City grants to boost North First Street development

By Jonathan Mendes

Editor’s note: This article is the result of a month of research about North First Street conducted by the reporter. It is the first story in a series of three parts. The interviews were conducted in November and December of 2004.

Cut off from the urban revival of downtown by the Illinois Central Railroad tracks, North First Street remains in shadows like Champaign’s Cinderella.

On the three blocks north of University Avenue, a handful of black-owned businesses sit few and far between among stretches of vacant land. At the northern edge of the street, wooden boards cover up a gnarled and worn storefront – a remnant of the past.

Nearly 15 years ago, the look of this dilapidated building was the norm, not the exception. “It was a rundown area that needed to be redone,” said Champaign Mayor Jerry Schweighart.

The city began to redevelop the area with the intent of restoring it as a commercial district of black entrepreneurs. Without the city’s investment, many banks might not have financed the construction of the new buildings, impeding redevelopment and perpetuating the area’s decline.

The city grants for First Street provided the boost for business owners to expand their businesses and renovate their properties, especially when they tried to obtain financing, said John Lee Johnson, director of the East Street Development Corporation. The nonprofit organization is dedicated to promoting housing development and economic projects in low- and moderate-income neighborhoods in Champaign County. The city employed Johnson to work with area business owner and identify resources to finance the construction of North First Street projects.

“There’s a pot of money available to North First Street that’s not available anywhere else in the city,” Johnson said of the grants, which are capped at $200,000 and are the highest in the city. “It’s a Donald Trump deal.”

‘No money, no capital’

Many North First Street business owners lacked the cash to fund building improvements on their own, Johnson said.

Lawrence Jackson and his brother, Larry Algee, fell into that category. The two decided to take advantage of the city’s grants to reopen their father’s barbecue restaurant that had closed in 1994.

“There weren’t very many barbecue places in this town, and it was a good opportunity for me and my brother to reopen our father’s business,” Jackson said. “I always wanted to be my own boss and have my own business.”

Jackson’s father still owned the property that housed the old restaurant, but the building was crumbling and in much need of repair to bring it back up to code. The building would have to be rehabbed at a cost of more than $350,000.

The brothers applied for the city grant and received $150,000 in 1998; the grants provide funding for no more than 50 percent of a building project. The brothers still had to come up with the rest, but neither could afford it, Jackson said.

The brothers worked with Johnson to secure financing from banks to fund the rest of the project.

Getting bank loans proved difficult, however. When the brothers applied for loans, several banks rejected their application, Jackson said.

“We had to come up with the financial backing, but we got turned down by a lot by banks,” Jackson said. “We didn’t have no money, no capital. They didn’t think we were good enough risk.”

When the brothers first applied for loans, they only had the city’s money to start the project. “That’s what the banks were griping about. I felt we had a good product, but we didn’t have the personal money other than the grant money to invest,” Jackson said.

Jackson and Algee also sought a loan from the Champaign County Community Development Corporation (CDC), a group of eight banks that pools together money and makes low-interest loans to high-risk businesses.

“It’s our mission to help businesses that wouldn’t be able to start otherwise,” said James “Casey” Rooney, economic development manager at the Champaign County Regional Planning Commission, which administers the funds of the Champaign County CDC.

The CDC loans money to high-risk ventures because the risk is spread out among its members, he added.

Originally, the CDC declined to loan the money to Jackson and Algee, Johnson said.

Barriers to capital

“The city didn’t recognize the historical levels of discrimination that had been practiced by lending institutions toward the businesses in the area,” Johnson said. “What the city did recognize was that (the grants) could be used as collateral incentive to approach the banks,” he said. “But that didn’t mean the banks would accept it.”

Johnson said he believed blacks are held to stricter loan standards than non-blacks.

“Blacks have always been excluded from institutional processes of America,” Johnson added. “Champaign is no exception.”

Historically, banks illegally denied or restricted the number of loans to certain communities through a process called “redlining,” according to William Patterson, associate director of the Afro-American Studies and Research Program at the University of Illinois.

“Banks are going to scrutinize loans anyway, but if they’re going to have an extra set of standards for a certain neighborhood that’s ethnically identifiable, that’s redlining,” Patterson said. “It has everything to do with skin color and race, and it’s been used across the nation.”

Johnson said the city grants should have served as proof that, though Jackson and Algee were unable to invest personal money, they still had money behind them.

Johnson, on behalf of Jackson and Algee, filed a complaint alleging that the banks and the CDC used stricter standards for blacks than for non-blacks.

“Our point before filing the complaint was: ‘Don’t f**k around with us. We’re entitled to the same banking privileges as any other type of American,'” Johnson said.

Rooney, of the Champaign County Regional Planning Commission, said he was unaware of the complaint; he has only worked at the commission for two years. He said while the CDC makes loans to high-risk businesses, it still requires that loan applicants have sound business plans and good financial projections.

“We don’t just throw money and hope they succeed,” Rooney said. “We don’t want to help them fail.”

