RETURN TO CURRENT ISSUE

When business turns a profit, they reinvest. The Federal Housing Administration-which racked up a $5 billion surplus this year because so many new homebuyers have used the FHA and because fewer of these buyers went into foreclosure over the past year-has the opportunity to do the same. As the law stands, the $5 billion 'profit' goes to the U.S. Treasury to erase a tiny bit of the federal debt. A better way to use that money would be to create a national housing trust fund that would build new and preserve existing affordable rental housing.

A neighborhood is a place where people should be able to live their whole life if they wish, from young couples starting out who want to rent a place to seniors who avoid homeownership so they don't have to pass on a burden of debt to the next generation. A recent study by our coalition documented the rapidly shrinking number of people for whom that vision of a neighborhood is reality, and showing just how far the $5 billion FHA surplus could go toward preserving the vision by building new and preserving existing affordable rental homes.

In place of that vision, neighborhoods in Chicago as well as other urban centers in Illinois are being homogenized by young urban professionals who buy homes right away, while the working people who've grown up in the neighborhood can no longer afford to live there. Meanwhile landlords of many so-called project-based subsidized housing units, which are reserved for lower-income folks and seniors, are converting them to market-rate rental buildings or turning them into condos and selling these buildings off.

Three are three kinds of affordable rental housing in the U.S.: public housing, Section 8 vouchers, and project-based subsidized housing. The government has knocked down 80,000 units of public housing and plans to demolish an additional 50,000. Meanwhile, the number of Section 8 rental vouchers, which many families use to procure decent housing, shrank in recent years due to lower levels of federal funding. And now landlords are opting out of project-based subsidized housing programs because they say there's not enough money in it for them to make a profit. Don't confuse the word project with 'the projects'-these units of affordable housing are generally the highest-quality subsidized housing in the country.

More than 114,000 of these project-based federally subsidized housing units were lost in the period January 1997 to March 2000 due to owners' pre-payment of their government-insured mortgages or their decision to opt out of the program once their contract expired. Illinois alone lost 37 whole apartment complexes. Rents increased an average of 50 percent in the newly unsubsidized housing units. More than 4,000 Illinois families who used to live in project based subsidized housing lost their homes in the last few years as a result of this privatization.

Saving this project-based subsidized housing and building new units is where the $5 billion surplus would make all the difference. President Clinton will decide in the next three weeks how to spend the surplus. The Administration will then have to reach agreement with Congress. The choice seems obvious: either help solve Illinois' housing crisis by allocating the $5 billion for building and preserving affordable housing, or continue to allow our neighborhoods to be swallowed by growth.

The benefit to Illinois will be significant: more than $240 million for the state, which could build 9,320 units of affordable housing. This would increase by 500 percent the funds available for this purpose nationwide; it would be quadruple the amount Illinois currently receives for building new and preserving existing affordable rental housing.

In Peoria, this would mean some $3.4 million for new construction, which could build 131 safe and affordable apartments for Peoria families. Currently 20 percent of Peoria housing is in substandard condition. In Rockford, where 40 percent of rental units are in substandard condition, the surplus could result in $3.2 million in available funding for new construction which could build 125 safe and affordable apartments. Chicago could get $108.2 million to house 4,188 needy families.

For nearly 30 years community advocates have worked neighborhood by neighborhood, here and across the country, to keep the dream of homeownership alive. With some 5.4 million Americans who qualify for rental subsidies either homeless or living in substandard housing according to a recent government report, let's not become victims of our own success in calling for more homeownership- instead let's seize this moment of opportunity and put a dent in Illinois' housing crisis.

Gale Cincotta is national chairperson of National People's Action, a Chicago-based coalition of grassroots neighborhood groups based in 38 states that work on housing, neighborhood safety, and other issues of concern to communities.