How Obama and Valerie Jarrett Helped Launch Their Political Careers in an Outrageous ‘Urban Renewal’ Scheme
Valerie Jarrett at the 2009 World Economic Forum Annual Meeting in Davos, Switzerland. (Photo: Monika Flueckiger / WEF)
Originally published at AlterNet.
As President Obama’s second term begins, and inequality, especially
for black Americans, is worse than it was when Obama first took office,
it’s worth revisiting progressives’ and Obama supporters’ impression of
the president as somebody who might actually care about equality and
helping the most unfortunate in society.
And
a big centerpiece of that impression, which endures despite evidence
that he’s at best ambivalent, is his early days in Chicago.
The narrative that Obama is a salt-of-the-earth community organizer
has been spoon-fed to the American populace since Obama first began
campaigning. In reality, there’s a big piece of the president’s past
that has gone under-reported and that will help us to understand Obama
and his closest adviser Valerie Jarrett a bit better.
Obama and Jarrett built the nexus of political support that took him
to the presidency by participating in one of the most appalling examples
of neoliberal-corrupted City Hall-”urban renewal” projects in recent
history. It enriched developers and investors and destroyed the lives of
thousands of Chicago’s poorest black residents, while using Obama’s
community organizer job as camouflage.
We have the opportunity to revisit our impression of Obama thanks to a
speech by Robert Fitch, a radical journalist and activist who chronicled the destruction of public housing in his 1996 book,
The Assassination of New York,
in which he detailed the changing landscape of the city at the hands of
bankers and developers. New York’s poorest were left to the mercy of
the extremely rich, who used their power and money to gentrify, gut and
obliterate public housing.
Fitch’s accounts of the plunder of New York and Obama’s efforts in
Chicago offer a different narrative than we’re often accustomed to
hearing – they weren’t the “fault of Republicans,” but rather examples
of the most frequent attack on democracy and the general welfare: how
politicians
of all stripes served the interests of the richest
and most powerful in the society. In the case of NYC and Chicago, the
powerful took the form of a collection of interests that Fitch called
FIRE: finance, insurance and real estate.
During a speech delivered at the Harlem Tenants Associations in
November 2008, directly after Obama’s presidential win, Fitch explained
how the new president and other middle-class blacks, including Valerie
Jarrett and Obama’s wife Michelle, climbed the power ladder in Chicago
at the expense of poor African Americans by aligning themselves with
“friendly FIRE”:
…[A]s Obama knows very well, for most of the last two
decades in Chicago there’s been in place a very specific economic
development plan. The plan was to make the South Side like the North
Side. Which is the same kind of project as making the land north of
Central Park like the land south of Central Park. The North Side is the
area north of the Loop—Chicago’s midtown central business district—where
rich white people live; they root for the Cubs. Their neighborhood is
called the Gold Coast.
For almost a hundred years in Chicago blacks have lived on
the South Side, close to Chicago’s factories and slaughter houses. And
Cellular Field, home of the White Sox. The area where they lived was
called the Black Belt or Bronzeville—and it’s the largest concentration
of African American people in the U.S.—nearly 600,000 people—about twice
the size of Harlem.
In the 1950s, big swaths of urban renewal were ripped through the
black belt, demolishing private housing on the south east side. The
argument then was that the old low rise private housing was old and
unsuitable. Black people needed to be housed in new, high-rise public
housing which the city built just east of the Dan Ryan Expressway. The
Administration of the Chicago Housing Authority was widely acclaimed as
the most corrupt, racist and incompetent in America. Gradually only the
poorest of the poor lived there. And in the 1980s, the argument began to
be made that the public housing needed to be demolished and the people
moved back into private housing. …
If we examine more carefully the interests that Obama
represents, if we look at his core financial supporters, as well as his
inmost circle of advisers, we’ll see that they represent the primary
activists in the demolition movement and the primary real estate
beneficiaries of this transformation of public housing projects into
condos and townhouses: the profitable creep of the Central Business
District and elite residential neighborhoods southward; and the shifting
of the pile of human misery about three miles further into the South
Side and the south suburbs.
Obama’s political base comes primarily from Chicago
FIRE—the finance, insurance and real estate industry. And the wealthiest
families—the Pritzkers, the Crowns and the Levins. But it’s more than
just Chicago FIRE. Also within Obama’s inner core of support are allies
from the non-profit sector: the liberal foundations, the elite
universities, the non-profit community developers and the real estate
reverends who produce market rate housing with tax breaks from the city
and who have been known to shout from the pulpit “give us this day our
Daley, Richard Daley bread.”
