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An unseemly and potentially ruinous dispute has broken out between Mayor Richard Daley’s camp and senior federal housing officials who hold regulatory power over the Chicago Housing Authority.

This bickering needs to stop. Immediately.

Too many lives are at stake, now and over the coming months, to allow a bureaucratic “gotcha” game to disrupt replacement of the nation’s worst public housing with humane alternatives.

Actually this fire began smoldering last summer, shortly after Daley’s handpicked team took over CHA, ending a three-year regime during which the chronically dysfunctional agency was operated directly by the U.S. Department of Housing and Urban Development. At the time, the Daley team had begun sensitive negotiations with HUD, seeking regulatory freedom in the operation and rehabilitation of buildings, including the relocation of some 20,000 families.

Such latitude, though extraordinary, is key to Daley’s prospects for success with CHA. So it seemed ill-timed–if not downright foolish–when CHA chief executive Phillip Jackson called a midsummer press conference to parade examples of allegedly wasteful spending by the departed HUD management team.

Similar show-and-tell sessions were staged when Daley took control of the public schools, but they were intended to convince Republican legislators that Chicago was finally fixing its own problems.

The news media coverage of never-used CHA laptop computers and security patrol bicycles produced something in addition to public indignation. One enraged HUD legal counsel fired off an intemperate fax asking “What kind of bull—- is this?” and another stating “Consider your deal canceled.”

The bad feeling has only worsened this fall, with Daley taking exception to HUD’s convening of a public hearing here to let CHA resident-leaders and activists blow off steam about the mayor’s ambitious plans. Last week Daley took his frustration public, referring to senior HUD bureaucrats as “political appointees.”

Needless to say, this blowup does not bode well for the waivers and requests Chicago has pending before HUD, nor for the prospects of adequate federal funds being dispatched to Chicago for re-housing the displaced 20,000.

Both sides need to cool off and recognize they share the same goal. Housing Secretary Andrew Cuomo needs to step in, cut the paper chase and grant the waivers. Daley’s CHA team needs to quit biting the federal hand that feeds it and start dealing forthrightly with the understandable anxieties of tenants who are to be relocated.