Inner-city projects get closer look as good investment
Chicago — The new row of red brick townhouses and the apartment high-rise stand straight and tall, a clear point of pride in one of Chicago's most blighted inner-city neighborhoods. It is the first privately financed housing construction in Lawndale since the riots of 1968 leveled large sections of this West Chicago area.
Lawndale Terrace is in many ways a symbol of rising business confidence that a growing number of neighborhood improvement projects deserve support - not as do-good ventures, but as calculated business investments that can turn a profit while helping a community in need.
An important catalyst in this new concept is a nonprofit Ford Foundation offshoot called the Local Initiatives Support Corporation (LISC). Started almost two years ago with an initial pool of nearly $10 million from Ford and six major corporations, LISC disperses its funds gingerly, preferably as loans and guarantees rather than grants.
As director Mitchell Sviridoff explains, LISC seeks out community development organizations with proven track records in management capability and an effective relationship with the private sector and local government.
Similarly, despite the recession, business has responded with dollars and expertise in impressive amounts. LISC assets, now fed by 85 corporations and 30 foundations, are expected to total $35 million before the end of this year. Some 19 cities now have LISC advisory committees, made up largely of donors, to put their seal of approval or veto on applicant projects.
In Chicago, for instance, which accounts for more than one-third of LISC's 30 projects to date, local coordinators and the LISC advisory committee have managed to raise close to $3 million, including a matching Ford grant, during 1981. It is more investment capital than has yet been raised in any other city.
Unlike the national 50-50 ratio of loans to grants, Chicago has managed a healthy 4-to-1 ratio, which has helped to stretch available resources even further, according to Chicago LISC representative Allison Davis.
Not even its founders claim LISC is or will be a panacea for the problems of neglected inner-city neighborhoods. But its flexibility helps in trying to bring about a significant change. While there has been a heavy emphasis on housing construction and rehabilitation, LISC also encourages development of office complexes, shopping centers, industrial parks, and even new businesses.
A community development group in Cleveland, for instance, has a technical assistance grant to conduct a survey of one neighborhood's need for commercial space. And Asian Inc. in San Francisco has a LISC loan to revamp an existing building as a child care center and as housing for the welfare mothers who will run it. A South Bronx group, by contrast, will receive staff and consultant support to operate a greenhouse and energy conservation business.
''LISC is only one of the things that can make a difference (in neighborhood revitalization), but it's an example of the kind of thing that's often needed to get a project off the ground,'' says Fidel Lopez, head of the Area Development Division of Continental Bank, one of LISC's founding sponsors. ''If a project can be made more businesslike, business is more likely to get involved.''
In the Lawndale Terrace project, for instance, Pyramidwest Realty and Management Corporation leaned on LISC and the Continental Bank not for a loan or grant but only as a needed backup to guarantee loans from other sources. As Cecil Butler, who heads Pyramidwest, points out, those letters of credit issued close to two years ago have never been drawn on. Recently LISC offered the same group a $250,000 loan, but only if it could raise $1.2 million in loans from other sources to build a shopping and bank office complex.
Mr. Sviridoff was vice-president for national affairs of the Ford Foundation during the 1970s and late 1960s when it disbursed more than $100 million in grants and investment support to neighborhood development groups.
''If we've learned anything from previous efforts, it's that programs to combat the residue of the complex poverty problem must be sharply targeted, limited in scope, and modest in their goals,'' he says. ''It's important not to try to be all things to all people.''
One hope is that LISC's example will lead to a generally closer alliance between business and community development groups and less dependence on traditional federal and philanthropic help.
''The hope is that the credibility of community development organizations as responsible members of the community as well as do-gooders will be increased,'' says Nancy J. Anderson, a Chicago attorney and local LISC coordinator.
To date, there have been no defaults on LISC loans, few lagging payments, and only two loans in enough difficulty to require some special attention.
''So far, so good,'' says Sviridoff, who hastens to add that he thinks the potential exists for a significant increase in private and corporate giving.