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Time's Up

Section 8 housing at Clark and Diversey was nice while it lasted, but now longtime residents may have to pack up and leave.

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By Ben Joravsky

In 1991 Olga Kipnis came to Chicago from Ukraine--64 years old and unfamiliar with the ways that politics, law, and housing policy work here. Ten years later she's struggling with one of this country's thorniest public-policy issues as she fights to keep 140 subsidized Lakeview apartments--her own included--from going condo. "If the apartments go condo we will be displaced," says Kipnis, who lives in the Rienzi Plaza complex at Diversey and Clark. "We are old people, disabled people, poor people, and that would be a tragedy."

Kipnis and her husband, Mark, have depended on subsidized housing since they settled in Chicago. "We came from Kiev in October 1991," she says. "My husband was very sick, on the verge of death. We are Jewish, and anti-Semitism was very bad then."

She says that despite the hardships, her husband was reluctant to leave Kiev. "You give up so much when you leave your country. He was an architect. He was a tank commander in the Soviet army. He fought the Nazis in World War II. But finally he agreed. We had no choice."

They traveled to Moscow, where they got permission to emigrate to the U.S. "We have no relatives in America, but the American embassy found us a sponsor in Chicago," says Kipnis. "I had some advantages over other immigrants because I spoke fluent English--I had taught English at a college in Kiev."

Nonetheless, she and her husband, who isn't fluent in English, were a little bewildered by the complexity of life in their new country. One of their biggest problems was finding housing. They live on a relatively small social security allowance, and it was hard to find an apartment they could afford. At first they lived in West Rogers Park, then they moved to a subsidized apartment in Uptown. In 1996 they had to move when the landlord decided to sell the building.

It was then that they found their way to Rienzi Plaza. "It's a lovely building," says Kipnis, "and we were very happy to be here." She had only one concern. "We wanted to know if it was going to stay affordable," she says, "because we were frightened after what happened on Sheridan. We asked, how are things? And they told us that you will live here forever. So we moved."

They liked their two-bedroom tenth-floor apartment, with its sweeping view of Lincoln Park. Mark Kipnis took up painting, filling the walls of the apartment with watercolor landscapes. Olga, a voracious reader, got a library card and spent hours at the local library. Their son and his wife also emigrated from Kiev, eventually settling in Evanston, and the Kipnises found themselves frequently baby-sitting Victor, their seven-year-old grandson. "We take Victor to the zoo and to the museums," says Olga. "My husband's health improved. We love Chicago. We love America. We miss our old friends in Kiev, but we love our new life. It's like a dream. We're very fortunate."

Then in September they got a letter from the landlord, informing them that they might have to move. "It was a form letter with complicated language, and at first I didn't really understand it," Olga says. "It read, 'The Section 8 contract that pays the government share of your apartment rent expires on September 30, 2001. This letter is to notify you that we do not intend to renew the contract when it expires.'"

Unsure of the letter's implications, the Kipnises and other tenants turned to activists from the Jane Addams Senior Caucus and the Lakeview Action Coalition, a leading community group. They learned that Rienzi Plaza had been built as part of the federal Department of Housing and Urban Development's Section 8 program, through which HUD offered the developers a low-interest 20-year mortgage as long as at least 60 percent of the Rienzi's 250 units were reserved for low-income tenants such as the Kipnises. "That's why you have such a mix of people living there," says Ken Snyder, director of the Jane Addams Senior Caucus. "You have market-rate tenants, who pay the going rate. And you have Section 8 tenants, who pay no more than 30 percent of their income for rent, with HUD picking up the rest."

At Rienzi the Section 8 tenants are a diverse bunch. "You have seniors like the Kipnises, and single parents, and a good number of residents who are disabled, since the building's accessible," says Snyder. "It's unique in terms of diversity. It lends a lot to the community."

But come September, the original HUD mortgage will be paid off, leaving the Rienzi's owners pretty much free to do whatever they want with the building.

The Kipnises now understood the letter they'd received last year. When the landlord wrote that he and his partners "do not intend to renew" their contract with HUD, that meant they were either going to sell the building or turn it condo. Either way, the low-income residents might well have to move.

"The situation at the Rienzi is part of a much larger problem," says Chrissie Richards, a spokeswoman for the Chicago Rehab Network, an affordable-housing advocacy group. "There are 16,000 similar Section 8 units at risk in Chicago over the next five years. We're already facing a shortage of low-income housing. Imagine how much worse it will be if we lose all these units."

