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2 Investigators: CHA Collecting Millions In Tax Dollars For Mostly Vacant Housing Complex

CHICAGO (CBS) -- Prime Chicago river-front real estate with a rundown housing complex costs all taxpayers millions of dollars a year, even though most of the complex sits empty. CBS 2's Dave Savini investigates the city's handling of your money.

It is Lathrop Homes that has housing advocates alleging misuse of taxpayers' dollars. The Chicago Housing Authority (CHA) gets $10,000 per apartment, even when the units are rundown and vacant which means, for the 925-unit Lathrop Homes, the CHA gets more than nine million federal tax dollars a year.

J.L. Gross lives in one of the buildings. In fact he is the only resident in the 11-unit building. The other apartments are boarded up, but the CHA still gets $100,000 annually for each unit. Gross wants to know what the CHA is doing with that money.

"Everybody wonders," said Gross. "Everybody in this complex is wondering."

Leah Levinger, executive director of the non-profit Chicago Housing Initiative, has been fighting to end what she says is a misuse of public housing funds.

"Everybody should be angry about it," said Levinger. "We're all being scammed."

It's not just Gross' building. Levinger says of the 925 Lathrop units, about 775 sit empty. Which means the CHA is collecting about $7.7 million dollars a year for boarded up real estate.

"It's millions of dollars going nowhere," said Levinger.

Levinger says the CHA is one of a select few housing authorities nationwide with no oversight.

"HUD no longer regulates them; HUD no longer monitors them," said Levinger. "They are accountable only to our mayor."
She says the CHA is trying to push out remaining residents by leaving conditions this way so they can eventually sell off the valuable real estate.

"Thirty-six acres of environmentally pristine land, right along the Chicago River front," said Levinger.

Folks like J.L. Gross, a Vietnam veteran, live with poor conditions. Gross says he has water damage from the vacant units above him which he says also caused mold to grow. There also are fire dangers including a broken escape door to the roof.

Levinger says there needs to be CHA oversight, "It's outrageous."

Levinger says these Lathrop's problems began fifteen years ago. Now the CHA is moving to redevelop the property with a private company.

Citywide, there is an estimated 2,800 vacant public housing units, despite hundreds of thousands of families who are trying to get housing assistance.

City Council will soon vote on a CHA oversight ordinance. If passed, it will allow the Council's public housing committee to control the city's 40-50 million dollar contribution to the CHA. That is a fraction of the $900 million critics say the CHA gets from HUD each year.

CHA says they offered to move J.L. Gross to a new place but he declined. He says with all that money, the CHA should be able to fix up his apartment.

The mayor's office did not return our call.

In a statement to CBS 2, the CHA says, it "continues to work to build strong, vibrant communities and ensure CHA residents live in safe, viable housing throughout the city. Lathrop Homes is a key component of CHA's housing portfolio and the agency plans to begin construction this year to create a mixed-income neighborhood. CHA will continue to update residents as well as the community on development plans.

CHA will continue to spend down the reserves to a healthy level and utilize the reserves on real estate development and other housing activities. In addition, the agency anticipates that, under Plan Forward, these reserve funds will be used for capital and development projects. Acting CEO Eugene jones, Jr. has an aggressive plan to build key housing for CHA residents.

The development reserve balance as of Jan. 1, 2015 was $221 million. The CHA also has an operations reserve of $115 million. The CHA plans to expend $90 million of the development reserve balance this year on capital projects and resident services.

Capital expenditures through Aug. 31, 2015 were $81.9 million, compared to $65.5 million in 2014, an increase of $16.4 million, or 25.1%. The CHA has not expended this much by August since 2010.

We anticipate a balance of $131 million remaining in the development reserve by the end of 2015. CHA expects to spend down the development reserve funds to approximately $21 million by the end of 2016. In 2016 we plan to spend $110 million of reserves and $183 million from capital grants. Among the projects to be funded from reserves and capital grants in 2016 are Altgeld for $84.7 million, RAD for $40 million, Parkview/Fannie Emmanuel for $23 million, Sterling for $13.8 million, Caroline Hedger for $12 million, Horner for $11.6 million, Minnie Ripperton for $8.7 million. and Cabrini for $8.1 million.

As of mid-2015, CHA has spent $47 million. This includes: Oakwood Shores, $8 million; Sheridan, $5.5 million; Eckhardt, $3.5 million; Armour Square, $3.3 million; Altgeld, $3.1 million; Rosenwald, $2.6 million; Judge Slater, $2.6 million; 65th Street, $2.4 million; Lincoln Perry, $2.6 million; 3916 W Washington, $2.2 million; Parkside of Old Town, $2.1 million; North Central, $1.9 million; ABLA, $1.6 million; Other (less than $1 million), $5.6 million for a total of $47 million.

The $90 million projected to be spent from development reserves in 2015 will be expended as follows: Senior Housing, $44 million; Resident Services, $17 million; Scattered sites, $10.0 million; ABLA, 4.3 million ; Altgeld/Murray, $3.6 million; Lathrop, $2.5 million; Other, $8.6 million.

As an example of recent development, CHA recently celebrated the ribbon cutting for Park Boulevard Phase 2, which had 108 total units, including 37 public housing units – bringing 164 total public housing units to Park Boulevard, the former site of Stateway. In the pipeline is Park Boulevard Phase 3, which is expected to deliver 148 new units by 2018-19.

Regarding vouchers, we had leased 43,537 of 51,703 vouchers that are currently available, a difference of 8,166, according to the Quarterly Report (second quarter). By the end of the year, we expect to have approximately 46,000 vouchers leased, which will bring this difference to about 5,700 vouchers.

Currently, we have approximately 2,800 families that are searching for units with a voucher."

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