Editor’s Note: This article contains an addendum featured on NHI’s blog Rooflines or by clicking the “sidebar” link toward the bottom of this page.

Chicago’s southern suburbs, nestled between Lake Michigan, the Calumet River and canals, rail lines, swaths of forest and wetlands, are often overlooked by the general public, legislators, and policy advocates more focused on the famous city to the north.

But these towns have long harbored a wealth of diversity and cultural and economic potential while also facing economic challenges long-preceding the current economic crisis. Now, south suburban community leaders and elected officials are hoping a novel collaborative approach to the federal Neighborhood Stabilization Program (NSP) and other stimulus dollars can help them realize a wider plan for regional collaboration and forward-thinking urban planning, based around transportation corridors and job creation.

South suburban communities including, Harvey, Dolton, and Robbins have suffered severely from high rates of foreclosure for decades. In the past, this was largely because these low-income, largely minority suburbs had many faulty Federal Housing Administration (FHA) mortgages. Moreover, many residents lost jobs as major employers pulled out. But since foreclosure rates were already high, the increase has not been as dramatic as it is in other areas. Meanwhile, solidly middle-class and predominantly white southern suburbs have also suffered many foreclosures in the past two years.

In fact South Cook County has the highest level of REO (real estate-owned) auctions per property in the region at 22 per 1,000 mortgageable properties, according to the Woodstock Institute, with 3,552 foreclosure filings in the first nine months of 2009.

Town officials hope they can find relief through NSP funds targeted for foreclosed properties, and also leverage those funds to fulfill larger plans for reshaping the area. Any one community would have been challenged to obtain NSP funds on their own, since most of them don’t have the staff and resources key to navigating the lengthy, complex application process. This challenge was compounded by the reality that both the State of Illinois and Cook County received direct allocations of NSP dollars to regrant to eligible communities. This positioned dozens of devastated communities in southern Cook County to compete with each other—and area developers—not once, but twice for these federal resources. Instead, south suburban communities banded together under the South Suburban Mayors and Managers Association (SSMMA) to create a plan for the stabilization of their communities. Of the nearly $4 billion of federal dollars which is currently being doled out through the first round of NSP (NSP 1), the State of Illinois itself received approximately $53 million and Cook County another $28 million. By the time the state’s application was due in May 2009, 17 towns were part of the newly formed South Suburban Housing Collaborative and submitted a joint NSP plan. In August, when Cook County’s application was due, Collaborative membership had reached 28 towns.

The Collaborative’s overall plan submitted to the county would cost $72 million to fund, surpassing the amount the county had to allocate, but combined with other funding sources. Ultimately, this plan calls for the acquisition, demolition, land banking, or redevelopment of nearly 700 homes or abandoned lots. Much of the proposed demolition is targeted for areas that can later be redeveloped into larger-scale mixed-use and transit-oriented development. By the time the County proposal was due, Collaborative members knew that the County might receive additional resources through an NSP 2 award, and that unfunded proposals submitted through NSP 1 would likely get first preference.

SSMMA and the Metropolitan Mayors Caucus worked with the nonprofit Metropolitan Planning Council (MPC) to craft the joint NSP applications as part of a broader housing and economic development strategy and to hire the Director of Housing Initiatives, with funds from the Chicago Community Trust. Both applications actually requested funds for only a portion of the communities involved in the Collaborative, with others weighing in with letters of support. The specific plans for NSP funding not only address problem areas hit hard by blight and foreclosures, but envision revitalizing the area by building affordable housing, mixed use developments and public space around train stations and bus routes; and attracting new employers and employer-assisted housing near freight corridors, as the area is criss-crossed by barge, rail and truck lines.

In other words, these communities hope to convert the region into a more stable and thriving place than it was before the crisis.

The first round of NSP of roughly $4 billion was part of the Housing and Economic Recovery Act (HERA) of 2008, with the the second round of $2 billion made available through the American Recovery and Reinvestment Act (ARRA), or “stimulus.” Applications for NSP 2 grants opened in July 2009 with funding awards slated for December 2009 and distributed by February 2010.

An analysis of the ARRA by the Brookings Institution lauded the Chicago collaborations, saying, “The efforts are already yielding rewards. The communities haverealized valuable efficiencies through the process. The state, county, and area developers (who may redevelop areas devastated by foreclosures) are enthusiastic about having a single point of contact—the collaborative coordinators—to reduce the challenges of dealing with the 270 municipalities in the metropolitan area.”