Cecil Lawrence and his children. Photo by Shlomo Krudo. to provide assistance in job creation and housing rehabilitation with an emphasis on cooperative ownership. TNI recently organized a for-profit real estate subsidiary to expand its development capacity. The South Shore Bank and its affiliates have developed effective mechanisms for making credit available to low- and moderate-income people. Since 1973, over $75 million has been dispersed in "development loans." Bankers have traditionally avoided such lending, assuming they would lose their shirts. Yet the repayment rate on these loans is 98 percent. The total capital invested by the four divisions of the holding company combined exceeded $150 million at the end of 1986. Funding Housing Cooperatives Genesis is an example of South Shore's success. Initiated by TNI, Genesis is a "sweat equity" project in which community members worked eight hours a week for one and a half years to renovate an abandoned 26-unit apartment building. Once completed, workers would be members of the cooperative owning the building. Cecil Lawrence, a bus driver since 1976, was the first to apply for membership in Genesis. He had doubts when he saw the building. "It was dirty. The place was boarded up and a section was burned out. It was a total disaster. I didn't believe anyone could transform a place that looked that bad." Lawrence and 14 other members, with instruction and training from professional carpenters, hammered, painted, re-finished floors, and hung doors. With the building completed in 1982, Lawrence was elected the first president of the Genesis Cooperative. "When you become a member of a co-op, your responsibility changes. You're not just a renter any more. You have to be able to take care of your own building and its problems because nobody else is going to do it for you," says Lawrence. Lawrence's building has become one of the cornerstones of a new TNI program for improving the entire block. Lawrence recently led training sessions for Genesis Two, a 27-unit TNI cooperative being rehabilitated. Because of the experience, he may pursue professionally the training of co-op members in building management. Reversing the Money Drain Gryzwinski and his associates founded the South Shore Bank with the dual goal of initiating a permanent community renewal process and making a profit. The bank has been profitable since 1975 and in 1985 had a 1.1 percent return on average assets (the industry's norm is 1 percent). This has been done by operating on an active policy of reinvestment and bringing a net inflow of capital into the South Shore area. Banks are generally considered to be doing an adequate job if 50 percent of deposits go to loans. Increasing criticism is leveled today at financial institutions because too much is loaned outside the com- munity-often in real estate or foreign loans. Other deposits go into the securities portfolio to boost shareholder profits. South Shore's innovation is to reverse the flow of capital. By policy, 65 to 70 percent of its assets, many of them from outside Chicago through its "Development Deposit" program (see "Socially Responsible Investment Funds Guide," page 8), are in loans of which half are within its community. The remaining assets are kept liquid and are used for normal bank management. South Shore Bank's success has made it a national model and led it to expand its operations to meet the credit needs of other deteriorating communities. A new branch recently opened in Austin, a large (138,000 people) far west side community in Chicago. The bank and its affiliates will bring their expertise to provide homeowner loans, rehabilitate largePage 19
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