A $291 million bond issue by the Chicago Housing Authority (CHA) in December 2001 represented the first such issue by a public housing authority (PHA) in decades. A little more than a year later, smaller PHAs are preparing their own bond issues by banding together and committing their combined resources.

The "resources" in both of these cases are annual capital grants provided to PHA's by the U.S. Department of Housing and Urban Development (HUD). Like other housing authorities, the CHA receives annual grant money from HUD to be used for capital improvements. The annual grant amount fell short of CHA's immediate needs under an aggressive $1.5 billion capital program to produce 25,000 new or rehabilitated public housing units over 10 years. Proceeds from the bonds allowed CHA to move forward quickly on its modernization program, so that the authority is now two years ahead of schedule toward meeting its goal.

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