Rooney said startup small businesses usually are undercapitalized and need financing, but some entrepreneurs lack financial resources, have bad credit or simply have no sound business plan. He also said North First Street is a fledgling neighborhood, which to bankers signals risk.

“Bankers are the most conservative people on earth,” Rooney said. “First Street is an experiment. We’re going into an unknown. Bankers don’t take risks. They have to be fiscally responsible with their customers’ money.”

Johnson said he believes the CDC became more responsive after the complaint was filed. Meanwhile, Jackson and Algee, along with their father, managed to pool together some money of their own, Jackson said. The CDC later approved the loan and financed the renovation of the building, which was completed in 2003. Jackson’s Ribs N’ Tips Restaurant and Lounge opened for business that August.

‘Other side of the tracks’

In 1992, the Champaign City Council made redeveloping the area a priority. Though it sat just a block and a half from downtown and was separated by railroad tracks, the area over the years had spiraled into decay and was riddled with violence.

“It’s a big boundary,” said Dannel McCollum, the mayor of Champaign from 1987 to 1999, of the disparities between downtown and North First Street. “You’ve heard the expression ‘the other side of the tracks.'”

The area used to be a high crime area, said Gary Spear, a crime analyst with the Champaign Police Department. “There used to be lots of bars, lots of violent crime, lots of shootings,” he said. “It was a tough area.”

Once the police station was built at the corner of University Avenue and First Street in 1983 and the bars began to close, police began to see a decline in crime, Spear said. He estimated that the crime rate has dropped about 75 percent during the past three decades. According to Champaign crime statistics, there were no reported violent crimes on North First Street in 2004.

The city hoped the redevelopment would resurrect the area as the bustling black commercial district it had been decades ago, said Dennis McConaha, a consultant the city hired at the beginning of the revitalization project.

“This went into disrepair in the ’70s,” McConaha said of North First Street. “It was an opportunity to bring that back as a pride of the community and upgrade the buildings.”

McCollum said the plan was also logical.

“I think the real promise was the chance to promote black-owned enterprises and pick up the area that has for the last 30 to 40 years been a black area,” McCollum said. “I think in reality, it was unlikely a white entrepreneur would pick this area to invest in.”

A thriving enclave

During the first half of the 1900s, the area east of the Illinois Central Railroad tracks became an active commercial area serving white railroad workers and blacks, who had settled in an area northeast of the tracks, said Paul Idleman, director of the Champaign County Historical Museum Cattle Bank.

By the 1960s, white-owned businesses operated along First Street, and black business owners set up shop on a portion of First Street and Main Street, which was paved over and now serves as a city parking lot, said Mayor Schweighart, who at the time was a police officer assigned to the area. There was little interaction between the two races, he added.

Segregation caused the area to become a vital hub to the black community as blacks were prevented from frequenting white-owned establishments and obtaining employment in many businesses, said Ted Adkisson, a Champaign native who owned a beauty shop downtown and now teaches workshops on local black history.

“This community was segregated,” Adkisson said. “African Americans began to build their own businesses because they weren’t gainfully employed. The whole community was thriving with different businesses.”

Adkisson listed nearly 30 black-owned businesses that operated in the area during its heyday between 1950 and 1970 – from cafes, taverns and barbecue joints to cleaners, barbershops and funeral homes.

During the civil rights movement, racial strife enveloped the area, Schweighart and Idleman said.

“There was lots of turmoil,” Schweighart said. “It was not a good time to be a policeman. We’d go to campus because of Vietnam War protestors, then come up north and get shot at because of the black power movement.”

White business owners began to move out by the end of the 1960s, and more black business owners replaced them down First Street, Adkisson said.

“During the ’70s and into the ’80s, you began to see these businesses vanish,” Adkisson said. “As integration became possible, African Americans were able to move out of the African-American community and into the community at large. If it was being offered somewhere else, those services in the black community could be drained off.”

Resurrecting the area

The city has completed four full-scale construction projects on North First Street, totaling nearly $1 million. The city also leveled dilapidated buildings and replaced old streetlights with decorative ones. The area houses a realty company, a restaurant, a masonic lodge with a bar and banquet hall, two barbershops and four hair salons.

But some disagree about whether the redevelopment succeeded.

“The North First Street project has increased investment and has created jobs and an ongoing economic base in the black community,” Johnson said. “I would grade the project a double ‘A.’ The ‘but’ is there needs to be more partnerships between the city of Champaign and the black community.”

“It’s a success in one way that it got rid of dilapidated buildings,” Schweighart said. “But the vital goal was filling them back up with businesses. You got a lot of property off the tax rolls, so you can’t consider that a success.”

But in the eyes of Lawrence Jackson, who got a city grant to build his barbecue restaurant, the redevelopment pumped life back into the area.

“Without the city, we wouldn’t have this opportunity,” Jackson said. “Not just us, but First Street in general. Before the city started doing anything, First Street was dying.”