In 1974, people said neighborhood activists, city politicians, bureaucrats, and lenders were enemies who would never see the benefit of working together. Yet, that’s exactly who came together to create and run Neighborhood Housing Services of Chicago (NHS Chicago).
Since 1975, NHS Chicago has implemented 17 neighborhood revitalization programs and loaned $700 million to help nearly 19,000 individuals and families purchase or improve homes. House by house and block by block, lenders, activists, and city officials learned that together they could create new investment that would make a lasting difference.
But even those who would be most instrumental to NHS Chicago’s creation were not enthusiastic initially. Before I became NHS Chicago’s first executive director, I managed the partnership development process that led to the creation of the organization. Based on my memories of those early years, the outlook when I started was not promising. I remember hearing, during the development process in 1974, sentiments to these effects:
- I do not want to be in the same room with those people. They protested at my home, and I will not be embarrassed again by them. Lenders cannot give up their authority to decide on loans. —Robert Bartell, then-president of the Federal Home Loan Bank of Chicago
- If you want the city involved in a partnership, we will have to control it. —George Stone, then–deputy commissioner of the Chicago Department of Development and Planning.
- We will continue to protest bank redlining until we get the lenders to lend in our neighborhoods. But we are willing to take a few of those NHS programs in a few neighborhoods. —Gale Cincotta, founder and then-head of National People’s Action
If anything, these comments understate the lack of receptivity to working together among lenders, city officials, and neighborhood activists and organizers.
Neighborhood decline was not new in the 1960s and 1970s, but attention to the problem was growing. The media constantly discussed the supposedly negative futures of cities.
Through community organizing, however, local residents built people power, raising their voices to protect and improve their neighborhoods. Demanding that the city “do its job” was the bread and butter of the community organizing work I did with the Northwest Community Organization (NCO) in Chicago in the late 1960s and early 1970s.
We organized residents, block by block, to pressure local elected officials and city government to act on highly visible signs of neglect. We won specific demands for city services, including getting the garbage picked up, controlling traffic safety with stop signs at corners, and having building inspectors hold slumlords accountable for violations.
When we got enough people engaged, the Chicago Department of Buildings and housing courts forced landlords to make improvements or demolish buildings that were beyond repair. As part of the process, neighborhood leaders learned to direct their power into local and then citywide wins.
The lack of home financing became a major organizing focus. Savings and loan type financial institutions and the Federal Housing Administration (FHA)—the predominant home mortgage lenders in the 1950s and 1960s—both excluded Black, lower-income, and older neighborhoods. Lack of access to normal financing made our neighborhoods ripe for abuse by unscrupulous operators: contract sellers, panic peddlers, and redliners.
In the predominantly African-American community of Austin, a multiracial group of Black and white residents came together through the Organization for a Better Austin—led by Gale Cincotta and other West Siders—to battle panic-peddling real estate brokers and to confront the FHA on redlining, lending abuse, and fast foreclosure.
We were also battling against redlining and urban renewal at NCO, which covered neighborhoods east of Organization for a Better Austin. Our goal was to maintain and improve an older, multiethnic neighborhood and its aging housing stock. In the late 1960s, for instance, NCO protested the local National Security Bank.
The relative of a resident had been denied a mortgage to purchase a home in the neighborhood. A loan officer even told the potential buyer the area was in such poor shape he should buy a home elsewhere. Comments like these and other loan denials in our neighborhoods fueled anger against the bank.
After the bank’s president refused to meet with residents who were part of NCO, we began to demonstrate at the bank on busy Saturday mornings. Protesters “accidentally” dropped rolls of pennies on the floor. Following several Saturday disruptions, the bank’s president agreed to start lending in the neighborhood that had been redlined.
But a bank-by-bank approach was not enough. Bankers said they were willing to make loans but refused to share aggregate loan data, claiming it was proprietary information. Pushing for public disclosure of lending data was essential to addressing the problem. Our organizing pushed Mayor Richard J. Daley’s City Council to require loan disclosures and anti-redlining pledges from banks seeking city funds. In 1972, Cincotta and other local leaders convened National People’s Action on Housing, a national gathering that highlighted how cities across the country were facing these problems. This organizing eventually led to the Home Mortgage Disclosure Act and the Community Reinvestment Act.
Even with success, there was disappointment. Pressuring the city and lenders to “do their jobs” had limits; commitments to “do better” went unfulfilled due to a lack of interest or capacity.
