Chicago

CPS Unveils New Slate of Renaissance 2010 Schools

Angela Caputo — Fri, 10 Oct 2008 09:16:18 -0700

Forget the one-size-fits-all approach. Chicago Public Schools (CPS) officials have announced they're preparing to open a whole new slate of niche schools next year under the reform initiative Renaissance 2010.

Most will aim to prepare students, particularly high schoolers, for specific industries and trades -- from hospitality to technology to health sciences. Others, like the "gay-friendly" Pride Campus, hope to create an environment where students can learn at ease.

The Illinois Teachers Federation and Service Employees International Union Local 73 will also partner in opening one of the more traditional high schools in West Garfield Park. Among a handful of college prep schools is the Munchin campus, which will take up space in the historic Carson Pirie Scott Building at 1 N. State.

Just where each of these new schools will be located remains largely under wraps. More clarity will likely come after administrators make decisions regarding which existing schools, a dozen in all, will close next year, CPS spokesman Mike Vaughn said.

That's a departure from years past in which CPS targeted specific, low-performing schools, then brought in teachers, private firms, and other parties interested in taking on the task of independent stewardship. This year, much of the decisionmaking took place at official meetings. A shortlist was subsequently rolled out at community hearings held near South Shore, South Chicago, and East and West Garfield Park where the majority of the Renaissance 2010 schools are anticipated to open.

Jaime Guzman, who does outreach for CPS' Office of New Schools, explained the reasoning behind the new process: "This year we didn't have any schools that were vacant or under utilized."

The buzz around the education blogosphere, however, is that the process wasn't as inviting as CPS might suggest.

Renaissance 2010 has been controversial since it was launched in 2005. Education advocates have complained that there's no hard evidence that the 75 new or revamped schools have actually led to higher student achievement. The teachers union has denounced the initiative as a ploy to break the union's stronghold. And community members say their input is diminished when Local School Councils are disbanded.

"Our research shows that we have about 200 really good schools in the city that are already operating," said Don Moore, director of the school reform group Designs for Change. "We think they ought to strengthen them."

Research conducted earlier this year by the Rand Corporation suggests (PDF) that students slated to attended three new charter high schools could fare best among the Renaissance 2010 schools. That's because Chicago high school students have performed better -- in terms of higher graduation rates and test scores -- under charter school management than elementary schoolers.

A final hearing on the plan is scheduled for Oct. 15. The school board will vote on the recommendations Oct. 22.

The Last Word On The CRA: An Interview With Ron Grzywinski

Adam Doster — Thu, 09 Oct 2008 17:55:22 -0700

Searching for a politically convenient scapegoat to the nation’s mortgage meltdown, conservatives have focused their attention on the Community Reinvestment Act (CRA), a law passed by former President Jimmy Carter that requires banks to lend throughout the communities they serve. As the theory goes, CRA regulations placed tremendous pressure on banks to extend loans to people who were unfit to borrow, leading to an explosion in subprime mortgages and eventually a rash of foreclosures.

Chicagoan Ron Grzywinski, a co-founder of ShoreBank, thinks this argument is hogwash. And he should know.

In 1976, Grzywinski proposed the idea for the CRA and later became the only banker to testify on Capitol Hill in favor of the legislation, drawing criticism from many of his colleagues in the banking industry. His courage paid off. Once enforced, the CRA brought safe, sustainable investments to communities long-ignored by traditional financial institutions, spurring an increase in homeownership rates as well investment in affordable housing, small businesses, and community facilities. And contrary to the revisionist line of attack, the lenders subject to CRA have engaged in less of these dangerous lending practices – not more.

Grzywinski has witnessed at close range the power democratizing credit can have on underserved communities. Measuring success by development and conservation goals -- rather than simply earnings -- the once-floundering ShoreBank he operates (based in Chicago’s South Shore community) has transformed into the nation’s premier community development bank. In Chicago alone, ShoreBank has invested $3 billion, financing improvements to churches, homes, health clinics, and the construction or rehabilitation of 52,000 affordable housing rental units.

