By Linda Lutton
For months, an unassuming "UNO" sign has been hanging in the window of the Eighteenth Street Development Corporation. It's a small announcement for a union that could have a significant impact on the future of Pilsen.
The marriage of these two nonprofit community groups is curious, given that for most of the last 15 years they've held disparate views on neighborhood development. As recently as 1997 they sparred publicly over the expansion of the University of Illinois at Chicago, though a year later both supported the Pilsen industrial tax-increment financing (TIF) district--ESDC with some caveats, UNO like a cheerleader.
But over the past year the United Neighborhood Organization--a powerhouse Latino group with strong ties to City Hall--has played a growing role in running ESDC, the area's oldest community development corporation. Today, UNO hires ESDC's staff and has put together a board of directors comprised of allies of Danny Solis, who was a founder and executive director of UNO before being appointed 25th Ward alderman by Mayor Daley five years ago. In January, UNO bought the building that houses ESDC's offices, giving it a shop in Pilsen for the first time since 1988.
ESDC was founded in the mid-70s to promote development plans written by neighborhood residents. Since then the group has rehabbed buildings, built affordable housing, provided technical assistance to small business owners and industries, and trained residents for jobs in the construction trades. According to a UIC Web site, between 1992 and '98, ESDC helped start 63 new businesses, assisted 31 businesses in expanding, and packaged $2,219,950 in loans.
The 21-year-old UNO is best known for offering assistance on immigration and citizenship issues and for its ability to turn out busloads of protesters for a variety of causes. UNO consistently sees eye to eye with Mayor Daley when it comes to controversial issues in the Latino community--the group has championed the gang loitering law, for instance, and the Board of Education's "three-years-and-you're-out" policy for bilingual education. In 1999 UNO received more than $1 million in taxpayer money through grants and contracts from the city, state, and the Chicago Public Schools.
UNO's alliance with ESDC will give UNO a formal foothold in the economic development field and put a onetime independent-minded community development corporation solidly in Solis's camp, just as the alderman prepares to reintroduce another controversial TIF along Pilsen's commercial strips.
UNO executive director Juan Rangel says his group hasn't technically "taken over" ESDC, or merged with the organization, but it is acting as ESDC's executive director. That's a highly unusual arrangement, says Susan Kaplan, director of the Community Economic Development Law Project, which assists CDCs with legal issues. Usually an executive director is a person. In this case, UNO is a separate nonprofit with its own mission statement and board of directors. At the same time it's acting as executive director of ESDC, which means it is employed by and accountable to the board of directors of ESDC and charged with carrying out that group's mission.
Rangel insists ESDC is still an independent organization. "ESDC has staff," he says. "It's a very capable staff. They are paid for by ESDC." But employees of other Pilsen community groups say day-to-day operations there are being handled by Holly Denniston, a onetime UNO employee who still answers her phone extension at UNO and who represents UNO on the Pilsen-Little Village empowerment-zone committee.
ESDC board president Armando Saleh says the new relationship is beneficial to both groups. "UNO wanted to begin working in the economic development field, and obviously they didn't want to come in from a position of 'Oh these guys are coming into something totally new to them.' On the other hand, we were the economic development experts in Pilsen, but we needed to start developing partnerships and become a favorite again of all the funding agencies. UNO provides those contacts at the different levels of government."
ESDC ran into trouble starting under director James Isaacs, who headed the nonprofit from 1996 to '99. After bringing in a record $1.64 million in 1997, ESDC collected less than a third of that in each of the following two years. Money secured by previous directors didn't even get put to use. Six years ago UIC's Neighborhoods Initiative program offered $277,000 for the project of ESDC's choice, but the group still hasn't spent the money. Former employees complain they stopped receiving paychecks in the summer of 1999.
Shortly after Isaacs left, board member Joseph Galvan was voted in as acting director, a position he held for a year before UNO took over. Tax reports indicate that ESDC paid Galvan $70,000 a year for his services--$26,000 more than what Isaacs had been paid--at the same time that employee paychecks stopped. "CDCs don't pay as well as consulting gigs," explains Galvan, who continued to run his own development business while serving as ESDC director. "But it's all about giving back to the community."
Even before becoming director, Galvan apparently benefited from his association with the nonprofit. In early 1999 Olmeca Development--a private company that at the time wasn't registered with the state but whose listed address and telephone number matched Galvan's home and phone--received $20,000 from ESDC to do a study on wire manufacturing that the nonprofit had been commissioned to do by the National Council of La Raza and UIC. Some former board members claim that Olmeca got this subcontract without their approval (Galvan disputes this), and it wasn't disclosed on ESDC's tax forms.
Isaacs, now a manager in the Chicago Housing Authority's development department, describes Olmeca as "a partnership" that he and Galvan formed "early on," though he "can't remember" if he had an interest in Olmeca at the time it received the subcontract.
By late 2000, Galvan was still signing papers as ESDC's acting director, and the group's letterhead no longer listed any board members. One former board officer says that when the deal with UNO went down only four board members were present. Galvan says he was recently asked by UNO to rejoin ESDC's board.
