When its sales office opened in 2006, Enclave at Galewood Crossings was touted as an upscale, gated community of almost 200 single-family and multifamily homes built on the largest undeveloped piece of land left within the city limits.
Now Chicago Housing Authority residents are moving into seven three- and four-bedroom town houses sold to the public housing agency. Meanwhile, many existing owners, deeply underwater on their mortgages and some in foreclosure, are trying to sell their homes and leave. Houses that once sold for more than $500,000 have lost more than half their value.
"For the (CHA residents) that are moving in, this is like a dream come true," said Tasharia Gardner, treasurer of Galewood Crossings' master board. "There are people making $100,000 and can't (afford to) live in a gated community."
Gardner is one of the five members of Galewood Crossings' master board named in a federal lawsuit that reinforces how fair housing, while often tied to race, is also an economic issue.
The federal suit, filed 21/2 years ago, came after the builder, Northbrook-based Red Seal Homes, tried to sell some homes to the CHA and the board took steps to quash the deal. Since then, homeowners in the development have been paying legal fees to defend the homeowners' board against accusations of racial discrimination.
At Galewood Crossings, the Chicagoans who say they sought to protect their home values by keeping the CHA outside the gates are primarily African-Americans and Hispanics, as are many CHA residents.
"Housing is economically segregated in this country, it is class segregated," said Maria Krysan, a professor at University of Illinois at Chicago's department of sociology and Institute of Government and Public Affairs. "Class matters for everyone: whites, blacks, Latinos. Everyone wants a better neighborhood.
"Location, location, location is premised in part on economic segregation,'' Krysan said.
At first glance, Galewood Crossings looks as it was intended — a quiet, well-tended, suburbanesque oasis plunked down in a challenged part of Chicago. Despite its name, it is not in Galewood; the 50-acre former rail yard and industrial site hugs the boundary between the North Austin and Belmont-Cragin neighborhoods, two areas rife with foreclosures.
Surrounded on all four sides by fencing, Galewood Crossings' single-family homes, town houses and condos are fronted by neat landscaping, and red mulch surrounds young trees.
The privacy, the security and the brand-new homes are what attracted early buyers like Nathan Terry and his family, who already lived in the area. Terry paid $538,000 in July 2008 for a six-bedroom, four-bathroom home with a finished basement that suited him and his wife, their three children, his mother and his mother-in-law. "It was a gated community and it was all homeowners and there was no public housing," Terry said. "That was the main reason to buy into this community. It was 100 percent homeowners."
Gardner instantly felt at home inside the gates, too, and paid $212,000 for a condo unit in one of the two-flats. "It's like its own little suburb in the city and that's what sold me," Gardner said. "When I drove in, I said this is home. This is where I want to be."
In 2008, almost 90 of the homes sold, according to public records. A year later, things began to unravel as the local housing market froze; only 13 homes were sold within Galewood Crossings in 2009. The rules allowed rentals, and homeowners say that renters began to occupy some units.
Meanwhile, in May 2009, then-Ald. Isaac Carothers, 29th, and real estate developer Calvin Boender were indicted on federal charges of bribery and corruption connected to the rezoning of part of the site from manufacturing to commercial and residential. In 2010, Boender was found guilty in a jury trial and sentenced to 46 months in federal prison, and Carothers pleaded guilty and was sentenced to 28 months.
In late 2009, Red Seal, which owned nine town houses and six two-flats, began discussing the possible sale of eight town houses and one two-flat to the CHA. The agency, in turn, would rent them to low- and moderate-income families as part of its Property Investment Initiative, a program to buy empty homes in economically diverse neighborhoods.
A contract was signed July 23, 2010. The next day, according to the lawsuit, homeowners considered a proposal to limit rentals in the development to 25 percent of the units, but it did not pass.
On Sept. 20, 2010, the board of Galewood Crossings' master association amended the community's rules to restrict rentals. The big change: Only owners on the date the rules were changed would be eligible to rent their units, effectively killing the sale of units to the CHA. A petition supporting the change was signed by 92 owners.
The CHA and RSD Galewood, the entity established by Red Seal to build Galewood Crossings, filed a fair housing suit in federal court in early December 2010 against the master association's board and its five members. According to the lawsuit, in an early August 2010 meeting to discuss the pending sale of units to the CHA, an unnamed board member told Red Seal and the CHA "we don't need any more poor, black people living here."
"Defendants' motivation for the leasing amendment, however, had nothing to do with property values, but rather was intended to prohibit the CHA from leasing residences to minorities," the complaint states.
In addition to alleging that the master association board's action discriminated against minorities, the lawsuit charged that the process by which the board changed the leasing rule was invalid and sought to rescind the rule.