasing any kind of drug control funding or any kind of drug con-
trol projects?

Ms. CALVIN. It is going to hurt me more for cutting, because most
of the budget goes for the drug elimination, and that is dealing
with security.

Mrs. CoLLINS. And that is going to hurt? All right, thank you
very much. Thank you, Mr. Chairman.

Mr. Suays. Thank you. Mr. Souder.

Mr. SoupER. I wanted to ask Ms. Calvin a little followup on the
crime and—and drug question. I know that when I visited at
LeClair Courts probably 6 years ago as they were in the third year
of the transition over where they had taken the control of the
project and the Chicago Housing Authority was working alongside
in the 3-year transition program, one of the things that Irene John-
son said was—is that previously there was a lack of trust with the

do! ph.
do not see any difference


9

to the Washington Public Housing Authority which was being run
by a receiver as an example. In Washington the receiver was able
to cut costs through layoffs that the housing authority found itself
unable to do. Moreover, a receiver could cut through the Federal
redtape to more quickly address CHA’s problems.

In fact, HUD’s own actions this far lead credence to the inspector
general’s conclusions. HUD’s ability to move quickly to demolish
and redevelop the Henry Horner Homes was made possible because
Henry Horner is at the center of a court battle that led to develop-
ment of court approved plans for redevelopment. With this in mind,
I question whether HUD will be able to move as swiftly at the re-
maining CHA sites without court intervention and approval. The
residents of CHA need swift and decisive action; yet more impor-
tantly they need effective and lasting change that allows them once
and for all to take control of their lives and their communities.

Finally, I remain concerned about the issue of accountability.
HUD has been in charge since May, but we did not see a detailed
plan from HUD until last week in anticipation of this hearing.
Moreover, I am concerned that the executive director is a HUD em-
ployee, as is a—is a single person on the board of CHA. While I
commend Mr. Marchman and Mr. Shuldiner for undertaking this
Herculean effort, I believe that the State of Illinois and that the
city of Chicago might be more receptive to HUD’s apportionment
plans if the State and city had at least one voice on the board.

Again, Mr. Chairman, I want to thank you for conducting this
hearing and for allowing me to participate, and I look forward to
the witnesses’ testimony on how best to serve all the residents of
CHA who have been victims of not only the criminal element on
the street, but also the ineffective and often corrupt management
of CHA. We can no longer wait on promises of change; we must in-
sure that real and lasting change comes to them at last. Again,
thank you, Mr. Chairman.

Mr. Suays. I thank the gentleman.

At this time I would also like to welcome Mr. Durbin. It is nice
to have you here. Mr. Durbin and I go back a ways. I used to work
for his predecessor many, many moons ago as an intern, and know
the city of Springfield well because I campaigned there, I think in
1966. So I welcome you, and it is nice to—I encourage you to have
a statement.

Mr. DurBIN. Thank you, Mr. Chairman, and thank you for com-
ing to Chicago. I am glad that you are joined here by Congress-
woman Cardiss Collins who is recognized not only in Washington
but in this city as someone with a special sensitivity to the needs
of public housing and to the people who live there.

To my colleague, Bobby Rush, who has just joined us here, he too
represents an area that is served by the CHA and has spoken to
me on many occasions of his concern about the future of public
housing. To Ed Towns from New York City; before the hearing, Mr.
Chairman, I asked Mr. Towns if things were much better in New
York and he said not much better. So we have a national situation
on our hands here that we are addressing, an important element
here in the city of Chicago. And to my other colleagues—welcome
as well.


77

Speaker has asked the mayor to provide a list like that, and I
would make that same request of HUD. The list should include
things that Mr. Weller and Mr. Gutierrez’s subcommittee could be
working on.

Mr. CISNEROS. And the appropriators. Because we think that in
the absence of a housing bill this year—and I am not giving up on
it, I am hopeful that we can. The House has been great, Congress-
man Lazio is moving right along. We do not think we are going to
get as far in the Senate on an authorizing measure. But that
means that the appropriators will do a lot of legislating this year.
Senator Bond and Congressman Lewis, respectively, are moving a
lot of these provisions in the appropriations process. So your atten-
tion to that would be very helpful.

Mr. Suays. Great. Thank you.

Mr. CISNEROS. Thank you.

Mr. Suays. I appreciate you being here. I would also say for the
record, Mr. Secretary, that you requested to be here, and felt it was
important to be here. We have had you before the subcommittee in
the past and did not feel that we wanted to ask you to be here.
It is nice that you came.

We have as our second panel Ms. Artensia Randolph, president,
Central Advisory Council; member, CHA Executive Committee;
former member, CHA Board of Commissioners. Ms. Hattie Calvin,
president, Local Advisory Council; building president, Cabrini
Green. Ms. Cora Moore, tenant manager, 1230 North Burling
Building, Cabrini Green; vice president, Local Advisory Council.
Ms. Mildred Williams, teen advocate, West Side Futures, YMCA;
former CHA tenant. If they would all come before us and we will
swear them in. We just have one witness here? Please come for-
ward. You can just sit right up in front here and we are going to
put you a name tag out. And this is Cora—Cora Moore, correct?

Ms. Moore. Yes.

Mr. Suays. Cora, you do not mind being the only one, do you?
OK, Hattie is here, too. OK. Ms. Randolph, you are in a wheelchair.
Would you like to be wheeled closer to the table and—OK. I am
going to ask the two who can stand to stand, and if you would all
raise your right hand I am going to be swearing you in, which is
our custom. And if you would, raise your right hand.

[Witnesses sworn.]

Mr. Suays. I do note for the record, all three have responded in
the positive. And Ms. Randolph, we will start with you and I am

joing to leave this hearing for a few moments. I will be right back,
ut I leave the gavel in the trusted hands of Mr. Souder.

STATEMENTS OF ARTENSIA RANDOLPH, CHA EXECUTIVE
BOARD MEMBER, CHAIRPERSON, CENTRAL ADVISORY COM-
MITTEE; HATTIE CALVIN, PRESIDENT, CABRINI GREEN
LOCAL ADVISORY COUNCIL; AND CORA MOORE, TENANT
MANAGER, CABRINI GREEN

Ms. RANDOLPH. Good afternoon to the distinguished members of
this congressional panel. My name is Ms. Artensia Randolph, presi-
dent of the Central Advisory Council of CHA. I am and have been
a resident of the CHA for 22 years—29 years. The Central Advisory
Council is the duly elected representative body for the public hous-


Reactivate the door answering systen
Red paint removed from the walls
(Tm the pest a cleaning solution was used for cleaning
followed by a glazing).
Floor tiles replaced (if you cannot replace the missing
Pieces of this terracotta tile, do not remove this
tile.)
iz cracks and holes in walle and floors
Ceiling panels need to be replaced
Light fixtures replaced and repaired
Electrical outlet covers replaced
Heaters replacod or repaired
Doors - two entrance doors are missing
Handles installed on existing entrance doors
Rxposed tubing needs to be capped
Hole in wall exposing plumbing needs to be recovered
Brick up or install a door, with a lock to the old
incinerator chute.

Banisters replaced where needed

Ldght fixtures installed or repaired

Light bulbs replaced

Doors installed on every landing

Walls painted
Floors repaired, cleaned, disinfected and maintained
daily (if possible painted and glazed)

Open and unclog drains

Holes in floors repaired where needed

Doors installed to all laundry rooms

Light fixtures replaced and repaired and install light
bulbs

Bars/gates/mesh enclosure repaired or replaced

Cleared of debris

Drains Fodded out.
(Gast floor laundry roam) Reopen for tenants use
for rodents

lectrical cutlets operative
Plumbing probleas corrected
Walia and floora repaired

Water valves opened and operating

Install aoin/token operated washara and dryers


5

Again, I commend HUD for its plans for ongoing resident in-
volvement and strategic planning for CHA developments. Genuine
and substantial resident involvement is critical to the success of
this venture. I recognize also that this commitment to resident-
driven strategic planning runs counter to demands made on HUD
by the Congress and others to articulate a specific and detailed
long-range plan for the CHA. The value of resident planning far
outweighs any inconvenience which may result from not having a
complete and detailed plan before us at this particular moment. We
cannot and should not dictate a plan to CHA residents.

However, neither should we ask CHA residents to commit to a
strategic planning process without a real understanding of the fis-
cal constraints which will be faced. Upon taking over the CHA Sec-
retary Cisneros commented about hundreds of millions of dollars in
unused Federal funds which night be applied to the current effort.
But recently we have learned of a likely budget shortfall, and that
no funds for modernization will be available for this fiscal year. We
must avoid at all costs raising these kinds of false expectations if
we expect residents to be full partners in this effort.

Given the scope of the task, it is reasonable to ask whether HUD
has bitten off more than it can chew with its intervention at the
CHA. However, we have to recognize that this is a job that can
only be done through a partnership of the city of Chicago, the State
of Illinois, the private sectors, CHA residents, and the Federal Gov-
ernment. And we must ensure the interests of CHA residents be
placed above all others, including political, private, or the bureau-
cratic interests of HUD itself.

Finally, if the Congress is truly concerned about improving the
quality of life for residents of C we must appropriate funds ade-
quate to the task. The shortfall of modernization funds currently
available to the CHA is due, at least in part, to the recision of $35
million in fiscal year 1995 funds.

The oversight of the HUD operation of the CHA is an important
role for the Congress and for this committee, but I submit to m:
colleagues that if we really care about what happens at the C
we are going to have to put our money where our mouth is. Thank
you, Mr. Chairman.

Mr. Suays. I thank the gentlewoman, and at this time I would
call on the vice chairman of the subcommittee, Mr. Souder from In-

liana.

Mr. SoupER. Thank you. I do not have a prepared written state-
ment, but I wanted to make a few comments. I have been inter-
ested for over a decade through my——

Mr. DuRBIN. Let me interrupt you a second. Are you hearing in—
is this coming through loudly? No? Is that mike on? OK.

Mr. SoupeER. Through my friendship with former Secretary Kemp
and with Bob Whitson, I was challenged years ago, when I was Re-
publican staff director with the Children and Family Committee, to
go out and actually see what was working and was not working.
Visited Irene Johnson years ago at LeClair Courts here in Chicago,
which is one of the first resident management operations, and Ber-
tha Gilkey in St. Louis, was in San Antonio with Freddie Garcia
and Juan Rivera, and visited about 15 of the different buildings
down there and all around the country, and saw that good things


lll

Mr. Chairman and Members of the Subcommittee:

We are here to discuss recent events at the Chicago Housing
Authority (CHA) related to its May 30, 1995, takeover by the
Department of Housing and Urban Development (HUD). HUD's takeover
was necessary because the poor physical condition of CHA‘s
extensive housing stock and the troubled management of the housing
authority, among other longstanding problems, had made improvements
at CHA practically impossible.

Today, this Committee is addressing a series of questions that
include the following: (1) From among several intervention
alternatives, did HUD choose the most appropriate one by using
temporary staff from HUD and other housing authorities and industry
groups? (2) What obstacles will HUD face as it tries to plan for
the rebuilding of CHA? (3) What has HUD accomplished in the past 3
months and what additional steps can HUD take to ensure not only
the recovery but the sustained revitalization of Chicago's public
housing? Our testimony is based on our ongoing work on low-income
housing issues and our recent work on community development for
your committee.

We would like to summarize our views on these questions and
then turn to a more detailed discussion of them.

-- First, once HUD decided to intervene into the management of
CHA, several intervention strategies were available, including
seeking a third party (court-appointed receiver) to manage the
housing authority, replacing CHA management with a professional
housing manager, or assigning HUD staff to manage CHA. Because
CHA's executive director, board of directors, and other key
staff resigned, and Chicago's mayor did not support
receivership, HUD's decision to take over CHA with its own and
borrowed staff appeared to be the best option available


81

Dear Representative

My name ia Hattie Calvin, mother of 4 children and 2 grandchildren;
1 son, Donald, 3 daughtere;Chataone, E-Tika, Gieinni.

I reside in Chicago Housing Authority Development located at 660 W.
Divieion #403. I am currently employed at the Cook County Clerks
Office as an Assistant Administrator I, where I have bean euployed
aince 1987,

I have lived in Cabrini Green Homes since October 25, 1975 and
ide there. I am community active in all aspects as =
I am building president and alvo Cabrini LAC President
the Liaison between CEA and the residents of my
development.

There is good and bad in all places of government. CHA 16 no
different than any otber type of government. There are those that
care and those that do not care about people in public housing,
Management haa 4t’s good and bad aspects. Management only do what
they are told to do from operations. Management cannot make any
decisions on their own and same with maintenance.

our problem with some of the managers is they lea
is* only to keep their quota for their davelopne:
managers don’t know how to communicate with the rei

apartments
Some of the
ents,

The problem with maintenance in that most of the time they don’t
have the necei ry equipment to work with or the plumbers are not
familiar with the work. some plumbers don’t try to do the work
they just sluff off on the job then we are left in the sama
situation we were in before they got there. Plumbers that are
hired by CHA should be briefed on the problems that are here and
that the jobs are not easy at CBA.

The janitors work is never done they really need ansistance. 99%
of the time they don’t have the 2 ry items to clean with, The
bleach that CHA uses for cleani no-no it does not mel] like
bleach. Some of the craftanan do half jobe also.

The electricians, carpenters, plumbers, ironworkers, bricklayers
and welders should be on all developments, at all tine: a
development the sixe of Cabrini should have at least, per sections;
2 Plumbers, 2 Electricians, 2 Carpenters, 1 Bricklayer, 1 Welder,
1 Ironworker and 1 Glazer.

Each building should have the following:

7 story - 2 Janitors
10 story - 3 Janitors
20-16 story - 3-4 Janitors
16-20 story - 3-4 Janitors

One Janitor to take care of the ground floor and outside of the
building. ‘Two Janitors in the building to clean stairwells, rampe
and the Laundry rooms.


107

There had been some discussion about how do residents feel
about the HUD activity. One of the things that we have done is we
have provided money to in fact do resident surveys. While they fo-
cused on three developments where there was an—a preexisting
contract with APT Associates, we are looking at a way to have
some sampling of residents throughout—throughout the housin;
authority, so in fact from year to year changes can be measured.
And when we are talking about is what we are learning here
prototypical or can it be used elsewhere, I would like to see a time
in which every housing authority, as a matter of course, surveyed
its residents on a variety of issues in terms of what its priorities
are, how is the work going, et cetera, which is not something that—
unlike something that a private company would do in terms of
serving its customers.

Just on the resident patrol, let me just quickly say on that when
we came the resident patrol had a history of paying rent—they ba-
sically gave rent abatements, partial rent abatements to people
who participated. That had been suspended before we entered
cause of alleged abuse. We have—we are looking to increase the
volvement of resident patrol because we recognize that resident in-
volvement is the only answer to the—to the question of—of secu-
rity, but we also have an obligation to ensure that we do not start
this up until we have the safeguards to see that the program is not
abused.

Now, Mr. Weller asked a very interesting question about would
residents respond if they did not get the rent abatement. While
there can be some question as to whether the New York program
in whole can be implemented here, it is interesting to note that the
residents there are volunteers, do not get rent abatements, and
that the only stipend is for the building captains, the people who
coordinate the effort of the volunteers who are in effect part-time
employees.

Again, we are not suggesting that rent abatements would not be
an appropriate way to go. Frankly, the rent abatements is a whole
lot cheaper than the cost of the rest of the security. But I think
we have an obligation to the America taxpayer to review this pro-
gram and make sure that if we are going to give funding, that
there are proper controls.

Last, let me just talk about the strategic plan and the question
that I think it was Congressman Rush or whomever raised about—
or perhaps yourself, about the issue of would residents know before
we take down any buildings. What we have proposed is to provide
money for every evelopment that is interested in hiring their own
urban planner to do their own strategic plan for their site. We
want resident-based plans. We would like residents to go through
the process of looking at their development and really determining
what it should look like in the future.

Unfortunately, many of the developments do not lend themselves
to just, well, fix it up and keep it as it is. There are physical prob-
lems at the sites, there are other issues at sites which do not make
the present configuration or structure the appropriate one for long
term.

But we do not want to—as the Secretary said, we do not want
to come in and say, “This development is over.” What we—instead



92

you know, that is how it goes. So I think we are—we are doing
that.

We are also working with Ms. Randolph in the city-wide in terms
of preparing for the elections that will occur in early December
both to insure, from the residents’ perspective and the public’s per-
spective, that those elections represent the wishes of the residents
in—in those developments.

Mr. Suays. Mr. Shuldiner, my light is off. But I just want to be
clear on one other element. What I am hearing is—because I—I do
think there has been a lot of contact with tenants. I, one, wanted
to know whether there was a formalized structure.

But second, what I am hearing—and maybe I am hearing cor-
rectly—it is not necessarily the long-term plans, but it is—you S
are in charge now. I have a problem on something immediate. Who
is hearing me? I mean, that is kind of—I mean, it is long term, but
it is also the short term. Is there any way that you are trying to
change the short-term kind of problem in communication?

Mr. SHULDINER. I understand what you are saying, and please
understand it is—it is not just HUD and the residents, it is also
the CHA staff. I mean, residents would normally turn to the CHA
staff at the site with a specific problem, and some staff may re-
spond, “I do not know what to do because HUD has not told me,”
or some staff—

Mr. Suays. Right.

Mr. SHULDINER. So again what we are trying to do is reach out
directly to the resident councils on the—on the local level and es-
tablish—establish some kind of rapport. We basically have one—
one person from Washington as well as several other people from
around the country who, between them, are here all the time to try
to—to try to do that. Obviously, based on what Mrs. Randolph said,
you know, they—they would like more communication because a lot
of things are going, and that is a question that we have to continue
to ask ourselves.

T mean, some of the statements made to us, you know, display
a lack of information. I am sorry that Congressman Gutierrez is
not here. I mean, he talks about the change in—in the tenant as-
signment plan. That was ordered by Judge Aspen, that was not a
HUD or CHA thing. When the settlement at Henry Horner went
to Judge Aspen, Judge Aspen said, “You get-——.”

Mr. SHays. OK, let me interrupt you for a second.

Mr. SHULDINER. Sure.

Mr. SHays. You have fulfilled my request and you have been re-
sponsive, but I want to make sure that this is the tenants’ oppor-
tunity. And I would suggest-—

Mr. SHULDINER. I am sorry, I will step back.

Mr. SHays. No, no, you can stay there, it is just—what I would—
what may be a factor here is that when you have the former hous-
ing director, Mr. Lane, may have given certain people a special ear.
And I would think that, you know, the challenge would be for this
new group to allow everyone.

So, Ms. Randolph, it may be that you had a gigantic opportunity
with Mr. Lane that may not be available to you in the same way
and that may be a little difficult, I do not know. Ms. Calvin, I am
going to come back to your point about drugs and gangs after other


60

MacArthur Foundation, and the Corporation for Supportive Housing. We will
Continue outreach to civic, business, and political leaders of Chicago for support and
partnership with the CHA.

‘The Administration has made great headway in building the foundation for a smooth
transition to a permanent solution for the City of Chicago. We are working with the Mayor
fon the longer-term goals of the Chicago Housing Authority and aim to make a joint
announcement on the turning over of the CHA management to a permanent Executive
Disector as soon as possible, but no later than the end of the year. 1 will keep you apprised
of our progress as we finalize our “exit strategy.”

My sense is that the general appraisal in Chicago of our decision to step in at the
CHA and of car progress since June is positive. I know we have brought the Chicago
Housing Authority from the brink of "melidown’; the task now is to create conditions which
everyone involved agrees are noticeably better for the residents and for the taxpayers of
Chicago.


quouioSeueyy Suipling 929:

aanvagn
asnoysre yy
wwowains01g
dp-daig s01alag annensumpy-
wawdojeaag wreiBoig 7 yoseasoy muawofeuey 4sry
‘anyyng 7 uoneonpa soquonsarg plata pewowuonaug, saoinosay ueuiny
sureifloid 2anuanaig uoneaisey suods stam so8eueyy [e19U90- uononnsue) jeiseds sumein)
Ayunaag 19210) areypI wei Buneoy av SIN
Auunoag VHD: S90U96 [e1905; aoueuaureyy qunosy 20104 siefipng:
aoljog—]  suoneziue819 1wapisey—| sataiag uoddng wowoserepy dOWWVIIDD jonuo:
4012911 sor9911q sowed so1ang 4994 [eroueutd Jar4
[ Aayes 2uand (E suritoig wapisoy | [Eitoneiadg Suisnoy. [tuswofeuvey uousnnsuo)} [uouensimupy 7 eoueuta]
I I [ I J
esunop pesuap pesauan sosadsuy
sIRyY jeg ovo

[_sorsana eannaoxa |
srquo|stunuo;) Jo preog VHD)


18

Mr. Suays. Well, thank you, Mr. Secretary. Mr. Secretary, before
I proceed to ask you some questions, I would like to note for the
record that Mr. Gutierrez, besides being a member of the Illinois
delegation, serves on the Banking Committee’s Housing Sub-
committee with Mr. Weller, an important committee to us all. Mr.
Gutierrez, if you have any statement you would like to put in the
record, I would be delighted to hear it.

{The prepared statement of Mr. Cisneros follows:]


47

Start date: July
SStapletion de: Sept 15 (2)

Refocusses emphasis from reactive police/security services to a "Safe environment”
Forges a partnership among residents, police/security and housing officials

Assigns officers to foot and bicycle patrols within the developments

Establishes motorized quick response units

-police stations in each of the 12 developments

Implements mobile/foot inspection patrols by security guards

Establishes a totally integrated police/security system, tenant programs, technical security
(4) Implement Specialized units with Current Police and Security Staff

Start Date: July 1
Completion date: Sept 15

Establishes mit

Senior Citizen Unit - will focus on crimes against the elderly
Elevator vandalism unit -structured to prevent and reduce costs and timing of elevator repairs

Eviction Unit - accelerates the timing of evictions and reduces the need to remove officers from
walking beats

(5) Begin installation of Mini-stations/Lobby stations to:

Start date: July 15,
Completion date: Sept 15 (for one?)

Improve resident access to police and security forces
Retain offeiers and security personnel in the developments

Ecourage resident participation in police/security programs

Reduce crime and fear of crime through increased police/security visibility

Reduce gang activity

(6) Finalize a written service agreement between CHA and the Chicago Police Department

Start date: June 15
‘Completion date: Aug 15

Define Specific roles and responsibilities
Improve communications between agencies
Coordinate police/security services for CHA residents

(7) Begin Commi Policing training for CHA police and officers and residents,

Start date:
Bompletion ihe: on-going)? ?

(8) Improve police supervision by making promotions that have been delayed

Start date: July 15
Completion date: Aug 1

(9) Authorize, Develop and Activate Critical Services Task Force

Start date: July 1
Completion date: 120 days and beyond


51

frame

30 days
Deliverable
Co-Chair(s)

Identify regular schedule and meeting location.

Lead:
White, with CHA Office of Extemal Affairs
Time
frame

14 days
Deliverable

Written schedule

2
Form an executive committee to govern CHA
Tasks:

Establish regular contact with Mayors office

Immediate
Deliverable

Regularly scheduled meeting with Mayor's office and
Schuldiner/Marchman

Work with Mayor's office to develop short

of potential board members

Lead:
Schuidiner/Marchman

Time

frame

Immediate

Deliverable

List of potential board members

Establish resident input regarding "important qualities" of potential candidates
Lead:

Schuidiner/Marchman (ORI)

Time

frame

7 days
Deliverable


80

SEPTEMBER 5, 1995
FEDERAL TAKEOVER OF THE CHA

SUB-COMMITTEE:
HUMAN RESOURCE AND
INTERGOVERNMENTAL AFFAIRS

SPEAKER:

Ms. Hattie Calvin
Building President
President, Cabrini LAC
(Local Advisory Council)
Cabrini Green Homes
660 W. Division Street
Chicago, Illinois 60610


142

HUD Washington and HUD Connecticut. So you are still going to
have a lot of oversight?