With an eye toward the environment, they now finance the decontamination and redevelopment of abandoned manufacturing sites, provide information to real estate borrowers on ways to improve buildings’ energy efficiency, and operate nation’s first environmental development bank. Grzywinski has consulted with some of the leading micro-financers globally, including former President Bill Clinton and 2006 Nobel Peace Prize winner Muhammad Yunus. On top of all that, the South Side institution has assets worth $2 billion and netted $5.3 million in profits last year.

Less than 12 hours after he returned from a bank opening in Belarus, I had the chance to speak with Grzywinski about community banking in Chicago, the origins of and impetus for the CRA, and the difference between responsible and irresponsible lending. Here’s an edited version of our discussion on Wednesday.

AD: First off, can you describe the economic and social climate in South Shore when you acquired the bank in 1973. What type of changes were taking place in the neighborhood and how did that affect the lending practices in the community?

RG: The late 1960s and early 1970s was a time of riots in Chicago. Neighborhoods were being abandoned; many parts of the near South side and West sides were being torched. The adjacent neighborhood of Woodlawn was one of those neighborhoods that probably had 75 percent of its housing stock torched. Nobody was ever indicted, but the housing went down. South Shore was threatened because it had a similar housing stock – about 75 percent of the stock then, and now, is multi-family walk-up buildings built between 1910 and 1930 – and it had experienced rapid racial change that started in about 1963. The two census points between 1960 and 1970 went from 100 percent white to 70 percent black.

So the expectation was, if that’s what happened to Woodlawn, that’s what’s going to happen to South Shore. And the South Shore National Bank, which had been here since 1939, had experienced a 50 percent drop in its deposits between 1968 and the time we got here. It tried to relocate to downtown Chicago, out of what banks euphemistically called “deteriorating market conditions” -- otherwise known as racial change -- but was denied permission in December of 1972, probably the first time a bank was denied in U.S. history.

We bought the bank on August 23, 1973. There were four of us: two African American men, Milton Davis and James Fletcher, Mary Houghton, and myself. ... We bought this failing bank with the idea of using it to rebuild the neighborhood. So that was the beginning.

AD: Can you talk a little about what you and your colleagues wanted to change about the way business was being conducted in the neighborhood?

RG: We knew that there was a lot of discrimination and prejudice in the system and that redlining was fairly rampant. At one point, it was official policy of the FHA [Federal Housing Administration] to redline neighborhoods based on various conditions, with the most prominent one being racial minorities. And so what we knew from our prior experience was that there were many credit-worthy borrowers in these neighborhoods with whom we had had good success. So starting in the South Shore neighborhood, we were interested in demonstrating to the larger banking community that there was good business on market terms and conditions that could be done. The basic idea was using the banking system to rebuild urban neighborhoods without being dependent on deep public subsidy.

AD: What kind of success has your bank had ensuring both economic and environmental sustainability? What are a few achievements that you’re most proud of to date?

RG: Well, the bank is modestly larger – about 60 times larger – than when we started [laughs], so it’s gone from a $40 million failing bank to a $2.4 billion bank. It’s expanded to other domestic locations and since 1983 has been doing a lot of work in developing countries with local development banks … We started working with the Gramean Bank in 1983 -- that’s where Muhammad Yunus just won the Nobel Prize -- and we did that for over a decade. We started working in Poland in 1990, eighth months after the change of governments there, too, so that’s the international side.

On the domestic side, in addition to growth and size, every year for the last decade we put out about four times the shareholder’s capital in the form of new development credit around the U.S. The cumulative total that’s gone out is about $3.5 billion. But if you talk about other things we’re proud of, the bank has operated profitably every year since the first year. We created in 1995 and 1996 the nation’s first environmental development bank – it’s a wholly-owned subsidiary that was founded in a small Washington town at the mouth of the Columbia River with offices in Portland and Seattle. We’ve been able to bring the whole business of conservation into our Midwest banks -- we have significant programs now on home energy conservation loans that are tied into rehab.

And then a year ago, we started in Chicago the Rescue Loan Program, which is designed to reach out to people who are not our customers but who have been disadvantaged by these explosive ARMs [adjustable rate mortgages], these loans given to people with no credit reports, no jobs, no anything. What were finding is about 70 percent of those borrowers qualify for fixed rate conventional mortgages, so we’re doing a lot of outreach in the neighborhoods to get people familiar with that and that’s going quite well. We also created and run the Center for Financial Services Innovation, which has now become the national go-to place for the large financial institutions who are trying to help banks reach the “underbanked” in the U.S., which is a significantly larger amount of the population than you might imagine. And then along the way I was able to testify in favor of the Community Reinvestment Act, which is getting a bit of flak these days.