The flip side of our do-your-job demands was, “Let’s do it ourselves.” Community self-help engaged neighbors and created new local development capacity, especially through community development corporations that were in their infancy in the late 1960s and early 1970s. At NCO, Bickerdike Redevelopment Corporation was founded in 1967 as a counter to the city’s urban renewal strategies, which emphasized demolition, laid out for example in the Chicago 21 Plan.
In addition to organizing with NCO from 1970–74, I wore another hat as Bickerdike’s executive director. My role was to build capacity for local project development efforts. Here, too, I saw successes but also limitations: Resident involvement and local development capacity was important, but outside actors—city officials and lenders—had a major impact on neighborhood conditions. These actors needed to be engaged, and new resources and capabilities needed to be developed.
Tying the Threads Together
In 1973 and early 1974, the pressure against redlining created by National People’s Action on Housing and others was producing results. The Federal Home Loan Bank of Chicago (FHLBC) agreed to a loan disclosure survey that clearly documented redlining. During survey development meetings with community organizations, FHLBC officials proposed a new model partnership program called Neighborhood Housing Services, which was being promoted by the Urban Reinvestment Task Force (URTF).
I was intrigued. The model seemed to build on our efforts at NCO to engage local lenders—and added the involvement of bank regulators to pressure lenders into participating in a reinvestment effort. With encouragement from NCO and Cincotta, I applied for the position to manage the development process with URTF. I later learned that I was hired because the FHLBC wanted to please Cincotta, National People’s Action, and community activists.
The model seemed like a no-brainer: Developing a partnership involving lenders, city officials, and residents combined the necessary resources for community change. The pressure campaign against redlining helped to secure neighbors a seat at the table. But this partnership approach went against current practices and conventional wisdom of what was considered possible in Chicago.
The goal of the 1974 development process was to engage potential partners in creating NHS Chicago. My role was to seek leaders among these potential partners to participate in a three-day workshop that would, if successful, create the foundation of our new organization. I held hundreds of interviews and meetings to promote the idea and to gather insight and information. Federal regulators hosted meetings with financial institutions to foster their involvement. Staff from relevant city departments and the mayor’s office were interviewed. I met with neighborhood leaders across the city, looking to find and engage all potential partners who shared the vision of a working partnership.
It was a rough start. When a bank executive fell asleep as I was describing our vision, I realized I had my work cut out for me.
After many interviews, as I prepared for the three-day workshop, I briefed Robert Bartell, the FHLBC’s president. As a federal financial regulator, he would be an important participant in the workshop process and a key figure in encouraging broader lender participation.
I gave Bartell a list of expected workshop participants. While reviewing it, he stopped and said, “If Gale Cincotta is going to be there, I will not attend.” Cincotta had led an anti-redlining demonstration that crashed a backyard barbecue at his home a few months before. “If Gale is not there, we will not be able to go through with the process,” I told Bartell. I went out on a limb: I assured him that Cincotta would not embarrass him. He relented. Significant local pressure, combined with the national FHLB’s support for the NHS model, had boxed him in.
Another key participant, Chicago’s then–Deputy Planning Commissioner George Stone, told me he was willing to attend the workshop and show support. But he emphasized privately that it was unlikely Mayor Richard J. Daley—whose oversight of city government and the Democratic party was notorious—was unlikely to let him join a board the city did not control. Stone was sympathetic but couldn’t officially commit his institution.
From the perspective of National People’s Action, engaging with lenders and the city could be valuable in demonstrating the viability of efforts to improve redlined neighborhoods. But their distrust of lenders and the city made them wonder whether the other parties would participate actively and in good faith. The fact that the NHS model had a majority of residents on the local boards was a positive factor.
City officials, lenders, regulators, and community also had reasons to collaborate at the workshop that would lead to NHS Chicago. In 1974, lenders were under attack by protesters and the media. They also faced pressure from federal financial regulators. (The federal Home Mortgage Disclosure Act would be enacted one year later.) Mayor Daley, a target of many of our campaigns, acknowledged that redlining was a problem, and city staff recognized that a Chicago NHS office might channel private resources to capital improvements that would complement their infrastructure and other investments. Community leaders knew that loans created by NHS Chicago would get credit flowing to their communities again.