Mr. SHULDINER. Yes, sir.

Mr. SHays. But you are going to take your central—your own
employees and push them out. And this is to your point, then, Ms.
England-Joseph. Your point is that you have not seen those people
stepped in, moved in. I spoke with the Secretary when he was fin-
ished with his testimony and he feels pretty convinced they can do
that, but I do not know about the pool of resources of people you
have and I do not know if you are going to be able to actually do
that. And are you saying to me that it is going to be your hope,
but not necessarily that you will have done it?

Mr. SHULDINER. I think by the end of the year that—that we
will—we will have the management positions filled. I mean, obvi-
ously there could conceivably be one or two people we could leave
in the interim. But I think that as the Secretary said, the upside—
I mean, Jeff has talked about the magnitude of the job, but I think
the upside is it is viewed as a tremendous challenge. And the peo-
ple that are good in the industry actually, you know, are looking
forward to participate. That is why we have been able to attract
people even on a detailed basis or a consulting basis to come here,
because people want to be part of this effort. So at least at this
point—at least at this point I believe that we will be able to attract
permanent staff.

Mr. Suays. One final question. Is the figure concerning the 35
people involved a specific number or is it a general number, about
35? And second——

Mr. SHULDINER. It is general.

Mr. Suays. Is it all HUD people, or are some of those people indi-
viduals you have brought from around the country?

Mr. SHULDINER. No, no. It is—many of it is HUD, but many of
it is from other housing authorities across the country.

Mr. SHays. Who is being lent, and who are actually here?

Mr. SHULDINER. Either lent, or their personal services contract
allow them to consult elsewhere and we are paying. We have an—
we have—as part of technical assistance HUD has indefinite quan-
tities contract with NAHRO, and we are making use of that con-
tract to bring people in as consultants. So it is a combination.

Mr. SHAYS. One last thing. I do not need to know it now, but I
would like you to specifically tell us how many positions need to
be filled and how many of them have been filled by permanent peo-
ple? That is something that I am expecting the committee staff to
follow up on. That would be very helpful for us.

Mr. SHULDINER. Sure.

Mr. SouDER. Congresswoman Collins had some more questions.

Mrs. CoLLins. Just a final brief question. You will recall, Mr.
Shuldiner, that when Mr. Towns was here he asked the Secretary
if there were a sort of a unified plan with other agencies within the
Government, and the Secretary pointed out that HUD could use
some help from the Justice Department, Education Department,
Department of Labor, and all of that. My quick question is: Have
any formal requests been made of HUD, that you know of, to those
particular agencies?


135

Mr. Souper. I thank all the witnesses. I think I will hold my
questioning, and if Congresswoman Collins would like to begin as
our ranking member of the full committee.

Mrs. CoLuins. Thank you, Mr. Chairman. Before I begin to do
that, let me recognize the presence in the room of Mayor Maynard
Jackson. It is good to have him here and it is good to see you again,
Mr. Mayor. Thank you for coming.

Mr. Shuldiner, let me say, too, that I want to personally thank
you. I did so on the telephone, but I want to personally thank you
here for keeping me apprised of the activity that you were under-
taking in regard to the Chicago Housing Authority. I found it very,
very helpful, and it kept me informed as to what was going on so
that when my constituents asked questions I did have accurate an-
swers that I could give them.

The question that I have, Mr. Shuldiner, is that there are some
recommendations that have been made, and I cannot help but won-
der if there are going to be recommendations to separate distressed
stock further and—and all those kinds of things. Now, would that
not lead to more isolation of communities and exacerbate their dis-
tress?

Mr. SHULDINER. When you say “separate out,” for example, I—
I mean, since it is a little early to know what the plan will be ex-
actly for Cabrini, if I could just turn to Horner as a—as an exam-
ple. In Horner, on the space that we are demolishing, the two high
rises and the three mid-rises, there will be low rise housing, plus
it will—there will be in-fill construction in the community sur-
rounding it. So what we are—and we are restoring the street grid.
So what we are in effect doing is revitalizing the community with
the understanding that a certain number of units within the com-
munity will be permanently available for—and affordable for low
income housing. So I think we are doing the—the reverse. The plan
is to in fact incorporate these troubled communities back into the
community that is around them, if there is one.

Now, obviously in some places there is no surrounding commu-
nity and that presents a different kind of—a different kind of need,
again, which is why we think there has to be local planning. But
I would say that our objective would be to strengthen communities,
make them more viable, have as much mixed income as possible
so that public housing residents of the future in Chicago do not feel
themselves isolated and part of projects, but that they have units
in the larger community.

Mrs. COLLINS. Can you tell us whether any private managers
have expressed interest in managing CHA’s very severely dis-
tressed stock; and if so, what are the incentives for taking on these
kinds of properties, Mr. Shuldiner?

Mr. SHULDINER. Let me just say that on the beginning of August
we issued a request for qualifications. We are going through a two-
step process in terms of identifying potential private management
of CHA buildings. And the first is just to have people come for-
ward, express their interest, and express their qualifications, and
if they meet a certain standard, be placed on a panel.

We would then later negotiate with the panel members for man-
agement of specific developments. Residents from the city-wide
basis would be on the first group, on the RFQ, and then the resi-



13

strength on evictions when people are outside the law instead of al-
lowing them to remain there.

The preventative maintenance program had virtually broken
down because there was no procurement system, and there was not
a system for sending people out on maintenance. So it was no sur-
prise, then, that people waited literally months from the time they
placed a telephone call until the time they got any response at all
on maintenance issues.

The performance management score of a housing authority, is a
system that ranks from zero to 100. The best housing authority
rank in the 90’s. For example, Congressman Towns, the New York
City Housing Authority ranks in the 90's. It is a very well-run
housing authority. It proves the point that just because a housing
authority is big or it has old buildings or high rises, that it has to
be mismanaged. New York is well managed.

But the worst housing authorities are in the 30’s and in the 40's.
Washington, DC, for example, recently has been in the 30’s on
their—on their management score. Chicago was in the low 40’s; in
fact about 41 or 42 in their most recent PHMAP scores.

So we face a general situation of melt down, which frankly we
knew at some point we would have to address. We had been work-
ing on problems, for example, in our first year on the job in Phila-
delphia, where the mayor took command and named himself chair-
man of the housing authority. Washington, DC, which Congress-
man Weller accurately reported was pushed into receivership with
our involvement.

But we had held off coming with that level of intensity to Chi-
cago because, No. 1, it is so huge that we knew how resource-inten-
sive it would be. And second, Because of its size and the combina-
tion of problems, I have said, and I will repeat to you today, I con-
sidered the challenge in Chicago as the most difficult in the coun-
try, the most troubled housing authority, given the convergence of
factors here in this city.

So we began the conversation by talking to the mayor, and I
began the conversation by talking to the then-chairman of the
housing authority, Vince Lane. And we discussed a series of op-
tions. And the general sense was that we would have to begin to
work on this more intensively, and we set some time tables, some—
for action that would take place in May and in June.

In that time the chairman and the board decided that they would
voluntarily relinquish their authority over the housing—this is be-
fore we had set any ultimatums or deadlines or set a course. I
think they concluded that it was clear that so much had accumu-
lated that they just wanted to go on to other things. I believe the
board members felt that way, and I know the chairman felt that
way. They had lost an executive director who, when he was named
a year ago, Graham Grady, was thought to be a star executive di-
rector, and the agency did not have him anymore. They were losing
people in other key departments. It just got to be overwhelming.
And this sense of melt down was exacerbated by the fact that the
very leadership of the agency wanted to leave, as well.

e formality was the submission of a declaration of breach
which says, in effect, you are not abiding by your contract to pro-


137

There is no program or form of treatment that you could come up
with, given where they are. There are some that we think you need
to sort of privatize or hand off in some sort of a redevelopment sce-
nario, and others that are treatable in different sorts of ways.” And
we gave a couple of categories of conventional treatment. And we
felt as though planning with the residents around the future would
be an acceptable interim strategy.

See, if you plan—and I pointed out that the—one of the things
that I pointed out, because we did the work with the national com-
mission, was Ida B. Wells, the planning process I thought was not
very genuine. Folks did not come to grips with financial reality, did
not come to grips with where the future was going to be. I mean,
that is why I think Mr. Shuldiner has the residents at the Darrow
buildings coming to see him. After awhile when you tell folks that
something is possible and it is not, and then they realize it is not,
then they come to grips with the fact that they either need to tear
these down and move toward something else, or they need to re-
configure or look at something else. And what I tried to do is to
say, OK, HUD asked us to, we will bite the bullet, we will say that
there are some developments that cannot be saved and folks need
to figure out how to move that along, and we gave some illustra-
tions.

Mr. SouDER. Do you—this is slightly different. I want to come
back and revisit that in a minute if I have time.

Mr. Shuldiner, on the 35 people or however out-of-town people
that have come in at this point, is that—have they made long-term
commitments to Chicago?

Mr. SHULDINER. Well, some of them are—are HUD staff who are
detailed; some are either technical consultants or working for other
housing authorities and they are here in a consultant capacity
through an indefinite quantities contract we—we have with the
National Association of Housing and Redevelopment Organizations.
We are beginning to identify people and approach them to fill some
of the vacant management positions. That includes people who
have been on the recovery team, or just people in other housing au-
thorities that we have great respect for. So we are seeking to put
in that level of management on a—on a permanent basis and meet.
the Secretary's timeframe to be able to phaseout toward the end of
the year.

Mr. SoupEr. One of my concerns, in hearing what you said today
and your plans, is not with the plans in particular. They—they
sound ambitious and energetic, and I think Mr. Lane had ambi-
tious plans as well. But we have heard that people feel like the
past executive director came in and left; that it does not do any
good right now to talk to the former Chicago Housing Authority
employees because they may not be the people making the deci-
sions, that you in fact are making them. Does it not make it more
difficult for—while somebody has to clean up the situation and get
some order, that now you are going to, in effect, hand it off—I
mean, is your goal hopefully to have it cleaned up enough that the
people bidding on it will decide it is worthwhile to take over, or are
you going to have new planning systems in place and then have a
new authority take over at the end of this year who redoes it
again?


7
a
el
ea
ce
— Ee He [numemina
me
rg
eo ae
— (es } |

ARTLINE Sl
moras
cam ames
= [
veo oun
mee ey ee
si

ALIMOHLNY ONTSNOH O9¥ITHD


2

table problems. They are saying we cannot continue to entomb gen-
erations of Americans in isolated public housing development and
not expect to pay a tragic price as a society for the death of their
dignity and hope.

ese voices tell us that bricks and mortar alone will not fix a
dysfunctional social system in which 12-year-olds are having ba-
bies; 14-year-olds are selling drugs; 15-year-olds are killing each
other; 18-year-olds are getting diplomas they cannot read; 25-year-
olds are jobless, having never had a job; and 30-year-olds are
grandparents. The despair flowing from generations of social decay
will surely and utterly destroy any structure we erect.

We are called to Chicago today to listen to the voices of those
who seek a way out of the trap we have built for ourselves, and
to search for ways to build the next generation of public housing
on a sound social as well as physical foundation.

I hear no partisan tones in these voices. Our inquiry into the
facts and implications of the Federal takeover of the Chicago Hous-
ing Authority has been conducted with the cooperation and biparti-
sanship befiting the breadth and depth of the problems affecting so
many who live here. After we leave, the people of Chicago—Repub-
licans, Democrats, Independents, young and old alike—will face the
gangs, the drugs, the deplorable living conditions today, tomorrow,
and into an uncertain future. We all seek a better future for those
in public housing in Chicago and throughout our Nation.

mn this we can be united: What happens next in Chicago has im-
plications from Bridgeport, a community in my district, to Los An-
eles. HUD’s actions and plans here will chart one possible course
‘or the transformation of public housing redevelopment and man-
agement policy. Congress must then write the laws to implement
a new vision of a transformed public housing system. We hope to
hear such a vision’s voice today by HUD, local officials, tenants,
and the private sector, all who have been invited to testify today.

We welcome our witnesses, and particularly Secretary Cisneros
who has committed his Department to an unprecedented role in
running the Chicago Housing Authority. We look forward to his
testimony. He has been a voice for change, stressing individual
empowerment and responsibility as essential building materials in
future public housing. Yet fully 3 months after the formal HUD
takeover of CHA, questions remain about HUD’s long-term plans
here. It is essential the Secretary and the HUD officials testifying
today provide details to fill in the picture of CHA’s future that has
so far been painted only in fairly broad strokes.

Echoing across the chasm of racial and physical isolation, the
voices of Chicago’s public housing residents are asking for the same
things to which every American aspires: safe, sanitary, and afford-
able shelter in a socially and economically viable community. We
are here to listen to those voices. We are here to learn what the
Congress, HUD, and the eople of Chicago can do to transform the
State Street Corridor and all of public—American public housing’s
dead end streets into roads to self-sufficiency and family security.

At this time I will not call on our ranking member of the sub-
committee, I will call on the ranking member of the full committee,
Cardiss Collins.

(The prepared statement of Hon. William F. Clinger, Jr., follows:]


174

construction that you have in mind. Could that information be
transmitted to those who are in public housing? Could the un-
skilled work on and help to manufacture this housing?

Mr. WALLACE. Indeed, Congresswoman. And I apologize——

Mrs. COLLINS. That is my last question, Mr. Chairman.

Mr. WALLACE. I apologize for not addressing that. We have
worked for better than 2 years with one of the major banks in Chi-
cago to develop an initiative that would afford public housing resi-
dents an opportunity to participate in construction of units that, in
turn, would house public housing people and market rate people.

Our full objective was to make the technology available. I am an
architect. I do not know anything about manufacturing houses. But
make the architect—the technology available to public housing or-
ganizations, whatever the structure may be, so that they could in
turn employ people in public housing.

For example, the Step Up Program here in Chicago, one of the
major complaints they have is that no out-placement of the people
they train. Why not provide out-placement to the factory that the
people own.

We built, in Chicago in 1972, 459 units of housing that was a 50—
50 joint venture of a black and a white. We built this housing in
10¥%2 months. Recently we have built a prototype of a unit that pre-
ceded our building 20 units in two flats using light gauge steel
technology. Men from Henry Horner participated in the erection
and construction of that housing. The purpose of the technology,
and probably driven by my background, was to develop technology
that lowered the skill level requirements, and that could be pro-
duced to a great percentage, namely in this 80 to 85 percent in fac-
tory that would allow the involvement of these people.

Mrs. CoLLins. So then with HUD talking about demolishing
these old buildings that are not efficient and putting in new build-
ings, a possible means for doing so and a cost efficient and a very
quick way, and using CHA residents to help construct those new
units is something that you are interested in.

Mr. WALLACE. Cost efficient.

Mrs. CoLLins. And that is what you wanted to say here today;
is that right?

Mr. WALLACE. Yes. Yes.

Mrs. Couns. I thought it was.

Mr. WALLACE. Thank you.

Mr. SouDER. We thank all the witnesses for coming today. For
those who are in the audience listening, it has been helpful to us.
You have great responsibility caring for the many funds of the tax-
payers throughout the country, and the little children, and the
mothers and fathers, and the different homes that they are in. And
wish you the best. And we will keep our eye on it, but we hope ev-
erything works out wonderful because we do not have to keep it on
too close.

Thank you very much. The hearing is now adjourned.

(Whereupon, at 4:08 p.m., the subcommittee was adjourned.]

{The following information, Coalition to Save Greenview letters,
HUD/CHA 120-day working plan, and the HUD/CHA development
plans can be found in subcommittee files.]

{Additional information submitted for the hearing record follows:]


163

Mr. Souper. Thank you for your comments. I think that all of
us would agree that it gets frustrating to get down in the details
and not deal with the larger question of hope and opportunity
which would be our ultimate goal. Chairman Shays, do you want
to start with the questioning?

Mr. Suays. Chief, let me ask you just a few quick numbers. What
are the number of police officers you have?

Mr. Murray. We have 462 police officers.

Mr. SHAys. They are empowered to carry a gun and make ar-
rests?

Mr. Murray. That is correct, sir.

Mr. Suays. Same powers as the Chicago police?

Mr. Murray. Yes.

1 Mr. Says. Do they work in coordination with the Chicago po-
lice?

Mr. Murray. Yes, sir; they do.

Mr. Suays. So let me understand this. They technically could be
put under the command of the police? I mean, if a police officer and
a housing officer are at the same site, who supersedes who, if ei-
ther do?

Mr. Murray. If they are at the equivalent rank at this point,
there is no definitive statement as to who supersedes who. Nor-
mally it works out through mutual cooperation. If a supervisor ar-
rives on the scene, the supervisor assumes control.

Mr. Suays. Even if it is a supervisor from the housing authority,
he supersedes a lower ranked police officer?

Mr. Murray. Normally what happens, it is a mutual cooperation
situation, so if a supervisor arrives on the scene, normally that su-
pervisor will assume control of the particular situation.

Mr. SuHays. Bottom line, it has not been a problem?

Mr. Murray. It has—it has not been a problem.

Mr. Suays. The contract security guards, I missed your point. Is
your point that they are not needed or are they needed? Are they
more cost effective or are they less cost effective?

Mr. Murray. My point, sir, is that the contract security officers
are expensive and that we need to greatly reduce the number of
them and replace them by patrols by the CHA police.

Mr. SHays. Why would they be more expensive? I mean, in other
communities they are far less expensive. You do not have to pay
the same overtime, they are not on the same hourly wage. I do not
understand.

Mr. Murray. They are—they have proven to be expensive his-
torically here at CHA because of the sheer numbers that have been
utilized. For instance, as of a month ago there were approximately
900 contract guards that were being paid by the authority. We feel
that they can dramatically reduce those numbers, have increased
foot patrol by the CHA police and the CHA security officers. There
are about 380 CHA security force personnel. And deliver better
service more cheaply.

Mr. SHays. Do you believe in tenant control, tenant manage-
ment, tenant involvement?

Mr. Murray. Yes, sir; I do.


72

Mr. CISNEROS. The mayor.

Mr. RusH. OK. And by those being the mayor's appointees prior
to the changeover or prior to the CHA’s “takeover,” would we not
conclude that the mayor had an inordinate amount of responsibility
for the failures that you so eloquently voiced regarding the failures
of prior administration?

Mr. CISNEROS. Congressman, I do not think it is appropriate for
me to try to place blame. I have tried to avoid doing that through-
out my testimony.

Mr. RUSH. I appreciate that.

Mr. CISNEROS. J would simply say-——

Mr. Rusu. I can appreciate that, Mr. Secretary. I really can. But
my problem is, that there seems to be a willingness to finger-point
at Mr. Lane and his administration, and completely take what you
might perceive as being his failure out of the context of what is
happening in the city of Chicago locally, and that is the problem
that I have right now.

Mr. CISNEROS. Congressman, from day one on this matter, even
as the press has tried to push me to put blame somewhere, I have
avoided blaming anyone. And I must say I hope that my remarks
today are not interpreted as a blaming of Mr. Lane.

I have gone out of my way to say that I thought different people
have different skills, and I have tremendous respect for Vince's vi-
sion. The facts we found are simply a statement of disclosure of
what was there.

Mr. SHays. You have been extraordinarily gracious to everyone,
Mr. Secretary. Mr. Gutierrez.

Mr. GUTIERREZ. Thank you very much.

No. 1, Mr. Secretary, thank you very much for sending new tal-
ent to Chicago. Chicago needed an influx of new people from out-
side the city of Chicago. Let me put it this way: I was born here
and spent all my life here. I know about Chicago politics. Forty-one
years old, and I spent them all here in this city. And we needed
people to come from the outside if you are going to do—to make
some changes. And I say that as a former member of the Chicago
City Council that used to have oversight over the Chicago Housing
Authority. So thank you.

And specifically the person in charge of the day-to-day manage-
ment, I mean, Kevin Marchman is—every time I meet with him he
is very gracious, he is splendid, he answers the questions. And I
wanted to thank you for him and everyone else that you have
brought here.

But we really need, Mr. Secretary, the plan. When we had you
come before the Banking Committee and we talked about the plan.
I am going to raise three issues just to show you why we really
need a plan.

No. 1, the CHA residents deserve this, that they know where
they are going and we know what—before we take our first step,
where it is we—where the finish line is at. But then specifically the
situation of our senior housing that was for seniors only, we do not
know what priority that is being given within the plan. And there
are many of us——

Mr. CISNEROS. To revert it to senior only?


8

are a vital component of community policing as they provide greater accessibility, heightened
‘communication, and crucial visibility to the surrounding community.

Finally, a key component to enhancing security at the CHA will be greater interaction
and coordination with the Chicago Police Department. In that regard, the CHA will be
integrated into the City's 911 emergency system, and a coordinating agreement is being
developed to facilitate increased communication and interaction.

In the area of resident services, HUD initiated a summertime cleanup effort that
proved very successful. At Cabrini Green and Henry Homer Homes, over 600 residents
showed up to participate. Similar levels of resident participation were common at other
sites. The cleanup included such activities as street cleaning, garbage pick-up, graffiti
removal, gardening and beautification, and painting. This project is continuing at a different
development each week, and now, at the residents’ request, it incorporates the completion of
Jong-standing emergency work orders at each site. To date, more than 1,400 work orders
have been filled under this program. Another step taken was a resident survey, taken at each
of the family developments, of human service needs. Residents were surveyed in four key
areas: public safety, management and maintenance, economic development, and social
services. As a direct result of this process, the Resident Programs Department has been
restructured so that more resources are deployed at the developments so residents can take
greater control of their lives.

One of the top priorities for HUD is to include a broader range of residents in
Chicago public housing. In this regard, Assistant Secretary Shuldiner has conducted regular
meetings with resident leaders at the CHA offices and with all residents choosing to
participate at the various sites. Currently, we are in the process of establishing a system-
wide resident planning process to give residents unprecedented involvement in planning the
redevelopment of their communities. In addition, we are working with the residents to
ensure faimess as they prepare for their elections in December. We are also working with
selected resident management corporations and community groups to improve
homeownership opportunities.

One initiative that has received a good deal of publicity is the imminent hiring of 400
residents to perform basic custodial services at their buildings, Professional firms will join
resident organizations to train new workers and to promote resident-owned businesses. We
this as an excellent opportunity to put residents to work, create entrepreneurial
opportunities, and free the existing maintenance staff to do basic repairs in the units.

Other resident events in which we have been involved include the Chicago Inner City
Games and the Midnight Basketball all-star game. These events proved very successful and
exemplified the spirit of cooperation between HUD, the CHA, a variety of Chicago
organizations, as well as the Mayor's office. ‘The Inner City Games enabled thousands of
low-income children to participate in a full week of sports competitions, art, poetry, creative
writing contests, life skills, and entrepreneurial activities. Former NBA basketball player


70

of these funds and reallocate them from elsewhere in these unspent
$12 billion?

Mr. SHULDINER. OK, let me just remind the panel that public
housing receives $8.3 billion—I am sorry.

Mr. Suays. No, it is not your fault. These mikes pick it up even
if it is a little further back. So it will pick it up.

Mr. SHULDINER. I am sorry.

Public housing is funded predecision, so the $12 billion number
is only a year and a halfs worth of money. When you are you talk-
ing—basically the overwhelming majority of that money is capital
expenditure. Be it modernization or development, I would not call
that $12 billion either—a backlog, because that is the time it nor-
mally takes. Without knocking other departments, I think depart-
ments that have capital expenditures, whether it be highways or
buildings, it takes a few years to spend that money because of the
process of getting architects, doing the plans, awarding the jobs, et
cetera.

The idea of taking other people’s money, as—as you—as you
know, Congress has—and HUD, itself, has moved more and more
to formula funding. And maybe the Secretary should answer this,
but his discretion is—is really rather limited in terms of allocating
funds. We allocate funds either by competition or by formula, and
there is—there is not much that is kind of left over to be—to be
discretionary.