AD: That had to be a lonely time for you, as the only banker in the nation to stand up and speak to Congress in favor of the bill.

RG: Well, it seemed like the right thing to do then and it seems like the right thing to have done now.

AD: From a broader historical perspective, would you consider CRA a success? Has it fundamentally changed the way banks see markets in cities?

RG: If you go back to that time, there was a lot of concern about redlining in general. You can put it all in the context of the changes that were going on in the country. In my mind, it’s all a part of voting rights and civil rights and opening up society and anti-Vietnam protests and all of that. So it was within that context that there was growing awareness and community organizing around the issues of redlining and the damage that was being caused by it. [National Training and Information Center co-founder] Gale Cincotta, here in Chicago, who is now deceased, was a national leader of that, but they did a lot of organizing to create awareness that this kind of redlining was not right and proper and that it was bad business.

The opportunity to think through the way that the banking industry might get involved came during a conference in which people who thought that Jimmy Carter was going to get elected wanted to create a new federal organization which would be a community development bank. I was one of a handful of people who were invited. In the meeting, I suggested to that it didn’t make much sense to make another federal bureaucracy because it would just mean that all the resources would be focused in a narrow funnel. What we really had to do was figure out a way to release the energies of the nation’s banking system in a responsible and profit-oriented way. Nobody was especially interested in that except for one guy, [American Prospect editor-in-chief] Bob Kuttner, who at the time was on Sen. [William] Proxmire’s [D-WI] staff on the Senate Banking Committee. Bob happened to be there, and I didn’t know him, but he was interested in the idea, so we chatted a little bit about what the potential was for banks. He went away and I didn’t hear anything more for close to a year, but then he called one day and asked if I would come and testify. Thankfully, it got passed and became a law. […]

But contrary to all this stuff that anybody against it has ever said, there is never any suggestion by anybody that banks should be making irresponsible loans. And the last time, about five years ago, when somebody got fairly far in Congress and tried to ditch CRA, the big banks all testified in favor of it.

AD: Do you think the regulations are still important today? What do you think the lending landscape would look like without CRA?

RG: Well, I don’t know. That makes for good speculation. Despite what I just said, getting involved in public policy isn’t what ShoreBank does a lot of. I think in this current environment, it’s very hard to say what it would or will look like. Because it’s easy for the story to get clouded up and make it look like the regulating banks under CRA were the cause of the problem.

I think part of what [Chicago Tribune columnist] Clarence Page and others have pointed out is that probably about 75 percent of the what are called subprime mortgages were done by mortgage brokers and not by regulated banks. In his Boston Globe piece this morning, [Harvard University’s Joint Center for Housing Studies director] Nicolas P. Retsinas makes a point that almost 250,000 people worked at mortgage brokerage firms and they all focused on selling mortgages -- the solvency of the borrower was secondary. What you had was a whole industry that had absolutely no skin in the game. They were just writing and peddling stuff … and there was nobody checking. It was just reckless stuff -- sell it, make your fees, and move on. And people have no down payments and they were told they could own a home – why wouldn’t they?

AD: How are the loans that your bank gives out to lenders who might also qualify as subprime different from some of these peddled loans from the bigger mortgage firms?

RG: We do it the old fashioned way. It sounds like an advertisement but it’s the truth. We don’t do credit scoring; we do it after the fact in order to put a piece of paper in the file in case we ever do decide to sell it. We do not do variable rate loans or subprime adjustable rate mortgages. To the best of my knowledge we have never given out variable rate loans. And we meet with the borrower, and its old fashioned lending. Who is the borrower? What kind of down payment do they have? Where’s the money coming from? How real is the value of the house? Can they make these payments? All that kind of stuff. We do verification of value and of income. We lend in the markets that we know, here on the South Side and West Side of the city. There’s no magic about it. And our numbers right now in our homeowner portfolio are just about where they have historically been. They are up a touch, but that’s mostly the economy. It’s not rocket science [laughs]. We’re just old fashioned bankers.

