Commercial development and job opportunities, key elements for the success of the mixed-income communities created by the CHA Plan for Transformation

• By Robin Snyderman
• June 16, 2004

On May 26, in a forum attended by almost 200 people, national and local experts and policymakers shared their ideas about jobs and retail as critical, basic components in the development of mixed-income communities. The forum, co-sponsored by MPC and the John D. and Catherine T. MacArthur Foundation in collaboration with the Chicago Housing Authority, was part of the series “Building Successful Mixed-Income Communities.”

The forum was moderated by David Baker, vice president of external affairs for the Illinois Institute of Technology and MPC Board Member. IIT is located in the vicinity of Park Boulevard (one of the future mixed-income communities created through the CHA Plan for Transformation in place of the former Stateway Gardens). David discussed IIT’s plans to devote nine acres of its campus to commercial development and job “incubators,” as well as its employer-assisted housing program, which will provide $7,500 for down payment assistance and closing costs to IIT employees buying a home in Park Boulevard.

Terry Peterson, CEO of the CHA, and Denise Casalino, commissioner of the Chicago Department of Planning and Development (DPD), gave opening remarks. CHA and DPD, along with other city departments such as transportation, housing and human services, have partnered in multiple joint collaborations since the beginning of the CHA Plan for Transformation in 1999. Currently, more than 30 DPD planners work in support of the development of the Plan for Transformation. DPD is investing resources to attract and retain retailers in many areas where the Plan for Transformation is in motion, such as the former Rockwell Gardens site on the West Side (which will be redeveloped as the West End mixed-income community), the intersection of 39th and State streets (which will serve both Park Boulevard and Legends South, formerly known as Robert Taylor Homes), or the Cottage Grove Corridor — from Pershing Road to 51st Street — which will serve Oakwood Shores (formerly known as the Madden/Wells/Darrow site), and the future mixed-income communities on the lakefront, Jazz on the Boulevard  and Lake Park Crescent .

The forum’s speakers were:

• Jeremy Nowak, President and CEO, The Reinvestment Fund (Philadelphia)
• Sokoni Karanja, President and Founder, Center for New Horizons
• Phyllis Martin, Executive Director, Financial Research and Advisory Committee (FRAC)

Jeremy Nowak, Sokoni Karanja, and Phyllis Martin.  (Photo by Mary Johns, courtesy of We The People Media.)

Since its founding in 1985, The Reinvestment Fund has combined community organizing and successful financial development in a strong organization with a regional scope. In nearly 20 years, the Fund has created, renovated or preserved over 9,300 homes; created or retained over 18,000 jobs; and created, renovated or preserved over 3.5 million square feet of commercial space in the Philadelphia region — among other achievements. Its president and CEO, Jeremy Nowak, talked about lessons learned in Philadelphia that can be applied to Chicago.

According to Mr. Nowak, mixed-income communities are successful when one or more of their basic markets (business location market, real estate market, job market) are competitive. The simultaneous investment in quality businesses and labor, both through people-based and place-based strategies, is part of the recipe for success. He also emphasized the need for a network of financial and civic power extending from low-income places to business associations. Sometimes, the logic of community development (based on local needs, redistributive solutions, and job creation) may conflict with the logic of economic development (more focused on regional goals, generation of wealth, and productivity). Policymakers, practitioners and other stakeholders should look for the connections between these two logics when planning and building mixed-income communities. Examples of these linkages are:

• The positive impact that the redevelopment of urban enclaves may have in the overall regional economy;
• The use of region-wide institutions (such as educational, medical and cultural centers) and transportation hubs to support mixed-income communities located in previously disinvested areas; and 
• The connection between local workforce development and regional business growth.

According to Mr. Nowak, distressed urban neighborhoods pose unique economic development challenges. Mixed-income communities will play an important role in the urban communities of the 21st century, facilitating of wider social mobility, creating of public wealth, and strengthening political unity. The early development and sustainability of mixed-income communities requires economic logic and predictability for developers, and amenity premiums for consumers. Some of the “tips” that apply to the development of mixed-income communities are:

• Developers and investors need clear rules that mitigate risk and transaction costs;
• Early development must always provide an extra market premium signal;
• Construction and design quality for different price points should not diverge significantly;
• Excellent management and tenant selection in rental properties is key; 
• Retail options for middle-income residents have to be available;
• Proximate development landscape has to be hopeful; and 
• Perceptions about public safety and school options are key drivers.

