As development comes to South Shore, gentrification is focus of group aiming to safeguard residents
Near the corner of 71st Street and Crandon Avenue, Michael McDowell mans the flat top at Surf’s Up South Shore as he has nearly every day since 2014.
McDowell, who took over the Southern seafood and wing shop franchise from his stepmother, has seen South Shore’s ups and downs over the years. Vacant lots and boarded-up storefronts still pepper 71st Street, but McDowell says the neighborhood is transforming and he’s optimistic about a string of coming developments, most notably the Obama Presidential Center, a film production studio and a mixed-use project 2 miles southeast.
“I’m more so excited to see the new businesses and how we can grow from the gentrification from the projects that are coming like the Obama library,” McDowell said as he flipped a sizzling filet of white fish.
But while McDowell sees gentrification as an indicator of positive growth, nonprofit leaders in the South Shore neighborhood fear it will displace residents, leading community advocates to push for a novel development plan they say would allow locals to profit off gentrification and give them a say in the businesses that serve the area.
The plan, called a community investment vehicle, or CIV, is a little-used investment strategy where a group purchases a building and then usually sells ownership shares of the building to community members for a payment, often anywhere between $10 to $1,000 per month.
The We The People CIV in South Shore is still in the planning stages, but the head of the group said its first real estate purchase is expected to take place in April or May of 2024 along a roughly 1-mile section of 71st Street between South Stony Island Avenue and South Shore Drive. It’s expected to house commercial properties on the ground floor with residential properties above.
“It will give local residents currently living in the community an opportunity to have a voice in local development,” said Tonya Trice, executive director of the South Shore Chamber of Commerce and a member of the We The People Steering Committee.
Although the program can’t do much to stop displacement, it can allow community members to profit off gentrification if the land appreciates in value and potentially pay out annual dividends.
“We also have an opportunity to allow residents to invest not only in the property, the actual real estate, but also to invest in some of the businesses that are coming into the community,” Trice added. “Right now, there is a lot of local entrepreneurship within the South Shore community.”
The initiative is far from complete. With the necessary renovations and buildouts for the businesses that come into the space, the CIV is still about two years from being fully operational, making the idea both excitingly unorthodox but also untested in Chicago.
How precisely community investors would share in any potential largesse remains to be determined as well as assurances that rents for residents and tenants will be affordable.
Trice said the CIV will start by purchasing one building along 71st, but specifics such as which building, how much it will cost, who the tenants will be and how much they’ll pay for rent have yet to be nailed down. In October, the CIV is expected to be turned over to a board of directors and become a for-profit entity, which will be in charge of collecting and distributing funds to and from the investing residents when the CIV is operational, she added.
“This will be a legal structure that will hire a staff to manage the day-to-day operations that will include financial management,” she said of the CIV, which was first reported by Block Club Chicago. Trice added that the duties of the business also will include asset management and acquisition.
Ja’Net Defell — the president and CEO of Community Desk Chicago, a program affiliate of The Chicago Community Trust that works to connect leaders on Chicago’s South and West sides with funders and investors — said there are many options about how the CIV could be run.
“It’s possible … that this CIV group designs a model where the revenues are reinvested in other properties in the South Shore area. It’s possible that that design process … (could) allow residents to cash out in two years,” she said. “There are so many paths this community can take.”
There also is a chance it is a fully philanthropic purchase where community members are not putting up money and instead any proceeds get reinvested into the community, which would raise questions about whether the CIV board would stay a for-profit entity.
The model that’s garnered the most early interest from the South Shore advocates is a Community Investment Trust, which is similar to a CIV, in Portland, Oregon.
The East Portland Community Investment Trust with Mercy Corps Global Innovations Team allows people in specific ZIP codes to invest between $10 and $100 per month to own shares of a building. As property values increase, the residents can take their money out plus the dividend representative of the change in value.
John W. Haines, East Portland CIT’s executive director, said the resident investors who put cash in early have nearly doubled their money as the building it purchased six-and-a-half years ago has grown in value.
“I’m fully of the feeling that you can’t really stop gentrification, but you can mitigate it and you can also put people into a path to be a beneficiary of it,” Haines said.
Still, with community members investing significant savings into a development project, there are obviously concerns about ensuring the proper guardrails are put in place before the project gets too far along.
