Community organizers and local leaders are urging Mayor Lori Lightfoot to negotiate a resolution to an environmental justice complaint after the federal government threatened to block millions of dollars in federal aid to Chicago.

Citing provisions of the federal Fair Housing Act, community activists in 2020 filed a complaint claiming the city of Chicago perpetuates environmental racism by pushing industrial polluters from wealthier, mostly white North Side neighborhoods to low-income communities of color on the South Side.

In a letter to Lightfoot issued in July, the U.S. Department of Housing and Urban Development agreed with those claims and threatened to withhold HUD grants spread throughout city agencies if the city doesn’t reform zoning and land use policies that civil rights investigators said are discriminatory. In 2021, those grants totaled $375 million.

On Wednesday morning, members of the same community organizations that filed the complaint called on Lightfoot’s administration to negotiate a resolution and stop putting low-income South Side communities further at risk by threatening needed funding for housing and other federally funded programs.

“The fact that the mayor is risking federal funding is just a perpetuation of punishing the poor,” said Gina Ramirez, senior adviser of Southeast Environmental Task Force.

Gina Ramirez, who fought against allowing a metal recycling yard on Chicago’s Southeast Side, speaks to reporters outside the County Building on Clark Streeton Feb. 18, 2022, after it was announced that the Chicago Department of Public Health denied the recycler's permit application to operate. (Terrence Antonio James / Chicago Tribune)

The federal funds support programs including Ryan White HIV/AIDS Program health services and programs that support people experiencing homelessness and victims of domestic violence, among many others.

“The funds that she is putting at risk are going to affect real people,” said Chris White, organizing director of Alliance of the Southeast.

The two-year investigation was prompted by city actions that made way for General Iron Industries, a scrap shredder, to leave Lincoln Park in 2020 and relocate to the Southeast Side.

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.

Jacy Gage, director of HUD’s compliance and disability rights division, said the federal agency shared its findings with the Lightfoot administration in February, just before the Chicago Department of Public Health abruptly rejected the last permit needed to open the scrap shredder location on the Southeast Side.

Reserve Management Group facilities can be seen on Feb. 16, 2022, in the East Side neighborhood of Chicago. General Iron, a chronic polluter and scrap shredder that closed its Lincoln Park facilities on the North Side, planned to move operations to a site on the Calumet River in the East Side neighborhood. (Erin Hooley / Chicago Tribune)

“Disparities in environmental burdens and their health effects were well known by the city and raised by residents and experts,” Gage wrote in the letter dated July 19. “Yet the city took significant actions towards the relocation without considering how the relocation would exacerbate those disparities.”

During Wednesday’s virtual news conference, Ald. Byron Sigcho-Lopez, 25th, said it’s important for government agencies like the Chicago Department of Public Health and Illinois Environmental Protection Agency to collaborate to address issues of environmental justice.

“All these agencies should be working toward addressing environmental justice,” Sigcho-Lopez said. “Not taking this matter to the courts to try to justify what is unjustifiable.”

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

Ald. Byron Sigcho-Lopez, 25th, speaks during a news conference denouncing General Iron's proposed move from the North to the South Side on Feb. 16, 2022, at Chicago City Hall. (Erin Hooley / Chicago Tribune)

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 city health department study confirmed that neighborhoods near the Reserve Management Group scrap shredder site are significantly more vulnerable to pollution than the North Side neighborhoods where the company operated the now-defunct General Iron shredder.

“We’re dealing (with) a housing discriminatory legacy for decades and this is the opportunity to change that,” Cheryl Johnson, executive director of People for Community Recovery, said.

Johnson, a longtime resident of public housing on Chicago’s Far South Side, said the city should be ensuring more affordable housing options after years of disinvestment in Black and brown communities instead of risking needed federal funding. She said the city has already fallen short on its promises to replace public housing that has been torn down.

“I don’t think the city of Chicago has the resources to jeopardize HUD funding when it comes to supporting affordable housing,” Johnson said.