Bartell, Cincotta, and Stone—along with 60 other leaders and representatives—brought their perspectives to the three-day workshop. Among the participants were executives from large banks as well as neighborhood savings and loan companies; officials from city departments and the mayor’s office; and leaders from National People’s Action and other community organizations.
We chartered a bus to take everyone to the workshop, held at a retreat center out of town. The conference almost ended right then: A few of the lenders suddenly realized what they had agreed to when they saw neighborhood activists board the bus—but we convinced them to stay.
Our first activity was an icebreaker aimed at building relationships among people with different perspectives. Everyone sampled an assortment of foods and compared the flavors they tasted. Debating whether they had tasted something sweet or sour helped participants understand that there are valid reasons for having varying perspectives. Recognizing and accepting different perspectives started to foster an environment in which people were open to working together toward some agreement.
To move the discussion forward, the three partner groups met separately. Community activists and organizers, lenders, and city officials caucused among their respective groups to discuss: What remaining questions do you have? What do you want the other two partners to do? If they commit to your requests, what are you willing to provide in return?
Report-backs from these sessions began to define each partner group’s willingness to participate and their conditions of participation:
- Residents wanted the city to focus resources, such as capital improvements and housing assistance, in the areas where NHS Chicago would operate. Besides lending, they wanted bankers to provide operational funding and serve on the organization’s boards. If these commitments were made, the resident group would encourage neighbors to promote the organization to existing groups, and work with partners to develop neighborhood strategies.
- Lenders agreed to provide “time, talent, and treasury,” funding the organization and serving on local boards. They also agreed to approve loans on a case-by-case basis and to try to figure out lending in the neighborhoods. They supported a revolving loan fund for borrowers who didn’t qualify for bank loans. They wanted the city to focus resources on targeted neighborhoods and for residents to step up to access the new credit opportunities they offered—and to encourage their neighbors to do so, as well.
- City representatives declined to serve as official board members of any new organization, but they agreed to collaborate on the process. They would consider new ways to engage with neighborhood efforts and organizations. Officials agreed to cooperate with NHS Chicago on local capital improvements, and to assign accountable building inspectors to NHS neighborhoods.
There was consensus. The three groups’ commitments were enough to begin working together on building an NHS effort. And while no group wanted to stop the process, it was unclear whether the commitments could be met.
Over the next few months, we divided into working task groups and dove into specifics on site selection, fundraising, and organizational structure and implementation. Each task group included city, financial sector, and neighborhood representatives. During follow-up all-day workshops, the task groups reported back to ensure that progress was being made toward fulfilling commitments.
A unique feature of NHS Chicago’s development was the commitment to start with three neighborhoods: Heart of Chicago, a predominantly Hispanic neighborhood located in Chicago’s Lower West Side; Austin, an African-American neighborhood on the city’s West Side; and Near Northwest, a historically Puerto Rican and Polish neighborhood in West Town.
The lenders’ fundraising efforts secured adequate commitments from their fellow lenders to move forward with all three neighborhoods. The city began to fulfill its commitments by engaging with neighbors to plan capital improvements on target blocks. The Chicago Department of Buildings cooperated by assigning local inspectors to support a code enforcement process that included local resident owner meetings in the local NHS office to develop an improvement plan.
In each neighborhood we formed a local board. Local residents made up more than half of each board’s members, along with representatives from local lending institutions and downtown banks. Together, they would develop a neighborhood reinvestment strategy that fit the local neighborhood conditions and met the local needs and objectives.. A local office with staff expertise in lending and housing rehab would provide accessible support to assist resident owners in their home repair and improvement needs.
We officially incorporated NHS Chicago in February 1975 and held our first board meeting the following month. The organization’s first board consisted of 15 members: two residents from each neighborhood board, along with at-large resident leaders and representatives from neighborhood and downtown lending institutions. The majority of members were residents. I was hired as the executive director.
During our first year, we focused on building relationships among our board members and we walked the blocks to gain insight from neighbors on conditions. We worked to get loan applications in front of our partners, engaging lenders to actually make loans in formerly redlined areas.
We also set up the revolving loan fund that we managed in house, with contributions from the Chicago Community Trust and the Urban Reinvestment Task Force. This fund provided a back up for current resident owners who could not get a bank loan. We used it to assist owners to fix their home and stay while furthering the block strategy of improvement. Meanwhile banks helped to fund our operations and participated in the monthly board meetings that developed the neighborhood strategies.
