Feds slam Chicago for locating polluters in poor and minority neighborhoods, threaten to block millions in aid

The Biden administration is threatening to block millions of dollars in federal aid to Chicago unless Mayor Lori Lightfoot reforms zoning and land-use policies that civil rights investigators concluded are discriminatory.

Time after time city officials have encouraged polluting industries to move from white neighborhoods to Black and Latino communities that already suffer disproportionately from environmental maladies, the U.S. Department of Housing and Urban Development declared Tuesday in a letter to Lightfoot.

The letter summarizes a two-year investigation prompted by city actions that greased the way for General Iron Industries, a clout-heavy scrap shredder, to leave wealthy, mostly white Lincoln Park and relocate on the city’s Southeast Side.

Black and Latino community activists in the low-income area near the Indiana border petitioned HUD in 2020, accusing Lightfoot and her predecessors at City Hall of perpetuating racial segregation and housing discrimination in the nation’s third-largest city.

If changes aren’t adopted, HUD warned, the housing agency could withhold grants spread throughout city agencies. Those grants totaled $375 million during 2021 alone.

“Many of the processes discussed in this letter remain unchanged and are ripe to be repeated,” Jacy Gage, director of HUD’s compliance and disability rights division, wrote in the letter to Lightfoot.

General Iron, which had a long history of pollution problems on the North Side, was on track to become the latest polluter in a long-neglected corner of Chicago, where residential yards, baseball fields and playgrounds are contaminated with heavy metals and toxic chemicals from other companies, including steelmakers that abandoned the area decades ago.

“Disparities in environmental burdens and their health effects were well known by the city and raised by residents and experts,” Gage wrote. “Yet the city took significant actions towards the relocation without considering how the relocation would exacerbate those disparities.”

Though the letter was dated Tuesday, Gage noted that the federal agency had shared its findings with the Lightfoot administration in February. Shortly afterward, the Chicago Department of Public Health abruptly changed course and rejected the last permit needed before the Southeast Side scrap shredder could open.

The decision left General Iron’s corporate successor with piles of flattened cars, twisted rebar and used appliances surrounding an idled machine built along the Calumet River under a deal executives thought they had brokered with Lightfoot.

Reserve Management Group, an Ohio-based company that bought the North Side operation before closing it at the end of 2020, is appealing the permit denial.

In a statement, a Lightfoot spokesman accused HUD of leaking the department’s letter to journalists. Not mentioned is the fact that three community groups are copied on the letter and shared the findings with local media.

“Any allegations that we have done something to compromise the health and safety of our Black and Brown communities are absolutely absurd,” the mayor’s office said in its statement. “We will demonstrate that and prove them wrong.”

During their investigation, federal housing officials found many of the same problems that community activists and City Hall already have documented.

For instance, more than 75 polluters on the Southeast Side have been investigated for Clean Air Act violations since 2014, including companies that contaminated yards and playgrounds with brain-damaging manganese and lung-damaging petroleum coke.

People living on the Southeast Side breathe some of the city’s dirtiest air, monitoring data shows. A study by the city health department confirmed that neighborhoods near the RMG site are significantly more vulnerable to pollution than the North Side neighborhoods where the company operated the now-defunct General Iron shredder.

City officials working for Lightfoot and former Mayor Rahm Emanuel worked closely with RMG and General Iron executives to clear regulatory hurdles for the Southeast Side operation, HUD investigators found. They even coordinated statements to the public and to local news outlets.

The Chicago Board of Zoning Appeals, led by mayoral appointees, “refrained from exercising its broad authority to conduct fact finding” and approved the new shredder “based on assertions by the companies alone and without any meaningful consideration of the numerous concerns with the environmental impact of the new site,” the letter concluded.

In mid-February, before the permit decision, a HUD official complained in another letter that city officials had failed to release records to civil rights investigators in a timely manner, writing the Lightfoot administration “severely delayed the production of requested materials without good cause.”

Some records were withheld from the feds but given to the media. It took “an inordinate length of time to produce” other records, the HUD letter said.

Heading into a reelection campaign, Lightfoot has been under fire from activists who contend she has done little other than acknowledging the racial, economic and environmental divide in one of the nation’s most segregated cities.

Biden, a fellow Democrat, came into office pledging to address the nation’s long-standing racial disparities, in particular the concentration of dirty industries in poor communities.

Underlying the shredder dispute are zoning ordinances intended to encourage and protect industry in certain parts of Chicago.

General Iron lost those special protections under Emanuel, who backed the transformation of properties zoned for industrial use along the North Branch of the Chicago River into the upscale Lincoln Yards development.

The Southeast Side scrap shredder, built amid the ruins of the former Republic Steel mill, is in another planned manufacturing district, which includes several of the city’s dirtiest industries.

Tweaks made during the Emanuel administration encourage industrial development and retention in 20 corridors throughout the city where white Chicagoans account for just 20% of the population, the HUD letter noted.

Federal investigators concluded the new policies are intended to funnel upscale, nonindustrial development similar to Lincoln Yards into three other corridors that are 68% white.

“Textbook environmental racism,” Olga Bautista, executive director of the Southeast Environmental Task Force, said in a statement co-authored by Cheryl Johnson of People for Community Recovery and Gina Ramirez from the Southeast Side Coalition to Ban Petcoke.

In an interview, Bautista hailed the federal agency for validating the concerns of community activists.

“Now we need to make sure the city follows through, and we get the results we need,” Bautista said. “We’re not done. Now the real work begins.”

mhawthorne@chicagotribune

gpratt@chicagotribune.com