But again I would suggest to you that the $12 billion, you know,
it—it gets spent during the course of the year then it gets replen-
ished. If you were just to take $6 billion out of it, as has happened,
there is—there is virtually no float. And again, the noncapital work
is primarily staff and salary and supplies, and they get spent rath-
er rapidly and regularly.

Mr. WELLER. Of course, you reallocated staff which could have
been sent elsewhere in the country, to come to this priority which
is the CHA.

Mr. SHULDINER. Yes, sir.

Mr. WELLER. So you made that decision internally in saying
what you could do with your dollars?

Mr. SHULDINER. Yes, sir.

Mr. Suays. If I could, I would like to get to Mr. Rush.

Mr. Rusu. Thank you, Mr. Chairman.

Mr. Secretary, in my opening remarks I neglected to welcome
you back to the city of Chicago again, and please forgive me. I do
welcome you back to the city of Chicago, and I do have some ques-
tions that I would like to get an answer to.

Mr. Secretary, you and I have had some public discourse and
some private conversations regarding CHA over the years and the
plight of CHA, and frankly I must say that I am somewhat amazed
at your characterizations at this point, not regarding the problems,
but regarding the failure of the management team that existed
there. And I do not want to sound at all political here, but I must
remind members of this committee, and also you and other wit-
nesses and the people in the audience, that some of us have to live
here. And we are going to live here with public housing when you
all have gone on to loftier heights and to much more mellower


146

tions that the chairman or any other members of the panel may
ave.

First, by way of introduction, my name is Rosanna Marquez. I
am the director of programs for the city of Chicago under Mayor
Richard Daley. Among the duties I have had over the last several
years is to coordinate and oversee a number of activities in both
the housing and the community development arenas. And so I
think it is—it is by way of that work that I have come also to be
the mayor’s appointee to the executive committee overseeing the
Chicago Housing Authority at this time.

I just want to say a couple of things on the city’s perspective on
the HUD takeover of the CHA. A lot of it I think you have already
heard, it is just the city’s perspective on it. First of all, HUD did
approach the city sometime mid-spring of this year, clearly con-
cerned about the lack of progress in a number of areas at the CHA.
While there has been some Progress on a number of fronts, there
remained a great deal of—of concern about some deep-seeded and
pretty—pretty large scale problems at the CHA.

Given this, and given the city’s——

Mr. SouDER. Could you back up the mike just a little?

Ms. MARQUEZ. Sure.

The city shared that perspective, as well; and so with that, very

juickly agreed to support HUD’s intervention and takeover of the

HA which, as you al know, took place on the 30th.

Given that, it is clear HUD alone cannot do the job. There are
a number of parties that need to be at the table and each provide
resources, time, and assistance; among them the private sector, the
residents, themselves, and the city.

And so to that end the city has done a number of things in active
support of HUD’s efforts. One, if not the most perhaps obvious, is
that the mayor actually appointed someone—me—to serve on the
executive committee and play an active role not only in overseein;
what is going on at the CHA but also to coordinate city efforts an
to provide whatever city assistance is needed and appropriate to
carry forward plans for the CHA.

The city has for years provided a number of services directly to
residents of the CHA. That work continues. That includes social
services and comprehensive health services. We have a Department
of Housing ourselves which provides assistance to private devel-
opers and operators of low income housing. That city department
has increasingly become active in providing alternatives to publicly
owned housing for very low income residents.

We have also made a number of investments in communities that
include the CHA, that directly affect and benefit CHA residents.
Out in the Horner area, for example, we are building a library; we
are investing in the Boys’ and Girls’ Club; and we have similar ac-
tivity at Horner and elsewhere.

And then the last general—well, the last—or most recent way
the city has been demonstrating a commitment to public housing
residents is through designation of portions of CHA housing as part
of Chicago’s Empowerment Zone. Chicago is one of six urban
empowerment zones that has been designated. Large portions of
Stateway Gardens and the Robert Taylor Homes are included with-
in Chicago’s Empowerment Zone, and are therefore eligible for


63

we found that Mr. Lane’s long-term vision was essentially a correct
vision. And we are, on the whole, abiding by that vision, which
was: Bring down some of the high rises, replace them with town-
houses; seeking some integration; seek private business—private
investment, development investment on the sites. The big vision
was correct, but we would have had no way to know that the man-
agement circumstances were as severe as they turned out to be.

Mrs. CoLLiNs. To your knowledge, Mr. Secretary, has the CHA
Executive Committee seen the 120-day plan yet, the action plan?

Mr. CISNEROS. The plan that I have been sharing with you?

Mrs. COLLINS. Yes.

Mr. CISNEROS. It is my understanding that it is a regular com-
munication to them, updating of how we are doing on that plan.

Mrs. COLLINS. May I ask you another question? Have you been
advised by those 35 or so members of HUD staff who you say have
been here on the ground now for—for 3 months?

Mr. CisNEROS. HUD and other housing authorities.

Mrs. COLLINS. OK, I stand corrected; HUD and other housing au-
thorities. That the residents of the Chicago Housing Authority now
see a physical difference in what has happened on the ground, and
have a better sense of security since you have been here in this
short-term plan?

Mr. CISNEROS. Madam Congresswoman, that is a very hard ques-
tion. I cannot speak for the residents. You will hear from them
today and I think it is more appropriate that they should answer
that question. I would not presume to say we have made that kind
of difference.

I will say this: We have worked very hard with the residents, we
have been respectful of the residents. I have come to Chicago nu-
merous times during this period and met with them, and every
time insist on meeting with the resident leaders. I will tell you that
I think early on, the first couple of months, it was just too early
for them to tell me that they had seen any difference. Plus you will
find, as you well know, the level of distrust; the level of having
been lied to so many years; of having been told one thing and an-
other thing done; of having a leader come in as executive director
and leave a year later, with great fanfare, and then it falls through
the floor; people are just horribly skeptical about anything.

But on my more recent trips, as I ask people face-to-face, eye-to-
eye whether they are noticing anything different, more are telling
me that they are seeing some difference. But I think you have put
your finger on the right test. We must not rest and cannot con-
gratulate ourselves on anything we have done until by and large
the residents can tell us that things are physically better.

Mrs. COLLINS. Mr. Chairman, I know the red light is on. I would
appreciate you allowing me to make a very short statement.

. SHays. Happy to have you do that.

Mrs. COoLLins. I will tell you what that statement is. Mr. Sec-
retary, you mentioned in your remarks that sometimes when peo-
ple come into a district and in a partisan surrounding, that there
is a tendency to denigrate those who come here to try to do some
good. I want to go on the record now as saying I do not believe it
is the intention of those of us who are deeply concerned about the
Chicago Housing Authority to denigrate anybody or their efforts. I


20

Chairman Clinger, Chairman Shays, ranking member Collins, members of the
Committee:

‘Two and a half years ago, the Clinton Administration made a commitment to tum
around public housing in the United States. We piedged to take on the problems of the most
physically distressed public housing in the country. We pledged to take on problems that had
been festering, not just for years, but indeed, for decades. We said we would make a
tangible difference. We said that we expected to be held accountable for the commitments
that we made, and we expected to see results during our tenure in office.

Today, I appreciate the opportunity to appear before you to discuss the progress HUD
is making in Chicago to transform the worst public housing authority in the nation, to rebuild

its public housing communities, and to enhance the quality of life for public housing residents
who live here.

Across the country, signs of dramatic change already abound. The metamorphosis
has begun in cities such as Atlanta, Washington D.C., New Orleans, Philadelphia, Detroit
and Baltimore, ‘These recovery efforts -- whether they entail reforming the management and
administration of dysfunctional housing authorities, of tearing down obsolete projects and
rebuilding with smaller scale, less-dense, more liveable housing -- are proceeding at an
unprecedented rate,

Nowhere is the need for change greater than here in Chicago.

Public housing in Chicago should be a springboard to a better life, as it is in many
cities and towns in America. When public housing becomes a gateway to self-sufficiency,
residents are well-served. When public housing is well run, when buildings are maintained,
when the environment is safe, when authorities are fiscally accountable, taxpayers receive a

return on their investment. Regrettably, the Chicago Housing Authority (CHA) had failed to
meet these goals.

CHA is the third largest housing agency in the nation, behind New York and Puerto
Rico. CHA administers over 57,000 public and assisted housing units. 32,000 are family
housing units, 15,000 of which are situated in isolated high-rise buildings. The CHA has
been on the troubled list since 1979, the year the list was created, with a Public Housing
Management Assessment Program (PHMAP) score of 46.38, as of December 31, 1693 (60
percent is considered troubled).

‘The problems in Chicago have accumulated over decades. Discrimination was part of
the problem. Low-income African-American families were segregated in huge projects and
deliberately isolated from: white neighborhoods. The architectural designs of the past, dense
high rises, contributed to the isolation. As the years went on, little attention was paid to the
residents’ needs in these public housing communities. As a result, projects have decayed and
the residents have become poorer. Crime, violence, gang warfare, rampant drug use, drug
dealing, and poorly maintained units are the day-to-day realities which too many Chicago



37

CHA Administration

Goal:

a)
@
@)
@
©)

Replace the existing CHA administrative structure and create a new structure
‘which will (1) provide fleld support for site management; (2) manage CHA assets
and resources; and (3) restore confidence and integrity in the Authority
Restructure and consolidate the finance and accounting and edministrative departments:
Reconcile 1995 budget which includes a 15 percent staff reduction
Begin reorganization of the legal department
Prepare and release RFP for private management of senior housing developments
Prepare and release RFP for Management Information System

(6) Prepare and release RFP for Section 8
(7) Implement corrective action plan to address procurement and contracting issues
(8) Continue legal and investigative efforts related to the Velukas report
Asset Management
(9) Prepare and release RFP for pension fund management
(10) Outsouree the management of deferred compensation plan
(11) Investigate procurement of third party administrator for workmen's compensation assets
Building Community Commitment
Goal: Increase the community's involvement with CHA programs
(1) Establish roundtable discussions with decision-makers from the civie, business and
religious communities to familiarize them with CHA initiatives
(2) Form an executive committee to govern the CIA,

@)

@)

Create a public information forum to keep media, residents and the public at-large
informed of the changes at the CHA

‘Engage foundations, universities and the business sector to active partnerships with the
CHA


157

1), Local people could be effectively involved in the coustrection prograsa
both in the field and in the plant ( Horoer Association of men
participated im the erection and constroction program.)

2). The firet cost of construction and operating cost of the structures was
more thas competitive,

3). The time compression achieved was such that fall building enclosure can
be achieved within 8 to 12 hours,

‘With the success of these projects, please accept that I thoroughly support the
position that sound innovative approaches utilizing technologies and expertise aad
fiscal conservatism found in the private sector are a critical factor in turning CHA
‘and public housing around.

Public housing in Chicago la now at a crossroads. It is xt this crvssroad that we will
vee the redefining of HUD’S mission to serve underprivileged persona. Asa
component of subeldy, bas accompliahed lite more than funding the “poverty
industry”, 1am confideut, certainly hopeful, that the recent change in CHA
administration will usher in an era that is truly more beneficial to residents, the city
and above all, the nation.


74
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
‘THE SECRETS

TARY
WASHINGTON, O.C. 20610-0001

MEMORANDUM

FOR: Members of the House Government Reform and Oversight Committee
FROM: Henry ©. cos [Merry Canucon

DATE: “September 5, 1995

SUBJECT: Our Partnership with Mayor Daley to Stabilize the Chicago Public Housing:
Ten Werks of Accomplishments

‘The Administration joined hands with Mayor Daley in May to pave the way for a tum

(CHA) and visible improvements in the physical landscape of its developments.
We have operated upon the basis of goals which I outlined in a “CHA visions"

press. Although local conditions are unique to every city, the Administration's success in
reforming puttic housing in Chicago is a strong indicator of the potential for transforming the
worst of public housing across the country.

1. Improving security.

= Consolidated two branches of police and crime prevention under a single chicf
for stronger response. Part of the restructuring included the granting of long-
delayed promotions to 20 CHA police officers to fill key supervisory needs.

+ Hired 60 additional CHA police officers. The officers are currently in an 8-
‘week training program that will conclude at the end of August.

+ Announced tougher tenant screening procedures and strengthened resident
-eviction policies. In brief, police records will be used in determining occupant

-history of an applicant, and any violation of the lease is subject to immediate

‘eviction. Eviction is curently spotty and sometimes a multi-month process.



We have used the findings of our improvement team, as well as other reports which
have been prepared over the last few years, to formulate and implement our plan. ‘The most
in-depth report done recently was by TAG and Associates, Inc. in October 1994. It
reviewed the organization, management operations, and public housing stock. This report
found CHA’s major deficiencies to be:

1) a large and loosely structured middle management layer;
2) centralized control and decision making;
3) difficulty in setting and enforcing CHA-wide performance standards;
4) difficulty in enforcing management controls and
maintaining a system of quality control;
5) difficulty in controlling the living environment at
certain housing sites;
6) lack of a clear planning process that would identify
solutions to problems at troubled housing developments;
7) inability to sustain operational improvements,
8) a high level of resident distress;
9) a difficult type of housing stock to manage, i.e., the large number
of high-rises; and
10) inadequate management and information systems.

These findings proved consistent with those of the General Accounting Office and the
HUD Inspector General.

With the findings of the TAG study clearly in mind, a 120 day stabilization plan was
developed and has been presented to the Committee. The plan outlines 6 specific tasks and
goals, with timelines and performance measures. These areas cover:

1) Security and Safety -- increasing the level of safety in and around Chicago's
public housing developments and develop community policing plans;

2) Resident Services -- increasing residents’ participation in the decisions that,
affect their lives;

3) Housing Operations -- improving the effectiveness of CHA's maintenance
rogram and improving the appearance of CHA buildings and open spaces;

4) Administration and Financial Management -- replacing the existing CHA
administrative structure and creating a new structure which will provide field
support for site management, manage CHA assets and resources, and restore
confidence and integrity in the Authority;

5) Building Community Involvement -- increasing the community's involvement
‘with CHA programs; and

© _ Redevelopment -- demolishing certain high-rise buildings and replacing them
with less dense dwellings that create better living conditions and opportunities
for low-income families.



144

have laid out a set of requirements or a set of actions that had to
be taken in order for HUD to feel that the board was giving appro-
priate attention to key parts of the CHA. I think that could have
worked just as well. And I think if the mayor had not been opposed
to receivership, perhaps receivership would have been another ap-
proach; although I think the time it takes to get a receiver may
have caused HUD to still step in for some period of time until a
receiver could be named.

Mr. Souper. I had two other questions. One, when the—for Mr.
Shuldiner in the—When the—we heard the concerns about the
building demolition. I admire your—your seeking resident input,
and that you need to have resident input. And you also made a
couple of references to funds for—or excuse me, for planning, you
know, that they send a plan. Are you providing funds if they want
a planner?

Mr. SHULDINER. Yeah, we think that that is—we have technical
assistance money that could be used for that. That should not be
a large amount of money, and we think it would go a long way to-
ward hastening any—.

Mr. SoupER. If they tapped into that money and developed plans,
are you going to have alternative plans in place for the residents
before you knock down the buildings, or will you—that is a very
tough question. In other words, if you are going to—if you are
going to displace——

Mr. SHULDINER. I do not beat my wife in the first place, so I can-
not stop.

Mr. Souner. No, but if there is a building that—I mean, there
are high rise buildings certainly you have—we have talked about
earlier today, informally as well. as formally, that you are going to
have to displace “X” number of residents when you move a
building. Will there be a plan for those residents before the build-

ings——

Mtr, SHULDINER. Yes. I think as a practical matter, given the fis-
cal restraints, we are not going to be able to just do, you know, a
lot. We are going to have to—beyond the three or four that are al-
ready targeted, we will only have the capacity to take on, you
know, one or two a year or—or just several—you know, a few at
a time. And I think it is just—we are likely to pursue those who
come up with a best plan.

I mean, we want to go first where there is resident support,
where the—where the—you know, the residents have thoughtfully
looked through the process. That does not suggest that there may
not be a situation where just under our police power or just the ac-
tual physical condition we will not have a choice to act. But if we
are talking about an entire development, we are going to have to
go—and I think in the package you have my recusal letter, so when
I say “we” I mean CHA, not HUD.

We, CHA, are going to have to go back to HUD and ask for funds
and be project-specific. And I think we will ask for it—I mean, not
“I think,” I know we will ask for it in those circumstances where
we have a—a plan with the residents involved. That is why, as I
said, the most recent one in Clarence Darrow the residents came
to us and said, “Look, we want to try something different. Will you
go get the money for us to do it?” And—and we immediately sub-


90

Mr. SHays. Thank you very much. I think I have a sense from
you, Ms. Randolph, what you feel about this question, but I am
going to ask all three of you: Do you feel that the model for tenant
participation being pursued by HUD is working and will remain in
place when a new director is appointed, and should remain in place
when a new director is appointed?

Ms. RANDOLPH. Yeah, | think that everything that is—is going
to be working well should be or—in place when the new director
is appointed. But it is not going to make any difference if they do
not communicate with us. Because if it were not for the residents
there would not be nobody.

Mr. Suays. OK, I just want to be clear. “They” meaning the rep-
resentatives with HUD, or HUD’s communication with you? In
other words, your concern is that the representatives representing
the tenants are not communicating with the tenants, or is it that
HUD is not communicating with the——

Ms. RANDOLPH. They are not communicating with tenants, and
especially me.

Mr. Suays. “They” being HUD or the representatives?

Ms. RANDOLPH. HUD.

Mr. Suays. OK.

Ms. RANDOLPH. All right, let me make it perfectly clear. Like Mr.
Shuldiner, he is the acting whatever of the department. A lot of
things that go on, I do not know if it is behind closed doors or
where, but we, the residents, do not get the true picture of what
is happening or what they are talking about.

I am the spokesman for the Central Advisory Council which en-
tails 140,000 units. Now, I am not saying people. But I do not have
the information to give to the residents what HUD is doing as it
was when we were commissioners. We had all the information and
we could take it back to my residents so they would not become
complacent, be angry and mad. But as it is now, I just hear a little
bit. And if I do not hear from the right persons I cannot dissemi-
nate the message to my residents because I do not want to give
them no wrong information.

Mr. SHays. You know Mr. Shuldiner, I am not really clear. how
this system works. I am going to ask our other two witnesses, but
if you would give me a sense of how HUD is envisioning their out-
reach to tenants or how it is supposedly reaching out. I am not try-
ing to blind-side you here, I am just trying to be clear, from HUD’s
standpoint. Or if you would want someone else to explain that,

r——

Ms. Moore. Well, I say one of the things he said was the new
administration come on, I think the procedures would change. Be-
cause under the past administration that—that came on with
CHA’s administration and the rules and the regulations changed.
Now, the things that HUD put in place today, when the new ad-
ministration came we would be picketing, we want a new commit-
tee because we are going to clear our projects.

Mr. SHays. Move the mike over a Rittle bit for me. These mikes
really pick it up. OK.

Ms. Moore. I am sorry.

Mr. SHays. No, no, you do not need to be sorry. I just want to
make sure we hear you.


172
ing. And I would like to see the kind of mixed use that allows that

to happen.

Mr. WALLACE. Mr. Chairman, you may find that we are in agree-
ment. Having a philosophy of working itself out of business is en-
tirely different from the physical improbability of you going out of
business working after that. It is a matter of attitude.

I sit here, I am an example. I work every day in the area, I work
with public housing people. My efforts within the limited scope of
technology lies in developing technology that affords them an op-
portunity to work in the work place. They do not have skills that
will qualify them to do exquisite carpentry. But they develop tech-
nology that affords them an opportunity to produce in a controlled
environment, and yet service both their re-housing needs and also
beyond that, the market rate housing need.

in discussions, in fact, with Chairman Lane when he was there,
he said his objective was not to get rid of CHA, but in fact to move
CHA to more management and to see involvement moved down the
line to the people themselves.

I do not suffer from a dream that CHA will ever disappear. I
once read, in fact, a document. I have it, in fact. The writers were
describing a place where there were block clubs and there were
pardens and planting. It was integrated and people cared. They

ad their meetings and people could complain. And before I got to
the end of the document I was wondering. It was about Cabrini
Green. Cabrini Green once before.

I do not think that the housing itself, or the structure itself
makes a bad Person. 1 think wrong thinking eliminates opportunity
to dream. So I still believe that there will be a public housing au-
thority.

I think that HUD in fact should encourage those that would use
innovative technologies to employ people. I think those people that
you can consider to manage; you can consider to own production
units that would in fact provide housing for them and in the mar-
ketplace, things like that. I have every confidence in them, and I
do not in fact see public housing disappearing.

Mr. Suays. If I could ask one privilege, and that is just to make
a statement at the end of this hearing, given that I have traveled
so far.

I leave Chicago with a number of different impressions. One is
that Chicago looks to me a very livable city. There is a lot of open
space, the roads seem to work fairly well. Believe it or not, it looks
cleaner to me than a lot of cities. I mean, there were a lot of won-
derful surprises for me coming to the city. An extraordinary down-
town. You had some areas that look yuppie and every city needs
a little of that. But what I came with an impression was, I saw
some really ugly schools on the outside. And I compliment the
mayor for wanting to—to get more involved. He is getting more in-
volved in a micro way. And I agree that you can only take on so
many battles.

I went to St. Joe’s School, a parochial school near Cabrini Green
and met with some of the students and loved my interaction with
them. And then I went to the—is it the Shuler Public School, is
that it, that was nearby? And it does not look so great on the out-
side. But I really enjoyed my interaction with the teachers there.


44

+ managers;
Implement site-based maintenance program under the control of the property manager.
Person responsible: Director of Operations

‘Time frame: 3 to 4 months

-- Performance measure: milestones based on sublasks, number of sites under project-based
management

(2) Implement preventive maintenance program
= Subtasks:

Develop with site staff and residents PM work schedules and models. (Use the repair/clean-up
crews in (5) below to introduce the concept of PM)

Identify properties where PM can have impact; identify, by site, by building, the types of repait
een be accomplished using a PM iba (avolve Lie aaEand resident); SPS

Identify staff, trade skills for PM crews;

Estaptish link to HQS unit inspection process to generate PM work orders; train residents to
perform HQS inspectio

Determine area of operation for PM crew (site-based, group of properties, agency-wide)
Determine if PM can be contracted, use CHA staff, or both,
Assign staff to crews or initiate procurement;

Implement pilot PM program at selected sites.

+ Time frame: 3-6 months to initiation at selected sites.

~- Person responsible: Director Field Operations

~ Performance measure: # of apartments and buildings that receive PM on an annual basis
(3) Standardize CHA’s work order system

~- Subtasks.

Review work order intake procedures; track volume of work requests received; review staff
assigned; examine MIS options for intake and distribution of work orders;

Revise procedures, adopt interim, manual procedures if MIS cannot iramediately accommodate
new processing steps;

Adjust staffing to accommodate volume;

Train staff on new procedures;

Implement new work order system.

~- Time frame: 75 days

-~ Person responsible: Director Field Operations

-- Performance indicator: revised procedure in place, number of transaction handled, work orders
completed.

(A) Replace leadership of the operations staff
Subtasks: none

Time frame: 10 days


85

Mr. Suays. Cora Moore.

Ms. Moore. Well, I will not say my whole speech, but my
speech——

Mr. Suavs. If you would turn that mike just a little bit. You may
read your speech, you may do whatever you would like. You
can——

Ms. Moore. I will not read my speech but I would like my speech
to be entered into the record.

Mr. Suays. It will be in the record.

Ms. Moore. I will state rather than management do work, if
CHA and HUD would work along with them and give them the re-
sources that they need for resident management. Our main con-
cern, especially in Cabrini, is our resident security program that
we have with 200 residents that currently are working with the
partnership with contract security, which we are told that today,
the 5th, our residents will be unemployed because they are taking
security out of housing.

