Read the original article at Next City: The South Side’s New Collective Approach to Commercial Corridors (nextcity.org)
Sometimes the most beautiful creations start with old material, things forgotten or left behind. An old song gets sampled in a new one, an old recipe gets a single new ingredient, an old dress gets a new trim, and the whole world changes because of what it does or what it says or what it makes everyone else see or feel that they’ve never seen or felt before.
Can old mixed-use buildings provide that material?
On the South Side of Chicago, the building at 1122 W. 63rd Street is 103 years old, according to the Cook County Assessor’s Office. It’s modest, especially by Chicago’s skyscraping standards – just two stories plus a basement level, adding up to maybe 4,000 square feet. In its past lives, it’s been a corner store, a liquor store, a carryout, and anywhere from 2-4 apartments on the second floor. Scores of buildings have lived the same life along 63rd street, and dozens of corridors like these crisscross the South and West Sides of Chicago.
On a sunny afternoon in late August, residents, business owners, public officials and other supporters gathered at 1122 W. 63rd Street to celebrate the revitalization of the building into a new retail and office hub, featuring four Black-owned businesses with deep roots in the neighborhood. Three of the four business owners are founding members of E.G. Woode, the collective behind the building’s transformation.
“E.G. Woode” isn’t the name of a single person. It’s a clever play on Englewood, the name of this Chicago neighborhood where the group formed five years ago. Its members hope to demonstrate and promote an alternative to the traditional commercial real estate model, one that doesn’t depend on generating profits for developers and landlords to revitalize commercial corridors lined with small-scale properties like this one. The collective acquired this first building in 2018.
Like its founders, E.G. Woode is a lot of things, all at once. It’s a collective effort in the grand tradition of tenants living in dilapidated homes or buildings who organized to take ownership of those buildings as cooperatives, putting in some sweat equity to whip their buildings back into shape. But instead of residential tenants, E.G. Woode is by and for commercial tenants, small and local business owners from the neighborhood, which today is 92% Black. It’s also a business incubator, with members mentoring each other as peers and bringing in other resources from the neighborhood to lift each other up and keep each other up, with as few barriers to entry as possible for new members.
E.G. Woode is also a vehicle to access the capital necessary to revitalize buildings and corridors like these, and to do it in a way that goes deeper than merely providing benefits to the community and preventing their displacement. Perhaps more than anything else, E.G. Woode is about who the community sees when they see buildings like these brought back to life.
“What I love most about today is just the gathering,” said Deon Lucas, architect and E.G. Woode founding member, at the August celebration. “Part of building and developing spaces with E.G. Woode is not just about the entrepreneurs or the physical building itself, it’s about the people and the individuals you can bring together. There’s so many different folks here from every walk of life who had an instrumental decision and/or influence on the work that we do here, and I hope as you walk through it and you see this space, you can see a little bit of yourself and your imprint on what we do and how we did it.”
Needless to say, it’s been quite the journey these past five years to get E.G. Woode’s first project done. But along the way, the determination of its founders to take a collective approach to commercial real estate has already resulted in lenders and the city changing their rules in the hopes of facilitating more efforts like these. At the celebration, E.G. Woode also shared the news that it had already secured a property and raised all the necessary funding for its second revitalization project, just two blocks away at 1022 W. 63rd Street.
While others might think something seems crazy, pointless or brilliant, Deon Lucas just feels it has to be done a certain way, or else it’s not worth doing at all.
Working alongside subcontractors, Lucas carefully tore a giant hole on the western facade of E.G. Woode’s first building. Brick by brick, they made room for a three-story statement window stretching all the way down to the building’s basement level, which is now home to Beehyyve, Lucas’ architecture firm.
“I just knew I had to bring light down there somehow,” Lucas says.
For Lucas, E.G. Woode had to be a collective effort, and not just in spirit or on paper. It has a lot to do with doing things in a way that reflects who the founding members are and how they want to relate to each other and to the lenders, the city and other institutions. It was born largely out of the challenges of navigating those institutions – not to mention navigating the challenges posed by the legacy of racial inequality and segregation in Chicago.