Aggregate them and what emerges is a constellation of
interests around Obama that I call “Friendly FIRE.” FIRE power disguised
by the camouflage of community uplift; augmented by the authority of
academia; greased by billions in foundation grants; and wired to
conventional FIRE by the terms of the Community Reinvestment Act of
1995. And yet friendly FIRE is just as deadly as the conventional FIRE
that comes from bankers and developers that we’re used to ducking. It’s
the whole condominium of interests whose advancement depends on the
elimination of poor blacks from the community and their replacement by
white people and—at least temporarily—by the black middle-class—who’ve
gotten sub-prime mortgages—in a kind of redlining in reverse.
Evidence of the public-private partnerships’ failures emerged almost immediately.
The public housing included in Senator Obama’s transformation plans,
such as the 504 apartments in the squat brick buildings of Grove Parc
Plaza, quickly fell into disrepair. Reports emerged of
uninhabitable units
with collapsed roofs, fire damage, mice infestations, and sewage
backups. In 2006, federal inspectors graded the condition of the complex
an 11 on a 100-point scale, a score so bad the buildings were
demolished in 2011.
A
Boston Globe review
found that thousands of apartments across Chicago that had been built
with local, state and federal subsidies – including several hundred in
Obama’s former district – deteriorated so completely they were no longer
habitable. Grove Parc, a project that was, along with several other
prominent failures, developed and managed by Obama’s close friends and
political supporters, became a symbol of the broader failures of handing
over public subsidies to FIRE cronies and private companies to build
and manage affordable housing, an approach lauded by Obama as the best,
sometimes only, replacement for public housing.
At the time, Jarrett was the chief executive of Habitat Co., which
managed Grove Parc Plaza from 2001 until the winter of 2008 and
co-managed an even larger subsidized complex in Chicago that was seized
by the federal government in 2006 after city inspectors found widespread
problems. Jarrett had earlier served as Commissioner of the Department
of Planning and Development from 1992 through 1995. When questioned by
the
Globe, Jarrett defended Obama’s position that public-private partnerships are superior to public housing.
“Government is just not as good at owning and managing as
the private sector because the incentives are not there,” said Jarrett,
whose company manages more than 23,000 apartments. “I would argue that
someone living in a poor neighborhood that isn’t 100 percent public
housing is by definition better off.”
But as the
Globe pointed out, Daley’s plans to privatize Chicago public housing quickly drew criticism:
[Chicagoans] asked why the government should pay developers
to perform a basic public service – one successfully performed by
governments in other cities. And they noted that privately managed
projects had a history of deteriorating because guaranteed government
rent subsidies left companies with little incentive to spend money on
maintenance.
Most of all, they alleged that Chicago was interested
primarily in redeveloping projects close to the Loop, the downtown area
that was seeing a surge of private development activity, shunting poor
families to neighborhoods farther from the city center. Only about one
in three residents was able to return to the redeveloped projects.
“They are rapidly displacing poor people, and these companies are
profiting from this displacement,” said Matt Ginsberg-Jaeckle of
Southside Together Organizing for Power, a community group that seeks to
help tenants stay in the same neighborhoods.
“The same exact people who ran these places into the ground,” the
private companies paid to build and manage the city’s affordable
housing, “now are profiting by redeveloping them.”
Obama believes deeply that privatization works. He once told the
Chicago Tribune
that he had briefly considered becoming a developer of affordable
housing, but after graduating from Harvard Law School in 1991, he turned
down a job with Tony Rezko’s development company, Rezmar, to work
instead at the civil rights law firm Davis, Miner, Barnhill &
Galland. The firm represented a number of nonprofit companies that were
partnering with private developers to build affordable housing with
government subsidies.
The
Globe reported that shortly after becoming a state senator in 1997, Obama told the
Chicago Daily Law Bulletin that
his experience working with the development industry had reinforced his
belief in subsidizing private developers of affordable housing. “That’s
an example of a smart policy,” the paper quoted Obama as saying. “The
developers were thinking in market terms and operating under the rules
of the marketplace; but at the same time, we had government supporting
and subsidizing those efforts.”
What Obama is describing is corporate welfare: The government
subsidizes private companies, which then lack incentive to provide
services to tenants because the government (i.e. taxpayers) will
continue funding them regardless, and then the same private companies
win new contracts down the road when they demolish and rebuild
apartments as part of a “revitalizing” scheme.