And what we are saying, without resident participation the resi-
dent’s environment, the new way they want to bring the new secu-
rity in, one security guards would walk three buildings per day, it
is not going to work in public housing in Chicago, and I want to
only state Cabrini Green.

My other concern is the Tenant Patrol Program where we have
900 members and we tenant patrol all the buildings in the 19 de-
velopments in the city of Chicago. My understanding, that they are
going to decrease that program. And they have decreased the
stipending on home. I said that is another good program that will
go down the drain with resident participation. I understand they
are trying to bring in the new model that comes from New York,
and it will not work in the city of Chicago because the program
that they have in New York had enlisted resident participation.

And I would end to the—all I am saying, all 1 am—we are asking
is that we would have—we want resident participation in Chicago
in resident management, in resident security, and tenant patrol.
Thank you.

[The prepared statement of Ms. Moore follows:]


62

Mr. Cisneros. Employees of the Chicago Housing Authority.

Mr. Suays. Exactly. OK. And that would be—that is in fact your
intention?

Mr. CISNEROS. Yes, sir. I have made that commitment to the
President and intend to abide by it.

Mr. Suays. I am going to be asking some questions, but I am
going to at this time recognize the ranking member who may want
to yield to Mrs. Collins, but I recognize him.

Mr. Towns. Thank you very much, Mr. Chairman. What I would
like to do is to yield to the ranking member of the full committee,
the person who is really responsible for us being here, Congress-
woman Cardiss Collins.

Mrs. COLLINS. Thank you very much, Mr. Towns and Mr. Chair-
man.

Mr. Secretary, you testified that after trying to work with the
Chicago Housing Authority for 29 months, and that once you got
here you were surprised by the depth of the problems that you
found here. And so my question is: How is it that you did not know
that these problems were so deeply entrenched, after having looked
at this for 29 months?

Mr. CISNEROS. Congresswoman, I did not mean to say we were
intensely looking at this action for 29 months. For the better part
of the first 2 years our relationship with the Chicago Housing Au-
thority was the traditional relationship we have with a housing au-
thority: Trust the local board; trust the local management; and pro-
vide funding for the resources.

We, of course, grade them. The PHMAP scores, the management
scores for the CHA showed very low scores, but we did not have
the kind of intense, daily involvement that we would have when we
actually came to run it. So we were surprised that what we had
heard about the inadequacy of procurement systems was as serious
as it turned out to be, or the inadequacy of financial management
to keep track of financial management questions.

We, like you, read the newspapers and saw stories of $15 million
lost in the pension fund, but we were not running the CHA at that
time. So it was not until we actually had people on the jobs, our
own accountants going through it, that we discovered the cir-
cumstances had slid to that point.

Let me say that part of the reason why—and this allows me to
speak to the chairman as well on his earlier point—when you have
really good people, as no doubt you have discovered in your career
of analyzing and assessing people, they can see things quickly. Joe
Shuldiner has been the public housing authority manager for New
York City and Los Angeles, the two largest cities in the country.
Like a good businessman who has run many businesses, a workout
artist, if you will, he can look at a business and immediately tell
what is there. He had never had an insight into the Chicago Hous-
ing Authority until the day that we actually came here and took
it over, like that which he now has.

Mrs. CoLLins. Do you think that your trust in the local board for
management was misplaced during this 29 month period?

Mr. CISNEROS. Well, I do not want to choose a word like mis-
placed. I do not know that I would characterize it in that way. I
would say that different people have different strengths, and that


86

SEPTEMBER 5, 1995
FEDERAL TAKEOVER OF THE CHA

SUB-COMMITTEE:
HUMAN RESOURCE AND INTERGOVERNMENTAL
AFFAIRS

SPEAKER:
Ms. Cora Moore, Manager
Vice President, Local Advisory Council
President, Security Program
President, Tenant Patrol
Cabrini Green Homes
1230 North Burling
Chicago, Illinois 60610


121

Mr. LinEs. Sure. I am Jeff Lines and I am the president of a firm
called TAG Associates, and also as of tomorrow will be my first an-
niversary as the receiver of the housing authority of Kansas City,
MO, under the Federal district court.

I was called upon a little over a year ago to do an assessment
study of the Chicago Housing Authority, having been involved off
and on with the CHA for some period of years, having predated my
time with public housing and been sort of a sister agency at Boston
to—to Chicago.

Much of what my findings were, were covered in the June 7 testi-
mony I gave, and also were covered in the Secretary's testimony.
But by and large, we found a rather significantly distressed organi-
zation, one that primarily had the worst housing stock in the Na-
tion. I take a little bit of exception to the Secretary in the sense
that New York City’s housing stock is more typical of the housing
stock in New York City, with a different sort of a structure and de-
sign that blends and is more suitable to the type of management
scenarios that you have in New York City. So Chicago’s housing
stock is significantly different, significantly hard to manage, very
difficult, in very poor condition, was not designed for long-term sus-
tainability. So you have very, very difficult housing stock. Coupled
with the size, the institutional isolation, the growing middie man-
agement and a number of other conditions had resulted in a very
distressed agency.

also, however, pointed out in my report that under Chairman
Lane that there were a number of significant initiatives that were
undertaken, and I pointed out to what they were. And I said, “But,
however, we have little instance here with long-term sustainability
and follow through on improvements.” And my findings were basi-
cally that there were certain systemic problems inherent to the
structure and type of the Chicago Housing Authority such that if
they were not addressed, ultimately you would have little long-
term progress in solving the needs of low income households in the
city of Chicago.

me of my concerns, the most important ones, I think, has been
addressed as HUD has made their early moves at CHA. First of all,
120 days or 90 days or whatever is not enough time to assess a re-
covery effort. What we have to do is we have to look at certain key
components that they have put in place. One is they have sta-
bilized senior management, regardless of how they have done it. I
know, and I agree with the Secretary, that there are too few man-
agers with substantive public housing experience who could come
in and manage a housing authority. I have got that problem; HUD
has that problem; we all have that problem. And when you have
short-term needs it is very hard to accommodate that.

The second issue is that they have moved toward stabilization.
In other words, they have moved aggressively toward prioritizing
those sites that could move forward and those management activi-
ties that would result in the best improvements in the agency in
the short-term, and that they, as HUD, can essentially initiate. I
would disagree with Congressman Weller that—sort of to say that
they should | be able to give quantitative measures as to which de-
velopments they are going to move at, at which time and which
place. These problems have taken decades to occur, and my report


124

Testimony of Jeffrey K. Lines Before the U.S. House of Representatives
‘Committee on Government Reform and Oversight
Subcommittee on Human Resources and Intergovernmental Affairs
‘on September 5, 1995

‘Thank you for the opportunity to testify today on issues affecting HUD’s rote and
interventions in the operations of very large troubled public housing agencies. Let me start by
telling you something about myseif and my company. TAG Associates is a firm that is
actively working in the field of distressed and troubled public housing and currently serves as
the Receiver, of the Housing Authority of Kansas City, Missouri, the Alternative
Administrator for the Ellen Wilson Hope VI Program in Washington, D.C.. as a principal
member on the Washington, D.C. Independent Management Team (IMT) supporting the
Receiver and is working as part of the public housing recovery efforts in Detroit. L have
been actively involved in working in troubled and severely distressed public housing for nearly
wwenty years and was a senior management team member of the Boston Housing Authority
working directly for the Receiver. [ also administered a Hope VI style severely distressed
public housing program at the state level for state assisted public housing in Massachusetts 1
and my firm served as the lead technical consultant to the National Commission on Severely
Distressed Public Housing established by the U.S. Congress.

My experience indicates that the task of addressing the needs of large and distressed
public housing is one that requires utitizing a range of solutions including the direct
intervention in the operations of public housing and the management of this housing. Taking
steps such as appointing receivers through federal and state courts or alternative administrators
through HUD are appropriate steps which should be considered and pursued when
circumstances warrant dramatic and aggressive intervention. Caution needs to be exercised in
riot implementing one size fits all solutions which may not be appropriate to a particular
agency. For example, the method of intervention and the objectives tor remedying causes of
severe distress in public housing will clearly he different tor Chicago than tor Kansas City

The basis for measuring progress in remedying distressed and troubled public housing
needs to be set carefully and cannot always be based on a set of mostly numerical measures
such as is used for the Public Housing Management Assessment Program (PHMAP). Clearly
‘one set of quantitative measures for approximately 3.200 public housing agencies nation-wide
is not the basis on which decisions should be made on whether to take control of the operauions
of housing agencies or to measure progress toward achieving critival objectives

Recently, 1 was asked to provide testimony to the House of Representatives,
Subcommittee on Housing and Community Opportunity (June 7. 1995) which covered many of
the topics being reviewed by the Committee on Government Reform and Oversight at today's
hearing. I am going to provide similar testimony to this committee as was provided for the
hearing held on June 7th with some additional thoughts and comments based on HUD's
continued efforts to address the needs of severely distressed public housing in Chicago and in
other cities.


31

Executive Advisory Committee, selected jointly by myself and the Mayor. Assistant
Secretary Shuldiner chairs the Council which will assist and guide the Department in
formulating policy and strategic planning. Realizing that this local input is crucial if we are
to be viewed positively in the community, it includes a resident leader, an appointee of the
mayor, as well as a business and community leader. Besides policy and planning, this
Advisory Committee will help chart the future of the agency and establish policies that help
prevent fraud, abuse, mismanagement, and discrimination. Helping to establish and maintain
the integrity of the Authority will be one of the committee's highest priorities.

Including the aforementioned meetings at the respective developments, official
Advisory Committee meetings, open to the public and the press, are scheduled every three
weeks at different developments. Even before the Committee was in place, these meetings
were held to discuss actions that the Authority was contemplating and to hear resident
concerns. These meetings are preceded the evening before by a city-wide resident meeting
which focuses on a particular policy issue, such as security or private management.

To help augment HUD's commitment to tum around CHA, federal support for the
Chicago recovery effort has been provided by the President's Domestic Policy Council
Already the Justice Department has agreed to help save much needed anti-drug and crime
fands that are now jeopardized due to previous mismanagement. We will also approach the
Departments of Labor and HHS with the hope of establishing a welfare-to-work strategy for
CHA residents.

Three months have elapsed since the HUD intervention, and I believe these remarks
will attest to the fact that real progress, not merely headline-grabbing, temporary fixes, has
been made. We have stabilized the agency and are instituting sound management reforms
and bringing fiscal responsibility to the Authority. We are beginning to dismantle an
outdated, 50-year old bureaucracy, and turn the CHA into a lean, efficient housing manager.

1am fully aware that many, including some Members of Congress, have questioned
how long HUD will stay and when a permanent director will be named. During my visit to
Chicago last month, | pledged that a new director will be named by no later than the end of
the year. While in Chicago on a day-lo-day basis, we are determined to:

1) Fully implement the 120 day plan;

2) Increase the capacity of the CHA to function as an effective housing manager;

3) Ensure that the CHA can deliver needed services in an efficient and timely
manner;

4) Have in place a long-term plan which sets the course for the future of the
CHA, including a strategy to deal with its entire housing stock.

We anticipate a continued HUD role on the Advisory Committee until we are
confident that such progress is sustainable. It should come as no surprise that the search for
@ permanent management apparatus has been a lengthy one. Given the gravity and depth of


156

This focus led to my specializing in the development of affordable technologies for
Gelivery of habitat. As an architectural technologists, my associate of come twenty -
five years, Mr, Paul Depoadt of Cergy, France and 1 developed, and received a
patent for, » unique light gauge steel construction technology that promises to
provide a mechanism for coastructoa of economical habitat, It will provide
affordable, energy efficieut habitat of high quality while utilizing public housing
residents and low income persons, With my testimony, I would like to submit 2
narrative description and copy of the pateat for the beariag record,

Our work with Eght gauge steel was preceded by development and coastructien of a
major steel based systems development of 459 dwelling units in 1972 here in
Chicago, This project was developed under the HUD 236 program. The project
was fabricated and erected in 10 1/2 months and remains fully occupied and viable.
‘Most receatly ome(1) two(2) fiat residential buildings were constructed utilizing light
gauge steel techaology. All acknowledged that the erection thme, the quality of
construction, the energy efficiency and architectural character of the buildings was
superior in every sense, Three(3) very significant facts is merged.


7

well as other troubled housing authorities that are on the brink of
catastrophe throughout this Nation.

Mr. Chairman, while our parties may look at HUD’s efforts
through different philosophical glasses, I sincerely hope we can
agree that a safe, affordable home in a suitable living environment
should be the right of all citizens; Chicago, New York, California,
Connecticut, throughout this Nation. If so, then we in Congress
have a responsibility to provide HUD with the necessary resources,
with the tools that they need to be able to carry out the vision for
Chicago and other authorities in the Nation.

On that note, Mr. Chairman, I yield back the balance of my time,
saying that I look forward to all the testimony coming forward be-
cause housing is a very serious issue, and I think that when we
look at it I really feel very strongly that not only HUD should be
pulled into it, but we should have, in terms of all these other Fed-
eral agencies being pulled into it to put resources into it as well,
because this is a very serious issue and it should be addressed in
a very serious manner. So I’m hoping that somewhere along the
line that this committee will also reach out for the other agencies,
to bring them to the table, as well. I yield back.

Mr. Suays. I thank the gentleman.

At this time I would like to call on Congressman Weller, a new
Member who serves not on this committee, but serves on the Bank-
ing Committee; Housing subcommittee. This committee here inves-
tigates for waste, fraud, and abuse. We look at the operations of
programs. Mr. Weller’s committee is the committee that drafts leg-
islation governing HUD. At this time I welcome you and thank you
for being here.

Mr. WELLER. Thank you, Mr. Chairman, and good morning, Mr.
Secretary. Good to see you again.

At the outset I first want to thank you, Mr. Shays, for the oppor-
tunity to participate in today’s subcommittee hearing. And I also
want to welcome my colleagues from out of State, and welcome you
to the Land of Lincoln. We are glad to have you here today.

And as a member of the Housing subcommittee, and more impor-
tantly for me as a representative of the city of Chicago and the Chi-
cago suburbs in the Congress, I want to of course reaffirm my com-
mitment to working in a bipartisan fashion with members of both
the Banking Committee and the Government Reform and Over-
sight Committee and the Secretary and administration to find solu-
tions for the residents of the CHA who for years, if not decades,
have had their most basic needs ignored.

This morning’s visit to Cabrini Green depicts the deplorable con-
ditions under which many children in this city are forced not only
to live but to fight to survive and merely exist until the next turf
war explodes into days of gunfire that could again cut any one of
their lives short prematurely. For the children’s sake, the residents
of CHA, this insanity must end.

And toward that end, I am glad that the problems with the CHA
are finally being unearthed in the light of day, and that this hear-
ing serves to allow us to measure the success of the HUD officials
who have been managin, CHA since Vince Lane’s departure in
May. I am also particularly pleased that two of those that are testi-
fying today are tenant leaders who rose up over the last few years


139

could spend dime one on actually improving the living conditions
for the individual resident, that—that one would question that kind
of expenditure, especially, as Congresswoman Collins reminds us,
in this environment of we are going to have less money. Can we
really put $70,000 or $80,000 into an existing unit when at least
theoretically we might be able to have a new unit for not much
more, and a desegregated or a de-concentrated living opportunity.

So those are the things that we have to balance. We have to rec-
ognize that in some of this we have made good progress; in others
there is a long way to go. We have to work with Habitat or whom-
ever in order to use the money that we have wisely and increase
these opportunities, as you said.

Mr. Rusu. Mr. Shuldiner, with all due respect, I maintain that
public housing residents will—if there are opportunities in other
parts of the city to get into clean, safe, wholesome environments
and communities, that they will leap for those opportunities, they
will jump for those opportunities. “And I am not surprised about
what is happening in Ida B. Wells because I know that residents
are looking for clean, safe, positive communities to live in.

Let me just finally ask you an additional question here. The 400
employees that have been taunted about as being—coming on
board as of September 1, are they permanent positions?

Mr. SHULDINER. No, these are not CHA positions. What we have
proposed is that we would actually contract with the local resident
council, that they would hire the employees. These are—in fact, we
are going to just provide—we are going to pay money for a specific
service. What we are proposing to the resident councils is that they
hire up to four people—four persons per high rise building and we
would—we would provide the money to do that. But in fact they
would be employees of the resident council, whether they would
be—you know, whether they would do—

We assumed four half-time people. If they do two full-time people
or eight quarter people is not really our concern. What we are
doing and what we are using this month to do is work with the
resident councils. We have given them a list of private companies
that are willing to partner, be a joint venture with them, with the
residents owning at least 51 percent of the joint venture to help
them do the business stuff for those who are not ready. You know,
pay the workers comp and the unemployment insurance, et cetera,
and the taxes.

So we are—we are hopeful that those resident groups can start
the hiring this month, but these will not be full-time employees of
the housing authority; they will not be employees at all of the
housing authority.

Mr. Rusu. Mr. Chairman, my time is up but I just want to take
a moment to join with my colleague, Congresswoman Collins, in
welcoming Mayor Jackson from Atlanta to this hearing. Thank you.

Mr. SouDER. Mr. Shays—Chairman Shays.

Mr. SHAys. Mayor Jackson, it is wonderful to have you here. I
have watched your career for many, many years, and it is nice that
you are here. And I am tempted to invite you to come and make
a statement when others are finished. [Laughter.]

Mr. JACKSON. Thank you very much for welcoming me. I am glad
to see my old friends, and pleased to sit in just for a few moments.


147

some of the benefits and incentives and activities taking place
there.

I will say one other thing and then invite questions. My overall
sense and assessment of what HUD has done in the last 120 days
or so is—is pretty—I am—I am fairly encouraged. I mean, there is
clearly a lot of work to do and some pretty deep-seeded problems,
but overall the city has been fairly encouraged. We have seen ad-
vancement on a number of fronts.

On the redevelopment side we have seen some real movement on
the Henry Horner, Cabrini Green and Lakefront issues. We have
also seen movement to privatize some key functions where there
was clearly a lack of capacity or systems to make—to upgrade
those functions out of the public housing authority; the section 8
program, management of some of the specific buildings and devel-
opments and so on.

But perhaps the biggest reason why I have been encouraged by
what I have seen in the last 120 days is because I have seen the
caliber of some of the people who have been brought to work on
public—on the CHA issue at this time. You have heard a little bit
about that; whether it is 35 or so persons I am not sure, but I have
had the opportunity to work with and observe the work of some of
these people, from Joe Shuldiner to Kevin Marchman to Greg Russ,
John Nelson, Ana Vargas, Bob Prescott. There are some really tal-
ented people that HUD has recruited to work on CHA issues here.
They are very energetic, clearly talented and committed, and it is
perhaps for that reason that I am the most encouraged by what I
have seen so far. And with that, I will stop.

Mr. Souper. Thank you. Chief Murray.

Mr. Murray. First of all, good afternoon to the distinguished
panel. My name is George Murray. I am chief of the Chicago Hous-
ing Authority Police Department. I have served in this capacity for
approximately a year and a half. That being the case, I was on
board prior to the HUD intervention of CHA, and I have been on
board since the intervention.

The HUD intervention of CHA has been short in duration, but
in my opinion as CHA police chief, the intervention has been fo-
cused and productive in the areas of police and security operations.
Let me give you some examples of that. To begin with, during the
first 2 weeks that Mr. Shuldiner and Mr. Marchman were on
board, I met with them and advised them that we had a desperate
need for 15 new sergeants and 5 lieutenants, and advised them
that these vital promotions had been gridlocked in the system for
about 6 months. The decision to provide these much-needed pro-
motions was made, and within 3 weeks they were promoted, on the
street, and functioning.

Next, we also had discussions reference the fact that we needed
additional police officers. And once again, I advised them that I
had a requisition for 16 new police officers that was gridlocked in
the system and IJ hadn’t heard anything in over 6 months. Once

ain, within a matter of weeks the 16 new officers were in the
Chicago Police Academy, were being trained, and they are due to
praduate toward the end of this month and they will be ready to

e deployed.


153

Mr. WALLACE. Mr. Chairman, members of the committee, Rep-
resentative Collins, again let me express my appreciation for being
invited before this committee to give you my views relative to CHA.

I once lived on West Maypole. Let me preclude that statement
by saying my testimony is before you. I would ask that it be read
into the record.

T once lived on West Maypole before there was a Henry Horner.
My family moved because of Henry Horner. Recently I watched the
beginning of demolition of Henry Horner buildings. Before that I
had watched the demolition of hopes and dreams and aspirations
of People I had come to know personally.

have listened here today. You have talked about management,
fiscal responsibility and you have talked about administrative
things. Two things that I have not heard: I have not heard anyone
talking about CHA working itself out of business. I have not heard
of anyone talking about reducing the population of CHA by creat-
ing contributing citizens. Somehow we have forgotten about that.

am an architect and I am a planner. And like those in my pro-
fession, I tend to stray. We assume great license, we philosophize,
we deal in technology. We predict futures, we deal with built envi-
ronment, things like that. And supposedly those things that we
build leave a mark of the times that we have passed.

Today, I come as a west-sider to talk about the use of technology
to generate opportunity for people who have been relegated to this
housing, this public housing that we have created.

I recently, and after several years of work, was privileged to re-
ceive, in partnership with my partner from France, a patent for
construction technology that promises to yield opportunities for low
income people and lower skill level people to involve themselves in
the building of homes that would afford them re-housing and that
would afford them an opportunity to service a marketplace beyond
public housing. This would not be a dead end activity.

I can truthfully say. having been responsible for the design, con-
struction, and the followup oversight of over 5,000 units since 1969
in the Chicago area alone, I can truthfully say there is no such
thing as poor housing or public type housing. A brick is a brick; a
stone is a stone. It is the character of hope, administration, and
program that causes it to be a place that causes the degeneration
of hope.

High rise, in and of itself, is not a bad thing; but wrong thinking
has made it bad. So now we have to eliminate it. We talk about
reducing density because we cover more land and therefore there
will be fewer people.

But we really do not talk about the thing that we need to talk
about: generating ple who want to be off public housing—out of
public housing, off the dole, able to look at an opportunity of going
to a job and coming home and facing their sons and daughters
squarely in the face and saying, “I made a day’s pay for a day’s
work, for a day of opportunity that HUD generated.” And I think
that is the redefinition of mission that H should be pursuing.
It should be working itself out of business.

We should look at micromanagement, rather than management.
We should give benefits to those middle income that we talk about
who would buy in transitional areas, buy homes, and they would


46

‘Suburban | La ion OT dea Se orca an of te receiver, initiate the Suburban
REDEVELOPMENT

— Occupancy subtasks to ready buildings for demolition

Ag par of Admissions & Occupancy F Policy sewrite, standardize and simplify transfer

Review occupancy levels in each building at each site

Review family demographics

fin amr lacs tenes erst sires eens
intra-site transfer

Issue Certificates and vouchers to families who want to permanently move.

identify units suitable for an intra-site transfer (different building, same property)

‘Identify units suitable for inter-site transfer (different building, gifferent property)

Ready units for occupancy by transfer families

Initiate intra-site transfers to consolidate occupancy

Initiate inter-site transfers to consolidate occupancy

Issue certificates or vouchers to hard to house families

Time frame: 45 days

Person responsible: property managers, Director of Occupancy

?erformance measure: # of families transferred, buildings come down.

AREA OF PRIORITY: PUBLIC SAFETY AND SECURITY
SPECIFIC GOALS:

<I) Restructure the delivery of Public safety services

Start date: June 15
Completion date: August 1

Appoint a full-time potice chief (current chief on-toan)

Consolidate all police, security and Crime Prevention programs under one chief
Increase police visibility through redeployment

(2) Implement A Public Safety Resident Advisory Counci/Committee

Stan date:
Soiled Sep

Gain resident input on a regular basis about crime and suggestions for change

Develop an advisory committee from each police/security district station to report to the district
Assign district representatives to monthly meetings with the Chief of Police

3) Implement a Community Policing Strategy that:


6

can happen when people are participating and having some influ-
ence over the things that are in their daily lives. It was good to
be out at Cora Moore’s resident management building this morning
and seeing her success as well. And I hope we can figure out how
to tackle the even more massive projects on the State Street Cor-
ridor.