The older ways had already failed neighborhoods like these. Small business owners or local developers first built many of these buildings along 63rd Street a century ago, but eventually those owners and developers retired, or moved onto bigger things, expecting some other local business or developer nearby would be in position to take these properties off their hands. Maybe there was for a generation or two, especially back when Englewood’s population was much higher and more diverse. In 1930, nearly 90,000 called Englewood home, and 63rd Street was a thriving commercial corridor. Back then, even Black Chicagoans were becoming known for the wealth they’d accumulated from their business ventures.
For a variety of reasons, many of Chicago’s previously successful Black-owned businesses that largely employed Black workers have long since shuttered or moved away. The Black-owned banks that those business owners funded, which in turn funded other Black businesses – they’re pretty much all gone, too. Without jobs or access to capital to create new ones, Black Chicagoans started leaving. Englewood’s population today is down to around 24,000. Newer Black-owned businesses, while they continue to form, have struggled to access capital and space to grow and reverse the tide of Black population loss in Chicago. Researchers at the University of Illinois Chicago point to segregation and racial inequities as the long-term driving factors pushing Black households out of the city, mostly to the suburbs.
The commercial corridors left behind, like 63rd Street, declined and decayed. Like many of the vacant homes around the neighborhood, the city decided to demolish many dilapidated commercial and mixed-use buildings. Vast stretches of 63rd Street today are lined with nothing but grass, including the entire block across from E.G. Woode’s first building and most of the block to the west. The corner lot next door was also vacant – until the collective took ownership of that as well, building a newly landscaped outdoor plaza space for community gatherings and events.
The result of all that history is a kind of Catch-22 that is familiar to anyone trying to revitalize commercial corridors in Black neighborhoods. The decline and decay results in property values that are so low, loan amounts from conventional lenders won’t be enough to pay for the necessary rehab or new construction, because conventional lenders only loan out a certain percentage of the underlying property’s market value. That’s if you can get a bank or other lender to give you a loan at all for a commercial property in a place like Englewood.
“You could have good credit but a bank still won’t give you a loan because of where you’re talking about putting a business,” says Sunni Powell, another E.G. Woode founding member.
The City of Chicago has shown a willingness to step in with resources to fund the revitalization of corridors like 63rd Street, but actually getting those resources out and into projects has been a frustrating process. E.G. Woode was born directly out of those frustrations.
Powell’s Barbershop Academy and Co-op takes up most of the split-level ground floor at the revitalized 1122 W. 63rd Street. Born and raised in Englewood, Powell wants to restore barbershops to their glory days.
“Back in the day barbers were pillars of their community, but through generational curses and different societal plagues, the barbershop has become a haven for money laundering, a place where you go smoke weed while you’re waiting to get your haircut,” Powell says. “It’s a thing that can uplift a neighborhood, but it’s not. So now it’s become my goal to bring everything back, to restore barbers to be pillars of the community again.”
Powell opened up his first barbershop in a mini strip mall surrounding a gas station on 63rd Street, kitty-corner from E.G. Woode’s first property. Powell’s quickly became a staple in the neighborhood, hosting community events and meet-and-greets with elected officials. Powell was renting out chairs to eight barbers, with clients coming and going all day and into the night. But one day in 2016, with the barbershop full of clients, someone came in and started shooting up the place. Two people were struck, one fatally.
“I thought my barbershop was sacred,” Powell says. “I thought nobody would come against me and try to hurt somebody in my shop, that’s for sure.”
Devastated, Powell wanted to keep his shop open, despite five barbers and their clients moving on to other locations. Folks no longer wanted to come to a place that reminded them of such violence. He reached out to Felicia Slaton-Young, co-founder of the Greater Englewood Chamber of Commerce. She organized a networking event at Powell’s barbershop, hoping to reset the vibe at the location and get the community interested in visiting again.
