Before the landlord’s notice came, Rosemary Winblad and her two daughters lived comfortably and affordably in a well-managed federally subsidized apartment building at 833 W. Buena in Uptown.
Then came the jolt: an immediate rent increase of 20 percent, on top of last year’s hike of 10 percent, with warnings of unspecified raises to follow.
“The notice was slipped under my door on January 28th; I had no warning,” says Winblad, a security guard. “I’d been living here for over five years, and basically the landlords were telling me I had one month to decide whether to pay the rent increase. If I didn’t want to pay, I had another month to move out. Let me tell you, that’s quite a shock.”
The raise would send Winblad’s rent to $495 a month (from $414), and require her to pay an additional $188 security deposit. And yet, ironically, she was one of the luckier tenants in the 22-story, 209-unit brick high rise. Some of the others were asked to pack up and leave, within two months, because they were not “valued tenants.”
“I got this notice that says I’m a no-good tenant,” says Katherine Castillo, an immigrant from Belize, a country in Central America. “I was confused, so I [went] to the managers. They say I was late on rent once. I [have] lived here for one and a half years, and I was late once, so I’m a no-good tenant? That doesn’t make sense.”
“There are people in that building who have lived there for 15 years,” adds Susan Gahm, an organizer for the Organization of the NorthEast, a community group that has assisted the tenants. “And now, just like that, they have to leave. Some of them are senior citizens. It’s very hard for them to find new housing.”
The reason for the threatened rent hike and evictions is that in January the building’s owners attempted to pay off, after 20 years, their 40-year mortgage with the U.S. Department of Housing and Urban Development. If they succeed, the building will no longer be reserved for low- and moderate-income tenants, as HUD now requires. The landlords will be able to rent to any tenant willing and able to pay their rising rents. In short, after 20 years of serving the poor and lower middle class, 833 Buena will go upscale.
In reaction, the tenants sued HUD and the landlords. And, for the time being, the rent increases and evictions have been stayed pending a ruling by U.S. District Judge James Moran on the larger matters of the case.
But the fundamental issue–which the judge probably will not decide–strikes at a long-standing and bitter conflict in Uptown: the right of landlords, in our free enterprise system, to make as much money from their property as the market will bear versus the need of poor people for housing.
“This country doesn’t know how to build housing for the poor but it knows how to destroy housing for the poor,” says Thom Clark, a longtime Uptown home owner, and advocate of affordable housing. “I believe we can have an economic mix of people in Uptown. Housing for the poor doesn’t have to be decrepit. Unfortunately, it takes a constant commitment from the government that we haven’t seen.”
As many observers see it, the roots of the conflict go back to the 1950s, when Uptown, once an exclusive north-side community, began to change. Thousands of residents and hundreds of businesses fled to the suburbs. In their place came poor people–black, white, and Hispanic.
This meant that landlords often could not pass on to tenants the cost of improving or even maintaining property in the form of higher rents. Buildings fell apart for lack of repair. There was widespread arson. Many property owners–playing to a low-rent market–subdivided their units and converted courtyard apartments into single-room boardinghouses. And then, in the early 1970s, thousands of housing units were cleared for wholesale urban renewal.
“We lost thousands of units of housing when Truman College was built,” says Clark. “And we lost even more housing when our hospitals in the area–Thorek, Weiss, and Cuneo–expanded.”
The institutional development fanned the hope that rejuvenation lay just around the bend. After all, as buildings collapsed, the poor would go–they’d have no choice–leaving behind another embryonic Lincoln Park. Indeed, many developers and real estate writers remain convinced that Lincoln Park-like gentrification is destined to happen again and again up and down the north lakefront.
Of course, revival needs some help, usually in the form of some big-boom project. For Lincoln Park, it was the construction of hundreds of federally subsidized buildings, including Carl Sandburg Village. Some realtors hoped that Pensacola Place, a 264-unit rental development just east of the intersection of Montrose and Broadway, would do the trick for Uptown. Alas, Pensacola was built, but the regentrification of Uptown never happened.
“I’ve seen it happen so many times, it almost pathetic,” says Clark. “A developer comes in and starts a project. He clears out the poor and then loses his shirt. With the so-called condo boom, it was because the market collapsed. Sometimes he just runs out of money. But we’re left with the empty lot.
“It’s not the only reason we’ve lost housing in Uptown. And I’m not saying that the housing we’ve lost always is above standards. The point is that poor people have to live somewhere. For many, Uptown is already their home. Should they be driven out by speculation? I don’t think there’s a strong market for upscale housing in Uptown. Look: I’m one of nine children raised in a western suburb. At one point or another, all of my siblings lived on the north side. I’m now the only one left in Chicago. For reasons of their own, the others have moved to the suburbs. That is the future, particularly as more people have children.”
Not everyone agrees. The landlords on Buena apparently believe that there is an upscale market waiting for their product. It’s true, the 833 W. Buena building is right on top of the home of Governor Thompson, not to mention several other larger and even more glorious mansions. The building’s top floors offer a generous view of Lake Michigan. Who knows, with a little redecoration, and clever marketing, 833 W. Buena might rake in some top-rental cash.