As someone who grew up as a White Sox fan and Los Angeles
Fox fan, went over to Operation Beethoven a number of times and
visited that area, it is a massive and overwhelming problem that
we have tackled here in Chicago, as our oversight function is to
sort out as much what we can. And I am looking forward to hear-
ing the testimony today and having an ongoing part of the inves-
tigation.

Mr. SHays. Thank you, Mr. Souder. At this time I recognize the
ranking member, Mr. Towns, who has been a particular delight to
work with. He is a gentleman who chaired this committee in the
past and may someday get to chair it again. Mr. Towns.

Mr. Towns. Thank you for the encouraging words.

Mr. Suays. Someday. Someday. [Laughter.]

Mr. Towns. Thank you, Chairman Shays. I commend your lead-
ership in convening this hearing to consider the Federal Govern-
ment takeover of the Chicago Housing Authority. This is an impor-
tant first opportunity for the committee to examine the Depart-
ment of Housing and Urban Development’s objectives and strategy
for transforming Chicago’s public housing.

As legislators—oh, this morning my tongue is all right here. As
legislators we are often far removed from the consequences of our
actions, or sometimes we can be slow to appreciate the needs for
action unless it is right under our noses. For this reason I praise
my colleague, Congresswoman Cardiss Collins, for calling for this
hearing and for insisting that the hearing be held in Chicago; not
in Washington, DC, but in her district where two-thirds of the CHA
residents reside. I salute you, Congresswoman Collins, for your
commitment and dedication to the people of the Seventh District.

The HUD takeover was a necessary action to rescue a housing
authority that had fallen into catastrophic disrepair and to prevent
further squandering of resources. I look forward to the testimony
of each of today’s witnesses and their thoughts on these matters.

However, I would like to especially commend Housing Secretary
Cisneros for offering to come to Chicago and appear before the sub-
committee to discuss HUD’s views. Mr. Secretary, I know you are
aware that serious questions will be raised here today that chal-
lenge both the value and integrity of HUD’s intervention efforts.
Your presence significantly enhances our ability to understand
these difficult issues, and demonstrates the highest level of com-
mitment on the part of your agency and the administration to im-
prove conditions not only in Chicago, but housing throughout the
Nation, and I applaud you for that.

Finally, Mr. Chairman, even as we evaluate the Federal take-
over, I am concerned about the very likely prospect of HUD’s un-
dergoing severe budget reductions in the coming year. These cuts
threaten HUD’s ability to out many of the strategies it is—
proposes to put in place to reform Chicago Housing Authority, as


40

redeveloping) of Chicago's poorly-designed and dysfunctional public housing stock will involve
decades of work, given the available and foreseeable financial resources, Public housing in
Chicago needs to blend in with the communities in which it is located. Public housing should not
stand apart physically or architecturally; it should be woven into the fabric of the City's
communities. Rehab, demolition, height limitations for new and redevelopment, community
meeting and recreation facilities, and commercial business facilities are important ingredients for
drammatic change that can breathe new life into existing settings. If low-rise apartments and
single family homes are the rule in a neighborhood, then public housing should be built to blend
with them,

ignificant changes to the current CHA landscape can not hope to get started, however,

~ jaisut combined civic leadership, resident cooperation, and intergovernmental and industry
ulvericut to forcefully eradicate the immediate dangers, cestare safety and establish an orderly

foundation of basic service. .

THE FRONTEND PARTNERSHIP AND INITIAL STEPS

In the first 1wo weeks of HUD's intervention, immediate attention went to receipt of legal
transfer from the Board, appointment of HUD's interim Executive Director, revamping internal
communications and management direction, reviewing threats to site security and public safety,
conducting resident outreach, along with grounds cleanup, and assessing breakdowns in routine
maintenance and basic services. Currently, weaknesses in major systems, management
procedures and staff capacities dealing with property operations, capital programs, finances,
accounting and administration are being prioritized for short and long-term technical assistance
strategies

To buttress leadership voids and weak expertise in existing operations, HUD has recruited and
deployed an on-site transition team. Highly skilled problemsolvers drawn from well-performing
public housing agencies and the department's own ranks, are serving in temporary capacities until
agency re-organization and subsequent employee replacements and transitions are accomplished
In the coming months, other technical expertise and assistance will be determined on the basis of
what is needed to carry out working plans and strategies developed with residents bodies, CHA
staff, and City officials,

RESTORING SAFETY & BASIC SERVICES; A CRITICAL SERVICES.
TASK FORCE IS NEEDED.

An immediate and essential next step is the formation of a Critical Services Task Force to
which are appointed key supervisory staff from both the City and CHA, along with HUD. On
this Task Force should be City officials who can authoritatively represent Police, Fire, Rescue
and Ambulance Services, along with regulated Utilities (Water/Sewer, Electrical, Gas and
Telephone). HUD/CHA participation needs to include Executive staff responsible for CHA’s
Property Operations (management, maintenance and occupancy), Security, Resident Services and
General Counsel.


120

HUD and its successor management, community leaders will probably
remain reluctant to become involved with CHA development .

In summary, Mr, Chairman, we believe that HUD officials had
little choice in taking over CHA. Even if the progress that HUD
has made in stabilizing CHA to date continues, HUD will not solve
CHA's problems in the near future. Because of the magnitude and
persistence of the problems, improvements at the authority will
take years to accomplish and short-term gains will be difficult to
achieve or svstain. Thus, it is important that HUD officials do
not raise expectations of tenants or the public for immediate
solutions to difficult and chronic problems. Although HUD has
established and already met some short-term goals, preparing a
comprehensive long-term recovery plan will be critical to ensure
sustained success.

Mr. Chairman, this concludes my statement. We would be
pleased to answer any questions that the Subcommittee Members or
other Members of Congress may have at this time.

(385492)
10


19

TESTIMONY BEFORE THE HOUSE COMMITTEE ON
GOVERNMENT REFORM AND OVERSIGHT
SUBCOMMITTEE ON HUMAN RESOURCES AND
INTERGOVERNMENTAL AFFAIRS

CHICAGO, IL
SEPTEMBER 5, 1995

IMENT o,
ee 7

Peay DEN ar

Q
_
I
3
z
~

©)
“he NT * 8

TESTIMONY ON CHA TAKEOVER BY
SECRETARY HENRY G. CISNEROS


14

vide decent housing. That is a formality that needs to occur before
we could take over. And we stepped in.

Receivership was considered, but let me just say two things
about receivership, Congressman Weller. The first is that it is not
a panacea. We have many instances across the country where re-
ceivers had been in place by courts to manage school districts or
even housing authorities, and circumstances do not automatically
change. One of the reasons is that a local judge might pick some-
one who is renown for their management skill in some other area,
but it does not automatically transfer into the area in which they
have been named a receiver, so nothing really changes. I felt that
it would be more appropriate to bring public housing experts to the
job instead of taking our chances in a partnership with a long-term
receiver whose skills and identity we did not know.

Second, the mayor I think felt that receivers in the past have
taken to look at the local government as if it had infinitely deep
pockets. It is easy for a judge to simply demand more and more re-
sources of a local government that it does not have, and therefore
we felt that a partnership with those of us responsible for the out-
comes and responsible for the resources was a better course than
simply turning it over to someone who did not know public hous-
ing; and, as I say, whose identity we could not possibly—positively
have known.

The time since we did take over and now has been a very busy
time. I will not dwell at length on this, but I have asked to be dis-
tributed in front of you a memorandum dated September 5, today.
Frankly, that is a document that we have retitled for you, but it
is a report to the President which I sent on August 25. But let me
just very briefly—and I promise it will be briefly—hit the high-
lights of some of the accomplishments of this period which I think
are substantial.

An honest analysis—an objective analysis—tells me that our peo-
ple have been working just as hard as it is possible to work. If you
look at that document dated September 5, on page 1, you will see
the six areas of goals of action that we set for this period. Improv-
ing security: We promoted 20 CHA police officers to fill supervisory
jobs; and added 60 additional CHA police officers; we have changed
the screening procedures and eviction policies in order that the
residents can have their first priority addressed, which is safety
and security.

Second, we attempted to address the maintenance and cleanli-
ness questions. You see that we activated six family developments
over the summer; most importantly, hired 400 residents who are
now working on day-to-day cleanup so that the better trained cus-
todial personnel can do repairs and maintenance. So it should be
a visible and quick effect in terms of demonstrations of cleanliness
and maintenance.

Under item 3, on page 2, you will see the action we have taken
on, Henry Horner, Cabrini Green, and next the State Street Cor-
ridor.

Congressman Weller, it is correct that Henry Horner that was
first up because it had been longest in the pipeline. It is one of our
HOPE VI grants. I promise you it has absolutely nothing to do
with its proximity to the United Center but everything to do with


(on HUMDRED FOURTH CONGRESS

Congress of the United States

Pouse of Representatives:
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
2187 Rayburn House OFFICE BunoNO,
WasrinaTon, DC 20515-6143

Statement of
The Honorable William F. Clinger, Jr.

Chairman

Government Reform and Oversight Committee cnr am et

HUD’s Takeover of the Chicago housing Authority peaineienal
September 5, 1995

1 am pleased to have the opportunity to participate in this field hearing on the Department of
Housing and Urban Development's (HUD) takeover of the Chicago Housing Authority (CHA).
‘Today's hearing reflects a bipartisan commitment on the part of the members present to ensure the
integrity of the CHA, protect the billions of dollars of federal investment here, and enhance the lives
of CHA residents, I commend Chairman Shays and my colleagues on both sides of the aisle for this
oversight effort

‘The Chicago Housing Authority has achieved the dubious distinction of operating the worst
public housing in the nation. CHA has remained on HUD’s list of troubled housing authorities since
the list was first created in 1979. Historically, the CHA administration and its residents have been
the victims of abhorrent levels of corruption, abuse and violence. The squalid high rises are a tragic
product of federal and local policy that should not be sustained.

Public housing has clearly failed in Chicago. Despite the commitment of billions of federal
dollars over the last decades, the CHA has not produced viable housing opportunities. In fact, when
HUD assumed control of the authority in late May of this year, $600 million in HUD funds for CHA
remained clogged in the bureaucratic pipeline

The federal takeover of the CHA represents an unprecedented act by HUD to reform a
troubled housirig authority. Given that CHA js the third largest housing authority in the nation,
HUD has assumed a vast responsibility. In a hearing before this subcommittee in March of 1994,
HUD Assistant Secretary Shuldiner, stated that, "HUD is primarily staffed by people who do audits.
‘We do not have staff experienced in running housing authorities.”

The Generat Accounting Office and the HUD Inspector General have also expressed doubt
about HUD’s ability to carry out substantial reform at CHA. Consequently, itis my hope that this
hearing will assist in efforts to determine what strategy HUD intends to pursue for reforming CHA,
determine HUD"s capacity to carry out significant reform and determine what implications the
takeover has for troubled public housing nationwide

ook forward to hearing from the witnesses testifying before us today and wish to thank
them in advance for participating in today’s hearing


132

September 5, 1995 __ Testimony of Jeffrey K. Lines ______9

4. Promoting Intensive Social Support Services at Distressed Public Housing Developments -
CHA has implemented successful programs such as “CADRE” (Combatting Alcohol and Drug
Abuse through Rehabilitation and Education)

3. Instituting a Major Anti-Crime Effort - CHA has initiated a number of public satety and
security programs, of which some are "first in the nation” approaches now being used by other
large public housing agencies.

6. Other Special Programs - range of program initiatives have been developed and
implemented including income mixing, construction management and comprehensive and
coordinated planning approaches to redevelopment

Each of the above represent areas of strength and accomplishment in CHA operations. Even
though these actions are commendable the review of the CHA clearly indicates that their
agency is severely distressed both operationally and organizationally. The review of the CHA
confirms a range of systemic problems across major operational areas including housing
management, maintenance, financial management and security

The size and complexity of the CHA as a very large public housing agency make the
task of addressing its needs to be extremely difficult and to require extraordinary levels of
change in the organization, For many very large public housing agencies which are severely
distressed there improvement efforts need to be evaluated not in the context of whether they
show intent and effort to improve but rather, whether the efforts will result in sustainable
improvements in the operation of the public housing agency. HUD’s strategies for intervening
in the operations of a public housing agency must clearly include an understanding of the
extent of change and needs of the organization as well as those approaches which will actually
result in needed improvement in the public housing. The strategies and problems of large and
medium size public housing agencies differ significantly trom those of very large agencies and
this needs to be a part of the program to be followed by HUD

V. Programs for treating the needs of the public housing program in the City of Chicago.

Any strategy for improving the operations of a very large public housing agency must
recognize both the present strengths and weaknesses of the agency. The report prepared hy
TAG proposes an overall strategy that is tailored to the problems and needs of the agency and
provides an overall program for addressing the needs of the CHA’s most distressed housing
communities. A summary of the key elements of this strategy is summarized below

A. Undertake revitalization of selected large high-rise developments - revitalization 1s
proposed for certain high-rise properties which can be treated under a variety of
approaches, ranging from the efforts outlined for Cabrini Green under the Hope V1
Program to models such as those presented for Ida B, Wells (and reviewed by the


110

United States General Accounting Office

GAO

Testimony

Before the Subcommittee on Human Resources and
Intergovernmental Relations, Committee on Government
Reform and Oversight, U.S. House of Representatives

For Release on Delivery
Expected at

Ham CST

Tuesday

September $, 1995

PUBLIC HOUSING

Status of HUD’s Takeover of
the Chicago Housing
Authority

Statement of Judy A. England-Joseph,
Director, Housing and Community Development Issues,
Resources, Community, and Economic Development Division

GROMT-RCED-95-275


69

testify, I think you have given us some general comments. And if
the gentleman would be willing—otherwise I—I am willing to
swear Mr. Shuldiner in.

Mr. WELLER. I would like an answer to the question.

Mr. SHays. OK. All right, then, if you do not mind, Mr.
Shuldiner, I am going to swear you in now and we will not have
to do it later.

(Witness sworn.]

Mr. Suays. For the record, the witness has responded affirma-
tively. Mr. Shuldiner.

Mr. SHULDINER. Mr. Weller, basically the $600 million figure the
Secretary mentioned first arose in response to the question—a
question that was raised when the Secretary was talking about the
larger picture of redeveloping the Chicago Housing Authority and
its stock, and it was really a question of Mr. Lane having spoken
about the need for literally billions of dollars in order to effectuate
a true redevelopment. ‘And the Secretary indicated the $600 million
as being available for the purpose of making a start.

And as the Secretary said, this is primarily capital money to do
redevelopment as opposed to money that would be used for ongoing
operations. Approximately half of it is either general development
moneys that have been allocated to the housing authority in the
past, or moneys specifically allocated in this case to Cabrini and

orner. That is over 300-—$300 million of the money.

The balance is the $150 million or so that they receive each year
in operating subsidy; the $179 million through recision that they
received for modernization; and I now recall $30 million I did not
mention in the list I gave you of vacancy reduction moneys.

Your specific question about the obligation: The Horner money,
by the consent decree, was considered obligated upon signing the
consent decree. As you know, their demolition has started, and con-
struction will not start, of course, until the site is made available
and we start in the spring.

In the other development, the housing authority and HUD do not
actually do the development. Under the Gautreaux consent decree,
that redevelopment is done by the receiver, the Habitat Co., and
Habitat is basically building scatter-site throughout the Chicago
area and is literally slow going, identifying sites and then going
forward to construction. To their credit, they have produced ap-
proximately 1,000 units and have literally hundreds more of con-
struction. But it is—it is a big task, and I think it is understand-
able that capital money is spent on a somewhat slower basis than
operating funds.

Mr. WELLER. If I could have a quick followup on that. As—as I
indicated, the $12 billion of unspent funds that are currently in
your 1995 budget for HUD agencywide—and of course I have a
copy of the impact of—estimated impact that your staff has put to-
gether of the appropriations bill. And if I recall correctly, the ap-
propriations for HUD reduced funding for HUD by about $6 billion
as part of the effort to balance the budget, while there is $12 bil-
lion in unspent funds. That is $6 billion more than the spending
reduction for the coming year.

If the CHA is of course the top priority and a model to be used
for HUD for fixing a system that has failed, now, can you use some


Conceding that much more must be done, I nevertheless can report with confidence
that significant progress has already been made. Because our efforts to redevelop obsolete
pubic housing communities will in large measure judge the success of our efforts, I will
begin there,

Efforts to wansform Henry Homer and Cabrini Green have progressed more quickly
in the last three months than in the past year. ‘The first high-rise ever to be demolished in
Chicago has occurred during our watch.

HENRY HORNER

Jump-starting the transformation of the Henry Horner development has been a top
priority for the Department. Negotiations had been on-going for quite some time, but
resolution proved elusive. I am pleased to report that we have reached an agreement with
the resident organization. ‘The demolition of two vacant high-rises containing 286 units at the
Homer Extension began on August 1. Once the 38 families residing in three mid-rise units
+= which contain a total of 180 units -- are relocated, demolition will begin there as well.

Both the law at the time and the consent decree required one-for-one replacement. As
a result, low-rise duplexes and townhomes will be built both on and off the site. Half the
units will be reserved for public housing-eligible residents who are below fifty percent of the
median income. The other half will be reserved for working families eligible for public
housing who eam between 50 to 80 percent of the area’s median income. In the Chicago
area, this uanslates to between $25,000 -§36,000 for a family of four. The tremendous
effort and resources committed to this project will be well worth it. An entire neighborhood
on the near West-side of Chicago will be rebuilt and reconnected to the city grid, ending
decades of isolation. Just as important, an environment where work is valued will be
spawned.

‘Those residents who are displaced may choose from Section 8, scattered-site homes,
or conventional public housing as replacement housing options. In all cases, they will have

top priority to return to the new townhomes or duplexes, with construction slated to begin in
about four months.

This is a better deal for the residents than the original consent decree, since additional
funding will be pumped into the project. in addition to the $30 million committed by HUD,
the Gautreaux receiver will contribute $28 million to help fund the additional units for those
families occupying the mid-rises. ‘This is the first time the receiver has committed funds to @
project where a portion of the redevelopment will occur on-site -- a testament to the

soundness of the plan and the need to assist as many families as possible. In all, nearly 700
units of new housing will be built

AS part of the new agreement, the CHA will dedicate $5 million for needed repairs at
the Horner Homes, and $9 million will be devoted to the Horner Annex. Residents at the
Annex will vote on whether to rehabilitate their buildings or approve construction of new townhomes.


143

Mr. SHULDINER. I would say that there are two that we have ac-
tually done. First we have had success with the Justice Depart-
ment. They have helped us, as the Secretary said, through Oper-
ation Safe Home. We have also been discussing with them pursu-
ing the prosecution of the people involved in the—in the pension
fund mess, as well as other issues that they are looking into.

We have gone to them in Washington to help us with certain
funding issues and have been responsive. In addition, we are look-
ing at—as the Secretary said, with labor potential identifying sites
here for programs. I cannot say that it has been formal, that there
has actually been a writing for specific funds or—but I know there
has been discussions, and the same is true of HHS, that kind of
thing, whether programs can be situated on our sites.

Mrs. COLLINS. Thank you. Thank you, Mr. Chairman.

Mr. SoupER. I have a couple of additional questions, as well, one
for Ms. England-Joseph. We heard pretty much everybody on the
panel talk about the—Mr. Lines talked about the sweeping powers
necessary, which I assume you agree with, that you need to have
those kind of ‘powers to reform Chicago. Do you agree with his
statement on the procurement, personnel, and financial resources?

Ms. ENGLAND-JOSEPH. I would say that there needs to be greater
flexibility. I think some of the proposals that are part of the blue-
print both that the administration has proposed and some that are
coming out of Chairman Lazio’s subcommittee address some of the
Federal statutes that need to be reconsidered or repealed. So yes,
I think there needs to be greater flexibility.

Although in our review, when we talked to HUD officials, they
were not really in a position to tell us how much change in the law
or additional flexibility—procurement flexibility—they really need.
I think some of what they see is that they can try to work within
the system and see if the system itself can be used effectively. So
I do not know that they were identifying real show-stoppers that
caused them to feel that they were not going to be successful if cer-
tain laws or certain regulations or certain procurement require-
ments were not addressed immediately.

Mr. SOUDER. One of the concerns I have, because on the one
hand using Chicago as a model can be very exciting and a chal-
lenge to people who are experts around the country, and on the
other hand we have seen various other kind of model cities or excit-
ing periods come and go and the People in that city, itself, not
being in charge of it. And you kind of backed into your statement
where you said that because the Chicago Housing Authority execu-
tive director, board of directors, and other key staff resigned, and
because the Chicago mayor did not support receivership, this was
the best option. Are you saying that perhaps, had they been willing
to show leadership or not resign, you would not think this would
have been the best action?

Ms. ENGLAND-JOSEPH. Basically, I think this was the only alter-
native HUD had. The minutes those keys were turned over there
was little left, I think, that HUD could do quickly. And so I think
that is why we felt that it was an appropriate action.

But certainly if the board and the executive director had been
willing to agree to whatever actions HUD felt needed to be taken
to improve the CHA, I think that could have worked. HUD could


10

Let me say I welcome the Secretary’s call for changes in public
housing. I think all Americans do. For taxpayers, public housing
assets represent a national investment of hard-earned tax dollars
made by generations of Americans. For those 1.4 million Americans
living in public housing, this call for change may finally mean
plumbing that works, playgrounds that are safe, clean and com-
fortable homes, something every family looks for.

A stronger housing authority is a challenge for all of us. Do we
have the will and the resources to make sure that public housing
in Chicago is an example to America of what public housing ought
to be? I think it is important that those of us who work some time
in Washington and live back in Illinois and other States to actually
come home to see the problems, that we not get lost in the organi-
zation charts and statistics; to meet the real families, the real kids
that Congressman Weller referred to earlier who actually should be
the focus of our attention today. The goal, as the chairman said at
the outset, is to make sure that every American, including those
Americans living in public housing, have safe, clean, and affordable
housing. I thank you for being here.

Mr. Suays. Thank you, Mr. Durbin. It is nice to have a member
of the Appropriations Committee here as well. And Mr. Rush, I
welcome you as a member of the Commerce Committee and resi-
dent of Chicago. Nice to have you here, sir.

Mr. Rusu. Thank you, Mr. Chairman.

Mr. Chairman, first of all I want to commend you for conducting
this hearing. I know that although you are a Member of the other
party, I can vouch for the fact that you are very, very sensitive to
the plight of people who reside in public housing, and you are prob-
ably a beacon for the Members of the other party in the House re-
garding these types of issues. And I want to again commend you
for coming to Chicago to conduct this hearing.

I want to commend my colleague from Tilinois, Congresswoman
Collins, for her—all of her efforts on behalf of public housing resi-
dents. Throughout the years I have worked very, very closely with
her, and I know that she continuously demonstrates the sensitivity
and the capacity to work and fight for the interest of people who
reside in public housing. I indeed find that she is really a leader
in the areas that relate to public housing.

And to my colleague on the Commerce Committee, who as a
ranking member of this committee, Ed Towns, I certainly appre-
ciate Ed coming to Chicago, the second city—or the third city, I

ess some would say, to look at these particular issues. Ed is very
familiar with the plight of public housing residents in that he rep-
resents the public housing tenants in New York. And I certainly
want to welcome him. And Gerry Weller, I also appreciate the fact
that he has come up to be a part of this hearing.

Mr. Chairman, I am going to be quite brief. I sit here with some
mixed emotions simply because I know that the members of this
committee and myself, are really trying to get to the essence of the
problems, we are trying to get a real picture, an absolute under-
standing of what is happening since the so-called HUD takeover a
few months ago. My constituents, people who I have represented as
a member of the city council and who I also represent as a Member
of Congress, they are concerned. My office continually on a daily


141

them down into manageable pieces where people can have a sense
of community, where folks who deliver services can be closest to
their clients and have a sense of also deployment and control so
that the quality of the services can be there.

