CHICAGO - The Chicago Housing Authority and the city of Chicago are working on a plan to promote minority businesses in the inner city that would involve the issuance of $56 million of bonds, according to Vincent Lane, chairman of the authority.
Mr. Lane, who was speaking at the 22d annual Council of State Housing Agencies conference here, declined to give more details on the program or type of bonds, pending a formal announcement by the city that is expected in October. But he said the plan would be "very unique."
Felicia O. Flowers-Smith, a senior vice president of public finance at Kemper Securities Inc., the investment banking firm working on the project with public officials, said the city would issue the bonds.
She said repayment of the bonds would come from a "direct" funding source rather than tax revenues. The criteria outlining what the proceeds will fund are still being determined, she noted.
Mr. Lane said that, if necessary, the bonds would be supported by a pledge of the city's Community Development Block Grant funds over the next 20 years.
"Without any leverage at all we should be able to create 300 businesses, many of which will be retail businesses," Mr. Lane said, adding that the Chicago Housing Authority is working with the city's Department of Planning and members of the city's "major" religious communities on the project.
Noelle Gaffney, a spokeswoman for Mayor Richard Daley of Chicago, said yesterday the plan is in the "discussion phase" and that the city has not committed to the project.
One public finance official speculated that the plan appears to involve enterprise zones, economically depressed areas in which tax incentives would be offered to start-up companies or to companies willing to relocate there.
Ms. Flowers-Smith declined to say whether the bonds would be tax-exempt. The federal government currently restricts the use of tax-exempt bonds for private purposes to a narrow spectrum of businesses.
Congress is currently considering three proposals that would include federally sponsored enterprise zones.
Mr. Lane, who has received accolades for his public housing initiatives in Chicago, said the purpose of state housing finance authorities is not only to create affordable housing, but to assist in the general improvement of inner-city communities.
"State housing finance agencies play a critical role in rebuilding the urban areas of this country by becoming a little more aggressive and a little more involved in city administration and their local housing authority," Mr. Lane said.
He cited an innovative program in Chicago that provides intensive schooling for inner-city children in four of the city's "toughest" areas.
The program, which he called the "cluster initiative," is a concerted effort by the Chicago Housing Authority, the Chicago Park District, the Chicago Board of Education and private industry.
John Martinez, executive director of the New York State Housing Finance Authority, said his state is also working on different ways to finance inner-city housing projects.
Since 1985, New York has issued $82 million of tax-exempt service contract revenue bonds to finance the construction of over 800 apartment units in New York City, Mr. Martinez said. The bonds are being paid off with revenues from the apartments or services used by residents who receive Aid to Dependent Children payments, Mr. Martinez said.
The apartment complexes provide day care, access to social workers, and other programs to individuals and families.
"That holistic approach is designed to ensure that we move away from warehousing people and get them to become independent," Mr. Martinez said.
Meanwhile, the Michigan State Housing Development Authority recently started a loan program to enable inner-city families to acquire and rehabilitate deteriorated homes, according to James L. Logue 3d, the authority's executive director.