munity Action Program—who, like Davis, had no experience in banking. Grzywinski hired Mary Houghton, a white 27-year-old graduate of the Johns Hopkins School of Advanced International Studies. Together, the four of them made the program work. Chicago is often considered the most segregated city in America. Local residents joke that the definition of integration is the period between the arrival of the first black family and the departure of the last white family. When neighborhoods go from white to black, banks and other in s t itu t ion s norma lly quit investing, hastening the slide into decay. Watching th is happen all around Hyde Park, Grzywinski and company began talking about how to reverse the process, how to bring capital back into black communities. Gradually the idea of using a bank as the stable, profit-making base for other development efforts emerged. When South Shore Bank came on the market, Grzywinski had raised only $800,000. But the opportunity was too good to resist. Only a few miles south of Hyde Park, the South Shore neighborhood was not yet too far gone to help. As a white community, it had been middle and uppermiddle class, w ith single-fam ily homes of all sizes and gracious, red brick apartment buildings from the 1920s. It was bordered by Lake Michigan on the west and a park on the north and was only 15 minutes from downtown Chicago. Despite a 98 percent racial turnover in the preceding decade, the neighborhood was still perhaps two-thirds middle and working class, only one-third underclass. For all its amenities, however, South Shore was headed rapidly downhill. “There were no loans being made,” says James Lowell, community affairs manager for the Federal Reserve Board. “The bank wanted to pull out; it did not want to deal with black people, period. The neighborhood was going to lose its park, because the city felt it was just going to be a crime hazard. The shoreline was becoming a disaster area. A lot of those old, beautiful buildings were just crumbling. An awful lot of units had been walked away from.” In 1973 Grzywinski and his colleagues bought the bank, putting down their $800,000 and borrowing the rest—more than $2.4 million. They launched a variety of aggressive lending programs: single-family mortgages, small-business loans, consumer loans. This lending program worked. Though at that time not one other bank or savings and loan would lend to anyone in the neighborhood —bankers had reflexively begun redlining as soon as the neighborhood went black—Shorebank had no problem with foreclosures. By 1980 other institutions had entered the market in South Shore. Most of Shorebank’s other efforts failed, however. Between 1974 and 1980 Grzywinski and his colleagues loaned $6.7 million and provided heavy technical support to small businesses. Outside of loans to McDonald’s franchises, the results were dismal. Most of the businesses went under, and by 1980, 71st Street, the main shopping strip, looked worse than it had in 1973. With small interest. Even so, it took an intensive nationwide effort to attract them, since the bank ’s ne ighborhood wasn’t exactly filled w ith eager depos ito rs . Today development deposits account for almost half of the bank’s $150 million deposit base. Gradually it became clear that the key to stabilizing the neighborhood wasn’t so much reviving its commercial areas as rehabilitating the apartment buildings that housed 70 percent of its people. When buildings are abandoned in a neighborhood like South Shore—as they were in rising numbers throughout the ’70s —the empty hulks become targets for arson, hangouts for drug dealers, and homes for junkies. Crime grows, law-abiding residents flee, and more bu ild ings are abandoned. Once things get that bad, no amount of loans or rehab projects will stop the "Real estate here doesn't makesensefor investors. It'sgotta befor hands-on people.” stores—not to mention threatening teenagers loitering on the sidewalks —71st Street merchants could not compete with the shopping malls. The most dramatic failure came when a black merchant located catercorner from the bank—who was one of Shorebank’s first and most promising borrowers—tied up two Small Business Administration employees who had come to foreclose on him and burned down his building, with them inside. Throughout the ’70s the bank limped along, its profits in the bottom 25 percent of all banks; federal examiners pressured its managers to tighten up their loan portfolios. As high interest rates buffeted the Rustbelt economy, two black-owned banks on the edge of the neighborhood failed. South Shore Bank survived primarily through the invention of what is called “ development deposits” : large deposits made by institutions and wealthy individuals who shared the bank’s social goals. Some depositors accept below-market rates to subsidize Shorebank’s work, but generally these deposits offer market rates of process. And because most residents worked outside of South Shore, bringing jobs in was less important to them than saving the existing housing. At the time, financial institutions refused to offer mortgages on apartment buildings in Chicago’s poor, black neighborhoods. They had tr ie d and — as G rzyw insk i was warned by the chairman of one local savings and loan—they had failed. But-Shorebank’s managers decided to try anyway. They put in charge a young man who had started with the only made loans in South Shore, and only to people who agreed to rehab their buildings. He then worked with them c lose ly, even sponsoring monthly meetings where the growing stable of landlords could swap trade secrets. For the most part, they were people who had never before been landlords. “ Real estate here doesn’t make sense for investors. It’s gotta be for hands-on people,” Bringley says. “ It’s generally people with blue-collar mentalities, who don’t mind spending their nights and weekends. It’s not a coat-and-tie business—the dirtier you come in the better....You go in and buy a bad building, you got drug dealers, you gotta get these people out.” As the new landlords filled up one building with paying tenants, they bought another, then another. Today South Shore has a core of about 50 housing entrepreneurs,- some of whom own as many as ten buildings. They have learned the trade; some have taught themselves Spanish to communicate with their low-cost crews. By investing in the neighborhood’s primary resource, its housing stock, they have kicked off a development process that has its own momentum; each renovated ,apartment building adds to the value of the last, and makes the next one easier. Driving Sduth Shore’s tree-lined streets, one sees elegant courtyard buildings that would fit well into the tonier north side neighborhoods. The brick is freshly sandblasted; the grounds are immaculate; wroughtiron fences and gates lend the old buildings an air of grace. There are still pockets of decay, but the better blocks bring to mind a white, well-todo community in the 1940s, not a black, inner-city neighborhood in the 1980s. As important as Bringley’s entrepreneurs have been to South Shore, there are some areas they would not touch. One area, known as Parkside, had been designated the site of an urban renewal project that was never carried through. With seizure by eminent domain seemingly, a certainty, landlords had quit maintaining their buildings. By the mid-’70s, nearly half of the large apartment buildings in the area were tax delinquent, most well on their way to abandonment. After taking a close look, Bringley concluded that no rational person would buy and rehab a building there. He recommended a large, government-subsidized rehab project as the only way to stem the area’s decline. City Lands Corporation, Shorebank’s real es ta te deve lopmen t f irm , brought in First National Bank of Chicago and another real estate development firm as partners, and together they structured a package that used heavy public subsidies and syndicaByinvestinginthe neighborhood'shousingstock, theyhavekickedoff adevelopment process. bank as a teller supervisor, Jim Bringley. Bringley is a nuts-and-bolts, bluecollar, get-it-done type. Slowly, carefully, he began lending to people who wanted to buy apartment buildings. He started with three- and six-flat buildings and gradually moved up. He tion to limited partners, who invested as a tax shelter. They bought 25 buildings, tore down five for parking lots, and ended up with 446 units of moderate- and low-income housing— the largest such rehab project in state history. With deep federal subClinton St. Quarterly—Fall, 1989 13
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