If the Chicago Housing Authority were a private corporation, its 2,000 employees and vast real-estate holdings would make it one of the city`s largest companies. It also would be a company on the verge of collapse.
Therefore, Mayor Eugene Sawyer plans to rescue the crumbling agency by treating it as a giant corporation in the throes of bankruptcy. According to the proposal adopted by Sawyer, the CHA needs ”radical surgery” performed by a ”work-out team” of skilled financial, managerial and legal experts.
”You have to treat the CHA`s problems as you would treat any very difficult corporate insolvency situation,” said David Kurtz, a lawyer with Mayer, Brown & Platt, a law firm that specializes in bankruptcy cases and is one of the consultants on the mayor`s CHA plan. ”Everyone knows there`s a major problem, but you can`t begin to bring the situation under control until you understand the chaos.”
The ”chaos” is ”a deficit of $22 million, ongoing management shortcomings, serious deterioration of the capital stock, lack of continuity in leadership and an exodus of senior staff,” said the ”Work-out Proposal,” which is endorsed by a consortium of civic and business organizations.
A financial report done by Arthur Andersen & Co. in March found that no audited financial statements existed for 1986 or 1987. It also found ”tight cash-flow problems” and ”competing demands for minimal operating
resources.” In addition, the report said, ”Most personnel lack the training needed to do their jobs efficiently.”
Those who drafted the proposal, which will be a blueprint for the mayor`s plan, believe the only answer to the troubled agency`s myriad problems is ”an institutional turnaround of major dimensions.”
”Most of the steps are common-sensical,” Kurtz said. ”But you need a master game plan with the right people in place, otherwise you are running from one problem to another. (The CHA) is living hand-to-mouth, and they`re not doing it very well.”
The proposal`s objectives are:
– To stabilize the financial and operational situation.
– To develop and implement a comprehensive program that addresses the agency`s underlying problems.
– To identify and recruit qualified permanent staff to assure the effective future operation of the agency.
A similar approach helped rescue the Regional Transportation Authority and McCormick Place.
”We are at a crisis point in public housing, and we had to let the mayor know the CHA may be on its very last leg,” said Vincent Lane, who is Sawyer`s choice to become both CHA chairman and executive director.
The mayor quickly signed on to the plan, which was based on a report by the Metropolitan Planning Council.
”What struck us was the fact that it wasn`t a Band-Aid approach,” said Sharon Gist Gilliam, the mayor`s chief of staff. ”Before, you put in two or three new people and hoped to make a change. That wasn`t enough.
”To turn around an agency this size, you have to literally put in teams of people with new ideas. You have to involve all the sectors of Chicago.”
The work-out team, which will include lawyers, accountants and managers from some of Chicago`s top firms, will be selected by the CHA executive director, and will continue working for a ”substantial period of time,” Lane said. After three to six weeks of intense study of the agency, the team will come up with a list of ”milestones” or ”goals,” he said.
A management grant from the U.S. Department of Housing and Urban Development will help pay the team`s salaries, Lane said.
”We will be talking to the tenants, to the people who live there 24 hours a day,” Lane said. ”We want to involve the residents. This is a social problem; it`s not just a physical problem.”
But critics of the plan question its possible effectiveness in turning around an agency that for years has been viewed as a political grab bag. The team also faces restructuring a ”monolithic bureaucracy” in which most of the 2,000 jobs are protected by unions.
Critics say the plan is similar to one rejected by the late Mayor Harold Washington last summer, when HUD threatened a hostile takeover of the CHA.
”HUD sees the plan as a way of coming in the back door and taking over,” said a top CHA official who asked to remain anonymous. ”You`re just adding another layer of bureaucracy.”
Critics of the plan believe CHA`s problems are social, and they are deeply rooted.
”The assumption is that CHA`s problems are managerial, but the problems are deeper,” said Ed Marciniak, professor of urban studies at Loyola University and a proponent of tearing down the high-rise projects. ”The
(proposal) is totally wedded to the mistakes of the past. Even if you straighten out the fiscal part and get rid of the political shenanigans, you`re still confronting the fact of wall-to-wall poverty.”
