Taxpayer Money Set Aside to Curb White Flight Helped Some Flee City

Like many homeowners these days, Victor and Yvonne Delia stood to lose a lot–about $90,000–when they sold their townhouse near Midway Airport five months ago.

Instead, the two retired Chicago police officers managed to walk away with a 23 percent profit–thanks to property taxes collected from 61,145 of their fellow Southwest Side homeowners.

The Delias benefited from a law Illinois legislators passed in 1988 to curb white flight in Chicago’s bungalow belt. The law offered homeowners a guarantee: They wouldn’t lose money if they sold their home even if property values declined.

But there was a catch: No one was supposed to profit if their property values went down because of a national housing slump–as has happened in Chicago the past several years.

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And a law that was meant to keep people in their homes in the city has often ended up paying for them to move out of Chicago.

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The Delias got the biggest payout anyone has ever received from the 21-year-old Southwest Home Equity Assurance Program, one of the three agencies created to stem block-busting and white flight on the Southwest Side and the Northwest Side.

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The law that established Chicago’s three home equity assurance districts caused controversy even before it was passed in 1988 at the urging of white legislators who feared their constituents would flee the city following the election of Mayor Harold Washington, the city’s first black mayor. They argued the legislation would combat “panic peddling” if the racial composition of certain neighborhoods begin to change.

Every black legislator voted against the measure. Then-state Sen. Howard Brookins (D-Chicago), whose son is now a Chicago alderman, was among them.

“We see it as a racist, dividing bill to divide the city of Chicago,” Brookins said at the time. “If it was a good thing, then we would have it for the entire state of Illinois.”

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In the 1990s through the mid-2000s, when the housing market in Chicago was booming and home values were rising, few people enrolled in the home equity programs. Even now, fewer than 10 percent of eligible homeowners have enrolled in the programs, which collect taxes from every residential property in each district. Last year, the owner of a home valued at $200,000 paid as little as $1.89 in equity taxes on the Northwest Side to as much as $27.63 on the Southwest Side.

When homeowners enroll, their property is appraised and given a “guaranteed appraised value.” To be eligible for compensation, they have to wait at least five years before they put their homes up for sale.

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