Oftentimes, Obama’s community organizer veneer served to camouflage
his FIRE roots. For example, Grove Parc Plaza opened in 1990 as a
redevelopment of an older housing complex, and the new owner was a local
nonprofit company called Woodlawn Preservation and Investment Corp, led
by two of the neighborhoods’ most powerful ministers, Arthur Brazier
and Leon Finney. All of this sounded like grassroots in action. However,
Woodlawn Preservation hired a private management firm, William
Moorehead and Associates, to oversee the complex. The company then lost
that contract and a contract to manage several public housing projects
for allegedly failing to do its job, and was subsequently convicted of
embezzling almost $1 million in management fees, the
Globe reported.
Woodlawn Preservation then hired a new property manager, Habitat Co.,
where Valerie Jarrett served as executive vice president. Residents
told the
Globe that the complex deteriorated under Moorehead’s
management and the decline continued after Habitat took over. A
maintenance worker at the complex told the
Globe that money
often wasn’t available for steel wool to plug rat holes, but regardless
federal inspectors rated Grove Parc an 82 out of 100 as late as 2003.
In their extensive report on Obama’s private-public partnership failings, the
Globe
profiles one of the largest recipients of government subsidies: Rezmar
Corp, founded in 1989 by Tony Rezko, who between 1999 and 2008 used more
than $87 million in government grants, loans, and tax credits to
renovate about 1,000 apartments in 30 Chicago buildings. Companies run
by the partners also managed many of the buildings, collecting
government rent subsidies. Neither Rezko, nor his partner Daniel Mahru,
had any
development experience:
Rezmar collected millions in development fees but fell
behind on mortgage payments almost immediately. On its first project,
the city government agreed to reduce the company’s monthly payments from
almost $3,000 to less than $500.
By the time Obama entered the state senate in 1997, the
buildings were beginning to deteriorate. In January 1997, the city sued
Rezmar for failing to provide adequate heat in a South Side building in
the middle of an unusually cold winter. It was one of more than two
dozen housing-complaint suits filed by the city against Rezmar for
violations at its properties.
People who lived in some of the Rezmar buildings say trash
was not picked up and maintenance problems were ignored. Roofs leaked,
windows whistled, insects moved in.
“In the winter I can feel the cold air coming through the
walls and the sockets,” said Anthony Frizzell, 57, who has lived for
almost two decades in a Rezmar building on South Greenwood Avenue. “They
didn’t insulate it or nothing.”
“Affordable housing run by private companies just doesn’t work,” Mahru told the
Globe. “It’s difficult, if not impossible, for a private company to maintain affordable housing for low-income tenants.”
Most of Rezko and Mahru’s buildings have since been foreclosed upon, forcing the tenants to find new housing.
When Obama opened his campaign for state senate in 1995, Rezko’s
companies gave $2,000 on the first day of fundraising, and as the
Globe points out, essentially “seeded the start of Obama’s political career.”
While Obama eventually distanced himself from Rezko, he maintained
close ties to other developers. Jarrett became a close adviser, and
Obama chose Martin Nesbitt, chairman of the Chicago Housing Authority,
as his campaign treasurer. Nesbitt was one of the key overseers of the
shift toward private management and development. And Obama kept the rich
families around him.
From the
Globe story:
As a result, some people in Chicago’s poorest neighborhoods
are torn between a natural inclination to support Obama and a concern
about his relationships with the developers they hold responsible for
Chicago’s affordable housing failures. Some housing advocates worry that
Obama has not learned from those failures.
“I’m not against Barack Obama,” said Willie J.R. Fleming,
an organizer with the Coalition to Protect Public Housing and a former
public housing resident. “What I am against is some of the people around
him.”
Jamie Kalven, a longtime Chicago housing activist, put it
this way: “I hope there is not much predictive value in his history and
in his involvement with that community.”
In a 2012
Harpers magazine article,
Ben Austen
writes that the area around Cabrini-Green no longer resembles the
neighborhood he remembered from his years growing up in Chicago in the
’70s and ’80s.
Down the street from 1230 N. Burling stood a mixed-income
development of orange-bricked condos and townhomes called Parkside of
Old Town. Its squat buildings were outfitted with balconies and adorned
with purple ornamentation and decorative pillars. There was a new
school, a new police station, a renovated park, and a shopping center
with a Dominick’s supermarket and a Starbucks. A Target was expected on
the site the last tower would soon vacate. Later, I would warm up two
blocks south in @Spot Café, where employees from Groupon’s nearby
corporate headquarters streamed in to pay full price for lattes and
panini.