“Deon was there offering his services to people, anything he could do as an architect,” Powell says.
One of those services was help applying for grants — he would volunteer to help folks in Englewood submit grant applications, in the hopes that they would hire him afterward as their architect for revitalizing homes and other buildings. Between Chicago’s many foundations and many programs offered by the city government itself, it can seem like an endless, overwhelming barrage of RFPs — requests for proposals — to obtain grant money or loans for projects, programs or small businesses.
Chicago’s situation is particularly acute. In 2016, for example, the city created the Neighborhood Opportunity Fund. It offers eligible grantees funding for construction or rehabilitation of commercial spaces or cultural establishments located in targeted areas across the South and West Sides of Chicago. The fund has so far awarded $28 million in financing to 164 active and completed projects, according to the city.
The money for the Neighborhood Opportunity Fund comes from fees that developers pay to get permission to build projects in Chicago’s downtown areas that are more dense than current zoning allows. But that money comes in on an inconsistent basis, so the fund only accepts applications when there’s enough money to dole out. And there’s almost always far more applications than funding to go around. In 2017, the first round of the Neighborhood Opportunity Fund saw 700 businesses apply for funding; only nine received funds.
Powell’s Barbershop was one of the rejects. Lucas helped Powell with the unsuccessful application. But not long after that, Lucas came back around to see if Powell would be willing to apply for another grant from yet another new city program, called “Retail Thrive Zones,” funded using tax increment financing. Also known as TIF, it works by setting aside a portion of property taxes from a specific area to fund projects within that area, also known as a TIF district. It’s controversial, but still widely used as a source of development and infrastructure funding in many cities, especially Chicago.
Regardless of the specific funding mechanism for these grants, Powell was skeptical.
“I’m thinking, ‘This dude is annoying me,’” Powell recalls. “He asks me to fill out this paperwork and made me think I’m going to get something and I don’t get it. Now you want me to do it again. I appreciate it, but this ain’t cool.”
This time would be a little different, however. Instead of applying solo, Lucas had gone around his Englewood network and found a group of budding or aspiring entrepreneurs who were willing to submit their applications as a collective. He checked with city officials, who encouraged him to move forward with the approach. They technically submitted five applications, including one for Lucas’ architecture firm, but noted on each application that they were part of the “Englewood Thrive Zone Collective.”
As a collective, Lucas explains, they can reduce the risk for new entrepreneurs up front, giving them space and mentoring to learn how to crawl before they walk. And looking ahead, once some entrepreneurs start to run and eventually fly off into their own spaces, the collective approach means they’re constantly preparing others to take over spaces as they open up. If an entrepreneur’s business flounders, they’re still personally a member of the collective and they can work together to try and find a better location for that business or the entrepreneur can try their hand at something else with the support of the group. No entrepreneur, no space, no building gets left behind.
“Some of the entrepreneurs, their businesses weren’t as strong as others,” Lucas says. “But I’m kind of under the mindset that if we start singling out those that aren’t as strong, and pushing those that are stronger forward, then we lose a good group of people who are willing to work and contribute to their own community.”
In addition to Powell’s Barbershop and Beehyyve, the other collective applicants included two restaurants and a resale and consignment boutique. It surprised everyone when all five applications were approved.
“Since we went in as a group together, we agreed to operate as one and we can jump through all this red tape together instead of doing it all ourselves,” Powell says. “So we put together E.G. Woode, and then from there everyone started coming to us wanting to be a part of it. But we didn’t even have it running yet.”
The excitement of their Retail Thrive Zones announcement was cut short when the E.G. Woode founders learned the city would only award them up to $250,000 per building, not per business. It was a big stumbling block, the first of many during the process of raising all the funds for E.G. Woode’s first project.
With drastically less funding than they were expecting, the group ended up relying much more than they expected on sweat equity and calling in favors from subcontractors in the neighborhood. It’s a big reason why the rehab took four years, though it also made it a little bit more meaningful that it became even more a community effort.
