Access to capital has been the stumbling block inhibiting commercial investment and home ownership in Austin and other South and West Side neighborhoods, but financial institutions and nonprofits are taking a fresh look. They are joined by a new generation of benefactors such as family offices and socially minded funds.
Of BMO Harris’ $5 billion equity initiative, $3 billion is slated for community development and neighborhood revitalization. An additional $500 million is designated specifically for Black- and Latino-owned commercial businesses.
The special-purpose credit program for Black and Latino borrowers is to “make sure we provide access to capital for them to invest in their businesses in way we haven’t done in the past,” says Vice Chair Eric Smith. The bank is training branch managers to provide more flexibility, he adds. BMO also is investing in private-equity and venture-capital firms that support minority- and women-owned businesses.
Developers and the retail chains they’re courting need a more expansive formula for assessing opportunity and risk. National chains use yardsticks that are specific and unyielding, says Calvin Holmes, president of the nonprofit Chicago Community Loan Fund, or CCLF. They insist on a certain population density and minimum household income.
He points to developer Leon Walker’s (see Page 16) successful courting of Starbucks for the Englewood Square shopping center, for which CCLF was a funder. Despite an anemic average household income of $29,000 within 1 mile, compared to the citywide median income of $62,000, a deeper analysis showed there were 1,000 families in the densely populated neighborhood earning more than $50,000. This gave Starbucks the confidence to open in the center alongside a Whole Foods and Chipotle.
“DL3 (Walker’s development firm) used alternative analytics to build a case that these retailers could be successful,” Holmes says. Besides being willing to use those alternative analytics, private-sector investors need to adopt a longer-term horizon than the typical five to seven years. “Often in low-income communities, you might need 10 to 15 years.”
Equally important is opening access to good-paying jobs with benefits, which paves the way for homeownership and savings. “How do we get people from the neighborhoods into the hot job market downtown—or bring the jobs to the neighborhoods,” Holmes says. “We need to provide economic anchors in the neighborhoods to keep people in Chicago and not have them move elsewhere.”
Some CEOs have concluded it makes sense to bring jobs to the community rather than require employees travel hours to a job site.
When Discover CEO Roger Hochschild concluded in 2019 that the company’s next call center needed to be on the South or West Side, he ran into institutional resistance. Site location teams typically seek out neighborhoods with top high schools, solid…
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