Ronald Reagan was president, and trying to make his conservative doctrine the ideology of the land, when the federal government took Atrium Village to court.

The year was 1987, and it was a bewildering situation: the Justice Department, which had defended the rights of segregated colleges to receive federal tax breaks, was charging Atrium Village, an integrated housing complex across the street from Cabrini-Green, with racial discrimination.

That’s because Atrium Village had at one time early in its ten-year history employed a racial quota system in tenant selection, to guarantee that its black population not exceed 50 percent.

“We find quotas indefensible,” says Paul Hancock, a Justice Department lawyer. “When you limit the number of minorities that live in a housing area, you are discriminating against them.”

But now the Justice Department has apparently flip-flopped. Last month it settled the case on terms the Atrium Village lawyers had been proposing from the start. After three years of legal fighting, and at a cost to Atrium managers of at least $250,000 in legal bills, Atrium Village is getting the message that for all intents and purposes they were right all along.

“Basically what happened is that we have a new administration that’s less ideological than the old one,” says Greg Heine, executive vice president of the Crane Construction Company, part of the consortium of investors that owns Atrium Village. “So here we are three years later, having spent all this money defending ourselves, and the government takes the same position they had before they sued us. It’s a little crazy, and it has made our life much more difficult. But an important principle in integration has been upheld, at least for now. All in all, we came out all right.”

The irony is that Atrium Village set up its quotas at the federal government’s urging. During the Carter years of the late 1970s, the U.S. Department of Housing and Urban Development helped Atrium Village get off the ground. At that time, the area that became Atrium Village was a “no-man’s-land of high crime, low development, and little hopes for revival,” says Heine.

“Developers looked at it as a buffer zone between Cabrini-Green and the Gold Coast. No one ever thought it would be developed. No one thought that middle-class people, black or white, would ever want to live that close to Cabrini.”

It was then that leaders from four local churches–LaSalle Street, Saint Matthew Methodist, Fourth Presbyterian, and Holy Family Lutheran–announced plans to build a low-rise housing complex at the corner of Division and Orleans.

“Most of the area along [Orleans] was just vacant land because the houses had been torn down during various urban-renewal programs,” says Heine. “The churches wanted housing for their parishioners. But they were not developers, and they didn’t know how to get these things done.”

Crane Construction was brought in, and a not-for-profit joint venture with the churches was formed. Looking for financing, they asked the Illinois Department of Housing for a loan. The state agreed, but only if the federal government would insure the loan. But HUD officials subscribed to the view that a housing complex reserved for the poor could not raise enough in rent receipts to pay all of its maintenance bills. In time, HUD maintained, the building would fall apart and become one more federally subsidized slum.

So HUD required that Atrium guarantee an even mix of races and income. It demanded that Atrium’s managers employ a quota system and carefully screen its tenants, giving white applicants precedence over blacks if black tenants became a majority at the complex.

To some this smacks of bigotry. It seems to suggest that black residents are like a disease, spreading economic ruin wherever they go–a ludicrous assumption, as Chatham, South Shore, and other flourishing all-black communities attest.

Atrium’s supporters deny such accusations of racism. They argue that they are realists. Cabrini-Green is so notorious–at the time Atrium was built, the papers were filled with stories of gang warfare at the high rise–that the only way to spur investment was to prove that middle-class blacks and whites were moving there. In short, HUD had no confidence Atrium would be able to repay the loan unless its tenant pool had moderate-income whites as well as poor blacks.

“It was clear to the state and to HUD that Atrium Village could not be maintained as a racially integrated complex unless occupancy controls were created,” says Michael Shakman, one of the lawyers defending Atrium Village. “The reason is that white people were not prepared to live near Cabrini-Green. And the federal government wasn’t going to insure the loan if they thought the complex was going to fail.”

Atrium Village was completed in 1979, and it certainly was an oddity. Riders passing Division Street on the Ravenswood el could see the barren, concrete high rises of Cabrini on one side, and the manicured lawns, tennis court, and swimming pool of Atrium Village on the other.

