Online Extra: From Projects to Progress in Chicago

A massive renewal effort that stresses new housing, community services, and commercial development is turning neighborhoods around

Looking southwest from Roosevelt and Homan Avenues in Chicago's North Lawndale neighborhood, you get a glimpse of the area's infamous underbelly: dilapidated houses, storefronts boarded up and worn out, streets with too many potholes to count. But spin around and witness the new North Lawndale. You'll see a clean, recently built strip mall anchored by a Dominick's supermarket and state-of-the-art movie theater. Freshly paved streets lead to well-kept homes with neatly manicured lawns.

The mix of 300 single-family and rental units make up Homan Square, the first leg of what developer Charles Shaw calls the "three-legged stool" of inner-city development: housing, community services, and commercial economic development. All told, North Lawndale's revitalization project is valued at some $200 million in private and public investment.

PEDESTRIAN-FRIENDLY.

  Homan Square is but a taste of the sweeping development going on throughout Chicago's urban neighborhoods. Few cities can claim as much progress in turning areas of historic decay into ones burgeoning with economic vitality. Chicago is now undertaking one of the most ambitious and expensive economic redevelopment efforts in its history. Under the Chicago Housing Authority's Plan for Transformation, 25,000 units of deteriorated public housing are to be rebuilt or renovated by 2010.

Gone are the hulking high-rise projects of Chicago legend: The Robert Taylor Homes, Stateway Gardens, Cabrini Green. Mayor Richard Daley has endorsed a plan that replaces the projects with pedestrian-friendly, mixed-income housing developments comprising subsidized and market-rate units. And around those homes the city is luring major retailers, from Home Depot (HD ) to Blockbuster Video (BBI ).

Since 1989, when Daley was elected to his first term, the city has pumped more than $8 billion in reinvestment into the inner-city schools, libraries, roads, parks –- "the bread and butter stuff. All the things that lead to improved quality of life," says Alicia Mazur Berg, commissioner of the city's department of planning and development.

"ISOLATED COMMUNITIES."

  Consider what's happening in Bronzeville, a district about 30 to 40 blocks south of the center of downtown Chicago. In the 1940s, it was home to the city's black elite -- a place where jazz musicians lived and played, and where author Richard Wright made his home and based his books. But over the years, when low-income housing projects were built nearby and aspiring residents moved further south, the neighborhood deteriorated.

Now, the housing authority is preparing to level roughly 3,245 public housing units and replace them with 3,000 new mixed-income units that include single family homes, townhouses, and multifamily walkups. The income split: 44% market rate, 23% affordable, and 33% public housing. "These were huge isolated communities, says Phyllis Martin, executive director of Financial Research & Advisory Committee, which is coordinating the effort to secure private funds for redevelopment. "That resulted in disrepair of buildings and poverty that is likened to third world countries. So the goal of our plan is to correct that isolation."

Bronzeville is following the example left by Cabrini Green. Chicago's most famous project has been almost totally renovated. A $65 million plan razed three of the high rises and at least 79 of the 261 residences serve as replacement units for people who were displaced. The area now has a new library, new schools, a new park, and a new commercial retail center featuring a major grocery store, Starbucks (SBUX ), Blockbuster Video, and Pearle Vision eye care center -- all staffed by local residents. The city even funded a job-training program to help spark "a significant amount of hiring from the community," says Commissioner Berg.

$300,000 HOMES.

  Chicago's success at inner-city development has come from a combination of public and private investment. Developer Charlie Shaw stepped into Chicago's West Side back in 1988 when he agreed to redevelop the North Lawndale neighborhood surrounding the original Sears Roebuck (S ) headquarters. By this time the North Lawndale community had been ravished by the riots of the 1960s, and for a long while, Shaw says, it remained a poor "pocket of neglect."

In 1994, Shaw successfully built the Homan Square homes, which sold for about $100,000. Now, their value has soared to as much as $300,000. In addition to the retailers that came in the housing's wake, a $28.7 million community-service center has been built, complete with a health-care facility for the uninsured, a tech center, and recreation center. "Housing stabilized the neighborhood," says Kristin Dean, executive director of the Homan Square Community Center Foundation. "That gave retailers confidence to build."

What's remarkable about Chicago's urban development trend is that it has endured through tough economic times. Berg says the recession has curtailed some federal assistance, but Chicago has been tapping private sources with vigor. "We really had to come up with a new financing strategy," she says. For every public dollar spent, the city has gotten $6.35 in private investment. And that has steadily grown over last few years, when it was below $6 in private funds to every public dollar.

PROBLEM POCKETS.

  Some $700 million in public investment has reaped $4.8 billion in private investment. "Retailers are finally realizing that [urban areas] have such higher population density than the suburbs that buying power is very high," Berg says. For example, the Target (TGT ) in a predominantly Hispanic West Side neighborhood, Logan's Square, is one of the highest grossing in the nation, she says.

Of course, many pockets of poverty remain. Research conducted by a division of Chicago's Shorebank, Metro Edge, reveals that in the Bronzeville area, for example, only 25% of households in the area have annual incomes of $50,000 or higher, compared to at least 34% in other communities, and 17% of residents own homes, compared to 31% in other comparable communities.

Worse, crime rates in the area are higher than Chicago's average, and public school performance is below-average. "Sure, there's more quality urban living today," says Metro Edge Executive Director Shelly Herman. But especially since the recession, there's plenty of poverty too. Herman says it has become more dispersed. The reality: "There still is a lot of investment that has failed," she says. "And the recession, in terms of joblessness, is affecting the inner cities."

NO HESITATION?

  The good news for Chicagoans is that the city of big shoulders is faring better than many. Some cities, such as Philadelphia, haven't had the population surge that Chicago has experienced. Others are characterized more by urban flight, and low population density often turns developers away. "If retailers don't see density, they ask: 'What does that mean for me?'" Herman points out. "So they're going to hesitate."

Policymakers hope developers don't pause for a minute when it comes to investing in Chicago's resurging inner-city neighborhoods.

By Roger O. Crockett in Chicago

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