CHICAGO — Over the last two decades, government-backed affordable housing in Chicago has largely been confined to majority-Black neighborhoods with high concentrations of poverty, a design that has perpetuated the city’s long history of segregation.
As these neighborhoods continued to face increased divestment, gun violence and food deserts, the lack of affordable housing in other parts of the city restricted many people of color from leaving.
But now, using what is currently its largest pot of federal housing funding, Chicago wants to chart a corrective path by aggressively pushing for more affordable homes in high-income, well-resourced areas of the city, something housing experts say will unlock previously unavailable opportunities for communities of color.
Chicago Housing Commissioner Marisa Novara said the city has tweaked its qualified allocation plan to encourage developers to submit proposals for new affordable housing in parts of the city that are higher income, amenity rich and have traditionally excluded people with lower incomes and people of color. She added that the city is prepared to make it happen by paying more to acquire land in these areas.
Earlier this month, the city unveiled the results of a self-conducted racial equity impact assessment that examined how different racial and ethnic groups are or will be affected by existing or proposed programs, policies or decisions.
While these kinds of assessments aren’t new, Chicago says it is the first time a city has actively taken stock of its own racial equity when it comes to federal dollars from the Low-Income Housing Tax Credit program, the largest source of funding for new affordable housing in the United States.
The assessment revealed that the city’s low-income tax program has developed or preserved about 10,000 low-income units across the city since 2000 with 60 percent of the funding going to high-poverty areas.
When broken down by race, however, allocations were stark.
The majority of Chicago’s low-income developments have been new construction located in high-poverty, majority-Black areas, with a quarter located in higher-income “opportunity” areas, even though only 35 percent of city tracts have majority-Black populations.
Less than 20 percent of units were in majority-white neighborhoods, even though 30 percent of Chicago’s tracts are majority white. Only 6 percent of units were developed in majority-Latinx areas, even though over 20 percent of all Chicago census tracts have a majority-Latinx population, the assessment stated.
“Infamously, Chicago is one of the most segregated cities by race and income. We have a disproportionate number of affordable rental housing units in majority-Black spaces because, fundamentally, our biggest source of racism is anti-Black racism. That is how we function as a country,” Novara said. “Because there was this fear and racism of not letting Black people expand into other parts of the city, more and more housing was built on the South and West sides.”
Using this sobering data, the city said it will now actively restructure the parameters of the Low-Income Housing Tax Credit program to reflect racial segregation by pushing development in highly resourced, amenity-rich areas, thereby giving residents more choices and mobility.
The city is allocating $61 million for 2022 and 2023 low-income tax credit developments and has opened public comment on the developer application until April 15.
The Low-Income Housing Tax Credit program was created in 1986 and accounts for about 90 percent of all affordable rental housing in the nation. The program operates under the Department of Treasury, which provides tax incentives to encourage developers to create affordable housing. These tax credits are given to states — or in some cases, cities like Chicago — based on population and are distributed according to affordable housing needs through the qualified allocation plan process, which acts as an application for developers.
The low-income tax credit program is different from Section 8 or public housing. Generally, “tax credit units are set aside for households with incomes at or below 60 percent of the local median income with rents no higher than 30 percent of that maximum income level, and owners must meet these affordability requirements for at least 15 years,” according to the Center on Budget and Policy Priorities.
In Chicago, which adjusts for family size, in order to qualify, a family of three would need to earn $49,140 or less to meet that mark.
However, the city’s allocation plan also allows for two other options that adjust the median income requirement, including one that would be affordable to a household earning up to 50 percent of the average median income.
Other than a few general guidelines, the federal government does not give much guidance as to how funding should be directed, said Shamus Roller, executive director of the National Housing Law Project.
“The federal government is not prescriptive about where in a given city or how much gets built in higher-opportunity areas or any of those things, so, in practice, what it's been is that mostly across the country, it's developers making those decisions about where our properties get built,” he said. “One driver for them is lower-poverty neighborhoods tend to be more expensive to buy the land, but also you run into real racism and class discrimination if you're going to try to put it in a low-poverty neighborhood, which may dissuade some from building.”
And the issue runs broadly across the country. According to the Center on Budget and Policy Priorities, tax credit housing is disproportionately concentrated in poorer, racially concentrated neighborhoods nationwide. Just 15 percent of tax credit units are in low-poverty neighborhoods, and 56 percent are in neighborhoods where at least half of the residents are people of color, compared to 40 percent of all rental units.
“This is not a reflection of some kind of extremely unique problem that's going on in just Chicago, but it's also just one piece of the puzzle of segregation," said Tracy Hadden Loh, a fellow at the Brookings Institution who studies residential segregation. “It's a particularly important piece because as bad as racial residential segregation is in the U.S., when you combine it with income segregation, that kind of stacks the inequity.”
“It's a problem if Black people are confined and isolated in a specific set of neighborhoods where they can then be targeted by some kinds of policies such as overpolicing,” Loh said, “and where policies can also withhold things like access to quality jobs, high-quality food or open space because that just kind of layers on the ways in which structural disadvantage is being concentrated and magnifies the ways in which all of these impacts can come together.”
Loh added that if the state or local governments are looking for ways to reduce segregation, then using tax credit housing, like Chicago, is a good place to start.
"This is one of the things that's on the table that the public sector can actually pull a lever on," Loh said.
And the benefits of such initiatives could be far-reaching.
A seminal housing study conducted by Harvard University economist Raj Chetty found that children under 13 whose families took up an experimental voucher to move to a lower-poverty area were more likely to go to college and had higher average earnings than kids who didn’t move. In fact, there was about a 31 percent increase in earnings by their mid-20s. “These children also live in better neighborhoods themselves as adults and are less likely to become single parents,” according to the research.
While the idea may seem ideal in theory, reality has been much more challenging for similar integration initiatives.
Ann Lott, vice president of housing initiatives for the Inclusive Communities Project, worked on fair and affordable housing initiatives in high-opportunity areas in the Dallas area and found that while opposing groups will cite excuses like safety and property values, what it really comes down to is race.
“They see affordable housing as equal to housing for low-income Black people, and that's what they're fighting against,” she said. “They may argue that it’s not, but when we start reading their blogs, reading their social media posts, it's typically loaded with racial undertones.”
Chicago’s housing advocates say they are cautiously optimistic about the city’s plan to push forward with mixed-income housing.
Local leadership has exerted power to stop inclusive housing initiatives in the past, said Andrea Juracek, executive director at Housing Choice Partners, a nonprofit housing organization in Chicago.
“There is just such a legacy in our city of unspoken racism and all of these dog whistle politics, but it's great to see at the city level that there is a commitment,” she said. “Changing hearts and minds is one thing, but it’s the systemic changes that need to be made, and this seems to be the start of it.”
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