Will new performance fees keep CHA property managers honest?

The Chicago Housing Authority’s new CEO, Eugene Jones, has made his first radical change to public housing. Last June, the CHA issued a request for proposals (RFP) for property management contracts. For the purposes of the RFP, Chicago was divided into five zones and companies were asked to bid on up to all five zones, with the final contract to include no more than 10,000 units per organization. There are a total of just over 19,000 public housing units, meaning the CHA was willing to award management rights to just two companies if it saw fit.

Yesterday, Jones decided to keep three of the five previous management companies (Habitat, Eastlake Management Group and Woodlawn Community Development)  and accept two new players (Realty and Mortgage Company and McCormak Baron Salazar). H.J. Russel l & Co. as well as Hispanic Housing Development were dropped, leaving advocates to worry about the future treatment of Hispanic residents. The new contracts will be worth a total of $29.3 million over three years and include a two year renewal option of $19.3 million. The five companies will be collectively responsible for maintaining all public housing properties throughout the city and adhering the CHA and HUD standards.

These contracts include new performance-based fees, which include $6-per-unit incentives and $3-per-unit penalties.

The method for oversight is not readily available, so I do not know how strictly the performance evaluations will be enforced, or how often. I also cannot say how much the fees will improve the quality of CHA buildings. I do know that paperwork moves slowly through the CHA and deadlines and regulations are fluid. It took more than a year to make the decision on which management firms to keep and which to remove a process that, in the original announcement for the RFP, should have taken a few months. The concept of fees and of consolidated neighborhood oversight seems okay in print, but I will wait until I see results to make a final opinion on the program’s efficacy.

 

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