Obama and South Chicago Slum Developers

CLINTON: "...I was fighting against those ideas when you were practicing law and representing your contributor, Rezko, in his slum landlord business in inner city Chicago.

OBAMA: No, no, no.
(Excerpt from the January, 21, 2008, CNN Democratic presidential debate in South Carolina)

Barack Obama's political career rose from the south side of Chicago with a lot of help from his friends involved in the housing industry. They have profited and thrived, unlike the Senator's south side constituents

The Tony Rezko scandal focused the nation's attention on just one piece of a much larger story: Obama's close association with several South Chicago slum landlords, plus one property manager who is now his senior advisor. 

A remarkable June 27, 2008 article entitled "Grim proving ground for Obama's housing policy" by Binyamin Appelbaum of the Boston Globe, exposed the Chicago housing mess and the role of a circle of associates of Barack Obama. A principal actor is Valerie Jarrett, Obama's senior campaign advisor, close family friend, and Michelle Obama's former boss on Mayor Daley's staff, where Jarrett hired her in 1991. Currently, Michelle is on leave from her position at the University of Chicago's Medical Center where Jarrett is Vice-Chair of the Board of Directors. Newsweek described Jarrett last May as Michelle's "mentor."  She also chaired the finance committee for Obama's 2004 Senate campaign.

Friends don't get much closer.

The scope of Appelbaum's exposé remains unparalleled. He can be heard here discussing his findings in a 12 minutes interview on National Public Radio, with rebuttal from an Obama apologist.  

Mayor Daley's Housing Reforms

The mess began with a massive wave of housing projects. When construction of the Robert Taylor Homes, named after an African-American activist and former CHA board member, was completed in 1962, it was the largest public housing project in the nation, with 4,415 apartments in 28 high-rise buildings. Richard J. Daley, the current Mayor Richard M. Daley's father, was mayor of Chicago. 

In time, the Robert Taylor Homes and many other CHA properties became open sores of poverty and crime.  

Valerie Jarrett is Robert Taylor's granddaughter.

On October 11, 1991, the Chicago Tribune reported (article available via the Tribune archives) that,

"Continuing what he described as "sweeping changes" in the structure of city government, Mayor Richard [M.] Daley Thursday announced the merger of the city's Planning Department and Economic Development Department, to be headed by Valerie Jarrett, his former deputy chief of staff."

Eventually, one piece of Daley's reform initiatives involved the Chicago city government out-sourcing ownership and operation of Chicago Housing Authority (CHA) low-rent, subsidized public housing to private developers. The city also subsidized private enterprises to build new affordable housing. 

Involvement of the public sector in low-rent housing was an appealing theory that failed in execution, with the help of several Obama financial supporters and friends. That failure resulted in a worsening of living conditions for poor residents already suffering from below basement-level amenities in CHA housing.

Example of Failed Reform: The Lawndale Restoration

The Lawndale Restoration project illustrates how an Obama friend's company, and an Obama financial supporter's enterprise, made money off their failed efforts to improve housing for Chicago's poor.

On October 21, 2004, the Tribune reported (available via Tribune archives),

"City officials are pushing the federal government to seize control of more than 100 apartment buildings in Chicago's Lawndale neighborhood, signaling the demise of one of the most ambitious redevelopment projects in the city's history. (snip)

Cecil Butler, general partner of Lawndale restoration and a longtime West Side business magnate, is two months and about $900,000 behind in payments on a government-backed $51 million mortgage, officials at the U.S. Department of Housing and Urban Development confirmed Wednesday.

The appeal to the federal government was triggered when city inspectors found 1,800 code violations in housing units dilapidated to the point of being uninhabitable. 

Back in 2000, Butler had hired the Habitat Company, a respected real-estate firm, to help manage the properties. By then, Valerie Jarrett had resigned from Daley's staff in 1995, and was Habitat's Executive Vice President (EVP), later to become CEO. The deterioration of living conditions in the Lawndale Restoration continued during Habitat's involvement, but Habitat seems to have still been paid.

In 2006, in the final disposition of the dissolved Lawndale Restoration, its properties were sold back to the City of Chicago for $10 (ten).  And, the U.S. Department of Housing & Urban Development (HUD) assumed the $51 million debt at the foreclosure sale. Butler walked away. Twenty-three smaller profit and non-profit developers eventually assumed responsibility for the properties. 

According to the Boston Globe's exposé, Butler was one of "six prominent developers" who,

"...collectively contributed more than $175,000 to Obama's campaigns over the last decade and raised hundred of thousands more from other donors."

Obama's Housing Plans

The Obama Campaign document, Blueprint For Change, notes his plan to pursue the line of the Daley reforms under the heading "Increase the Supply of Affordable Housing," wherein, 

"Obama will create an Affordable Housing Trust Fund to develop affordable housing in mixed-income neighborhoods." (p.47)

In a 2007 speech Obama said,

"As President, I'll create an Affordable Housing Trust Fund that would add as many as 112,000 new affordable units in mixed income neighborhoods."

Since Obama planned to siphon off profits from the now bankrupt Mae twins, Fannie and Freddie, to help grow this fund, he'll need to adjust that plan.

Meanwhile, add Valerie Jarrett (EVP, now CEO, Habitat Co.) and Cecil Butler (former general partner, Lawndale Restoration) to the list of Obama friends and supporters who aggravated the housing plight of South Chicago residents during the Daley public housing reforms. And made money doing it.

There were others.

If the full story is ever widely known of Illinois State Senator Obama's association with several South Chicago slum landlords to whom the Daley's administration turned-over ownership and management of public housing properties, the voters will rightly ask:

Did the candidate who tells us to be our brothers' keeper not know how developers in and near his district were turning housing for the poor into even more horrific slums? Or, did he know full well what was happening and either didn't care, or was afraid to speak-up? That seems a fair question.

Whatever the answer, the myth of the community organizer fighting for the poor is seriously busted.

[hat tip: AT reader "Dee"]