Last month the Institute for Housing Studies at DePaul University released a study, which found a significant increase in Chicago rental vacancies, from 5 to 5.7 percent in the last year.

Such findings seem intuitive.

As the Chicago region’s unemployment rate rose to double digits throughout the recession, most recently nearing 10.6 percent, many renters were forced to leave their apartments, either doubling up with friends or moving back home.

But perhaps less intuitive is that the internal deficiencies within the pre-recession rental market may have directly caused our economic meltdown.

“The genesis of the subprime mortgage crisis is the lack of affordable housing,” says James Shilling, professor of finance at DePaul University and director of the Institute of Housing Studies.

While discussing his department’s recent study last month with Lake Effect News, Shilling dropped a policy bombshell, one that may change the way cities like Chicago approach the problem of affordable housing.

To comfortably afford the median rent of a two-bedroom apartment, $1,004 according to 2009 HUD guidelines, a family must earn more than $39,000 annually.

Currently, an estimated 550,000 Chicagoans demand affordable housing, according to Shilling, while the market bears but 350,000 such units, leaving at least 200,000 residents without a viable renting option.

The picture grows bleaker.

“Not only is it a big gap,” Shilling said, “but the gap is increasing over time.” In the next 15 years, Shilling estimates that 75,000 more residents will be in need of affordable housing, housing that costs 30 percent or less of a tenant’s income. And in that time the existing stock of affordable housing will continue to drop, Shilling said.

This stock has already been deeply compromised by the economic boom of the last decade.

“Because credit was flowing, people were buying and converting,” said Shilling, of affordable rental apartments. In an unfortunately ironic twist, this created a housing economy that allowed the seedlings of the subprime mortgage crisis to fester.

“People were finding that their monthly mortgage payment was at the same level of their rents, or maybe lower,” Shilling said.

And the ethically-questionable banks seized the day.

“The financial institutions responded by offering subprime mortgages,” added Shilling.

What ensued is old news. From 2007 to 2008, the United States lost an estimated $10 trillion in household wealth.

But the crisis is not over. A second wave of foreclosures is upon us.

In the next two years, “there is $1.3 trillion worth of commercial mortgages are that are coming due, a large part of which are multifamily loans,” Shilling said.

And as rental vacancies rise, Shilling contends, “we’re likely to have another round of defaults.” Building owners won’t have the necessary rents to pay their mortgages.

For a neighborhood like Uptown, in which an estimated 25 to 50 percent of residents are not finding affordable housing, the country’s response to the economic sequel of 2008 is critical.

“In Uptown and other places the consequences are huge,” Shilling said. “We really need a stabilizing force.”

But contrary to the aldermanic wisdom, which has invested more than $100 million to create 178 new affordable housing units, Shilling hopes both the state and federal governments step in to preserve existing buildings for affordable housing, not finance new ones.

“There are various government programs that encourage the construction of multifamily affordable housing,” said Shilling.

“In this current [economic] environment, that’s not what you want.”

Dec. 11, 2008 – Three days into the new fiscal year, the Cook County Board of Commissioners unanimously approved an unprecedented $9.8 million medical malpractice settlement last week, as President Todd Stroger seeks $280 million in bonds to cover day-to-day costs.

Commissioner Peter N. Silvestri (9th) called the settlement, involving the 2005 death of 27-year-old Farrah Dickerson, atypical. He said he expected a 12 percent increase in total settlements for 2009 from last year's $80 million due to the large size of the settlement.

Still, Silvestri said $90 million is just a drop in the bucket considering the county's $3.2 billion annual budget. 

Others disagree. 

"Part of the problem is that the budget is not very transparent," said Laurence Msall, president of the Civic Federation, a government watchdog group specializing in budget analysis in the Chicago area. 

Msall said his group does not specifically track the county's legal settlements but said the way the county uses its Working Cash Fund, an internal savings account estimated to exceed $220 million and tapped in part to finance court settlements, is "subject to debate." 

