Bias Charged in Chicago Housing : U.S. Seeking to End Racial Quotas It Once Insisted On

CHICAGO — Nearly a decade ago, a group of churches here wangled $11 million in government loans and other subsidies to build new apartments in an attempt to improve a rough north side neighborhood known as Hell’s Corner--but there was a catch.

To get the money, the churches were required to devise a racial quota for tenants to ensure integration at the development, wedged into the three-block gap between the rundown Cabrini-Green public housing development and the city’s posh Gold Coast. As a result, the 309-unit Atrium Village has been evenly split between black and white renters ever since it opened in 1979.

Now, the Reagan Administration is threatening to sue the apartment complex over the same plan that U.S. housing officials had insisted on in the first place.

In an ironic twist, William Bradford Reynolds, head of the Justice Department’s Civil Rights Division, sent Atrium Village a letter in May accusing it of discriminating against black apartment seekers, who are forced by quotas to wait much longer for vacancies than white applicants.

Reynolds cited a recent court ruling striking down similar quotas at New York’s Starrett City housing development and said the government would take legal action against Atrium unless it, too, junked its race-based renting formula.

Atrium officials are crying foul. “This is crazy,” Michael Shakman, the development’s attorney, said. “They required us to do it, and now they’re talking about suing.”

The Rev. William Leslie, a founder of the development, charges that it has become a pawn in what he characterizes as the conservative Republican Administration’s ideological war on compulsory desegregation.

“What they’re really after is to get rid of affirmative action quotas in jobs and education,” said Leslie, pastor of the nondenominational LaSalle Street Church near the development. “We are part of a strategy to lessen the impact. They can say, ‘Look, we took a stand for blacks.’ ”

Justice Department officials refused to comment on the Atrium case, but a spokesman said the agency viewed housing quotas in general as illegal.

Parishioners of the five churches that own Atrium are predominantly black, yet it was the exclusion from the project of an elderly black woman, Charlena Edwards, that led to its present legal headaches.

Edwards, now 72, filed a federal lawsuit in 1983 charging Atrium Village with discrimination. Lawyers for the city, run by Mayor Harold Washington, a black, then filed suit in state court charging the development with violating Chicago’s fair housing ordinance by refusing to rent to Edwards. That, in turn, led the Justice Department to step in. Both the Edwards and city cases are pending.

Model of Integration

Atrium’s architects designed it as a model of integration which they hoped would ease racial tensions and bridge divisions between nearby black and white communities by mixing people of different races and socioeconomic backgrounds. About half the residents pay market rates ranging up to $815 a month for a three-bedroom apartment, and the other half get rent subsidies of varying proportions.

The trim landscape and attractive brick buildings of the Atrium Village complex are a sharp contrast to the grimy, crime-ridden 19-story Cabrini high rises, only one block to the west. But, back in 1978, when Leslie and his fellow pastors were wrapping up funding for the project, most officials predicted that it would either flop or devolve into an extension of the predominantly black Cabrini-Green. Illinois housing officials agreed to grant an $11-million mortgage, and the Department of Housing and Urban Development agreed to insure the mortgage and to fund rent subsidies for low-income residents, but only if Atrium officials would take steps to guarantee that the complex would not turn all black.

The government agencies, reasoning that whites would shun a heavily black development, proposed a ratio of 70% white tenants to 30% black. But the churches talked them into a formula that would eventually lead to an approximate 50-50 split.

The project was flooded with applications, although initially many more came from blacks than whites. One of those was Edwards.

Edwards, who suffers from a heart problem and arthritis, “wanted to live in an environment conducive to someone her age rather than in Cabrini-Green and put up with the bullets and the crime and the filth and the grime and the stench,” her attorney, Judy Mitchell-Davis, said.

Atrium managers say they rejected Edwards because she was habitually late in paying her rent at Cabrini and was a worse credit risk than many other applicants. Mitchell-Davis denied that Edwards had any payment or credit problems prior to being turned down, although she acknowledged that some had cropped up after Edwards filed her initial lawsuit.

Peggy Davis, a municipal attorney handling the city suit against Atrium, insisted that the case was not an attack on the quotas.

There is no debate, however, about what the Justice Department has in mind. In a landmark victory for the agency, a federal judge two months ago knocked out quotas at the 5,881-unit Starrett City complex in Brooklyn, the largest federally assisted but privately owned housing development in the country. The development has appealed the ruling.

Robert C. Rosenberg, a former New York City housing commissioner who is general manager of Starrett City, said the 65% to 35% white to minority ratio struck down by the court was part of an affirmative action rental plan agreed to by both the Department of Housing and Urban Development and state officials.

Without the quotas, “it’s a mathematical certainty that eventually this would become an all-black or nearly all-black development, and the integration effort would fail,” he predicted.

Atrium officials say that, unlike Starrett, their development has become successful enough to stay integrated without quotas. Shakman, the complex’s attorney, told government attorneys that, to avoid the threatened lawsuit, Atrium would be willing to drop its occupancy quotas as long as it could reserve the right to reinstate them should the racial balance begin to tip badly. The Justice Department has yet to respond.

More troublesome to Atrium was a demand in the Reynolds letter that the development agree to provide “appropriate relief” to anyone over the years who failed to get an apartment because of the quota system.

Reynolds did not specify what kind of relief he meant, but Leslie said any decision forcing Atrium to pay damages or provide housing to Edwards or other applicants could bankrupt the complex. “If everybody who sues us we let in, we might have 1,500 suits and, if anybody ever gets any money out of us, we might have 15,000 suits, knowing this neighborhood,” he said.

Atrium residents of both races are quick to defend the status quo and to bristle at the potential consequences of the lawsuits. “A lot of us will move,” said Mineola Booker, 87, a black who was one of Atrium’s first residents. “What will eventually happen is that we will have a mini-Cabrini-Green. I don’t want to live around all of any one group.”

Researcher Wendy Leopold contributed to this article.