In general, change occurs from the particular to the general, rather than through “sweeping” system reforms in the absence of tangible practice. “Mixed-income communities will be the difference between our cities making it or not making it,” Mr. Nowak concluded.

You can download a summary of Jeremy Nowak’s presentation in pdf  format by clicking here .

Sokoni Karanja, president and founder of Center for New Horizons (CNH), spoke primarily about CNH’s role as a Service Connector —successes, challenges, policy barriers, and opportunities. CNH is one of the 10 Service Connector agencies selected by the city to provide case management and services to more than 11,000 public housing residents affected by the Plan for Transformation. Founded in 1971, the Center is one of the largest employers in Chicago's mid-South area, with 235 staff members and a $10 million annual budget.

CNH was awarded $2.4 million by the Chicago Department of Human Services in October 2003. As of May 3, 2004, it has 1,728 households in its caseload — 1,206 are in the Altgeld Gardens/ Phillip Murray Homes development, 410 are Housing Choice Voucher (HCV) holders, and 112 are families living in scattered sites. The staff-to-client ratio is 1:55, which will require CNH to hire 32 case managers and four supervisors. The HCV holders and scattered-site households are located in the Bronzeville, Armour Square, Douglas, Near South Side, Oakland, Fuller Park, Grand Boulevard, Kenwood, Washington Park, and Hyde Park community areas. The contract period is October 1, 2003 – December 15, 2004. Extensions on the current contract will not be granted until a new RFP is issued.

The program has four goals:

• To assist residents with obtaining their first housing choices. This can only be accomplished if the rent and utilities are current, the household can pass the housekeeping inspections, there are no illegal tenants, school- age children are in school, the household complies with the 30 hours per week work responsibility requirement (soon to be implemented), and the residents can pass the criminal background and credit checks.
• To assist residents with increasing their household income. Residents must obtain employment or some form of income because the $0 rent has been discontinued.
• To stabilize families. All school-age children must be in school, residents who are mentally ill and/or using illegal drugs should be in treatment, residents in need of medical treatment must be referred to physicians, victims of domestic violence have to receive assistance, rent payments must be current, etc.
• To assist residents with connecting with their communities, such as joining block clubs, parents and teachers associations or other organizations, attending church, voting, etc.

Despite initial challenges — such as accommodating a much larger staff due to lack of space, and locating HCV holders who had moved several times since their first relocation — CNH has made steady progress. CNH’s employment team brought the GED program to Altgeld Gardens. CNH also started a traveling basketball team that recruited out-of-school youth, got them into the GED program, and benched them when they didn’t attend class. Most of the players have taken the GED test and passed. CNH has developed a working relationship with Altgeld-Murray’s property manager, East Lake Management, and is now meeting with its staff on a regular basis. Residents who are behind in their rent are referred to the Service Connector office, where case managers assist residents during the zero rent interviews and have been successful in having residents’ rent reduced. CNH held job fairs in Altgeld-Murray and Bronzeville in the spring of 2004 (to date, more tha 100 people have accessed jobs), and hosted a Domestic Violence and Sexual Assault seminar.

In addition to these achievements, the Service Connector program has provided a vehicle through which CNH was able to locate individuals who were skilled in areas of expertise that are greatly needed in Bronzeville.

For more information on CNH’s role as a Service Connector, click here.

Phyllis Martin, executive director of the Financial Research and Advisory Committee (FRAC), profiled the Mixed-Income Retail Investment (MIRI) project, an initiative looking at opportunities and needs for retail/commercial attraction and retention around mixed-income communities located in the South lakefront area (which includes the future mixed-income communities of Park Boulevard, Legends South, Oakwood Shores, Jazz on the Boulevard, and Lake Park Crescent) and the Rockwell Gardens area (which includes the future mixed-income communities of Westhaven and West End). For a map showing the location of these communities, click here . FRAC is a pro-bono consulting group founded in 1987 by the Civic Committee of the Commercial Club of Chicago that drives improvements in city operations and its sister agencies through research, consulting and partnerships with service firms, corporations, universities and foundations.