Mr. Suays. Provided we do not do what New York City did with
its local boards of education. They end up becoming the political
dumping grounds, candidly. And the school systems begin to be run
more politically than from an educational basis. So that is the dan-
ger, I think, when you sometimes decentralize.

Mr. LinEs. I commented earlier, sir, that my main concern, being
the receiver in Kansas City, is that the political demands on a
large urban housing authority far outdistance those instances. We
have got 3,400 housing authorities; we have got a handful that
service large populations and have tremendous pressures upon
them. And that absent of somebody who is going to run that hous-
ing authority with sweeping powers in the areas of procurement,
personnel management, and the management of financial re-
sources, I think that you will continue to have that type of a prob-

lem.

So, in other words, if you have got somebody who oversees it who
can deal with those situations, you can help prevent that type of
thing occurring.

Mr. Suays. f need to be clear on this, because this is of interest
to me. Under certain areas you still maintain a strong centralized
control of finances and so on?

Mr. Lines. Or you have the ability of an individual to provide,
like you do to your director in Bridgeport, sir, the cover, and also
the ability to make tough decisions about terminations and alloca-
tions of resources.

Mr. SHays. Yes, because that is the other thing. Sometimes you
simply have to be pretty strong in your positions that may not be
popular with tenants.

_Mr. Lines. Not only tenants, but Members of the U.S. Congress,
sir.

Mr. Suays. Sure. Sure. Sure.

Mr. Shuldiner, I want to qualify one thing. It is one thing to say
HUD central is out, but it does not mean that CHA is back in; it
just means you have basically someone who is under the authority
to run public housing in Chicago, but not under a board and under
the mayor; is that correct?

Mr. SHULDINER. Right. I think the Secretary mentioned the fact
that the exit strategy, if you will, is—you know, is not finalized. I
think he would see us out from the day-to-day control by the end
of the year. But exactly whether that would be the point that we
would go to the mayor and ask him to reappoint a board or wheth-
er the advisory committee would seem to continue to function, it

is——

Mr. SHays. Now, I just want to clarify this, though. When
Bridgeport was taken over——

Mr. SHULDINER. Right.

Mr. Suays [continuing]. It had a consultant, and then what they
did is said the Bridgeport Housing Authority would have some
independence, but a lot of things will still have to be approved by


service provision.

HUD will soon award a contract to a qualified private firm which will manage the
17,000 Section 8 certificates and vouchess currently under CHA’s control. The Section 8
program was wrought with mismanagement, leading to the subsidizing of poorly maintained
units, incorrect rent payments, financial disarray, and the failure to utilize up to 2,000
certificates. The selection process has whittled qualified applicants to three, and the contract
is expected to be awarded shortly.

Another policy area which demanded immediate attention is the related issue of
screening, lease enforcement, and evictions. At a time when affordable housing for low-
income families is becoming more scarce, it is absolutely critical that housing agencies
guarantee that only law-abiding, lease-compliant residents occupy units. A draft screening -
policy has been produced which calls for more diligent security and credit checks. By
increasing the probability that tenants admitted will pay their rent, the abysmal level of rent
collection, currently at 75%, will be improved as well,

While the screening process applies to potential residents, the tougher lease
enforcement and eviction policies will remove habitually disruptive tenants and law-breakers.
This will complement the security measures being undertaken, and change the longstanding
and ingrained belief that public housing is the housing of last resort, and that anyone may get
in.

In the area of Administration and Finance, an evaluation and restructuring of the
CHA leadership staff has taken place. Further efforts are ongoing to assess current staffing
levels, and reduce or redeploy existing staff. We have studied in detail CHA’s
organizational structure, including each department's oversight and daily responsibilities.
‘This has led to the restructuring and consolidation of the centra! office, including the finance
and accounting department. The legal department is also being reorganized and the
management and information systems department is being upgraded and totally revamped.

In addition, a Request for Proposal has been made to manage the CHA pension fund,
which lost $15 million due to theft and mismanagement. HUD is working with special
counsel and formal U.S. Attomey Anton Valukas to recoup as much of these losses as
Possible. To date, nearly $4 million has been secured from the liable individuals and firms,
and the recapture of millions more are being vigorously pursued.

Grasping control of the budget has proven to be one of our most difficult challenges.
We have revised the 1995 Operating Budget to reflect the actual expenditures to date,
teduced administration expenses and increased maintenance contracting. This reflects our
philosophy of reallocating resources to improve the maintenance of units. In addition, in
‘order to adjust the Comprehensive Grant Fund to reflect the reduction in funding approved as
Part of the recision bill, we will be forced to eliminate a yet-to-be determined number of
Positions funded by this program.


166

‘Mr. MARCHMAN. Yes; we do. We are currently in conversations
with the city specifically on the Cabrini sites and the sites sur-
rounding it.

Mrs. COLLINS. Could you tell us what options are under consider-
ation to bring commercial and social services to the area surround-
ing isolated CHA developments, Mr. Marchman?

Mr. MARCHMAN. Unfortunately, we have no plans yet with re-
spect to that.

Mrs. COLLINS. Do you plan to get any plans?

Mr. MARCHMAN. I think we—we have to. What we have seen in
Chicago and other cities, when you simply provide the housing
sites, whether it is mixed income housing or not, if you fail to pro-
vide commercial opportunities, places to shop, places to eat, the
sites will still be isolated. And, therefore, I think it is a critical
component in order to have—with the—in this particular case, the
Cabrini site. .

Mrs. COLLINS. Have you discussed that with the city?

Mr. MARCHMAN. Yes; we have.

Mrs. COLLINS. And that is ongoing?

Mr. MARCHMAN. Yes, ma’am.

Mrs. CoLLins. OK.

Ms. Marquez, I want to come back to you. Can you tell me the
specific recommendations that have been generated by the Daley
administration in improving conditions at CHA? First, how con-
fident are you that your recommendations are going to be a factor
in the current strategic planning? And second, what specific cri-
teria do you think have to be met for the city administration to,
in fact, make sure that CHA’s ability will be to resume control at
some point or other?

Ms. MARQUEZ. OK. The city was never interested in micromanag-
ing HUD. So we will not have said, “Here are some specific things
we want you to do, specific recommendations we want you to imple-
ment.” Having said that, though, there are specific concerns that
we have had generally that we wanted to see addressed.

To put in the broadest of terms and the way Mayor Daley would
keep putting it is, it is about the quality of life for the residents.
So whether that is security, whether that is enhanced cleanups,
whether that is enhanced screenings and evictions, whether it is
de-densifying, all of those were priority areas that we identified,
among them the—to get specific, the de-densification was a clear
priority, and we said so but did not say, “Here is how you have got
to do it,” just, “We have got to address this right off the bat. We
have got to address the senior disabled allocation issue. We have
got to address providing economic opportunities, job training, jobs
to CHA residents.”

A lot of it is the nuts and bolts stuff. It is in getting the janitors
out there onsite in a timely—you know, timely—responding in a
timely way to service requests. That is the way the city approached
it and the way the city expressed its concerns to HUD. It is about
all this stuff.

The bottom line is about providing—improving the quality of life
and opportunity for CHA residents. It is all of these things. How-
ever, if you break it down into those pieces, it is not all rocket


98

that have asked to provide leadership, I have had the opportunity
to work with them in other settings and I know their strong com-
mitment and dedication and ability. So I will be honest with you:
I am encouraged, based on the fact that I know who is involved.
So I just want to sort of share that with you.

And I know that communication is always a problem. And I am
hoping, Ms. Randolph, that the communication can be improved be-
cause 1 know that when you are providing leadership for a group,
when they ask you questions they want answers.

Ms. RANDOLPH. That is true.

Mr. Towns. And if you cannot provide answers it creates a seri-
ous kind of problem. And I think that it would be in the best inter-
est of the people that are coming in to provide you with that infor-
mation, because in order to fight this army they will need a lot of
soldiers.

I yield back, Mr. Chairman.

Mr. SHays. Thank you. Mr. Weller.

Mr. WELLER. Thank you, Mr. Chairman.

I am particularly interested in the resident security program,
and regardless of what—where your home is, what neighborhood
you live in, whether it is CHA, another neighborhood in the city or
the suburbs, or the country where I grew up, public safety is a
major concern for the quality of life. And feeling safe, particularly
for children or the elderly, and their ability to walk around freely
and feel safe and confident and enjoy the freedoms that we all
have.

The—and I am also particularly interested in the—the tenant in-
volvement. Of course, Jack Kemp pioneered that on behalf of the—
the residents of public housing throughout the country to give more
tenant involvement, not only in working as employees, but also to
have a say in—in actual management of—of public housing. And
I really enjoyed the opportunity, Ms. Moore, this morning to have
an opportunity to visit with you and to learn more about your pro-
gram right at Cabrini Green.

And as I understand that you had indicated this morning that
you have seen a—an impact from neighborhood involvement, the
community involvement that is part of the resident security pro-
gram, and indicated at least cutting in half the crime rate, about
half in your—in the community. And I wanted to hear from you,
No. 1, as—with the—the now HUD managed CHA, what is the
view that HUD has given you of your program? Have they been
supportive, do they view your program as a model that could be
used elsewhere in CHA housing in Chicago?

Ms. Moore. I would say no because they are talking about cut-
ting the programs. This one program, we—I had met with HUD
and come up with ideas and hoping that they would keep our pro-
grams, because it is—it is resident that are involved. In fact, there
is over 200. And they do security at Cabrini Green. And we were
told that it would be—today would be the last day they would be
employed because they were going to transfer them and put them
with the regular polices in them.

Mr. WELLER. So you are saying they have taken the—the 200 in-
dividuals that you had trained and they are going to be incor-


140

An important issue to every city in this country, including Atlanta.
Very important to Chicago, my second home.

Mr. SHAys. Are we going to have a nice Olympics?

Mr. JACKSON. Pardon?

Mr. SHAyYs. Are we going to have a nice Olympics?

Mr. JACKSON. The best ever. Twice the size of the L.A. Olympics,
largest gathering of nations in history, and everybody’s welcome to
tickets right outside. [Laughter.]

Mr. SHULDINER. Could I be excused to go get my tickets? [Laugh-
ter.

Mr. Suays. Mr. Shuldiner, I am hoping that you take some of the
suggestions of Mr. Lines and Ms. England-Joseph. I think both of
them made some very valid points when I read their statements.

I tell people that being a legislator is like going to school and
learning something new every day. One of the things that I am
struck by with respect to housing authority officials is the lack of
training for their line of work. In fact, in some cases we have al-
most a reinforcement of bad policies. Candidly I think almost every
public housing authority has been susceptible to political ap-
pointees.

I feel one of my biggest contributions in my city of Bridgeport
was to protect the housing director from the political machinations
that take place in the city over years and years and years. I credit
the last three mayors, two Democrats, one Republican, for having
a hands-off policy and for letting our Bridgeport Housing Authority
run more as a professional organization.

So having said that, I just want to reemphasize that Mr. Lines,

our comment about decentralizing and the fact that you cannot
be-and I want to make sure I am accurate. That one of the mes-
sages that I am hearing from you is that—that HUD cannot think
of—of this big public housing as a central—that can be run totally
and completely from a centralized basis; that CHA needs to be de-
centralized and have the ability to interact with different units and
different developments while maintaining the flexibility to treat
each of them differently.

Mr. Lines. That is exactly right. I mean, it is not one city, it is
actually a series of public housing sites that—and just good man-
agement, most good real estate management—although nothing is
religion in this Business—says that you want to be delivering serv-
ices closest to your customers. And the way in which you are going
to get the developments used as a—viewed as a community re-
source, you want to make sure that your presence is there, and
that you want to be certain that it is—for quality control purposes,
for surveillance purposes, for purposes of understanding, you know,
what the needs are of those sites, you want to—you want to make
sure it is housing-development specific.

And given how large some of these properties are, you know, the
Cabrini Green housin, development, 1 mean I think as you have
probably heard, would be, I do not know, maybe the 10th or the
11th or 12th largest public housing authority in the United States.
So in some respects, you know, a place like a Cabrini Green or an-
other development might even—you would even break that down
further. And we have done so in some scenarios in Boston and else-
where where we actually called them villages. You want to break


91

Ms. Moore. The procedures, what I am saying, that is taking
place today with HUD, some of it is good and some of it is not. And
they are not really listening to the resident as they should, are not
taking all the resident want. And like I said, they are having closed
door meetings and doing what they want to do.

And another thing, when the new administration comes on in
December or January of next year, we will still have other prob-
lems because the new administration—they will want to come with
their own ideas and they are not going to implement all the ideas
that are being put in place now.

Mr. SHAYS. Ms. Calvin.

Ms. CaLvIN. I have no problem with it, because if I cannot sleep
24 hours in the day——

Mr. Suays. Can you just turn the mike a little toward you.

Ms. CALVIN. I have no problem with it. If I cannot sleep, they
cannot sleep. If I have a problem and I cannot reach anyone from
CHA, I call somebody from HUD. I figure if I cannot rest and my
residents are not satisfied, no one else should be able to rest, ei-
ther.

Mr. SHays. Do you know the issue—I am just trying to be clear.
Let me just state it for the record.

Mr. SHULDINER. Please.

Mr. SHays. We have HUD taking over CHA. We have a history
of concern on the part of tenants as to what their relationship was
with CHA. They now have Washington here, and have people per-
manently here. You are here sometimes, but have you set up a
mechanism to improve communication with the tenants? And if so,
what is the mechanism?

Mr. SHULDINER. Let me say that because of whether it is the
issue that Congressman Gutierrez raised or others, the fact that we
were looking for almost site-by-site plans in order—in order to talk
about redevelopment in the future, what is necessary, our main
outreach has been to the developments, themselves. And I can sub-
mit this to you, but we can basically show that senior HUD people
have met with resident councils or as city-wide councils approxi-
mately 230 times since we have come in here. So that is on the av-
erage of two and a half a day that either myself or somebody from
HUD or one of the people that—and this is really all HUD staff
have been meeting with either resident councils or the—the city-
wide or resident management corporations.

So I guess the—what we have been trying to do is go directly to
the resident—the development councils to try to determine their
needs. We have—we have asked each of the LAC’s, the local area
councils, to—to provide surveys of needs in the development. We
are trying to learn firsthand, on a development-by-development
basis, what the problems are in those developments so that we can
come up with a responsive plan.

On a personal basis, obviously when I have been here I have
been involved in—in both Warner, Cabrini and the Lakefront in
the redevelopment, spent a lot of my time on that, and obviously
would have had the most contact with—in either—either with the
residents or their counsels. Sometimes when it is litigation the
counsel does not want you to meet with their clients. But that is—


il

basis is inundated with calls, questions about what is happening
with public housing. There are so many questions, so many unan-
swered questions. There is so much confusion that exists out there,
and hopefully this hearing will produce some real answers to some
real questions.

I intend to be very forceful in terms of some of my Questions, and
I want to make sure that when we leave here, Mr. Chairman, not
only will you have an adequate picture of what is happening in
Chicago regarding this so-called HUD takeover, but I want also to
assure that my constituents and the citizens of this city, that they
are being well represented by this particular takeover. If they are
not, then at least they should know that they are not being well
represented, that their interests are not being sincerely adhered to,
and then we can make certain strategies based on that particular
knowledge.

But my ultimate aim in terms of this hearing is to get the truth,
get the facts, to assure the people who have, over the last 40 to 50
years on a day-to-day, month-to-month, year-to-year basis who—
who have just been seeking, pleading, and. begging for public hous-
ing to be the kind of housing that we all can be proud of and that
they can be proud of and that they would be proud to live in.

So, Mr. Chairman, with that in mind, I intend to fully participate

in this particular hearing, and again I thank you and commend you
for coming to Chicago. And I commend Congresswoman Collins for
making sure that this event or this particular hearing takes place.
Thank you.
Mr. Saavs. Thank you, gentlemen. It is wonderful to be in Chi-
cago. And before asking Secretary Cisneros—before swearing in our
witness and beginning the testimony I am going to submit into the
record a statement by Rick Lazio, the chairman of the Subcommit-
tee on Housing and Community Op ortunities. Chairman Lazio
heads Mr. Weller’s committee. I ‘would like to read one paragraph
from Mr. Lazio’s statement.

He says, “I was affected profoundly by what I witnessed when I
came to Chicago in June, and plan to return for a field hearing in
early October. When I was here I saw some of the best and worst
of Chicago’s public housing. I saw massive public housing projects
that stood vacant for a decade. Why? Not because of a lack of
money, but because of the effects of some well and some not-so-well
intended policies.” And without objection, I will submit his entire
statement.

I would say to those of you who will be testifying, that you have
heard some heartfelt concerns by Members here. You could help
address some of the concerns you heard from the Members in their
opening statements and that will help the process. It is an impor-
tant process to allow Members to share their feelings, and then to
have you respond during the course of this day.

And as I will now point out, we swear in all our witnesses. The
Secretary, has come before our committee on many occasions in the
past. I will say before swearing you in, Mr. Cisneros, that I think
you are one of the finest Secretaries HUD has had. We have had
a number of good ones. You are a wonderful appointment by the
President and you honor us by being here. And I thank you for
coming. And if you would stand and I will swear you in.


97

been taken over, have you experienced additional resources in any
way?

Ms. Moore. As tenant management, we have been in tenant
management on 3 years. We have a standing contract with the
housing authority. Our resources and things are about the same.
And tenant management is glad that HUD took over so that we—
and tenant management we will have more resources.

Mr. Towns. Right. Ms. Calvin, for you, same question. Now that
HUD has taken over do you feel additional support and additional
resources now that they have taken over?

Ms. CALVIN. Yes, I do.

Mr. Towns. Is it the turnaround time in terms of getting things
repaired or what do you feel? I mean, in terms of what areas have
you felt improvement?

Ms. CALVIN. Improvements in management staff, maintenance,
security, and jobs that I understand some I am sure will be coming
on board within the next couple of weeks.

Mr. Towns. Well, you know, we were talking earlier about in
order to make this work that a lot of resources would be needed.
And we are talking about in terms of offsite, other agencies coming
in and providing resources. Has that started yet in terms of other
agencies becoming available to sort of pitch in to help in terms of
giving you additional kind of support? Have you felt that yet?

Ms. Moore. Not in Cabrini.

Ms. CALVIN. There are more politicians getting involved now that
have been involved. {Laughter}

Mr. Towns. Yeah, this is a pretty ——

Ms. CALVIN. Especially at Cabrini.

Mr. Towns. This is a pretty big group up here, too. [Laughter.]

Ms. CALVIN. No harm or disrespect to no one, but all of a sudden
everybody is interested in Cabrini. Where were they at years ago
when we needed all these help, more than what we need now. All
of a sudden everybody want to stick their hand in and grab some-
thing. I do not understand. Maybe it is me. But all of a sudden you
want to come in and give help, because they are talking about they
is going to give me $50 million. This $50 million is to help me?
This $50 million is to take away some of my homes from my resi-
dents. Every politician in the world that know Cabrini is getting
something, some of them are there to help me, but some of them
there are not to help me. And I know this——

Mrs. COLLins. Will the gentleman yield?

Mr. Towns. I would be delighted to yield.

Mrs. COLLINS. I thank the gentleman for yielding.

Ms. Calvin, I think that you will remember that it was at a time
when there was a great deal of discussion about Cabrini Green that
both Bobby Rush and I had come to Cabrini Green, along with oth-
ers, to insure that the $50 million promise would be made to you.

Ms. CaLvin. I understand that.

Mrs. COLLINS. And I just want the record to show that. I thank
the gentleman for yielding.

Mr. Towns. Right. Let me just sort of say this, you know. And
I have listened to Mrs. Randolph and I have listened to all of you,
and I am happy to hear there is positive feeling. I happen to know
some of the people that are coming into the authority and people


102

Ms. CALVIN. Yes.

Mr. Suays. Do the gangs try to portray themselves as helping to
provide leadership for some of the younger men? What are the neg-
atives of the gang and what are the positives?

Ms. CaLviN. I do not see any positive in them. The reason the
young boys and girls go to them is because they are looking for pro-
tection. A lot of those kids do not have love and understanding, and
they figure that the gangs can give it to them, and this is why they
go to them. We have no programs there that would help motivate

em.

Mr. Suays. You are saying you have no programs?

Ms. CALVIN. We have no programs that would motivate them,
the youths or our young mothers. If we had some self-sufficiency
programs or programs in general that would motivate them maybe
we could keep some of them out of the gangs and away from the
drugs and things. We would have something that would give these
young girls something to do besides running to these young boys
as protection.

Mr. Suays. I was out walking about 1:30 last night, 2 a.m. and
I was amazed at the number of young girls who happened to be
mothers, I am assuming, who happened to be there with their kids,
walking with 2 and 3-year-old kids, 11:30, 12:30, 1:30, 2:00—2 a.m.
I told one of the gang members, I said, “This—you know, with all
due respect, this—I have got a problem with this.” And he said,
“Well, it is a holiday.”

Ms. Moore, I was introduced to someone who is involved in your
tenant organization, really clean-cut, sharp young man who I was
told at one time had been a former gang member, involved in main-
tenance and so on. Really handsome young man. How did you out-
reach to someone like that?

Ms. Moore. With the help of Bertha Gilkey. At first it was very
difficult because when the youths come to our meeting they was a
little leery. Then they kept on coming and started being involved.
And then with Bertha Gilkey, we helped change their way of think-
ing. And that is when our maintenance mechanic started helping
with the building, changing his lifestyle and getting married and
starting a family.

Mr. Suays. I almost feel high rises work for seniors. They have
not, wherever I have gone, worked for families. The kids end up
trashing the place. We had a wonderful place in—well—I do not
want to get carried away. We had a rebuilt 12-story facility in what
was Trumble Gardens in Bridgeport. We had two of them. We tore
down the others in what turned out to be terribly built townhouse
kind of single-story units that were just—candidly, they fell apart.
They were built, in my judgment, by a crooked builder.

But the two high rises ironically were nice because they had sen-
iors in them. The problem with that, though, was that HUD had
to say that the seniors had to leave because they were two and
three and four units, so they were for kids. With one of the units
they brought in the kids and in 2 weeks time the elevators were
destroyed, the security systems were destroyed, and—and now they
are just like they used to be.


118

Creating a Sustainable Commmity Requires Commitment

HUD's short-term plan for the CHA identifies the steps needed
to change the community and economic environment of public housing
neighborhoods in Chicago. Our work in community development shows
that success in distressed neighborhoods is most probable when the
complex, interrelated problems they face are addressed in tandem
and when commitment from all stakeholders is sustained over a long
period.‘ Integrating public housing into the larger community is
important because the average income of CHA residents (many of whom
are below 10 percent of area median family income) would rise if
greater economic activity existed in the areas around housing
authority developments. However, the public housing is often in
neighborhoods where there are no jobs and little or no commercial
activity. Because businesses have moved out, poverty has
increased, and public and private services have been reduced in
these neighborhoods, community development experts cautioned us

that significant improvements may take a generation or longer to
achieve.

While HUD's plan to create mixed-income neighborhoods to
reduce residents’ isolation and help them become part of the nearby
community is a beginning, the plan also needs to go beyond housing
to encompass all aspects of community development, including social
services and economic development. To gain widespread commitments
the entire community--from nearby and public housing residents to
local businesses and service providers--should participate in
developing components of the plan. Ideally, it would include
partnerships with foundations and corporations to provide funding
and expertise, but also incorporated into a larger citywide plan
that addresses housing, economic development. and social services

‘Community Develonment; Comprehensive Approaches Address Multipie
Needs but Are Challenging to Implement (GAO/RCED/HEHS-95-69, Feb.
8, 1995).