“As long as this happens in an honest and transparent way, I think that the reward outweighs the risk,” said Ald. Desmon Yancy, 5th, the area’s newly elected alderman.
Yancy said CIV decisions should be done “out in the open” and that “historically, the disinvestment that has happened in our communities, particularly Black communities, has happened in a very quiet way. We find ourselves asking the question ‘Where did the money go?’ after it’s gone.”
Yancy said he trusts the CIV’s Steering Committee and thinks it has good intentions that are focused on benefiting the neighborhood.
“I think that the calendar on this might need to be pushed back, but this is the opportunity and the timing to do it because of all of this interest on South Shore right now,” he said. “There should be real metrics about the percentage of people from the community who are investing in the community.”
Increasing property values are often a healthy sign for a community and critical for the success of the CIV even if it may come at the expense of the local businesses the program is designed to protect.
Earl Muhammad, whose barbershop Original Man’s, the Grooming Lounge, has been around since 2015, has already been confronted by the gentrification coming to the area. The South Shore Chamber of Commerce bought the building where his barbershop is located with the idea of fixing it up to bring in new businesses. But the renovation means the barbershop likely will be displaced for about nine months and his rent — if he returns — would almost assuredly jump.
“I’m already looking at other spaces in the community and they were almost double,” Muhammad said of the rent, adding he’s heard some rents have increased from $600 to $2,000 per month.
Trice said the purchase of Muhammad’s building has nothing to do with the CIV and that the South Shore Chamber of Commerce is doing everything it can to ensure Muhammad’s business — which is the only occupied storefront in the building that has four other vacant spaces — is provided the best possible path forward during and after the building’s renovation.
The CIV is not the only attempt to safeguard current community stakeholders like Muhammad.
On Feb. 28, voters in 5th Ward precincts supported an advisory referendum — known as a community benefits agreement or CBA — which includes recommendations that the city set aside “100% of city-owned vacant lots in South Shore for affordable housing development” and states 60% of new developments in South Shore be reserved for extremely low-income households.
The CIV and CBA come as South Shore is on the precipice of major change.
Thrive Exchange — a $47.3 million mixed-use complex created partly through Mayor Lori Lightfoot’s Invest South/West program — promises to “reimagine, revitalize and reinvest in South Shore and South Chicago.” Peter Hawley, director of the Illinois Film Office, says the $60 million studio will be “a catalyst for the development of an arts and entertainment district for this underserved area of the city.” And the Obama Presidential Center — boasting a price tag of over $800 million — lists “creating jobs, driving economic opportunity and unlocking the potential that has always existed on the South Side” as part of its mission.
But it takes more than just pouring money into a couple of blocks to really invest in a community.
“One of the challenges with attracting investment to historically disinvested neighborhoods is that neighborhood residents are concerned that that investment is not going to benefit them and it is going to benefit someone else,” said Geoff Smith, the executive director of the Institute of Housing Studies at DePaul University.
The CIV attempts to allow the community to grow in a way that minimizes the expulsion of current residents. South Shore has played a critical role in Chicago’s history, one that tells the story of Black excellence as well as racial strife, gentrification and resilience. In the 1990s, South Shore was one of the most affluent Black communities in the city and before that it was the front line for Chicago’s civil rights movement, according to historian and professor emeritus at Columbia College Chicago Dominic Pacyga. But in more recent decades, disinvestment has reared its head.
“There’s been all kinds of disinvestment. This happens a lot, especially on the South Side,” Pacyga said.
An recent study by the Chicago Urban League showed “anyone of any race trying to invest in predominantly Black spaces on the West and South Side of Chicago face clear barriers because the rate of loan approvals is exceptionally lower in these spaces.”
Specifically in South Shore, it has taken a significant amount of time to fully rebound since the U.S. Steel South Works manufacturing plant closed, laying off residents in the area in 1992, Pacyga explained. It used to be an upper-middle-class neighborhood that is now struggling with higher unemployment rates, he said.
But the neighborhood — bolstered by the massive development plans and novel ideas to increase resident enrichment — has Pacyga excited for the present and future of the South Shore.
“I think there has been a revival in many ways,” Pacyga said.