Then there was the problem that none of the city’s funding came up front. To protect against fraud or other abuse, the city grant dollars are awarded on a reimbursement basis — you have to submit invoices to the city for eligible expenses you’ve already incurred. It’s a common practice for many cities that give out grants to nonprofits or businesses. If you don’t have the money up front, you have to get it somewhere else.
Under the Retail Thrive Zones program, the city arranged for various Community Development Financial Institutions, or CDFIs, to provide bridge loans for grant recipients who needed cash up front. Each lender also has its own underwriting criteria to evaluate borrowers’ potential to repay. As a source of potential repayment, the city’s grant dollars can be helpful to get through the underwriting process.
But E.G. Woode would test and ultimately push the boundaries of its bridge lender, the Local Initiatives Support Corporation, or LISC.
At the August celebration, LISC Chicago’s executive director Meghan Harte said E.G. Woode “presented a concept to us and to community development finance institutions that we weren’t ready to hear or receive.” That concept, she said, “forced us to change what we did as far as investing.”
As Harte explains, LISC gets money from banks that it re-lends, and there’s always a risk review when that happens. Startups are always somewhat questionable, higher risk. Then on top of that was E.G. Woode’s collective ownership model.
“Collective ownership is really hard to finance,” Harte tells Next City. “When you lend, you need a guarantor, you need one entity that you can hang the money on. When you have collective ownership, until it becomes its own entity, with income and existing assets and experience, it’s hard to figure out who can finance that.”
Behind the scenes, Harte and her team worked with LISC’s funders to figure out a way to make it work. They created a new program to train emerging commercial real estate developers, in partnership with the Urban Land Institute’s Chicago chapter. Lucas was the first to go through the program. They found other funding to set aside as a loan guarantee for loans to all entrepreneurs of color in Chicago, not just E.G. Woode. When E.G. Woode eventually needed more funding beyond the original loan, Harte found it by tapping into a new pool of local investor dollars called Benefit Chicago.
LISC even changed its lending policies, with E.G. Woode as one of the examples used to justify the change. Before, LISC would assign a risk rating to each loan, and charge a higher rate of interest to higher-risk borrowers. As of this June, LISC no longer charges interest based on risk rating.
“It’s about access to capital, and the one thing that gets capital open is risk mitigation,” Harte says. “But now we don’t have to worry about that because now [E.G. Woode is] proof.”
LISC Chicago ultimately lent E.G. Woode around $400,000 for 1122 W. 63rd Street, but the collective put around $300,000 more into the project. Some of that came from E.G. Woode’s founding members, but most of it came from E.G. Woode’s community investors.
E.G. Woode is incorporated in the state of Illinois as a Low-Profit Limited Liability Company, or L3C. All of the E.G. Woode’s member businesses so far have incorporated as L3Cs. A little over a decade ago, Illinois became one of a handful of states to pass legislation recognizing L3Cs as a corporate form, a kind of hybrid between nonprofits and traditional Limited Liability Companies or LLCs.
Under L3C laws, the primary purpose of an L3C has to be some kind of charitable purpose that fits within the Federal tax code’s definition of charitable purpose. The L3C’s articles of incorporation must also state that “no significant purpose of the company is the production of income or the appreciation of property.” Other than that, L3Cs can do pretty much everything conventional LLCs can do, including selling shares to private investors.
Under the terms of the investments, the entrepreneurs keep control over E.G. Woode, so the investors can’t come in and start kicking members out of the collective or evicting them from its buildings. E.G. Woode worked with attorney Fatimeh Pahlavan to conduct its modest private offering, raising a little over $200,000 from a handful of family and friends. Usually these kinds of offerings are available only to wealthy, mostly white male investors, but E.G. Woode is one of a growing number of efforts finding what they need from their own far less wealthy and usually more racially diverse circles.