The Rienzi residents and their allies did a little digging and discovered that the building was owned by a consortium of investors led by Sheldon Baskin, a local developer. The residents wrote and called Baskin, asking for a meeting. They say he didn't respond, so they sought help from Mayor Daley, Congressman Jan Schakowsky, and other public officials. In April, Schakowsky arranged a private meeting at her office between residents and Baskin. That's when they heard the other side of the story.

"Mr. Baskin was very polite and friendly, an elegant man," says Kipnis. "But he was not bending. He spoke about everything and didn't promise us anything. I told him, 'Mr. Baskin, many of us are old or disabled. We are victims with so few options. This is a terrible burden to make us worry so much. It would be a tragedy if we have to move.' He said, 'Mrs. Kipnis, I am the victim because we lose our profits. We have obligations, and for 20 years we have fulfilled them. Now we can do whatever we want.' I said that you should have pity on old people and disabled people. He said, we haven't decided yet, but I have other partners, and I have a fiduciary responsibility to them."

From Baskin's perspective, there are complications, if not hardships, in operating a Section 8 building at a time when the federal government is cutting back funds for affordable housing. "It's always difficult to be involved with Section 8," he says. "You're subject to rules and regulations, and there's all sorts of forms you must fill out that say you're under a penalty of perjury and you can go to prison. That's why many developers don't even want to bother with it. Every few years there's some sort of disaster with HUD, and they deal with that by cracking down on developers, even if it's not our fault. There are people in the Chicago office who are fine, but it can be very adversarial."

Baskin says that, all in all, the tenant mix at the Rienzi has been successful. "It's a good building. There are always issues, but basically it's worked. The tenants get along. Of course, there's always self-screening. You have [market-rate] people looking for apartments, and they'll ask, 'Do you take Section 8?' Some say good-bye if the answer is yes."

He finds it ironic that he and his partners are under siege from low-income activists, given that they were lambasted by local property owners for building the two 17-story towers in the first place. "We didn't need a zoning change to build, but we agreed to meet with residents anyway," he says. "Some of the meetings got a little out of hand. You're always going to get more people pouring out to oppose a high-rise, including people who live in nearby high-rises. They talked about density and traffic, but I think what was really behind the opposition was the low-income. You can never tell what the real motives are. I've been in a lot of zoning hearings, and no one says, 'I don't want poor people.' Well, we were building a seniors building in Wilmette, and one man said, 'Don't burden us with the stigma of the elderly.' Isn't that something? The 'stigma of the elderly.' Later he asked if we could get a relative in there."

It's unfair to burden developers with the full responsibility for housing the poor, says Baskin. "The deal was that we took a 20-year contract, and we lived up to our end of the bargain. A lot of developers wouldn't have gotten involved to begin with. A lot of people say it's bad that we should have 20-year limits. But the fact is that it was the 20-year limit that induced investors to get into this program in the first place."

But don't developers who've made money for 20 years from low-income housing have some moral obligation to keep poor people from being turned out on the street?

"Nobody's going on the street," says Baskin. "Even if we sell it, HUD regulations guarantee that current tenants get to remain in the building unless it goes condo. And if it does go condo, the tenants will get a housing voucher they can use at another location. If you want to talk fairness and equity, you're opening up a whole new issue. Let's say I'll renew the contract, but all the people who live there have to get out and let other people get in. Wouldn't that be fair to the people on a waiting list? The way the program is set up now, a small number of people get a huge benefit and a lot get nothing. The amount we spend on low-income housing is essentially fixed. The issue is, how do you use this scarce resource? This is bigger than any developer. It's really a governmental function."

For the moment, the tenants' protests have brought them a reprieve. Baskin and his partners asked HUD for a one-year extension, meaning they will run Rienzi as it is until at least September 2002. Even if they decide to sell the building, Baskin says he and his partners will try to make sure that some of the units remain affordable. "The residents have to understand that I'm not alone on this deal--I have fiduciary obligations to my partners. They could take me to court if I don't meet those obligations. Now if we sell the building, what I'd like to do is take bids on it, and then go to whichever buyer wants to keep it affordable and say, 'Here's the highest bid--can you match the price?'"

That means the residents and their allies must continue their campaign to get a larger subsidy from HUD or find a low-income developer who's willing to buy the building. "It would be difficult to find a new apartment, even with the vouchers, because there are fewer landlords willing to rent to Section 8 tenants," says Kipnis. "I realize that this is a process, and everyone plays a part. I understand what's going on. We must keep up our pressure. Mr. Baskin wants to make heat with our hands. That's how the process works. I've learned a lot about how the process works. I'm old and tired. But I'm willing to keep up the fight."

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

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