65

Mr. CISNEROS. On that score the record will have to speak for it-
self, gf what was there, what was publicly reported, and what we
found.

Mr. SouDER. What on—you say there is a ranking procedure,
professional management scores. Could you provide a list of the
rankings of the different housing authorities for us?

Mr. CISNEROS. Sure.

Mr. SoupER. How many were below Chicago?

Mr. CISNEROS. Not many. I can get that information for you. We
have housing authorities that have been ranked in the twenties.
D.C. I think once fell as far as 17 on a scale of 0 to 100. The most
recent ranking of Chicago was 42. Not the most recent, but over
the last year.

Mr. SOUDER. Does it not—does it make you nervous when you
say that you have professional management scores and that indi-
viduals who head housing authorities like Chicago can get all kinds
of awards around the country for leading an innovative and—au-
thority that is doing a ‘ot of changes, and yet they do not have
budgeting procedures, tney are letting legal contracts out, they
have no evictions procedures, they have no preventative mainte-
nance schedule that does not break down? What does that sa:
about our oversight function, when we are putting all these mil-
lions of tax dollars into these housing authorities? How do we know
this is not true elsewhere if you did not know until you took it
over?

Mr. CISNEROS. Well, what it says is that we knew Chicago was
a very troubled place, its scores were low, our system caught that,
and we acted on Chicago. What it says is that, you know, when
something stands out for those reasons that you have cited, we
have taken action. Others that have low scores are under some
similar kind of oversight. We have not taken others over, but as I
cited, Philadelphia; Washington; Kansas City; New Orleans; Ches-
ter, PA; all of these are cases where we have some kind of special
relationship.

Mr. SoubER. And you did not take them over because when you
looked at them you did not see the depth of the problems, or why
did you not take the others over?

Mr. CISNEROS. Well, that would be—that would be part of the
reason, but also because there was a better alternate plan. For ex-
ample, in the case of Philadelphia, Mayor Randell told me that he
would name himself chairman of the board, and the president of
the city council would become vice chairman of the board, and they,
with their reputation, both of them, John Street and the mayor
would—would take full responsibility for bringing that housing au-
thority around. I would much rather have that kind of local

Mr. SoupeER. So you are saying that the city of Chicago would
not take such leadership as Philadelphia did?

Mr. CisNnEROS. I do not want to characterize——

Mr. SoupERr. You said you were bringing 35 people, the cream of
the crop from around the country to help save Chivago. Is there an
implication there that you are—cannot find it in Chicago?

Mr. CISNEROS. I would say that I would just repeat my earlier
comments, that the Chicago situation is the most challenging hous-
ing authority circumstance in the country.


me

grounds, let us say. But some of us have to live and wrestle with
this problem, and we have wrestled with it over the years.

I want to ask you pointblank at this time. You have indicated
earlier about the cooperation or about the attitude that prevails in
Philadelphia, I think was the city that you were concerned about,
where there was a real commitment by the leadership of that city
to deal with public housing. And I have maintained over the years
that that commitment has been sorely lacking in the city of Chi-
cago and that is the reason—the essential reason for the failure of
public housing in the city of Chicago.

We understand quite clearly about the history and what this his-
tory of public housing in the city of Chicago has been about. And
the wise city council, back when public housing was developed, Chi-
cago City Council segregated public housing in one geographical
area. And as a result, with this concentration of public housing ten-
ants and buildings, we have reached a problem that frankly no one
seems to be able to turn around now.

My question to you is: Has there been a renaissance or have
taere been a reawakening or what is the attitude of the city admin-
istration as of this date regarding the issue of public housing, the
takeover? And is there a day-to-day interaction and coordination of
efforts and plans between the city administration and the CHA?

Mr. CISNEROS. Congressman, the answer to—to both questions—
in short, is yes. I do believe there has been a new attitude shown
by the city administration. And yes, there is a day-to-day collabora-
tion.

Mr. Rusu. OK. And when I said——

Mr. CISNEROS. If I may, this not only answers your question but
refers back to Congressman Weller’s question earlier. I know the
history of the past, but I must tell you that Mayor Daley has
shown tremendous willingness to work on this problem. I think he
really wants to make change. And there are very few mayors in the
country who would talk in advance about a possible Federal inter-
vention in their cities. They would view it as some kind of negative
thing for the Federal Government to come into their city.

But the mayor talked with us early on about this as a live option,
which said to me early that he recognized the problem, and that
it could not go on in the way that it was going, and that there
needed to be some correction.

I would also say, and I will close with this: That as against other
cities—for example, in Philadelphia where the mayor actually took
command of the housing authority—the mayor, at the time we
were talking about this, had to weigh other facts, like the fact that
the State legislature in Illinois was giving the mayor responsibility
for the schools at that moment. So the mayor was going to have
new and full responsibility for the oversight of the schools, and wel-
comed someone else taking responsibility for the housing authority.

Now, even as we have done that, the mayor has acknowledged
responsibility for the housing authority, we jointly named the exec-
utive committee, and a member of his key staff is a member of that
executive committee.

Mr. Rusu. Mr. Secretary, I appreciate your commentary. But let
me just ask you this. The board of directors of the prior administra-
tion, who appointed those members of the board?


16

pathologies which are unprecedented in American history or in any
other city in the country. That is what makes this situation so dif-
ficult, and why it is critical to bring down—to address the isolation
and why we have worked hard with foundations and the school dis-
trict and the parks district and others to begin to bring services so
badly needed to the State Street Corridor and to the other Chicago
Housing Authority developments.

Let me close my remarks by saying—by trying to anticipate sev-
eral roots of questioning which no doubt will come up, in order that
I can get them on the record, and then I will be happy to answer
your questions. The first is whether or not we have a long-term
plan or vision.

Let me say that our first task has been to deal with the melt
down circumstances that were bad enough in our outside view of
them in the spring, but worse than we thought when we actually
came on the job. The internal information systems, the manage-
ment systems, the accounting systems, the budgeting systems, the
procurement systems were in some cases nonexistent or so badly
structured that they could not function. Our first task was to sta-
bilize the management and budgetary environment, and to sta-
bilize the environment for residents who in those days were saying
to me, “Mr. Secretary, please just make it stop.” The shooting, the
being frisked by gangs as they came into the buildings. Please just
make it stop. So our first task over the last 3 months has been ba-
sically a stabilization function.

We are now setting out some sense of the longer run. These
areas of emphasis—these same six areas, it is fair to say—will
characterize what we want for the Chicago Housing Authority over
the longer run.

One area of emphasis will certainly be how we proceed beyond
Horner and beyond Cabrini Green to the State Street Corridor, and
beyond that to other developments, to bring down a percentage of
the high rises and use different strategies for replacement housing.
Some of it will be townhouses onsite, such as the plan that you saw
today at Cabrini Green where rep!acement townhouses will be built
onsite.

By definition, if you build single-family—rather single-story or
two-story townhouses you cannot house as many people as a 14-
story building. So there will be fewer onsite than the number who
were there when the buildings were full. That means we will have
to use our section 8 certificates to relocate people throughout the
metropolitan area on a fair basis, consistent with the spirit of
Gautreaux. It also means that the housing authority will embark
on a new strategy of purchasing existing single-family houses, as
housing authorities are doing across America, notably in Omaha,
for example, or duplexes, smaller-scale units, and housing people in
neighborhoods throughout the metropolitan area.

This serves a strategy of decentralization, it serves a strategy of
bringing down these high rises, it serves a strategy of giving people
a fair shake. All of the evidence is that when people live on such
a decentralized basis they do better, their children do better in
school, they have a better chance to get jobs. We think it is the
long-term vision.


160

© Provide an economical and competitive source of commercial and institutional
apace.

© Provide employment opportuaity sourced manpower and break the welfare
cycle.

© Employ and train public housing residents and low-income persons to
manufacture steel based compouents necessary to the construction of housing,
commercial, and institutional (etc.) projects.

© Provide ownership opportunity to local Advisory Councils, and other residents

organizations,

Along with professional involvement, management and training can be provided
under existing programs, [hasten to add that use of steel based building
technologies in the manufacture of building systems will lower skill level
requirements and thas, increase opportauity for persous with less developer skills.

‘While I strongty recommend the utilization of CHA Rehousing to cost justify the

establishment of a manufacturing plant of equal importance 1s a continuing

commitment of HUD to support the effort by providing development incentives

weh as:

© “Paired Unit” development with benefits being provided for persons in middie
Income and above iacome brackets that move into developing and mixed iscome

arent.


99

porated into the—the CHA police force, separate from your resident
training—I mean, resident security?

Ms. Moore. Yeah.

Mr. WELLER. OK.

Ms. Moore. The same thing with the tenant patrol program
which I am the president of that is city-wide. They want—they
have put that program, as they said, on freeze. And—and they
would decrease the membership, which now I have 900. And if—
with the program, the way they are talking about doing it, well,
they would pay coordinators to monitor the building. Like my
building at 1230 Burling, we have 20 tenant patrol members. If you
pay two members out of that building, well, then the rest of the
volunteers is not going to do anything, it will just be those only two
members working.

Mr. WELLER. Now, is the resident security program, are they vol-
unteers or are they paid a stipend of some sort to participate?

Ms. Moore. The resident security program pays staff, and they
are paid by the contract security which we have a partnership
with.

Mr. WELLER. Now, the tenant——

Ms. Moore. Our local—they have a partnership with the secu-
rity company. And the security company is the one that they are
going to have transferred out and put in regular police.

Mr. WELLER. And then tenant patrols, are they volunteers?

Ms. Moore. They are volunteers, too.

Mr. WELLER. OK. But you are saying that they—that HUD
wants to reduce the number of tenant patrols?

Ms. Moore. The tenant patrol program, with 900 members
where they volunteer, and they only get stipend off of their rent.
But I am saying now they are saying they want to pay some of the
peoples, which maybe about 20 peoples or 30 at the most, if they

(0 that high, to be coordinators to come and monitor the different

uildings. And what I am saying is if you go that route then you
are only going to have those staff persons working like it is in New
York, while we have over 900 tenant patrols t do not mind
going up and down the buildings all time of night and bringing in
reports when the lights is out and the laundry room is open. They
bring in daily reports on this.

Mr. WELLER. Well, thank you, Ms. Moore. And I will yield back
the balance of my time. Mr. Shuldiner, when you come up on the
next panel I would be very interested to hearing your perspective
and the involvement of tenant patrols in the future of CHA. hank
you.

‘Mr-Suays. I thank the gentleman. Mr. Rush.

Mr. Rusu. Thank you, Mr. Chairman.

Mrs. Randolph—

Ms. RANDOLPH. Yes.

Mr. Rusu [continuing]. Let me ask you a question regarding the
CAC’s and also the LAC’s. In your opinion, what is the future rela-
tionship?

Ms. RANDOLPH. Well——.

Mr. RusH. Well, let me just ask you, Mrs. Randolph, based on
what you see as the current relationship with the interim board
and with CHA, what do you see as being the role of the Central


21

families must face. Of the 15 poorest communities in the nation, 11 are in CHA public
housing communities, Seventy percent of the Chicago families in public housing are
dependent on public assistance, compared to New York's total of approximately 30 percent.
Forty-five percent of CHA's residents are under the age of 14 and, in almost all cases, live
in poverty.

I repeat, nearly half the CHA’s residents are children. We must find a way to help

For 29 months HUD sought to turn the situation in Chicago around. A confluence of
factors led to the ultimate decision to intervene, Chairman of the Board Vince Lane began a
dialogue with HUD staff to create an improvement team, ‘The improvement team was to
focus on a few specific areas to assist in a limited recovery effort. After a few visits, it
became obvious that an improvement team could not make significant changes. The
problems were too large. ‘The procurement system, Section 8 management, vacancy
reduction, financial systems, and the pace of the redevelopment efforts were some of the
areas that were found to be seriously flawed.

Key decision makers, including Mayor Daley, Vince Lane, and other board members
became increasingly convinced that the CHA needed HUD to play a more prominent role if
recovery was to occur and be fully sustained. This culminated in the decision of the Board
of Commissioners to on May 30, 1995 to transfer control of the CHA to HUD. HUD
subsequently declared the CHA to be in breach of the Annual Contributions Contract, which
stipulates that public housing agencies must meet certain conditions, including the provision
of decent housing and sound fiscal management, in order to continue receiving federal funds.
Thus, while HUD did not precipitate this action, we did accept the responsibility for the
administration of the CHA.

HUD’s Office of Distressed and Troubled Housing Recovery (ODTHR) is our lead
office in addressing the needs of troubled housing authorities. ‘The office provides technical
assistance and expertise to public housing authorities like CHA. Before ODTHR was
formed, 27 large housing authorities were troubled. Now, only 13 large authorities remain
n the list. The road to recovery is not easy. A housing authority must score above 60
percent on its PHMAP indicators to be considered non-troubled. ‘The PHMAP indicators
include such items as management, vacancies and rent collections. Once a troubled rating is
established, a housing authority can receive technical assistance from HUD. With this, a
Tecovery team can be put into place. The teams are comprised of industry peers and experts
who volunteer their time, as well as paid consultants.

Through this new office, HUD is seeking to attack the multiple problems that face
Chicago. We are seeking to redevelop public housing communities, institute aggressive
security measures, streamline a bloated central bureaucracy by re-deploying resources to the
field, and impose strict screening occupancy and lease enforcement measures.


Lead responsibility: (Same as above)

: Fasts Maintain aceurate records and provide monthly epor of resident pat ipants in

Completion timeframe: 30 days and on-going

AREA OF PRIORITY:COMMUNITY INVOLVEMENT AND PUBLIC
COMMUNICATIONS

SPECIFIC GOALS:

Building Community Commitment

1

(Lstai dish roundtable discussions with decision-maker from civic, business and religious
community to familiarize them with CHA initiatives

Tasks: .
Identif lity-based (resident and non-resident) i
dena community base (resi non-resident) organizations
Identy business (Chambers of Commerce leaders

Identify religious organizations/leaders

te, with CHA Office of External Affairs
‘
frame

7 day
Deliverable
‘Computerized data base

Develop "round-table" strategy; ie., identity proposed processes, participants, issues,
goals, objectives, etc.

Lead:

White, with CHA Office of External Affairs

Time

frame

14 days

Deliverable

Written strategy and tactical plan

tsqucg could include: Safety coordination, economic developmen, training and education,
Job placement, etc

Identify city-wide leader(s) (preferably elected or formally elected city-wide official and
business community types) 10 co-chaif the effort to ensure "community-wide"

responsibility.
Le
Ti

ite (Schuldiner and Marchman, possible Secretary)
ime


95

Chicago Police Department that when the—somebody would report
a crime nothing would be followed up and there would be retalia-
tion of the residents who in effect talked to the police and were
viewed as snitches or squealers or whatever, and there was a pres-
sure not to report. And the police, on the other hand, would get
frustrated because sometimes they did not come in because they
felt that the residents were not cooperating.

And one of the first things they did was they sat down with the
police, as the residents were running the projects, particularly
the—I think 10 of the 13 buildings were resident managed, and sat
down and said, “Look, we will cooperate with you if you will cooper-
ate with us.” And then in a period they went from one of the higher
drug areas to a place where I think they had, in the stretch I had
been there, two arrests for loud music was the only two arrests
during that last period.

Do you have problems coordinating with the Chicago Police? Are

fou—are you able, through resident association—I will ask Ms.
Moore that question in a minute, too. You seem to—you say that
is the No. 1 problem. Clearly it is. How much can be done with
that, and how much is structural? How much is dollars versus con-
ict?

Ms. CALVIN. It is a problem with it when you call the 911 or you
call directly into the station the first thing you want to know, who
you are. It automatically shows up on the 911. If I call for 911 or
call the police station and tell them who I an, the first thing they
are going to do when they get to the development is knock on my
door and ask me did I call the police. That is putting me on Front
Street. I do not think that should be necessary. If I call to tell you
it is a drug deal going down or you have got some gang members
hanging in the lobbies or in the stairway you should not have to
come to my door, you should go where I call and tell you the prob-
lem is at. That is the lack of communication. We do not want to
deal with the Chicago Police Department because 99 percent of the
time they put us in jeopardy.

Mr. SoupER. Every public housing project that I have been in,
their first complaint is always drugs and crime because much of
the deterioration and the problems in the projects that have been
built, particularly high rise, are related to that.

Have—do you believe there is an acknowledgement of that up
front, in sitting down? Are you sitting down and meeting with the
police to try to work these things through on a building by build-
ing, or what type of interactions are there? Because if it is—if it
is a common denominator that we see everywhere, it would seem
like that would be an immediate focal point.

Ms. CALVIN. I have a good communication with the commander
that is over there now and Chief Murray. That is because I talk
to them on a one-on-one. But going before their lieutenants and
sergeants and talking, I would not do. I have to talk to them one-
on-one so no one would know who is giving them the information.
Other than that, I would not have cooperation.

Mr. SoupER. Ms. Moore, could you explain a little bit what you
have seen in your resident management program, and also you—
you referred to your—where the residents themselves are doing an
amount of the patrolling and you said this morning that you did


33

vw.
fy ‘.Dopartuart of Housing ond ban Dewahepment
‘OFFICE OF THE ABSIBTANT SECRETARY
PUBLIC AND INDIAN HOUSING.
June 11, 1995

MEMORANDUM FOR: Henry G. Cimeros, Seeretary
Joseph Shuldiner, Assistant Secretary for Public and Indian

FROM: Kevin E. Marchman, Deputy Assistant Secretary for Distressed and Troubled
Housing Recovery

RE: Blueprint: Chicago

‘You have asked for an honest working document which spells out HUD’s immediate and long

_. term goals regarding the Department’ intorvention in the Chicago Housing Authority. In
addition to bringing moantngful, positive change to CHA residents, these goals also reflect a
long-term, big picture vision of what this Administration would like to see as its contribution
toward "transforming public housing."

‘Our intervention in Chicago must do two things, Firs, it must repair the foundation of x badly
broken agency that is not capable of delivering even tha most besic services to its residents in a
timely or effective manner. Second, it must make sure that the foundation is strong enough to
support moving the agency forward in a now direction. That direction must be guided not only
by the Department's reinvention of public housing, but also by the queation of what is doablo
and practicable, given diminishing resources and the tools we have to work with, ‘The CHA and
its developments are 20 far benesth the baseline of acceptability that we cannot expect it to

to "whiz-bang” solutions. We can, however, restructure the agency 60 it can provide
safo and decent housing to its residents.

If Chicago, as conventional wisdom muses, drags all of public housing down, then improving
Chicago will inctedse the likelihood that the rest of public housing will improve and become
mote acceptable of the kind of change outlined in HUD's reinvention blueprint. Thhus, it is
important to keep in mind that our efforts in Chicago will to a large extent determine whether the
Department met its prlority of “transforming public housing.”

We believe this plan meets the Department's overarching goal of improving the lives of public
housing residents and changing public housing as we know it. At the ond of the day, we will and
should be judged on whether HUD‘ Intcrvention in Chicago made a positive difference in the
lives of CHA residents,


168

part of that, to include the CTA and other key agencies in coordi-
nating all our activities as they relate to the entire empowerment
zone, but also the CHA residents who are to be served by these
various initiatives, as well.

Mrs. Couns. Thank you, Mr. Chairman.

Mr. SoupER. One of my frustrations, as we go through today,
is—is once again not with so much that there are a lot of good
sounding plans. But in going back to some of—of not having history
repeat itself in looking at how we got into where we are at. And
it still concerns me as to some of the—I mean, they are stated as
facts, not allegations, about how Chicago got in its situation that
it is in. There was a questioning whether it was a patronage dump-
ing zone and in fact that is how it got into that mess.

lo you believe that some of these things—I think it was re-
ferred to by two witnesses as semistructural in Chicago—do you be-
lieve that you can actually turn it back to the Chicago Housing Au-
thority? Is there a goal of having this come back into the city of

‘icago?

Mr. MARCHMAN. I think that is the specific goal, and I think you
have hit the nail on the head. The foundation of the Chicago Hous-
ing Authority was broke. It is broken. That if we simply redid what
was done before we would be back here in 6 months. And while we
had some fine staff at the housing authority, individuals; systems,
departments, divisions could not communicate with one another
and it was effectively a free-for-all.

If we do not—and we must—break that cycle, we will find our-
selves 6 months from now and the city will still not want this hous-
ing authority. And therefore, when I mention about the trans-
formation of CHA and public housing, we must build anew to—it
has to be a model. And y strongly feel if you can do it in Chicago—
and slowly we are doing it. It is not as fast as we want. But we
need to be able to have a housing authority for the city to be proud
of, like their school board or any other institution.

Mr. SoupDER. Are you saying that if the Chicago Housing Author-
ity and the mayor had the discretion that H had, they could
have fixed their problems? Or are you saying they were not able
to fix the problems or lacked the will to fix the problems? There
are not too many options here.

Mr. MARCHMAN. Sure.

Mr. Souper. In other words, either they did not have the flexibil-
ity, or they did not have the will, or there were some other reasons
you could come in and they could not. Did not have the ability?

Mr. MARCHMAN. I cannot say what the city could or could not do.

I will not say that. But I will simply say that when we came to
Chicago 3 months ago we had a system that did not work. The
foundation was not there. And what we must endeavor to do is re-
cast it.
Mr. SouDER. What we are trying to say is—is that if you—if you
say it is—you are trying to say, well, let us do not look at the past
and say—in the past and you want to recast it. What conditions
have changed in Chicago that will enable you to recast it?

Mr. MARCHMAN. Well, I think that you find a—in Chicago you
find a strong residents support. Although sometimes painful, the
residents want change. I think you have a strong mayor's office and


133

September 5, 1995 _______ Testimony of Jeffrey K. Lines _________10

NCSDPH). These types of revitalization efforts are likely to require significant outside
assistance and the services of skilled private development teams. Also, 111s
recommended that these “treatable” severely distressed housing properties be assigned
(o another entity that is created to oversee these revitalization efforts. The entity must
hhave the independence and capacity to move these projects forward.

B. Address the problems of certain high-rise developments which are not treatable under
any available program or approach - these are housing developments so distressed that
revitalization and hard unit replacements are not feasible. In other words. these
properties need to be demolished. Moreover, hard unit replacements for these types of
developments are not possible to provide or to create, Therefore. soft unit
replacements will need to be made possible

C. Undertake a coordinated stabilization effort to support large scale revitatization and
restoration of selected public housing units - this approach is needed to help stabilize
housing developments which cannot be treated in the short term due 10 the need for
planning or due to overall capacity problems with trying to simultaneously move more
than one or perhaps two major projects forward. Some or perhaps all of these
developments should be assigned to the new operating entity referenced above

D. Separate trom severely distressed properties those properties that can be managed and
treated through more conventional approaches - the CHA does have many
developments which can be managed successfully using more traditional public housing
approaches and can remain under the more routine oversight of a public housing
agency. By retaining a portfolio of less distressed housing developments the CHA can
undertake the significant management and operational changes required to move a
troubled housing agency to a better status.

E. Take steps to assure that the governance and leadership structure of the public housing
program is reflective of the scale of change and significant resource commitment
required to undertake the above strategies - the level of intervention in the public
housing program and the significant level of redevelopment required must be
ondertaken with a high degree of cooperation among residents. the City and others if it
is to be successful

The above elements constirute a strategy and framework for treating public housing im
Chicago. Absent a coordinated and intensive effort to address problems in this City's public
housing program and an infusion of significant resources, however. the conditions of severe
distress should be expected to continue and even worsen

Essentially, three major actions are needed. First. CHA must divest itself of the
larger. very troubled housing developments. The CHA as an “entity” simply cannot "work”
as long as it must direct its management attention and resources to these properties


17

Can we get you exact plans that say this development on this
date to be replaced by this house on this block in this neighbor-
hood? No. This will be an evolving process of working through all
of this in the years to come.