“It’s much more challenging and you have to have a much more nuanced understanding of securities law to shape an effort that revolves around getting money from regular people, giving regular people ownership in a growing enterprise,” Pahlavan says. “It was scary and a little challenging, but it was ultimately very doable.”
Meanwhile, the city is changing its rules for how its funding works to simplify the process. Planning commissioner Maurice Cox wants to reduce red tape around funding. The constraints have often been based on the ultimate source of the specific dollars behind each of the city’s raft of grant programs. TIF dollars for instance, have often caused frustration when project sites end up falling just outside of TIF district boundaries. Instead, Cox tells Next City, his vision is for communities to come up with their best proposals, and have his department work internally to figure out where the money comes from.
He also wants some of the money to be available up front, so groups focusing on smaller projects like E.G. Woode don’t have to depend as much on sweat equity or private investors to get the ball rolling.
“That whole labor of love stuff is what people expect out of you when you do community development, but it’s grossly unfair and you realize how much the market is skewed to the larger projects,” Cox says.
At the same time Lucas and the E.G. Woode crew were fighting with financiers for their collective vision, the Cook County Land Bank Authority could have hardly been more thrilled with the prospects of such an effort.
“I think of them as a true neighborhood-based community developer,” says Robert Rose, former executive director. “They are a collection of business owners that have come together to say we’re going to use our collective power to redevelop our neighborhood. For us, it’s exactly the sort of thing we like to see, which are community-based organizations and people finding creative ways to control their neighborhood.”
The land bank itself was a result of a grassroots campaign in the aftermath of the subprime mortgage crisis, which hit Chicago like an earthquake a decade ago. Lenders foreclosed on thousands of disproportionately Black and Latino families whom they had given mortgages using predatory terms, a tradition that goes back decades in Chicago. Advocates called for the creation of a land bank to pick up the pieces and put properties back on the market at prices hard-hit families could afford. In 2014, the land bank got started with $4.5 million in seed funding, which came out of Illinois’ share of the $25 billion national settlement with the five largest mortgage servicing companies.
Rose, who previously worked as a community development lender in Chicago, was recruited to lead the new land bank. During his tenure, which ended in June 2021, Rose worked to instill in his staff a culture of listening to the community. The land bank’s acquisition specialists and asset managers became familiar faces at community meetings, gathering information on which blocks or corridors were residents and small businesses most interested in revitalizing.
Rose himself became one of those faces, hardly spending any time at his desk. Englewood was among the neighborhoods where Rose ended up spending a lot of his time with groups like Teamwork Englewood and the Residents Association of Greater Englewood (RAGE). Rose and his staff would take what they heard back to their office in downtown Chicago and use it to guide the land bank’s acquisition strategy. Other than foreclosures, most of the properties the land bank has acquired for sale to rehabbers and developers have come from the city’s annual tax lien sale process.
Crucially, when it takes ownership of a property, the land bank has the power to extinguish previous tax debts, liens, fines and other “encumbrances” on a property’s title that have long prevented many families or small developers from revitalizing thousands of properties on the South and West Sides of Chicago — another example of how the history of racial inequity continues to linger and cause problems for future generations. On one unusually large property along 63rd Street, the Cook County Land Bank Authority extinguished $3.7 million in delinquent property taxes that a private developer would have had to pay if it acquired the property instead, even through the tax lien sales.
The Cook County Land Bank Authority also structured its sales process to work with smaller, emerging or first-time developers. Most of its sales so far have been for residential properties, but it does also strategically acquire commercial properties where land bank staff know that communities might be more inclined to take those properties off their hands.
By the time he called Rose at the land bank, Lucas was starting to get desperate. “We had hit a huge wall, because I literally went to every single owner [along 63rd street] where the grant area stops for us, as Thrive Zone recipients,” Lucas says. “Practically none of them wanted to sell.”
Lucas believes at the time, in late 2017 and early 2018 a new shopping center anchored by a Whole Foods had gotten nearby property owners’ hopes up that property values would climb over the next few years. But E.G. Woode was under pressure to find something soon, or else the group would lose its grant funding from the city.