Co-sponsored by the Partnership for New Communities and Bank One, the MIRI initiative has created a team of retailers, retail developers, financial institutions, policymakers and commercial development experts that will focus on finding ways to spur private sector investment in support of the CHA Plan for Transformation.

Ms. Martin started her presentation by pointing out some of the factors that drive retail investment into a community, such as significant public and private residential investment, market forces moving toward the area, and the existence of unmet demand. Some of the challenges to retail investment are the retailers’ aversion to risk, the limited amount of suitable land for retail, difficulties in estimating economic conditions, and existing competition.

FRAC is proposing two concepts for retail development around mixed-income communities:

• A first model based on a large (around 65,000 sq. ft.) retail anchor acting as a catalyst, in combination with 10 to 15 small retailers, for a total of around 120,000 sq. ft. of commercial space. This model needs between six and nine acres of land to be developed.
• A second model where the catalyst is a medium (around 15,000 sq. ft.) retail anchor surrounded by 5 to 10 small retailers, for a total of about 40,000 sq. ft. of commercial space. This model needs between two and three acres of land to be developed.

In both models, the anchor co-locates with other retailers to drive traffic, small businesses help the developer achieve the desired rent revenue, local entrepreneurs benefit from being included in the retail cluster, and the community receives a mix of goods and services.

The two areas that FRAC is analyzing, the South lakefront area and the Rockwell area in the Near West Side show promising signs in terms of demographics, public and private investment (existing and planned), and current retail profile. FRAC has identified three sites in each of these areas as ideal locations for new retail. At least $18 million in subsidies would be needed to support the private sector and jumpstart these sites. Additional funding would be needed to support small businesses both in the retail clusters and the nearby neighborhoods.

According to Ms. Martin, closing these deals will require a committed partnership between the City of Chicago, private sector, and local communities:

• The city needs to market and promote retail investment opportunities, lead the acquisition process of the targeted sites, and secure incentives to close funding gaps.
• The private sector needs to marshal private and public resources to pursue and close the deals, create capital investment funds, and foster development and expansion of local businesses.
• The local communities need to ensure that retail development aligns with the community vision, link local businesses with funding and advisory resources, and champion key stakeholders to support investment.

For learn more about economic indicators in communities affected by the Plan For Transformation, click here.

After the three presentations, the speakers had a chance to exchange questions and comments between themselves. Dr. Karanja asked Mr. Nowak about the linking of public housing residents to the economic engines in Pennsylvania. Mr. Nowak responded that this is being done sector by sector. For instance, they are linking training programs to hospitality jobs in conventions centers and hotels, and also creating business incubators with a focus on customer services. According to Mr. Nowak, trainings need to feel like real work and lead to the learning of both hard and soft skills. It is also very important to maintain ongoing relations both with the people engaged in these programs and the companies, in case they need follow-up assistance or help with conflict resolution. This creates a stronger relationship between employers, employees and organizations like CNH, which are providing services.

Ms. Martin asked Mr. Nowak how he created his organization and whether it would be possible to start a similar organization in Chicago. Mr. Nowak answered that it is very important to know what kind of money is needed, who is already doing that work, and where there are gaps. The job of the Fund, through professional managers, is analyzing where the gaps are and working to fill them.

A thirty-minute question and answer session closed the forum. One common concern for the audience was controlling gentrification in areas transitioning from disinvestment to redevelopment. Mr. Nowak asserted that gentrification is not necessarily a bad thing and is always preferable to disinvestment. He further stressed how important it is to be clear in assessing who local gentrification is benefiting vs. who it is hindering (renters, landlords, long-time homeowners…). Then, the challenge is to design a strategy that minimizes the negative impacts by introducing pertinent measures, such as property tax caps for long-time elderly homeowners, or development and preservation of sufficient affordable rental homes. Policymakers should be careful not to introduce measures that would hurt property values in the long-term. Another attendee asked Dr. Karanja about CNH’s relations with policymakers. He responded that CNH is mainly an advocate for residents in the community and that the organization's  goal is to create paths to self-sufficiency. One of the measures toward self-sufficiency that he would like to see more support for by policymakers is cooperative and mutual housing in Bronzeville, an idea that is being developed already in Hyde Park.

MPC on Twitter

Follow us on Twitter »