City should have cut off Rezko: aldermen

SLUMS | Daley administration slammed for not acting when 1st building fell into disrepair

The spigot of loans, grants and tax credits should have been cut off when the first of 30 taxpayer-supported Rezko buildings in Chicago fell into disrepair, the aldermen said.

Instead, a Chicago Sun-Times investigation showed that the city, state and federal governments kept the gravy train rolling -- to the tune of $100 million between 1989 and 1998. The lending to Rezko continued, even as the city repeatedly sued his company, Rezmar Corp., for such basics as no heat.

"They were going after people for being slum landlords in one department and loaning them money in another. That's one of the bureaucratic issues we've got to resolve," said Ald. Freddrenna Lyle (6th). "You have to at least suspend the payments until you can get some compliance."

Lyle stopped short of accusing Mayor Daley of deliberately turning a blind eye because of the $55,950 in campaign donations he got from Rezko. Instead, she blamed bureaucratic bungling.

"In every one of our departments, there's some bureaucratic snafu because somebody sitting at one desk doesn't know what somebody else is doing down the hall," Lyle said. "The right hand doesn't know what the left hand is doing."

License Committee Chairman Eugene Schulter (47th) called the Rezko case a "wake-up call" for the city's Department of Housing. "You've got to manage your projects a lot better and hold developers' feet to the fire," he said.

Ald. Pat O'Connor (40th), the mayor's unofficial City Council floor leader, added: "If the Housing Department didn't do the job, that's the department that should get the focus -- not who the personality is. . . . Whether it's Rezko or Rockefeller or Pat O'Connor, if you own a building and you're not doing the right thing, they should be in there doing whatever they're supposed to do."

Housing Department spokeswoman Molly Sullivan said the city was a secondary lender to limited partnerships that had Rezmar, Rezko's company, as general partner, and "we did not have the authority to replace them."

She stressed that no housing units were lost as a result of Rezko's foreclosures and that the nine Rezko partnerships that received city money represent only 730 of the 26,925 low-income rental housing units supported by the city since Daley took office.

Outgoing Ald. Burton F. Natarus (42nd) recalled that Rezko approached him on two occasions over the past four years with a pitch to develop a River North building. "I threw him out of the office," Natarus said. "I didn't like the way he stared at me. I didn't like the way he handled himself. I didn't like his record."

Daley got elected on a promise to build more affordable housing and made a big show of complaining about Housing Department loans his predecessors made to clout-heavy developers.

Rezko and his partner, Daniel S. Mahru, applied for their first loan six days after the mayor's 1989 election and fast became one of City Hall's favorite developers of low-income housing, even though they had no construction experience.

In October, federal prosecutors accused Rezko of defrauding Illinois taxpayers and said he helped shake down a company seeking state pension business for political contributions to Gov. Blagojevich. Rezko is fighting the charges, and Blagojevich has said he knew nothing of Rezko's alleged wrongdoing.