The Chicago Housing Authority (CHA) has been at the vanguard of public housing redevelopment, with its ambitious Plan for Transformation now in its 13th year.

The gist of the plan was to redevelop sites such as the notorious Cabrini- Green, which concentrated poverty into specific parts of the city, and replace them with mixed-income communities. Private developers partnered with the CHA to build a mix of public housing units, affordable rental and for-sale housing, and market-rate condos. The goal was to demolish or rehab 25,000 units in a decade, and the CHA is more than 80 percent there.

But the CHA has hit some speed bumps along the way. And it's “recalibrating” its vision and asking for input on how to improve the next generation of redevelopment, the Plan for Transformation 2.0.

“We involved a host of key organizations, community and civic leaders, and stakeholders in a variety of meetings in which we've asked for feedback on our Plan for Transformation,” says Wendy Parks, CHA's director of communications.

They should get an earful. Arguably, one of the CHA's biggest mistakes was in relying on market-rate for-sale housing to offset the cost of building affordable rental housing. Since the plan was drafted before the single-family housing meltdown, it made financial sense, on paper anyway. But the idea replicated some of the philosophical problems that the plan was trying to solve.

“It's a different kind of segregation,” says Richard Baron, founder and CEO of McCormack Baron Salazar. “They tried to satisfy the market-rate component by building for-sale housing for higher-income people, and then put all the tax credit and public housing people into apartments. Put a hedge down the middle, and it's the same stigma, and it absolutely undercuts the very thing you're trying to accomplish.”

Holes for sale

Baron knows a thing or two about revitalizing communities. After graduating from law school, he became a legal aid lawyer representing public housing tenants on a major rent strike in St. Louis. Forty years later, his firm is the nation's preeminent mixed-income developer, with more than 16,000 affordable housing units under its belt.

McCormack Baron Salazar's early developments served as a model for the HOPE VI program—in fact, the company developed the first HOPE VI pilot project, Centennial Place in Atlanta, in the mid-1990s. To Baron, the CHA's heavy reliance on market-rate for-sale housing also had significant financial implications. Many of these houses came on line just as the single-family housing meltdown began, and some remain empty, or never built, to this day.

“They got caught in Chicago, big time,” says Baron. “They have plenty of developments under Transformation that are underwater and never sold out the for-sale component. In many of those sites, they've got empty holes where they were going to build more for-sale housing.”

Many public housing advocates, such as the National Low Income Housing Coalition (NLIHC), also question the CHA's involvement in market-rate housing. The Plan for Transformation was crafted by the Daley administration and the Department of Housing and Urban Development (HUD), which awarded Chicago the largest amount of HOPE VI funds than any metro in the nation.

“The notion that a housing authority should be involved in higher-end, single-family homeownership should have been a nonstarter,” says Linda Couch, NLIHC's senior vice president of policy and research. “People were making money hand over fist in the real estate market, and to jump on the bandwagon must've been really attractive. But if it's public money being used, it should be focused on extremely low-income households.”

One for none

HOPE VI's focus on mixing incomes and reducing density resulted in the loss of more than 100,000 units of affordable housing across the nation, estimates the NLIHC. Only a fraction— usually about a third—of the public housing units that were demolished to make way for mixed-income communities were replaced.

“When you see a presentation on HOPE VI, 99 percent of it is the storefronts, the fountains, the paved sidewalks. Where did the people go?” asks Couch. “You don't see them because they're not there. If you're going to rip up people's communities, who's the developer, or HUD, or Congress to say we've decided that only some of you can stay?”

One-for-one replacement was a requirement until 1998, when Congress repealed the policy. But the tide is turning. Whereas HOPE VI focused on severely distressed public housing only, its successor, the Choice Neighborhoods program, focuses on entire neighborhoods as well as the public housing within. Last year, HUD awarded five Choice Neighborhoods grants totaling $122 million, and each one of those communities committed to doing one-for-one replacement of the public housing units.

“What mixed-income redevelopment ended up meaning to most public housing residents was the loss of their housing,” says Couch. “And I think that was a lesson that stuck with HUD.”

Where are they now?

One of the biggest criticisms of the early HOPE VI developments was a lack of focus on relocation services. Many displaced residents ended up moving to areas that were every bit as bad as the ones they were leaving.

“The field gained experience with HOPE VI over time, but in many of the earlier projects around the country, there was a huge missed opportunity to improve the life outcomes of the original residents through relocation to neighborhoods with better schools and access to jobs,” says Jeffrey Lubell, executive director of the Center for Housing Policy. “In many cases, large numbers of residents did not return to the revitalized developments, which meant that relocation was the only intervention they experienced.”

More than 6,400 households were relocated by the CHA to private homes between 1999 and 2008. And a recent study by the Urban Institute and Emory University attempts to measure the effect of these relocations—how it affected crime rates in parts of Chicago.

The study found that, throughout Chicago, the overall violent crime rate decreased by 1 percent and gun crimes dropped 4.4 percent between 2000 and 2008. And the impact on those neighborhoods with demolished public housing was much bigger—violent crime fell more than 60 percent, and property crime went down almost 50 percent.

But the findings weren't entirely positive. The study notes that neighborhoods with a concentration of relocated families saw crime rates go up. In Chicago, areas with moderate concentrations of relocated households saw violent crime rates increase 13 percent, and neighborhoods with high concentrations saw a 21 percent climb in violent crime rates. Yet, many of those areas where public housing residents relocated were already challenged because of existing crime and poverty.

Show us the money

Though Congress is again emphasizing the importance of one-for-one replacement, that doesn't mean it's easy to do. There are other ways to replace units while reducing density, such as scattered-site development. But it's an expensive enterprise, and the federal funds just aren't there.

“This is a classic situation of an unfunded mandate, which Congress does all the time,” says Baron. “They can write anything they want in the authorization language; the problem is, they never appropriate the funds. It's a cruel hoax.”

To advocates, the bigger issue is whether these mixed-income redevelopments had a positive effect on public housing residents.

“There's been no research that says income mixing helps low-income people,” says Couch. “And I haven't convinced myself that it's not OK for poor people to live next to one another if they want to.”