But in time, Atrium helped spark a local boom in real estate. Now there’s no question that the area is attractive to well-to-do whites. In fact, many activists worry that gentrification will displace the area’s poor.

“Since we built Atrium, the area’s become the hot spot to live,” says Heine. “We spent about $12 million to build Atrium Village. At that time, land–that nobody wanted–cost about $1.73 a square foot. Well, we just bid on some vacant land just south of Atrium that the city was selling. The winning bid came in at $33 a square foot.”

Atrium’s location is now so coveted that it no longer employs a quota, says Heine. Its racial composition is evenly mixed, and its waiting list includes as many whites as blacks.

According to Heine, the racial quotas were established at the insistence of the federal government–which then changed its stance in 1987. Ed Meese was attorney general, and William Bradford Reynolds was in charge of the Justice Department’s civil rights division. Both men believed that quotas, like other forms of affirmative action, are discriminatory–no matter how well intended.

“Racial quotas, while they may seem benign, can be discriminatory,” says Hancock. “They were denying blacks the right to live at Atrium Village based on race. And that’s wrong.”

Shakman counters that housing quotas that might exclude blacks–like affirmative-action measures that favor blacks–are necessary to undo past wrongs. “Quotas are not good, and no one argues that we should live in a society where we need quotas,” says Shakman. “But quotas have been permitted when they are necessary to accomplish an important objective, like the creation of integration.

“One reason Cabrini-Green is all-black is because the City Council engaged in discrimination by limiting public housing to only all-black communities. To break up that discrimination, quotas are necessary. Remember, we don’t start by playing on an even playing field. The playing field in schools, housing, and jobs has been skewed because of prior discrimination. It’s not a complete answer to say all of a sudden [as Meese did] that society is integrated. We have to create successful models of integration, and that’s what Atrium Village is.”

Three years ago the Justice Department didn’t buy that argument, and demanded that Atrium drop its quota system. Atrium’s managers responded that they no longer used quotas, but they reserved the right to do so if white demand for housing at Atrium fell.

So the Justice Department sued, seeking to prevent Atrium from ever employing quotas. The suit, which asserted Atrium’s management was discriminating against blacks, seems ludicrous to Atrium’s residents.

“Race is the least of our problems,” says Jim Plapp, a resident at Atrium for almost ten years. “I’m 51 years old, and I lived all over the area. Whites and blacks get along here better than anyplace I’ve seen. Segregation isn’t an issue here. That’s a joke. Everybody here is equal.”

Depositions were taken, the case dragged on, and legal bills mounted. Atrium’s owners felt that they were being picked on to prove a larger point.

“We were the victims of Ed Meese’s agenda against affirmative action,” says Heine. “If you want the Supreme Court to say that quotas are bad, the first thing you do is go after housing quotas that work against blacks. Then the Justice Department can say, ‘We’re heroes.’ Meanwhile, those same lawyers are using the same principle to go after all the other affirmative-action programs that help blacks.”

So Heine was prepared to continue the legal fight, but then this winter the Justice Department announced it was willing to settle. According to the document, which both parties have signed, the settlement “does not resolve the dispute between the parties concerning the legality of the tenant-selection program followed at Atrium Village in the past. It does provide, however, that racial criteria shall not be used in selecting tenants at Atrium Village unless and not until approval is received from [federal] court.” The settlement goes on to say that the order in itself “does not prejudice the parties’ positions should resolution of any dispute regarding a tenant selection proposal later become necessary.”

So both sides are agreeing to disagree. Of course, if Atrium revives its quotas, the Justice Department can sue–although it probably won’t, since affirmative action is no longer a target.

“We agreed to settle because we achieved the goals we were after; they aren’t using quotas anymore,” says Hancock. “It’s not correct to say we settled because of the change in the administration. We haven’t changed our views on the merits of the lawsuit at all.”

Many Atrium backers politely disagree. “From what I see, most of the lawyers at Justice didn’t want to take us to court in the first place,” says Heine. “This was a case for the ideologues. A lot of those ideologues are gone. Now it’s time to get on with our business.”

Art accompanying story in printed newspaper (not available in this archive): photo/Bruce Powell.