The question the public must ask of these settlements, Msall said, is whether "the county is learning from [them]." 

Commissioner Earlean Collins (1st) is not sure it is. During last Wednesday's county board meeting, Collins urged commissioners to settle litigation cases more quickly as she reminded them of past lawsuits the board took too long to settle. 

"This could have easily been twice as much," Collins said of the Dickerson settlement. Dickerson died at Stroger Hospital after medical personnel allegedly neglected to treat her excessive bleeding during childbirth.  

"When we get to a point where we can't win, you have to settle them," Collins said of the lawsuits filed against Cook County. Collins hopes the newly formed Board of Health, approved by the County Board in last March, will continue to emphasize "better accountability of nurses" and doctors.  

Collins added that the county should do a better job in tracking the medical malpractice history of its hospitals and doctors.  

Ultimately, Collins said, too many of the cases settled by the county could have been avoided, a trend that is "eating away at our budget." 

Cook County State's Attorney Anita Alvarez is responsible for evaluating each lawsuit filed against Cook County. They range from medical malpractice to sexual harassment suits. Alvarez then recommends to the litigation subcommittee of the Cook County Board's Finance Committee whether to settle a case or fight it. Cases involving less than $100,000 in damages don't go before the board, but are left to the discretion of Alvarez's office.

Calls to Alvarez's office were not returned but Silvestri, who heads the litigation sub-committee, said, "routinely more cases are settled [than are brought to trial]." 

The 2008 Cook County budget slashed funding to the county's three major hospitals including Chicago's John H. Stroger, Jr. Hospital, by $78 million, from $617 million in 2007 to $413 million.

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Oct. 27, 2008 – Starting in fall 2009, high school students more interested in joining the robotics team than playing on a sports team will have a new school to attend in the Loop, Chicago's commercial and financial hub.

The Chicago Academy for Advanced Technology, one of 12 new schools unanimously approved by the Chicago Board of Education last  Wednesday, will admit 150 students citywide who are interested in careers in business technology.

More than 76 major U.S. companies, including Microsoft and IBM, have already signed on to support the Chicago Academy for Advanced Technology, offering to teach classes, make presentations and offer paid internships to students.

"There are few schools in Chicago that can rival our industry investment," said Matt Hancock, assistant director of the Center for Polytechnical Education, the non-profit corporation that will operate the new contract school.

This will be the second school the non-profit operates in Chicago. Last year, the center founded Austin Polytechnical Academy , which presidential hopeful Sen. Barack Obama (D-Ill) recently praised.

"Austin Polytech is bringing hope back to the community," Obama said on a Sept. 9 campaign stop in Ohio. Obama said Austin's technology curriculum should be a national model as the U.S. moves to revive its technology industry.

Hancock of the Center for Polytechnical Education, agrees. The academy, he said, will teach students how "to be leaders in the global economy."

The key, Hancock said, is to combine the two existing Chicago Public Schools (CPS) educational models of college prep and vocational education. "Offering college prep without career prep," Hancock said of the two typical CPS high school curricula, "makes no sense. You need both."

Tamra Craig, an account manager at Nortel, another company supporting the new school, is excited about the possibilities of a technology-based high school located in the city laboratory of Chicago.

"It'll be easy to get to," said Craig, who hopes the school's location will attract many more industry employees.

"There are a number of good schools, like Whitney Young and Walter Payton," said Hancock, "that students already commute to from all over the city. Why not commute to the Loop?"

There are more than 75 elementary and high schools in Chicago that are not part of CPS. These include charter schools, performance schools and contract schools, which must first be approved by the Board of Education. More than 12,000 CPS students are currently on waiting lists for admissions to one of these non-CPS schools, almost four percent of the current CPS student population.

Proponents of charter schools say they offer teachers and administrators more flexibility to be creative with teaching methods.

"They're more adaptable to the community," said Christina Vera, director of communications of the Illinois Network of Charter Schools.