In the first year, 1975, NHS Chicago assisted 40 resident homeowners to get loans for improvements from our partner conventional lenders valued at $446,800 in these previously redlined neighborhoods. Our revolving loan fund filled the gap with unconventional loans to15 homeowners that averaged $3,015 each.
This demonstrated the NHS Chicago approach to reinvestment and building local confidence that engaged lenders to make loans in neighborhoods that they had ignored. Lending through the revolving loan fund developed NHS capacity as a lender that we would build on in the future. We created investment in previously redlined communities, which served as a model for our partner financial institutions of how they might conduct more lending there. Lenders developed experience and capacity to serve neighborhoods that had previously been redlined.
Over the years, we developed various loan pools managed by NHS including several $100 million pools for home rehab and homeownership. To further enhance the neighborhood investment strategies our real estate development subsidiary rehabbed hundreds of vacant homes that were then sold to new homeowners. The block-by-block approach, which built on individual investment, was a hallmark of these strategies. City government made good on its promises of carrying out capital improvements and providing sensible code enforcement.
The accountability framework of the Home Mortgage Disclosure Act and Community Reinvestment Act and continued local organizing kept community pressure on our lender and government partners to stay at the table. At the same time, we continued to strengthen relationships by sharing challenges, finding solutions together and living up to commitments. Participation on our central and neighborhood boards, along with the growing number of loans made, increasing funding commitments from lending partners and the ongoing support of city officials, built trust.
From the 1980s into the 2000s, we expanded into new neighborhoods, always involving residents, lenders, and city partners. We brought in new partners, such as property insurers like Allstate and State Farm, which had come under attack for refusing to insure properties in the same communities banks had redlined.
These insurance companies became partners in our reinvestment efforts and learned to write standard insurance in the neighborhoods we served, and places like them across the country. As they learned, they helped to strengthen our work; for example, Allstate and State Farm led a consortium of insurance companies that underwrote a new NHS Chicago office in the city’s West Humboldt Park neighborhood in 1980.
Through NHS Chicago’s innovative nature, we engaged unlikely partners in a process where each could contribute their expertise and resources toward a common goal of improving neighborhoods. We recognized the value of community organizing and the community development practice of engaging those affected, including those with the resources to influence a neighborhood’s trajectory. This effort served as a model for shifting from confrontation and blame to collaborative efforts that would create new opportunities for neighborhood reinvestment.
This uncommon partnership approach continued. Early in the subprime lending crisis, we discovered an increase in foreclosures in neighborhoods where we had offices. In 2000, years before the subprime foreclosure crisis was recognized, we partnered with National People’s Action to study the local foreclosure spike. This revealed that abusive loans by subprime lenders targeting minority communities were the root of the problem. Wall Street investors were involved in packaging and selling loans on the secondary market, which further complicated the issue.
Instead of dropping pennies on bank lobby floors, our neighborhood partners pressured subprime lenders and regulators by donning loan shark suits and demonstrating at loan offices. While many only condemned those responsible for the problem, NHS sought solutions. With the help of our lender, regulator, and city partners, NHS brought together subprime servicers, lenders, and representatives of Wall Street firms.
We developed solutions to prevent foreclosure for thousands of homeowners—solutions that would not have emerged without the negotiating table we had established over the last 25 years. One example: a Homeownership Preservation Initiative that brought all players, even some subprime lenders, into a partnership that created alternatives to foreclosure that kept people in their homes as well as new lending products. This initiative became a national model.
Partnerships that were unheard of in 1974 began to be accepted as valuable ways of doing business. Anti-redlining organizing at the local level created a receptive environment for mutually beneficial partnerships. This pressure established a negotiating table involving those affected by redlining and those with the resources to resolve it. Building on “do-your-job” organizing and “do-it-ourselves” learnings, NHS created a “let’s-do-it-together” model: one that built capacity to create a positive future for neighborhoods.
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Thanks Bruce,
I enjoyed reading about the days when “neighborhood health” was the primary goal for community development organizations and how Chicago NHS remained true to that North Star.
For much of the community development field, neighborhood impact got upstaged by the pursuit of “going to scale” in order to develop more government subsidized units.
I was struck too, by NHS’s continued emphasis on organizing. We all know how tricky the balance can be when you can’t afford to drive away the public sector and private sector institutions who you need at the table.
Congratulations.
Pat Morrissy
Former director of HANDS, Inc.
Co-founder NJ Citizen Action