AD: After the success of your bank and the high-profile success overseas of the Gramean Bank, do you think the community banking movement has blossomed in America as you would have hoped or expected? And if not, do you think the mortgage meltdown here could push some energy in that direction?

RG: I think that it probably has not blossomed here the way that we had hoped that it might. What has blossomed is just much more consciousness and awareness on the part of banks and others to become involved one way or the other. What are some of the other things that have happened? There’s been an entire Community Development Financial Institutions industry created, which are licensed by the Treasury Department. About 50 of them are commercial banks. There’s a much larger number of non-bank financial institutions that lend in communities, too. And the well-managed ones do quite well. They don’t get the leverage that commercial banks have but they raise money, they get loans from large banks, they get loans from individuals and they use those monies to finance community development activity. […]

When you start down a path, you never really know where it’s going to end. We’d probably like to see more truly dedicated community development banks than we have seen, but in terms of availability of credit and other financial resources, I think there is a lot there …. And when you do it the right way, with good management, these things are doing pretty well.

In this country, it’s unclear what the end will be for our current financial and market situation. I think when everything gets shaken out, were going to be back where we have been – that there is a need for credit and financing done the right way, for qualified small businesses, homeowners, everything else. That’s what’s needed.

Fighting City Layoffs, CFL's Gannon Takes Aim At TIFs

Josh Kalven — Mon, 06 Oct 2008 07:23:21 -0700

In response to the news that Mayor Daley's layoffs would largely affect workers in two departments -- Police and Streets and Sanitation -- Chicago Federation of Labor President Dennis Gannon hit back hard over the weekend. Speaking to the Sun-Times, he offered a litany of ideas for how Daley could make up the $425 million shortfall without laying off any city workers, including raiding the mayor's beloved Tax Increment Financing (TIF) accounts:

Gannon suggested that Daley could wipe out the entire $420 million shortfall without any layoffs. His recipe would call for: raising taxes and fees, possibly including the Laborers Union's proposal for a $10 monthly garbage-collection fee; raiding the $500 million Chicago Skyway fund; sweeping money out of scores of tax-increment-financing districts; reducing consulting fees, and having city employees perform services that have been privatized by the city.

"Raise a fee somewhere, raise a tax," Gannon said. "Instead of that, we're gonna cut front-line workers who live in the city and pay taxes.

"What's wrong with the mayor taking $200 million out of the Skyway? It's a rainy-day fund. Well, it's raining, Mr. Mayor. These workers helped everybody survive the North Side flood and picked up the bulk. The same guy who picked up all those downed trees, we're gonna tell him after Christmas, 'Thanks for your hard work. We don't need you anymore.' "

Gannon told the Sun-Times that minorities would bear the brunt of the layoffs and even warned that the Laborers Union is mapping out where the affected workers live -- data that they plan to share with aldermen.

Speaking of TIFs, be sure to check out Adam Verwymeren's latest comic book on the matter: "Where Do TIFs Come From?"

Midway Privatization: Yea Or Nay?

Adam Doster — Thu, 02 Oct 2008 09:09:11 -0700

Earlier this week, Mayor Daley announced that Midway Airport could become the first privately-run hub airport in the nation, not to mention a major test case for a 1996 Federal Aviation Administration privatization pilot program. Today, Chicago's two major newspapers came out in favor of the deal.

The Sun-Times editorial board writes that government has other services that need more attention, especially in tough economic times:

We don't necessarily endorse rampant privatization, but turning to the private sector makes sense for these sorts of assets. Roads, airports and garages are outside the core responsibilities of government and likely will be managed better by private companies.

In other words, we won't miss having them, and we can make good money off them. That's especially important these days, when tax revenue is down and funds to keep Chicago thriving are hard to come by.

The Tribune offers a more tepid endorsement, but hits on similar points:

The guiding principle in all such agreements should be to secure more efficient operations and make government more financially sound. At first glance, the Midway lease appears to pass that test.

When the alderman convene next Wednesday to debate the measure, they should think about the economic effects on both the city and travelers.

