Near the corner of 71st and Euclid, in the south-side lakefront neighborhood of South Shore, sits an ordinary reddish brown brick apartment building that’s a small part of an extraordinary tale. Four years ago, when James Trice decided he wanted to buy it, the ten-unit building was by his account “dilapidated and half-occupied. Some areas had not been lived in for four to five years.”
Without rehabbers like Trice, these once-solid, moderate rent buildings might well have been abandoned, then become eyesores and centers of crime and community collapse. Eventually they would probably be destroyed and lost to the city. Over the past decade the number of such chronically vacant housing units in Chicago increased by 71 percent to roughly 20,000 units, according to a study by the Housing Policy Center.
From the time it opened in 1973 through the end of 1993 the bank had loaned money to renovate 9,079 units of rental housing in South Shore, accounting for some 35 percent of that market. The results are easily observed in the fixed-up facades and strengthened security of many buildings (although abandoned buildings are still sprinkled throughout the neighborhood). Through its lending, the bank not only preserved and improved the neighborhood’s housing stock, but created a new group of African American entrepreneurs and local jobs in the renovation business.
At the same time, there’s growing skepticism about the possibility of community development in poor urban neighborhoods. Journalist Nicholas Lemann recently argued in a controversial New York Times Magazine article that economic revitalization of poor inner-city neighborhoods hasn’t worked, won’t work, and diverts attention from what might work, like more police and better schools. Shorebank, which seems to controvert this argument, is glibly dismissed by Lemann as irrelevant because it deals only with a blue-collar residential neighborhood. In any case, the relative success–or failure–of Shorebank is grist for a renewed debate over poverty and public policy.
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So what lessons have been learned in Shorebank’s 20 years? Here’s a quick assessment: It has worked remarkably well in saving an economically endangered neighborhood, but not as quickly and not in quite the way its founders had hoped. It has demonstrated that at least some kind of economic revitalization is possible in inner-city areas, even if it doesn’t satisfy the ambitious criteria for full-fledged “community development” that are advanced by many community activists, including some actors in the Shorebank saga. It has shown that many of the factors affecting neighborhood economies are regional and national in character, and that there are limits to the improvements a for-profit bank can make without the help of government and committed investors. And it stands as an indictment of the banking industry and public policymakers at all levels, who didn’t recognize its lessons much earlier.
“I remember having the idea that all these things would happen in a couple of years,” she continues, smiling at her naivete. “In six months the bank would be turned around, and in another six months we’d have successes, and in two or three years the banking industry would be interested. Maybe we would then do it in other places, but other banks would also do it in other places. I had no concept it would take this long.”
Yet as bankers, Grzywinski recalls, “we realized what the limitations of a bank are in dealing with the total array of needs. We were interested in creating a permanent, self-sustaining institution that could deal with that broad range of needs.”
