RENEE MONTAGNE, HOST:
In Chicago, a special tax program set up decades ago to prevent white flight from the city is getting some new attention. Natalie Moore of WBEZ reports from Chicago.
NATALIE MOORE, BYLINE: The year was 1983. A reformer promised a vision different from his opponents.
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UNIDENTIFIED ANNOUNCER: Harold Washington has a different plan.
HAROLD WASHINGTON: While they fight over that machine, I shall fight for Chicago.
MOORE: The city elected its first black mayor, and fear ripped through some white ethnic communities. Paul Green of Roosevelt University says even people living in modest houses were looking over their shoulders.
PAUL GREEN: You had these bungalows in the stockyards which, to be blunt about it, wasn't exactly desirable real estate. These folks living in those bungalow - six rooms, a knotty pine basement, one bathroom - and was there any racial acceptance? No.
MOORE: Unlike other major cities, Chicago had largely held onto its white population. Some white residents living in the bungalow belt pushed for something to help ease concerns that property values would plummet. Washington supported the measure until black alderman balked. So Illinois politicians stepped in, passing a state law 1988 that created three home equity taxing districts. Here is how it works. All homeowners in a designated district pay a small tax, sometimes as little as a dollar and 50 cents a year. That money goes into a fund. Homeowners voluntarily enroll in the equity program, and when a homeowner decides to sell, if the appraisal is less than the original purchase price, that homeowner receives a cash claim for the difference. While the language doesn't specifically address white homeowners, it's done with a wink and a nod towards them. and it's a program that most Chicagoans don't know about, though some activists have long had their eye on the money. Vanessa Valentin is a housing community organizer. She's in one of these taxing districts. It has 9.6 million dollars sitting in the bank.
VANESSA VALENTIN: Why should that money be sitting there? And if it's something that is not going to produce back, then stop it over all, right? Because it's something that is not being a benefit right now for people or the community.
MOORE: Valentin says the money could be used for any number of pressing needs - small home loans or foreclosure mitigation, for instance. Chicago remains largely segregated and is the national leader in this home-equity assurance pro experiment. A handful of other cities tried it. A neighboring suburb, Oak Park, was a national pioneer when it tried to manage racial integration the 1970s. No one ever filed a claim there and eventually the program ceased. That speaks to the psychology of equity assurance programs. They were designed to reassure homeowners that they were financially protected against a drop in property values, but there weren't many cash claims made. It happened mostly because of a bad appraisal or downturn in the economy - not because a black or Asian family moved next-door. Jim Capraro sat on the board of one of these taxing districts. We met up for coffee to talk about the program. Capraro wasn't active in initiating the home equity assurance program but had thought a lot about its effect.
JIM CAPRARO: Does a program like this support racism or thwart racism? Even the people who aren't racist might end up getting hurt because the very active large number of people fleeing puts more supply on the housing market than would normally be.
MOORE: White families didn't flee. Latinos and Asians and some blacks moved into the bungalow belt on the Northwest and Southwest sides. Many areas experienced a smooth racial transition in the 1990s with immigrants helping stabilize some areas. Now those same immigrant families are facing a fresh set of challenges as their property values recover from the recession. None of the officials from the three taxing districts agreed to be interviewed on tape. Replying in an email, one said the state statute is very restrictive as to how any taxing funds can be spent. But what community wouldn't envy a big pot of money that could potentially be reinvested back into the neighborhood. For NPR News, I'm Natalie Moore in Chicago. Transcript provided by NPR, Copyright NPR.