Rescue of Chicago Housing Founders

A THREE-MONTH-OLD ''crash program'' by federal officials to reform Chicago's titanic public-housing system has collided with several unexpected obstacles.

After initially promising ''dramatic change'' at the Chicago Housing Authority (CHA), US Housing and Urban Development (HUD) Secretary Henry Cisneros is now warning of ''tough choices'' in transforming the nation's most troubled low-income housing agency.

His comments underscore the difficulties the federal government faces in trying to orchestrate a revival of the public housing stock.

Immediate efforts to improve safety and repairs at the crime-ridden, dilapidated public high-rises are being undermined by a $52 million CHA budget deficit announced two weeks ago. About $34 million of the deficit stems from HUD cutbacks imposed by Congress.

The financial crunch contrasts sharply with the impression of plenty given by Mr. Cisneros in June, when he said HUD had discovered $600 million in unused CHA funds to invest in an 120-day reform of the CHA. Officials now say the bulk of those funds is sitting idle because they are earmarked for specific projects.

Long-term plans for turning around the 40,000-unit CHA are also being compromised by HUD's failure to find a new executive director, fill other top positions, and devise a long-range strategy for managing the CHA. Nevertheless, Cisneros revealed in testimony to a House subcommittee last week that HUD intends to pull out of Chicago by December.

Citing the lack of clear progress, members of Congress and other US officials assert that HUD made a mistake last May 30 when it took the reins of the CHA in the largest federal takeover of its kind.

''The lesson HUD ought to be learning is that it does not have the deep capacity'' to ''take over the day-to-day management of an authority,'' says Judy England-Joseph, director of housing and community development at the General Accounting Office (GAO), Congress's independent auditing agency.

Several experts, including HUD's own Inspector-General Susan Gaffney, believe that rather than step in directly HUD should have set up a court-appointed receiver to run the Chicago authority, as it has in Washington, Boston, and other cities. HUD says Chicago Mayor Richard Daley opposed that option.

Cisneros acknowledged last week that HUD failed to anticipate ''the magnitude of the problems'' at the CHA, which is in ''even worse shape than had been envisioned.'' HUD has had to resort to ''crisis management'' merely to stabilize the CHA, which has been on HUD's list of ''troubled'' housing authorities since 1979, he said.

HUD's lackluster results have stymied efforts to muster support from local businesses, community groups, and elected officials for redeveloping Chicago's huge stock of run-down tenements. They have also exacerbated tensions between the CHA's managers and its 86,000 largely poor, black residents.

''I have seen no improvement whatsoever. We are still standing still,'' said one resident leader on condition of anonymity. Her harsh tone reflected growing doubts among residents over the federal intervention.

Last week, for example, unrest nearly erupted at the Ida B. Wells housing project on Chicago's South Side after budget cuts led to the withdrawal of all privately contracted security guards, the only 24-hour security presence at the complex.

''People were frightened and highly upset,'' says Helen Finner, president of the residents' council at Wells. ''It was a slap in the face.''

At a heated, overflowing meeting at Mrs. Finner's office, a large group of residents threatened take their protest to a downtown federal building. They were dissuaded after Chicago police reassured them of continued patrols and Finner hastily revived an old system of tenant patrols and floor captains.

The dismissal of 193 private guards at Wells and two other housing developments was a budget - cutting move expected to save $2 million of the $7 million to be chopped from CHA's security budget by the year's end.

HUD officials stress that improving safety remains a top priority at CHA developments, where the crime rate is 60 percent higher than in the rest of Chicago. But they say the around-the-clock private guards were negligent and expensive, and will be replaced by less costly patrolmen and community policing.

''We have to cut the cost and try something different to see whether it works,'' says Joseph Shuldiner, HUD assistant secretary and acting executive director of the CHA.

Maintenance could also suffer as cost-cutting measures force reductions in repair staff. Residents complain that although HUD has organized residents to make cosmetic improvements, many vital, basic repairs are needed.

''There has been no change on the maintenance,'' says Finner, who also serves as co-chair of the CHA-wide residents' council.

To achieve lasting change and bolster residents' confidence, experts say it is crucial for HUD to establish a long-term recovery plan and put in place a new team of skilled managers before leaving Chicago this December.

But finding new leadership for the bloated, 4,000-employee CHA bureaucracy is not easy.

''Not a whole lot of people have the desire or the stamina to take it on,'' says Ms. Joseph-England. She says a fundamental turnaround of the CHA is likely to take 10 years.