As part of the deal, the long-term investors would enter into a 25-year use agreement with the airlines that currently fly into Midway, capping their rates and charges at the outset and freezing them for six years. This puts a ton of pressure on the airport's owners to draw profits from travelers in the way of fees and price increases. Of course, the lessee can increase revenue through other means -- such as cost cutting or adding more retail and dining options -- but there are no guarantees a private enterprise would do so. There also should be a focus placed on oversight. Unless the city makes sure to include in any deal safeguards to ensure the operator maintains or improves the airport's current level of cleanliness, safety and service, Midway could fall into disrepair.

On the other hand, cashing out of the aviation business is an attractive option. Decarbonizing air travel is very tricky and the nation's travel habits will shift significantly in the next few decades. If the city can pay off Midway debts, shore up underfunded city pension funds, and intelligently use an additional $550 million ($450 million of which must be spent on infrastructure projects like new libraries, roads and transit improvements), it might be an ideal time for a cash infusion.

Urban Farmer Named MacArthur "Genius"

Adam Doster — Tue, 23 Sep 2008 07:40:59 -0700

The urban agriculture movement received quite a boost today with the news that Will Allen -- the founder of Milwaukee-based Growing Power -- has been awarded the prestigious the MacArthur Foundation "Genius Grant." Distributed over five years, the grant comes with no strings attached or reporting obligations, meaning Allen gets free reign to expand his innovative farming programs:

Will Allen started a farm in a city, hired teenagers to tend the crops and now distributes the produce to some of the poorest people and priciest restaurants in Chicago and Milwaukee.

For his inventive work in local, urban agriculture, the Chicago-based MacArthur Foundation dubbed Allen a genius, awarding him $500,000 to use however he wishes through its prestigious fellowship program.

For more on the burgeoning urban farming scene in Chicago, check out our feature "A Growing Movement."

Chicago Fourth In Sustainability Ranking

Adam Doster — Mon, 22 Sep 2008 09:43:38 -0700

Just one week ago, Forbes dubbed Chicago a "Midwestern Molotov cocktail of stress." Because of rising unemployment, expensive gas, high population density, and relatively poor air quality, the business magazine concluded that the City of Broad Shoulders was more stressful than any other in the country.

This week, Chicago receives a better distinction. After the city released its Climate Action Plan, Sustain Lane -- an online sustainability guide -- ranked Chicago as America's fourth most sustainable city:

Long-serving Mayor Richard Daley is committed to making Chicago a healthy and attractive place for all creatures great and small, and for residents and visitors alike. The mayor has had greening on his mind since he first entered office in 1989, implementing progressive and sometimes controversial measures. He's planted about a half-million trees, removed traffic lanes in favor of green medians and bulldozed a downtown airport, putting in its place a 100-acre park. Under the mayor's leadership, Chicago has become known as the "Green Roofs City," with carbon-sequestering vegetation covering more than 4.5 million square feet of rooftop.

Chicago topped the 50-city survey in "City Innovation," "Metro Street Congestion," and "Water Supply" but finished 36th in "Housing Affordability" and 43rd in "Air Quality."

(H/T Dot Earth)

Image used under a Creative Commons license by Flickr user cookieevans5.

Organic Food Not Available To All

Adam Doster — Sun, 21 Sep 2008 11:03:34 -0700

While fresh food is difficult to find in communities of color, healthier, environmentally-friendly organic food is near impossible to track down, according to a new study by the Chicago Reporter. The story's authors surveyed 209 grocery stores spread across nine of the city’s 77 community areas and found some startling statistics:

- Ten percent of stores in black communities carry organics, compared to 24 percent in Latino communities and 63 percent in white areas.

- The population of the white neighborhoods was less than one-third of the total population of the communities examined, but were home to nearly two-thirds of the stores that carried organics.

And from the annals of irony, the Midwest’s largest distributor of organic food, Goodness Greeness, is located in Englewood, a South Side neighborhood that itself doesn't contain a single organic purveyor.

Although grocers and distributors have been slow to expand, citizens are beginning to fill the gaps. Aside from the rise of a small but burgeoning urban agriculture community, more than one-third of Chicago’s 27 black community areas have a farmers market that sells some organics.

(H/T Gapers Block)

Image of the Oak Park farmer's market used under a Creative Commons license by Flickr user Kymberly Janisch.