Lucas says he’s seen dozens of other grantees unable to secure a property in time to get the city money out. One estimate found around 35% of Neighborhood Opportunity Fund grants never resulted in projects, according to a 2019 study by the Urban Institute.
“If we achieved success in getting the grant, and we’re still experiencing this challenge acquiring assets in our own community, then there are certainly other entrepreneurs who will experience the same,” Lucas says.
Fortunately, the land bank had several possibilities in its acquisition pipeline. It had acquired a tax lien for 1122 W. 63rd Street, and was nearing the end of the foreclosure process, so the previous owner still held title but was close to losing it in court. That was enough to finally call back Lucas with an offer to sell the building for $50,000. The deal closed on Aug. 6, 2018 – the same date county tax records show the delinquent taxes were paid off.
E.G. Woode already has an agreement in place to acquire its second property directly from the land bank, just two blocks from the first. It’s also already secured more than $5 million in grant funding to revitalize it, including state funds as well as city funds that come from a combination of TIF dollars, municipal bond proceeds and local COVID-19 recovery dollars from the federal government. The building will become a food hub featuring restaurants from E.G. Woode founding members Antoine “DJ Dap” Butler and LaJunise McNeal, along with a shared commercial kitchen.
“I can’t think of another group that’s come in with the same composition and with the same intentionality,” says Rose. “I think they provide a model for how this could be, which is if people band together and pull together their resources, and are able to find common ground around their formation, there’s a power to be had in doing that.”
Nanette Tucker learned from her grandmother to see beauty and value where others no longer see those things. When she was growing up, they’d go on shopping adventures at thrift stores, resale and consignment shops wherever they could across the city. She started dreaming of having her own resale and consignment store one day.
That day finally came on the day of E.G. Woode’s ribbon cutting celebration. And she isn’t just renting out a space: As a founding member of E.G. Woode, she’s also part owner of the building.
“It’s epic,” Tucker says. “That’s the term I’m going to use for it. It’s something amazing, you’ve thought about it, you’ve dreamed about it. And today on August the 25th, 2022, it’s here, it’s tangible, I can touch it.”
Tucker first met Lucas back in 2017, at the networking event held at Powell’s former barbershop across the way. She lives within walking distance, and came to chip in on construction whenever she could.
“I’ve been here digging out dirt, everything,” Tucker says. “Sweat equity – that’s what Deon talked about when I first met him, that you could be invested in something with just sweat equity.”
Tucker never hesitated about the collective approach to entrepreneurship and real estate development.
“I thought it was brilliant, I really did,” Tucker says. “Because I had talked to bankers, and it is so hard. They want you to have something in order to get something, but how do you get something if you don’t have something to get something? How do you do that? It was crazy to me.”
Tucker also designs and makes bags and hats from repurposed material. Back in June, she organized what she calls Englewood’s first ever fashion show, turning the stretch of May Street next to the new E.G. Woode building into a runway. She hopes to make it an annual tradition.
Her store name, Marie|Wesley, comes from her mother’s middle name and her father’s first name. Inside the new store is one piece she’ll never sell: a jean skirt her uncle stitched together, with artwork her mother designed and had another artist imprint onto the skirt. “It just has to be here always,” Tucker says.
Tucker’s never owned a business before. The grand opening for E.G. Woode was also the grand opening for her store. E.G. Woode helped her come up with the concept for the store, and will continue to support her as she learns the ropes of being a business owner. Her store also has a dedicated classroom space where she’ll be teaching sewing classes. Art for sale from local artists will be on constant rotation. And thanks to the three-story statement window Lucas put in, her second-floor space also has a brilliant view of the sunset.
“My nieces and nephews have already created businesses because of what I do,” Tucker says. “My nephew, he might want to have a Marie|Wesley in Atlanta or anywhere. It’s also a legacy for them. It’s been difficult for African Americans to leave a legacy because we’ve never had a place.”