The second question that undoubtedly will be raised is how long
will HUD be in this role. There is the critique, of course, made by
those who would argue that this is not the Department’s function.
It is not our function. We have said this is an extraordinary event.
But the alternative would have been to watch Chicago continue to
slip off the precipice, which we felt we could not sustain as a strat-
egy.
I have said to the President that it is our goal to end this period
of HUD’s involvement by the end of the year. Our first hope was
to bring an executive director. But there are literally a handful of
people in the country who could step in and become the executive
director of the Chicago Housing Authority, a small handful of peo-
ple. And frankly, as we approached some of these people, they

ew the nature of the job. They said to us they would not come
except as a company, for example, where they brought an entou-
rage of people with them and wanted multimillion dollar contracts
to do it, which we did not feel was appropriate given the financial
circumstances. So we have felt that the right course is to keep our
staff in place for the next few months; and hopefully I mean that,
a few months, because it is our objective to transition this by the
end of the year, and in due course bring top-flight staff from all
across the country to be the permanent long-term management of
the Chicago Housing Authority. This gives us a chance to do an ex-
cellent assessment. And I must tell you we have about 35 people
who have been brought, the best, the cream of the crop in the pub-
lic housing field who are here now from Denver and Hartford and
places all across America, who are on the job here running the key
departments of Chicago Housing Authority, and it is why I can give
you this positive report of what has occurred over the course of the
last 3 months. This is a work-in-progress, and given the immensity
of what we discovered, I feel like there have been positive first
steps.

I know it is the nature of an oversight committee and the nature
of a partisan environment to have to denigrate what has been
done. But I must tell you, I want to commend the people who have
come here and spent the last 3 months away from their families
and jobs to try to get Chicago on track. It is a fair demand of us
to produce a long-term plan. We will. But we have been in that—
in that proverbial swamp fighting off alligators for the last 3
months, and we can now begin to think about the longer term task
of draining that swamp.

I have two papers which I do not want to task you with now, but
I will ask that they be distributed to you at this point, one of which
is dated June 11 that sets out the short-term plan for the summer;
and the other is dated June 15, which is a follow-up to that and
gives you some sense that we were thinking longer term even at
the beginning of the summer about where we want to go with this
in the long run.

That terminates my statement. Thank you for giving me the time
to give it, and I will be happy to answer questions.


61

Mr. GUTIERREZ. Thank you very much, and thank you for hosting
this hearing here in Chicago. I want to thank Secretary Cisneros
for being with us in Chicago today, and for all of his leadership on
housing issues in general, and of course specifically for his dedica-
tion in working to improve the condition of the Chicago Housing
Authority.

In the past when urban areas in general—and Chicago, specifi-
cally—have looked for leadership and guidance from Washington,
DC, we have found a vacuum. That has not been the case under
Secretary Cisneros. Under his leadership, HUD has been a Federal
agency that has had an open door to our concerns, and I wish to
express thanks to him publicly today.

believe we have all greeted the HUD takeover of the CHA with
arded optimism. We have all hoped that it would help CHA resi-
Fonts to live in safety and dignity. As basic and simple as that goal
might be, it is a goal that has quite obviously not been reached in
the past.

Public housing in our Nation was designed to be an option for
people who might need a helping hand during a tough time, a way
to help people make ends meet while they worked to improve their
lives. I do not believe it was ever designed to be a dangerous and
unhealthy trap that keeps people from moving forward and reach-
ing their goals. I think we must judge HUD by seeing how much
progress it is making in restoring hope to our people. And I am
sure the Secretary would agree that this goal is too important to
be neglected, and we must all work together tirelessly to reach it.
Thank you very much, Mr. Chairman.

Mr. Suays. I thank the gentleman.

Mr. Cisneros, there are a number of issues that you have raised,
but first we will make sure that your June 11 memorandum is sub-
mitted for the record, as well as your memorandum of September

Mr. CisNEROS. And then we have this June 15—this plan that
we

Mr. SHays. OK, and that also will be in the record, as well as
your statement. It is helpful to have them all for the record.

One of my concerns is that you have very capable people who are
being asked to focus a lot of their time and attention on Chicago.
I notice on_your left is Mr. Shuldiner who is your Assistant Sec-
retary for Public and Indian Housing, a full-time job. It is not so
much a question of whether he has the ability to run the Chicago
Housing Authority with the assistance of Kevin Marchman, your
acting person on the job is——

Mr. CisNEROS. Kevin Marchman.

Mr. SHAYS. Yes. It is really a question of whether the Assistant
Secretary has the ability to do both jobs. I salute you as well for
having a number of people from all over the country come here,
and to use it almost as a pilot program.

In response to Mrs. Collins, my concern is not that you have a
blueprint in every instance. You want tenant involvement and we
want to empower those residents who live there to be participants
in the plan. But what I am hearing you say is that it is your inten-
tion by the end of the year to transfer authority from HUD central
to a team of people who will be full time, working as——


130

September 5, 1995 Testimony of Jeffrey K. Lines Zz

and agreeing to a management plan that is fully tailored to meet the improvement needs of a
specific agency's situation. The size and complexity of the Indianapolis public housing
program is far less than that of Detroit's. Indianapolis’ improvement program was
implemented in 1992 and resulted in the removal of the agency from the list of troubled
housing authorities in 1994 (after more than a decade of being on the troubled list). Detroit's
improvement effort will require many years before using the mostly quantitative PHMAP
method of measuring performance will result in it being removed from the list of troubled
housing agencies. However, if clear qualitative measures are established and being met along
with the development of a separate housing agency and the revitalization of distressed
properties, “what reason would there be for HUD intervention in the operation of the agency”?
‘Therefore as stated previously, HUD must be careful to not use “one size fits all" solutions to
intervening in distressed public housing and the Congress must consider that requiring single
uniform criteria in undertaking interventions in a public housing agency may significantly limit
the success of this method of treating severely distressed public housing. As discussed below,
the program proposed for Chicago requires many actions be taken in a number of areas in
order to begin to address the problems in that agency and with the housing stock.

Whenever takeover or receivership actions are needed it is important that the
administrator or receiver be given a high level of support and authority. Oftentimes, local
governments and HUD Field Offices find the receiver to be imposing and attempt to limit or
even impede the receiver's efforts. This situation can create a high level of difficulty and
adversely impact the turnaround efforts at a PHA. Receivers need broad and uncontested
powers that can usually be granted by a federal court but can prove time consuming and
cumbersome to exercise. It is recommended that Congress grant receivers for public housing
the power to bypass procurement rules, local laws governing personnel practices (i.e. civil
service and related laws), to acquire and dispose of housing, the ability to program federal
funds at the discretion of the receiver and so on. Attempts to limit the receiver's powers in
Kansas City and in those areas have made certain turnaround tasks more difficult. HUD
recent legislative proposals for administrative receivership and related actions would provide
some significant support for takeovers of troubled PHAs.

TV. Need to differentiate between very large urban public housing agencies and those
that are in the large and medium size categories.

Very large urban public housing agencies today are in a unique and very difficult
position. They manage a diverse and geographically dispersed housing stock. Some of the
housing stock is entering its fifth or even sixth decade of use and needs substantial
re-investment and management attention to remain viable. Public housing agencies face a
difficult operating environment in that they must maintain efficient operating systems while
adhering (0 several sets of statutory and regulatory requirements. For public housing to
remain viable, large housing agencies need to invest substantial effort in providing a
combination of good management and adequate modernization and maintenance. vet they must


114

resources to seek a receiver to assume management of CHA.

According to a HUD and city cffical, Chicago's mayor did not £.

receivership, but would agree to HUD’s taking control cf CHA, The

mayor’ could have delayed appointing a recea.

aes like Boston, MA

occurred in other nd as!

Because

zrcumstances HUD faced in May

decision to of CHA with its own scaff, on

appears to have been the best option avaiiab

e. The imme:

for leadership prevented HUD from taking the time
options, such as con

N

exerci

ang with a property management firm

evertheless, private management and receivership are still viable
options for developing long-term solut
note that HUD is curr

s to CHA's probiems

ntly considering a change in ics
to require Departmental intervention when a housing aut

lati

jority has
been unable to improve its performance cver a specified period of
tame. Under such a requirement, there would have been no question
about the conseguences of CHA's chron

© low performance and HUD's
responsibility to intervene. This type of requirement could alert
housing authorities, motivate them to improve their perferma

and stimulate needed improvements or other actions at several ot

large housing authorities that, like Chicag
for over a decade

have been troubled
Working against the effectiveness

£ this
requirement, according to HUD's Assistant Secretary of Public and
Indian Housing, is that the Department may not have in the future
the expertise to manage several troubled housing authorities at one

tame.

HUD FACES SIGNIFICANT OBSTACLES THAT WILL TAKE YEARS TO OVERCOME

As HUD tries to rebuild CHA, it will face many challenges.
According to the conditions we have witnessed at CHA, documents we
have reviewed, and statements made by HUD officials currently


116

and part-time basis to restructure the organization and address
operational deficiencies. However, HUD has not taken some
additional steps needed to ensure CHA's long-term success. For
example, HUD has net hired an executive director and other upper-~
level management. In addition, HUD has

develop a lor
recovery pian that demonstrates, among other things, how ic intends
to devolve responsibility for day-to-day management and policy~

making back to CHA. Without hiring permanent CHA management and
planning for the future, HUD is unlikely to encourage increased
involvement and 1

mg term commitment by stakeholders. in act
needed to turn around CHA and make it part of the broader commun

and economic development.
HUD Is Making Progress Toward Short-term Goals

In a June 11, 1995 memorandum, HUD Deputy Assistant Secretary
Marchman, acting as CHA's interim executive director, stated a
series of recovery goals for strengthening CHA that included
specific improvements to the physical stock, organizational
structure, and management systems. Over the past 3 months, many of
these goals have been built into a 120-day action plan and HUD has
made some progress toward achieving them. However, CHA's troubled
conditions at the time HUD took over make it difficult to expect
substantial improvement in residents’ quality of life before the
end of the year.

Since the takeover, HUD has condensed the organizational
structure, has taken steps to privatize selected housing functions
such as the Section 8 program, hired additional police, and has
continued redevelopment of selected properties. In addition, HUD
is revising tenant admission, occupancy, and eviction policies,
overhauling maintenance operations, and improving budgeting,
accounting, and procurement systems.


4

Mrs. COLLINS. Thank you very much, Mr. Chairman. First of all
I want to thank you for bringing the subcommittee to Chicago for
what I hope will be ongoing oversight of the takeover of the Chi-
cago Housing Authority by the Department of Housing and Urban
Development. I also want to thank the chairman of the full com-
mittee, Bill Clinger, for honoring my request to convene this hear-
ing, and ranking subcommittee member Ed Towns and my other
colleagues, Congressmen Weller, Souder, and Durbin, for joining
me here today as we examine this issue.

The takeover of the Chicago Housing Authority is an extraor-
dinary action by the Department of Housing and Urban Develop-
ment, precipitated by the extraordinary suffering and urgent need
for progress of residents of public housing in Chicago. Now, I rep-
resent the majority of Chicago Housing residents. I applaud Sec-
retary Cisneros, Assistant Secretary Shuldiner, and others in HUD
for recognizing the urgency of the problems of the CHA and moving
decisively to address them. Too much is at stake at the CHA for
any of us to stand on the sidelines.

low that the decision has been made to shake up the status quo,
the job of rebuilding and reform must be done properly, and I hope
that through these hearings and the ongoing oversight of this com-
mittee, as well as the appropriations process, the Congress will be
a positive part of the broad partnership which will be necessary to
reverse 40 years of decline in the quality of life for residents of the
Chicago Housing Authority.

The history of broken promises to CHA residents requires that
we avoid at all costs raising expectations beyond our capacity to-
achieve them. Residents must have clear benchmarks against
which they can see that meaningful progress is being made in im-
proving the quality of their lives. Not coincidentally, just as resi-
dents need these benchmarks, so do members of this committee in
order to effectively exercise our oversight responsibility.

Secretary Cisneros has stated that the goal of HUD intervention
at the CHA is nothing less than the transformation of public hous-
ing; and that the transformation of public housing in America be-
gins with the transformation of the Chicago Housing Authority. By
these statements the Secretary has made the intervention at the
Chicago Housing Authority the linchpin in the reinvention of the
Department of Housing and Urban Development.

e 1994 TAG Associates’ final report on the organization and
operation of the CHA correctly states the scale of the physical, so-
cial, and security problems facing these communities and the Chi-
cago Housing Authority as truly daunting. While we welcome the

and vision which calls for transformation in public housing as we
fnow it, such promises mean little to residents for whom a visit
from a plumber, elevator repairman, or police officer would be a
momentous occasion.

Immediately upon taking over the CHA, Secretary Cisneros rec-
ognized the importance of short-term, visible progress in the phys-
ical environment of CHA developments to establish a seriousness
of purpose and good faith with CHA residents. He stated that a

rogram to fix-up, clean-up, and secure would be launched so that
residents would notice physical improvement within, “a matter of
weeks.” We will hear y whether that goal has been met.


93

Members have had a chance to ask questions. I stayed at Cabrini
Green last night and I met with some gang members and I would
love to ask you some questions about it. Mrs. Collins.

Mrs. COLLINS. Thank you, Mr. Chairman.

Let me ask the panel, in the testimony today, Secretary Cisneros
committed to fully implementing a 120-day plan which includes an
overall goal of—and I am going to quote now—“increasing resident
participation in the decisions that affect their lives.” Now, I would
like to know if you feel that you have been included and that you
have real involvement in these plans? I am going to start with you,
Ms. Randolph; and you, Ms. Calvin; and then you, Ms. Moore.

Ms. RANDOLPH. No, indirectly I have not. As being the leader of
our organization, I have asked who do I go to. And then I was told
to go to Mr. Kevin. A lot of times Mr. Kevin is not in the city, so
I do not know what to do. I am supposed to report to the—the
young man that is working for Mr. Kevin.

But my only concern is communication. When there is a meeting
that is important to our lives, nobody tells me, we are talking
about this. Although they have a personnel committee meeting,
which to me is—is fine, that is the chairman’s business, whatever

ou want to call him. But giving us information that affects our
lives, or what are you going to do today, what development are you
anticipating tearing down tomorrow, how many people are you
going to lay off? We hear this in the media.

Now, the last meeting Mr. Shuldiner, that was our first executive
meeting, he did come to us with some of the plans. But like I think
a Congressman asked, is there a written plan, what are you going
to do from month-to-month or day-to-day, I have not seen that
plan.

Mrs. COLLINS. Ms. Calvin, have you seen the 120-day plan?

Ms. CALVIN. Only plan I have seen is what they tell us that they
are doing.

Mrs. COLLINS. But you have not seen the written plan?

Have you, Ms. Moore?

Ms. Moore. No.

Mrs. COLLins. OK. Next question is: Do you feel that there has
‘been some improvement, there is a better way of life since HUD
has been on the ground here in Chicago for the last 3 months? Ms.
Moore, Ms. Calvin, and then Ms. Randolph.

Ms. Moore. I say in a sense we have more meetings with HUD.
But some of the things that the—the residents had wanted, some
of the things that they sit and agreed upon, and we agreed upon
it one way and the next day you hear it in the newspaper another
way. So I think it is lack of communication.

For instance, that we sat at the round table with the committee
and we agreed on that tenant patrol and said that we was going
to use the one site for the police to take over the building, which
would be Robert Taylor. And then the next day it was in the paper
saying they were going in five different developments. I am saying
that if we are going to be at the round table and coming to a com-
mon goal together, then that is the way it should stay.

Mrs. COLLINS. Ms. Calvin.

Ms. CALVIN. I see a change in some of the things they are doing,
and some of the things I do not. I see a lot of change in the admin-


38

U.S. Department of Housing and Urban Development
*) ‘Washington. D.C. 20410-5009

‘OFFICE OF THE ASSISTANT SECRETARY
FOR PUBLIC AND INDIAN HOUSING

June 15, 1995

MEM RANDUM

To: Henry G. Cisneros, Secretary
ph Shuldiner, Assistant Secretary for Public and Indian Housing
Edwin Fisendrath, Secretary's Representative

From: Kevin E, Marchman, Deputy Assistant Secretary for Distressed and Troubled Housing Oo
Recovery

Re: Blueprint: Chicago Workplan
Attached please find the first draft of the Blueprint: Chicago Workplan. The workplan is

a product of the goals we forwarded to you earlier this week. I have also attached a copy of
CHA‘ old organizational chart and the new transitional structure.


158

It is my bope that this new attitude will be guided by a solid, in depth commitment
to a policy of : “ a dollars worth of opportunity, a dollars worth of work, a dollars

worth of pay.”

To this end it is my belief that through the application if industrialized construction
technology we can achieve significant economies and improvements in the
construction of konsing and, in then, provide employment and wage earning

‘opportunities for low income and under privileged pervons.

It is also my belief that we must look at new techniques, methods aad materials in
the continuing effort to deliver affordable construction. This in every case, must be
accompanied by some form of cost benefit certification process that is designed to
guarantee that the resulting cost savings accrue to the benefit of housing owners
occupant(s). To date, code changes, write down benefits, tax credits, etc... have
done just the opposite. These benefits have simaply added to the margins of builders
and developers. I am not questioning the right to profit but I am questioning the
absorption of program generated dollars intended to reduce the cost of housing and
in turn, iocrease the poteatial for owaership and habitat for those with limited


125

September 5, 1995 Testimony of Jeffrey K. Lines 2

1. Issues confronting distressed and troubled public housing.

Troubled public housing is considered to be that housing which clearly has significant
difficulty being managed and serving as a viable housing resource for low income households
‘The reasons for troubled public housing developments are many: high rejection rate by low
income households (forcing high turnover among residents): high vacancy rates due to the
inability to ready vacant units or receive or program the funds needed to correct substandard
conditions; lack of staff capacity or management systems to effectively deliver essential
operating services; lack of public and private institutions in the overall neighborhood to
provide traditional supports for a residential housing community (i.e. police protection, job
opportunities, recreation space, etc); and the inability of the public housing agency (o adapt
its management programs and organizational structure to meet the changing needs of its public
housing communities. The causes for the above problems can vary and can often be traced to
the level of difficulty in managing specific public housing developments.

In the case of the Chicago Housing Authority (CHA) many core problems relate to the
overall conditions of distress found within the agency and at a number of its specific public
housing developments. The CHA has a large concentration of what must be considered the
most difficult to manage public housing developments in the country. ‘The needs of the CHA
are so geeat and the problems it encounters are so large that careful scrutiny and attention witl
need to be given to the development of any approach for infusing significant resources into this
organization. The problems of the CHA are not money alone and a comprehensive and
coordinated strategy for addressing the needs of the public housing program is absolutely
necessary, if the problems faced by this housing authority and the residents it serves are to be
addressed. The major findings with respect to the CHA’s organization and structure are listed
below.

1. The CHA has a large and loosely structured middle management which impedes
program accountability and creates inefficiencies in its operations

2. CHA ulilizes a highly centralized and controlled system for decision making.
which limits its capacity to effectively pursue and realize the benefits of a more
decentralized and site based management structure

3. CHA has been unable systematically to implement management controls and 10
maintain a system of quality control.

4. Despite extraordinary efforts on the part of the agency, there continues «0 be an
overall inability to control the general living environment at certain housing
developments in terms of management mules, security and physical conditions,


100

Advisory Council and the LAC in the future of the Chicago Housing
Authority?

Ms. RANDOLPH. You know, you ask me very hard questions which
I am going to answer because I do not mix friendship with busi-
ness.

Mr. Rusu. Right. Absolutely.

Ms. RANDOLPH. This committee or board or whatever should be
business and not run on friendship. We are all supposed to be
friendly, but I am not going to say, yeah, you are doing a good job,
because you are my friend. But it is——

Mr. Rusu. I know, Ms. Randolph. You have told me that a num-
ber of times as your Congressman, so I—-

Ms. RANDOLPH. But it could be better if communication or self
get out of the way. Now, as chairman of the city-wide organization

do not know anybody but Mr. Kevin Marchman and Mr.
Shuldiner of department heads. So how can I function when I do
not know anybody?

Communication is the main thing. I know Mr. Shuldiner, I know
Mr. Kevin, which when I said they do not communicate with me,
that do not make me be their enemies. I want to be a partner; part-
nership with them. But how could you be a Congressman ant
do not know Cardiss Collins? How can I be functioning when I do
not know anybody to ask anything?

I knew the person from human resources, I knew everybody. But
everybody that I know is just about gone. But nobody has brought
these people to our meetings, community service meeting to say,
“Mrs. Randolph, I would like to make this person—present this
person to your body.” So they are asking me who are the people

do not know. I am not a fortune teller. Nobody has made me ac-

juainted with those persons that have come here to do the work.

d that is my concern. And I will not be satisfied until I know
who they are.

Mr. Rusu. Would you——

Ms. RANDOLPH. So I can ask them questions: How are you going
to do this? How are you going to do that? I have talked to Mr.
Kevin, but I do not know that he can tell me all the names of these
people, himself. Or Mr. Shuldiner, yeah, I have asked—I can talk
With him, but I need for us to sit down and talk together. I am not

ing to run them down, and I do not want them to run me down.
But 1 do know we have got to communicate if we want to work in
partnership for this thing to work.

I can be more help to them than I can be harm. And, Mr. Chair-
man, you know how I—Mr. Congressman, you know how I work.
I do not lie on nobody. But I do not get the response from them
that I need to carry on my organization,

Mr. RusH. Would you say that the relationship between the CHA
and the LAC’s and the CAC is nonexistent at this point, is that
what you are saying?

Ms. RANDOLPH. No.

Mr. Rusu. Is nonexistent?

Ms. RANDOLPH. Nonexistent. They come to a meeting once a
month, but if you put oil in your car once a month how are it going
to run? Because you have not got nothing in it. But if they do not—
we do not communicate together oftener than we do, everything is


41

Front-end budgetary, personnel and in-kind resources should be committed by the HUD, CHA
and the City in support of the Critical Services Task Force; so that it can be assigned to execute
and oversee discrete priorities to secure and stabilize particular public housing sites during the
120 Day Start-up period and beyond. Where necessary interagency or cooperative agreements
can be executed to this effect, eg. the Drug Elimination Program Cooperative agreement with the
City Police Department for coordination with CHA policing efforts needs to be embellished and
made part of the Task Force. Site emergency responsiveness, maintenance performance results,
and service improvements acheived by any given Service component can be reported at regular
meetings of the Task Force as a whole, to ensure and account for progress. (HUD should
consider redirecting existing funds being spent on CHA security contractors -— an estimated $20
to $23m--, augmented by a special allocation of 6(5) funding, to leverage this relationship with
the City of Chicago agencies, who would be asked for a matching in-kind commitment. [tis not
inconceivable that in this fashion, an additional 200 City Police, could be dedicated to execute
priorities to restore safety and security at the State-Street sites.)

A 120-DAY WORK PLAN

“While internal re-engineering of CHA processes for better performance and the Critical
Services Task Force swing into motion, HUD must also ensure day-to-day continuity of routine
and non-emergency housing services, and administrative support such that their quality does not

~ decline. The following 120 day work plan sets forth the goals and objectives as tasks to be
carried ont towards these ends, along with performance measures, estimated timelines and the
lead staff (CHA/HUD recovery team) responsible for carrying them out,

AREA OF PRIORITY: ADMINISTRATION AND FINANCIAL MANAGEMENT

SPECIFIC GOALS:

CHA Administration

L Task 1 Restructure and Consolidate the finance and accounting and administrative
departments

Subtask: Announce consolidation
Performance measure: lidation announced
Lead Responsibility : i ‘kevin Marches

‘Time Frame : one week

pubeegs Jmplerzn! consolidation
sibility :, ‘Adarienne "Archia Earl & A Vargas to implement

ime Frame one month

Performance measure : Task completed

H1, Reconcile 1995 budget which includes a 15 percent staff reduction
Subtask: Analyze budget vs actual expenses and postion control

Time Frame: three w

a:
fa