"Charters are more autonomous," said Vera, and "not subject to bureaucratic regulations."

It is this autonomy, Hancock said, which will shape the student body and staff of Chicago Academy of Advanced Technology. The school is less interested in a student's past academic performance, he said, and more interested in their creative drive.

Admission to the Chicago Academy of Advanced Technology is open to students of all academic backgrounds, but students of math and science schools, like Spencer Academy on the West Side, will be given preference.

The Center for Polytechnical Education is nearing a deal for a Loop location for the school, Hancock said, and will most likely announce it next week. He said a principal has been hired, but declined to release her name, saying she has a "strong track record" from a high-profile New York City high school.

Each year the school will admit 150 new students with a four-year cap of 600. More than 400 CPS students are expected to apply before the 2009 school year.

Click here to read part two of this three-part series.

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Oct. 22, 2008 – Uninsured and low-income residents of the Uptown neighborhood relying on free healthcare clinics are about to take another blow, as the Department of Public Health faces $8 million in lost revenue, according to the 2009 department budget released last Wednesday.

The Uptown Neighborhood Health Center, one of the city's largest free or reduced-fee health clinics, is located at 845 W. Wilson Ave. The clinic's future is bleaker when considering the 2009 city budget, proposed to the city council by Mayor Richard M. Daley on the same day as the department budget release.

"It's pretty grim," said Michael Crulcich, director of clinical operations for Chicago's Neighborhood Health Centers. "We're down to a lot bearer bones than we're used to."  

The Uptown clinic is one of seven city-funded health centers, all located in some of Chicago's poorest communities like Englewood and South Lawndale, facing major budget cuts.

According to Daley's proposed budget, likely to gain approval by the city council, the seven centers stand to shrink by over 35 percent, losing 60 of 167 current positions, including nurses and medical assistants.

Daley also recommends a 24 percent decrease in overall funding for these primary care clinics, which provide basic medical care, STD screening and vital pre-natal care to nearly 30,000 people annually, from $11.4 million down to $8.7 million.

For individual centers, like the one in Uptown, these cuts translate to longer waiting periods for patients to see doctors, sometimes exceeding three months for those with minor medical issues.

"When there's no one to take vital signs," Crulcich said of the decrease in medical assistants at the Uptown center, "the primary care provider must do it."

With only two full-time physicians assigned to the Uptown center, fewer patients will receive treatment each day.

"We're at 80 percent productivity," Crulcich said. That means where once a center could see 20 patients a day, that number is now reduced to 16, Crulcich said. 

The number of physicians has not been cut in the 26 years Crulcich has worked in the Department of Public Health. But there has been no effort, Crulcich said, to replace those who retired in the past 10 years. In recent years, the Uptown center had up to five physicians.

Lost doctors means a decrease in patients served, Crulcich said. And despite a decrease in affordable housing options and a subsequent decrease in the amount of poor residents in the area, this decrease "is not in response to gentrification," Crulcich said. "There's still a lot of need in Uptown."

Dr. Esther Liu agrees. "This is the largest and oldest center, and we see the most patients," said Liu, who has been at the Uptown center for three years.

Liu could not offer a specific number of patients served at the center overall, but said its WIC center, which offers nutritional counseling and food packages to low-income mothers, serves over 1600 clients each month. 

"We're very busy," Liu said.

The number of people living below the poverty line in Uptown is over 15,000, according to the 2000 city census, including over 2,500 families.

The proposed budget and personnel cuts for the Uptown Neighborhood Health Center come at a terrible time. Two weeks ago, the Salvation Army closed a major community center in Uptown, the Tom Seay Center, leaving the remaining social service agencies in the area scrambling to accommodate hundreds of newly displaced clients.

Still, Richard Sewell, chairman of Chicago Neighborhood Health Centers, is optimistic. "We're in full advocacy mode," Sewell said, pressing the Board of Health to pressure the city council and Mayor Daley to re-evaluate the 2009 budget before the council officially votes on it next month.   

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