Alby Gallun, Chicago Business, July 28, 2014

The high-rise at 500 N. Lake Shore Drive is the second-most expensive in the city, with rents for a one-bedroom apartment approaching $3,000 a month, well beyond the reach of most Chicago residents.

But that’s not too much for the Chicago Housing Authority, which has used federal tax dollars to pick up most of the tab for four lucky residents in the year-old building, with its sweeping views of Lake Michigan, a concierge and a dog-grooming center.

The tenants moved in over the past two years as part of a push by the CHA to expand its housing voucher program so that more low-income residents can leave the city’s roughest neighborhoods and start a new life in places with low poverty and crime and close to good schools and jobs.

Yet some landlords say it’s a mistake to use scarce tax dollars to pay ultra-high rents for a fortunate few when more than 15,000 people sit on the CHA’s voucher waiting list.

“This is nuts,” says landlord Tony Rossi, president of Chicago-based RMK Management Corp., who describes himself as a liberal Democrat. “In a situation where you’re dealing with a low-income person, do they really need a 25th-floor apartment with a lake view? It just doesn’t make sense to me.”

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The CHA says in a statement that the “exception payments” for high-cost apartments cover less than 2 percent of the authority’s roughly 38,000 outstanding vouchers. The higher payments–known as supervouchers–are necessary to help low-income residents move into better neighborhoods, which have few affordable housing options, the authority says.

Most landlords agree with the effort to expand the use of “housing choice vouchers,” formerly known as Section 8 vouchers, to more prosperous parts of the city. Vouchers have become a bigger part of the CHA’s policy since it tore down big public housing projects like Cabrini-Green, offering recipients more flexibility to choose where to live so they can escape the cycle of poverty.

Under the voucher program, which is federally funded but run by local agencies like the CHA, an eligible resident can rent an apartment in a privately owned building. Voucher holders generally must pay up to 30 percent of their monthly income, if they have any, to cover rent and utilities, with the CHA picking up the rest.

HUD caps how much the CHA can pay a landlord. A few years ago, the CHA could not pay more than 110 percent of a fair market rent calculated by HUD. The current fair market rent in Cook County for a one-bedroom apartment is $826 a month.

But HUD allowed the CHA to change its rules in 2010, pushing the cap up to 300 percent in designated “opportunity areas,” such as downtown and Lakeview, where poverty is low and subsidized housing is scarce.

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The CHA has approved 706 supervouchers since HUD signed off on the higher limits, and the number has jumped in the past two years. The CHA approved 364 in the first half of the year, up from 291 for all of 2013, 44 in 2012 and seven in 2011, according to the authority. Eighty-seven payments exceeded 200 percent of HUD’s fair market rent in the first six months of the year, versus 49 for 2013 overall.

Eleven leases hit the 300 percent cap in the first six months of 2014, up from three for last year, according to the CHA. {snip}

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According to the CHA, 15,230 people were on its waiting list for housing vouchers at the end of 2013.

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In its statement, the CHA says exception payments provide “CHA families the ability to choose where they want to live and enjoy the great diversity that Chicago communities have to offer.” {snip}

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