How to preserve the black middle class

Federal Reserve holds conference to explore the question, possible solutions

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By Igor Studenkov

Contributing Reporter

The group of academics, real estate professionals, business owners and government officials sounded an alarm about the ongoing decline of historically middle-class neighborhoods on the South and West sides and argued that it would take significant changes to reverse the trends. 

Preserving Chicago's Middle Knighthoods Conference, which was held at the Federal Reserve Bank of Chicago (230 S. LaSalle St.), was organized by the bank's consumer and community affairs division, as well as the Metropolitan Planning Council, which is currently helping to develop strategies for preserving affordability in East Garfield Park and the Greater Chatham Initiative, which works to encourage economic growth in the area in and around that South Side, traditionally middle-class, African-American neighborhood. While the topic primarily dealt with middle-class black and brown neighborhoods that have seen declines since the early 2000s, it also touched on the broader decline of minority home ownership in general and the well-documented struggle of families to keep their homes.

Several speakers, including elected officials, suggested major changes, such as revamping the property tax system to help longtime homeowners stay in their homes, come up with more comprehensive, citywide strategies and do more to directly tackle racial biases that are present in politics and finance. And while everybody involved acknowledged it would take a lot of political will to accomplish it, they felt it was worth the effort.

According to the reports prepared by the Federal Reserve Bank, there is significant racial disparity in terms of who gets mortgages. While African-Americans make up 30 percent of the city's population, only 10 percent of black Chicagoans who applied for mortgages actually got them. And while Austin had the second-highest number of black homebuyers in the city, the number elsewhere within this newspaper's coverage area was below 12 percent. As noted during the conference, majority-black neighborhoods were harder hit by the collapse of the real estate bubble, in part due to the fact that homeowners in those neighborhoods were more likely to have subprime mortgages. 

WBEZ Public Radio reporter Natalie Moore, who reported extensively on the effects of segregation on black neighborhoods, moderated the "Safeguarding the Housing Market" panel. She didn't mince words, describing systemic racism that needs to be confronted — something, she said, that there wasn't a lot of political will for.

Robert Rose, executive director of the Cook County Land Bank Authority, which works to promote redevelopment by buying up vacant, abandoned, foreclosed or tax-delinquent properties, clearing the tax debt and other issues and eventually selling them or renting them out, agreed with Moore.

"It's not rocket science about what [the residents] want," he said. "The question is if we're prepared, as a region, [to give] the Knighthoods the tools they need to reach full potential."

Vickie Lakes-Battle, executive director of the IFF nonprofit lender, said coming up with those tools is only half the battle. The other half, is getting a buy-in from skeptical financial institutions, which requires her to overcome racial biases that lead them to subject ideas coming from minorities to more scrutiny than ideas coming from whites.

Marisa Novara, Chicago Housing commissioner, agreed, recalling that she tried to do a study on how living in majority-white neighborhoods affect white people, only to be met with incredulity from organizations that couldn't imagine there was anything negative about that. And she said that, as a commissioner, she was committed to doing more on the city's end.

"[There are] really small things that we look at [in the] Department of Housing — legalizing accessory units, making it easier for people who are longtime homeowners and who might be feeling squeezed by property taxes [to add a basement unit]," Novara said.

She wanted to expand the existing programs that provide grants from roof and porch repairs.

"We got thousands of people applying and we wind up doing 300 roofs and porches," Novara said.

Finally, she said she wanted to develop a citywide, affordable-housing plan instead of having a ward-based approach.

"We never had citywide vision for affordable housing; we haven't had a citywide plan since 1960s." Novara said. "Instead, we have 50 little fiefdoms."

Christopher Berry, a professor at University of Chicago's Harris School of Public Policy, called for a fundamental shift in the way the city and the county handle property taxes.

"If we really want to help those neighborhoods, why not have community preservation zones?" he said. "Property tax exemptions for people who've been there for a long time, and maybe the longer you stay in neighborhood, the bigger the exemption becomes. Maybe that exemption can pass down [in the] family. I hear a lot from the community —m the family doesn't want to inherit the house because of taxes."

And Rose suggested scrapping the property tax scavenger sale system, arguing that it's fundamentally discriminatory against African Americans and hurts black communities.

"Right now, [the county is] relying on a small group of private buyers [to make up the difference] between what we bill and what we collect, which is already rife with all types of biases."

Rose noted that what has been a persistent issue in the black community was the lack of access to information. Lakes-Battle agreed, saying that people who are most impacted by the issues they were discussing weren't at the conference — which was why it was important to do events like this, or at least set up information sessions, in the community. 

"They shouldn't have to travel downtown [to get the information]," she said. 

Later during the meeting, Maurice Cox, commissioner of the Chicago Department of Planning and Development, touted the recent Invest South-West plan, which will focus city investment on 10 minority-majority community areas, including Austin and North Lawndale. When asked about how much tax increment financing districts actually benefit such communities, Cox said he had his own concerns about that.

"Chicago has this tradition of using tax increment financing, which builds in a system of winners and losers," Cox mused. "If you have a lot of economic development, it gets a lot of revenue. If you have little development, it generates little. I think the whole TIF process needs reform, and I've only been observing it for 60 days. I can tell you there's something fundamentally wrong with the city's reliance on TIFs."

CONTACT: igorst3@hotmail.com  

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