Historical Housing Discrimination, Redlining, and the Contemporary Distribution of Local Economic Development Funding: The Case of Chicago

Local economic development programs, which provide financial support to attract, retain, or expand businesses and increase economic opportunity in local communities, are a powerful tool available for local governments to ameliorate the impacts of systemic underinvestment in particular areas. Using the residential security maps produced by the Home Owners’ Loan Corporation (HOLC) and the Federal Housing Administration (FHA) for Chicago, Illinois, this paper examines the extent to which local economic development funding is being directed to areas that suffered historic (pre-1940s) discrimination and (post-1940s) underinvestment. This author finds that areas designated by the HOLC and FHA as “risky” receive more local economic development funding than “less risky” communities. Moreover, the author finds limited evidence that this local economic development funding is correlated with changes in the median home values of these communities.