Today, what seems harder to fathom than the erasure of
entire high-rise neighborhoods is that they were ever erected in the
first place. For years the projects had stood as monuments to a bygone
effort to provide affordable housing for the poor and working-class, the
reflection of a belief in a deeper social contract.
Shortly before the demolition of 1230 N. Burling in 2012, Austen
attended a Chicago Housing Authority meeting during which residents
protested the board in response to the city forcing poor people off
prime real estate. Activists included residents and supporters of a
housing project called Lathrop Homes, a development in a well-off
section of the North Side that was next in line to be demolished.
“The residents didn’t want to be forced into the private market or
into temporary housing, especially since they doubted they’d be able to
return to whatever replaced Lathrop; nor did they agree that market-rate
apartments were needed in the redeveloped community, as the surrounding
area was already full of market-rate condos,” Austen wrote.
Chicago’s $1.6 billion “
Plan for Transformation”
envisioned a mix of public-housing residents with market-rate condos
and subsidized rentals or homes, with one-third of each in these new
communities.
In late 2012, NPR detailed how after more than a decade in the works,
one of the country’s most closely watched public housing experiments
was badly failing, partly due to the flailing economy.
NPR
profiled Lathrop resident Mary Thomas:
Thomas has lived here for eight years with her husband and
7-year-old son. Lathrop sits on what many now consider prime land, next
to the Chicago River. A busy street splits the development into a north
and south section.
The north side is completely shuttered, cordoned off by
gates, a ghost town of boarded-up buildings. Thomas lives in the open
southern section, where steam from the old heating system wafts into the
street. About 170 of the 900-plus units are occupied.
Thomas says all three of the concepts for Lathrop should be
dumped and there should be more input from residents. She says there’s
little affordable housing in the area and there’s no need for
market-rate units at all.
Far from adopting a reflective attitude in the wake of Chicago’s
failed experiment in public-private housing partnerships, Obama has now
taken his love of public-private co-dependence to a national level,
touting public-private partnerships in everything from creating jobs to
education and from tackling insurance fraud to
collaborations involving foreign nations,
which you can bet means the wealthiest multinational conglomerates
teaming up to increase their profits at the expense of the 99%.
The First Lady played her own part in the Chicago racket of profiting
off the poor. Michelle Obama worked at the University of Chicago
Medical Center “redirecting” low-income patients to community hospitals
in order to use its own beds for rich patients. Nick Jouriles, president
of the American College of Emergency Physicians, released a
statement saying
the practice comes “dangerously close to patient dumping,” a practice
made illegal by the Emergency Medical Labor and Treatment Act (EMTALA),
and reflected an effort to “cherry pick” wealthy patients over poor.
This is a dangerous precedent that could have
catastrophic effects in poor neighborhoods across the country. Congress
needs to hold hearings about the problems facing emergency patients. If
other community, non-profit hospitals follow this example and shift the
lion’s share of resources to its high-revenue elective patients and
procedures, it will leave many emergency patients virtually out in the
cold. The University of Chicago Medical Center is located in a poor
neighborhood whose residents have few, if any, other options for
emergency care.
The media barely paid any attention to Michelle Obama’s role in all of this, though the
Chicago Sun-Times reported in 2008 that her $317,000-a-year role as Vice-President of the hospital helped create the patient-dumping program.
Quoted in a related
Washington Post article,
Quentin Young, a South Side physician, remarks the scheme is nothing
more than an “attempt to ensure that the hospital retains only affluent
patients with insurance.”
“If you put enough money into it, you could save a whole
bunch of community health centers,” Young said. “But to date, they
haven’t.”
Edward Novak, president of Chicago’s Sacred Heart
Hospital, declined to discuss the center’s initiative in particular but
dismissed as “bull” attempts to justify such programs as good for
patients. “What they’re really saying is, ‘Don’t use our emergency room
because it will cost us money, and we don’t want the public-aid
population,’ ” Novak said.
At the end of January this year, community residents launched a
protest outside the University of Chicago Medical Center, angry that the
hospital
ignored their needs,
especially for “victims of gun violence,” according to a news report:
“One woman said her son, shot just blocks away from the university, died
on the way to a hospital ten miles away.” Four were arrested at the
protest.
Robert Fitch’s words hold true: The poor remain at the mercy of the
rich, who are seeking profits on everything possible, including their
homes, but also their water, healthcare and education.