Chicago Aims To Cut Carbon Emissions By 25% In 10 Years

Angela Caputo — Thu, 18 Sep 2008 14:04:53 -0700

Chicago officials rolled out a glossy "Climate Change Plan" this afternoon that'll no doubt be heartening for folks tuned in to the rising threat of global warming. If the city lives up to the five strategies rolled out in the plan, it'll be on track to reduce carbon emissions by 25 percent before 2020.

While officials and environmental activists say they're confident that the ambitious goals can be reached using a carrot over stick approach, it's clear from a cursory look at the plan that it's going to take a lot more than just the "cooperation" Daley called for today.

As Forbes pointed out earlier this week, environmental issues such as poor air quality and high population density are real problems in Chicago. They were primary factors landing the Windy City at the top of the magazine's list of the country's "Most Stressful Cities." The plan also banks on achieving things that are often out of the city's control, such as a financial commitments to improve the regional transportation and freight systems.

When pressed by Progress Illinois on what kind of local investment it's going to take to get the initiative off the ground, Daley said, "I think we're doing it right now. We have companies buying in. We have TIF districts and everything."

TIF districts, huh? Daley offered no further detail regarding how they're going to play a role. But if you've been keeping up with the Reader's Ben Jarovsky, you know that Chicago's TIF system is seriously straining budgets these days. And while the city has made strides in getting the word out about about individual conservation strategies, it's demonstrated that there's a long way to go in getting green basics like a proper recycling system in place.

If anybody embodies the "where there's a will there's a way" attitude, it's Daley. And goals to retool building codes and and create energy efficiency guidelines for residents will no doubt move forward under the city's environmental action plan.

The mayor also makes a good point when he says that having this sort of framework on hand will give Chicago an edge in competing for federal "green economy" grants. It goes without saying that this type of funding is more likely to expand under an Obama administration.

Food Market Can Do Well By Doing Good

Adam Doster — Wed, 10 Sep 2008 08:45:59 -0700

Chicago's urban agriculture movement, which I reported on in our most recent feature article, partly developed in response to what researcher Mari Gallagher dubbed "food deserts" -- geographic areas lacking access to grocery stores. When I asked about the market dynamics at play in these underserved urban communities, Gallagher (author of the landmark 2006 study on food deserts) offered this point: among grocers, market knowledge and profit margins are low. This means many are hesitant to jump into untested waters, preferring instead to compete in locations they are certain will support such businesses.

Nonetheless, in her first Huffington Post entry, Gallagher rightfully questions why purveyors don't explore these uncharted waters:

The National Center for Public Research makes its information available to the public and asks different kinds of questions. Here's one: can the market do well by doing some good? Why not? In Chicago alone we have identified a half-million-plus people who live in a Food Desert with no or distant grocery stores but nearby access to fast food. A substantial number of them are single mothers and children. My guess is that women, more than anyone else, know the importance of food to stitching together the delicate continuum of life. It is ironic that these women are the most disenfranchised from the food market given that they probably value and understand it more than any other consumer group.

Want some evidence that market knowledge is low? Gallagher provides some interesting data to show that the desperately poor aren't the only Chicagoans affected by the scarcity of quality grocers in certain urban areas. Of the 203,369 Chicago households that fall in food deserts, 31 percent have an annual income of $50,000 or more and 14 percent have an annual income of $75,000 or more.

At the end of the month, Gallagher's consulting group will release an update on its 2006 study. We'll be sure to post the findings.

The Obama Perimeter

Josh Kalven — Mon, 08 Sep 2008 09:30:09 -0700

As the Tribune recently reported, while Barack Obama accepted the Democratic nomination for president in Denver at the end of last month, the Secret Service seriously stepped up security around his Hyde Park house. I had a chance to walk around the area yesterday and snapped a few photos of the newly installed checkpoints at both sides of his block. They feature signs reading "Residential Traffic Only" and are guarded by both uniformed police and plainclothes Secret Service agents.

Surveying the scene, it occured to me that the high-density surroundings probably create an unprecedented challenge for the Secret Service. Can anyone remember the last presidential candidate of either party whose primary home was in the middle of a major city? Has there ever been one?