“We were told that the rent increase was needed because they were going to ‘upgrade’ the place,” says Winblad. “They were going to add vanities to the bathroom–you know, like four light bulbs around the mirror–put in wall-to-wall carpeting and new kitchen appliances. That way, I guess, they think they can attract a higher-income tenant.”
The building was constructed, however, in 1967 with low- and moderate-income residents in mind. It was built with money borrowed from HUD at below-market interest rates. As a result, rents were lower at 833 Buena than at other high rises in the area. And HUD regulations stipulate that residents make less than the Chicago area’s median income for an equivalent family.
“This place is a lot better than where I used to live,” says Winblad. “In fact, I can only remember two or three people leaving here on their own–that’s how nice it is. People are friendly. There’s no crime. I call it a little United Nations. We have Vietnamese, Greeks, Peruvians, Mexicans, Puerto Ricans, Jews, blacks, you name it. The diversity is one of the beauties of the building. That’s why I like it. I was hoping it would stay like this.”
There was, however, one drawback. HUD allows landlords in buildings such as this one to buy out of their mortgage after 20 years.
“The legal term is prepayment of mortgage,” says Dan Burke, a lawyer for the Legal Assistance Foundation, which, together with the Northwestern University Legal Clinic and activist attorney James Chapman, represents the tenants. “Basically, it means that the owner pays off his mortgage, and is no longer bound by HUD regulations. Without government action, the landlords could raise rents and displace people. In Chicago there are 91 [similar] buildings containing 17,240 units, which means at least 60,000 tenants whose mortgages hit the 20-year mark between 1988 and 1992. That could mean a lot of people in the street.”
Winblad’s building is owned by the 833 Buena Joint Venture, whose general partner is Dennis Fields, a Loop-based attorney. Fields would not respond for comment. But he has been quoted in other newspapers.
“Fields stressed that the rent increases, which average about 20 percent, were only twice as high as the average rent increase that HUD generally allows each year and wouldn’t create economic hardships,” reads a recent article in the Chicago Tribune. “‘These aren’t poor people here,’ [Fields] said. ‘I’m not going to sit here and get into an argument with anybody over 10 to 13 percent rent increases. My accountant handles it, and these are the numbers he gives me.'”
In Fields’s defense, it should be noted that some tenants in the building admit that they could afford the immediate 20 percent increase. Besides, why should Fields, his partners, or any landlords, for that matter, be obligated to house poor people?
After all, Ronald Reagan all but promised to dismantle federal housing programs in 1980, and he was elected president. Once in office he kept his promise, and he was reelected. If government–elected by the people–shows so little commitment to housing low- and moderate-income residents, why on earth should the burden be dumped on Fields and his partners?
The answer, Buena’s tenants respond, is that the law says so. And to prove their point, they have brought their case before Judge Moran.
“Congress passed a law to keep people from losing their homes because of prepayment agreements,” says Burke. “The law does not preclude prepayments. Landlords can prepay if they can prove to HUD that prepayment will not displace current tenants, and that prepayment will not injure the housing opportunities of minorities. An owner who can’t prove this has the option of asking HUD for additional incentives to maintain his housing for low-income people.”
The bill Burke refers to was passed by Congress on December 21, l987. President Reagan, however, did not sign it into law until February 5, l988. Fields and his partners prepaid their mortgage on January 4, 1988. As a result, the landlords argue, they do not have to comply with the new law’s regulations.
“Not so,” counters Burke. “There is a very specific clause in the law that makes it retroactive to November 1st. They [Congress] probably realized that landlords all over the country would try to get out of their mortgages in the time it took Reagan to sign the bill.”
For its part, HUD has tried to stay clear of the dispute, much to the chagrin of Burke and the tenants, who have named it as a defendant in the suit.
“It is our position that HUD’s constitutional obligation is to enforce the law and prevent it [the Buena buy-out],” says Burke. “Congress passed a law; HUD should obey it.”
“Our attorneys in Washington are looking into this situation to see what we can do,” counters Adolph Slaughter, public affairs director for HUD’s midwest region. “My own personal point of view is that it’s a shame this happened because we are in the business of trying to provide housing for the poor. We are not in the business of kicking them out of housing. But that’s my own personal opinion, and, I should add, we would face this situation even without prepayment. Because 20 years from now, the mortgage would be paid, and the building would be out from under our hands.”
As for the residents, they have, with Susan Gahm’s help, organized a tenants association, which vows to fight the legal battle to the end.
“I hope we win the lawsuit, and the people get to stay in affordable housing,” says Winblad. “I think we should win the lawsuit. We may win the first round, and we may win the second round. But we don’t have the money they have. And you know as well as I do that when poor people fight people with money, the poor people almost never win.”
Art accompanying story in printed newspaper (not available in this archive): photo/Loren Santow.