Several former ESDC board members--some of whom resigned within the last month--claim they were kept out of key discussions about the group's future. "There was a greater plan that only a few people were aware of," says Ramon Cepeda, a former board member and a vice president at LaSalle Bank. "Once they saw that I was trying to keep the organization on track, I was made to feel uncomfortable and unwanted." Cepeda and two other board members quit in 1999. He thinks ESDC's alliance with UNO means Pilsen is losing an important voice on development that's independent from the alderman.
One former ESDC board member says he tried to stay involved but was repeatedly given wrong information about meeting dates and times. Another was recently called to attend a meeting after a year and a half hiatus. "I thought the board had dissolved because I never got any notices or anything," he says. "I assumed I was off the board." At the meeting he was informed of UNO's new relationship with ESDC and was told that UNO had bought ESDC's building, which had brought in roughly $35,000 in rents annually. Rangel says the building purchase had nothing to do with the new partnership. "It's a business transaction. They have a building for sale, and we purchase it."
Now a majority of ESDC's board members have ties to Solis and other Daley allies. Carlos Gonzalez, the board's treasurer, is the brother of Solis's chief of staff. Veronica Alanis is the sister of another Solis staffer. Board president Armando Saleh works for Cook County commissioner Joseph Mario Moreno. Peter Romero of Del Mar, Inc., and Alphonse Guajardo of Guajardo and Associates are generous campaign contributors to Solis and other Daley allies in Pilsen and Little Village, and both firms have been awarded city contracts. Guajardo and Associates was the architect for the streetscape project that created the plaza at 18th and Blue Island, and the firm is listed as the architect on an empowerment zone proposal submitted by UNO to rehab Thalia Hall (see next item).
The first test of the new board will come when Solis reintroduces the commercial TIF in Pilsen, a provision so controversial that in 1998 it was taken off the table. (Solis did not return repeated calls for this story.)
Rangel says the partnership between UNO and ESDC will be a "tremendous asset to the Pilsen community" and that anyone who thinks otherwise or questions UNO's economic development experience is "trying to turn a positive into a negative." While UNO has dabbled in development--the group has rehabbed a handful of residential buildings and run a job placement program--it is entering new territory when it comes to bricks-and-mortar economic development and providing technical assistance to small businesses.
According to Ted Wysocki, president and CEO of the Chicago Association of Neighborhood Development Organizations, of which ESDC has been a member, "It's becoming more common for groups who are working to revitalize their community to get engaged with economic development." Wysocki suggests that a CDC in Pilsen should be concerned with helping existing businesses and residents to own property in the neighborhood. "It comes down to: Are they trying to get ahead of the real estate game and not let the neighborhood get picked off building by building or block by block? Are they putting together the private and public financing necessary to help residents and community stakeholders own the land and grow their businesses? How well can they leverage the current economic vitality in Pilsen and the current positive relationship with the mayor to have it pay off for the community?"
Rangel says ESDC will continue its current programs under UNO. But the $66,500 annual state grant that funds a Small Business Development Center at ESDC--part of a national network of such centers--expires at the end of this month. Mark Petrilli, director of the program in Illinois, notes that ESDC's center has been without a director. He says the state is looking for assurances that ESDC's commitment to small business development will continue and that UNO has the experience to get the job done.
The cost could be particularly high if technical assistance in Pilsen's industrial corridor falters. "Underused manufacturing space becomes a prime target for loft conversions and gentrification," says Pat Wright, associate director of the Voorhees Center at UIC, a founder of ESDC, and coauthor of a recent study on how gentrification happened in West Town--one of the few Chicago neighborhoods that lost Latino residents between 1990 and 2000. Joy Aruguete, executive director of Bickerdike Redevelopment Corporation, says she remembers watching an industrial corridor in West Town turn from completely industrial to completely residential in less than two years.
Some Pilsen residents say UNO's takeover of ESDC has been kept quiet--no public meetings, no press coverage. "I'm a block away and I don't know anything other than there's a sign there that says UNO," says Teresa Fraga, a longtime neighborhood activist who has challenged Solis for alderman and was a strong opponent of the Pilsen industrial TIF.
"We don't toot our horn on everything," counters Rangel. "That we came in and saved an organization? No, we haven't sent out a press release on it. But people know. It's not like it's a secret."
According to Juan Andrade, president of the U.S. Hispanic Leadership Council, the quiet move may be part of a political strategy. "The element of surprise is one of the most effective in the art of attack," says Andrade. "Danny Solis is an excellent strategist. It wouldn't surprise me if this was the strategy here." Andrade says it's normal for an alderman to try to shore up his base, and that's what Solis seems to be doing. "Everyone knows that UNO is an extension of the alderman's political operation. It doesn't surprise me that they are establishing a more official presence in Pilsen. He hopes to expand his political dominion."
UNO in Action
In 1999, Frank Rodriguez went to the Eighteenth Street Development Corporation to see if the Pilsen nonprofit could help him fix up Thalia Hall, the landmark building on the corner of 18th and Allport that's been in his family for 25 years. What he got, he says, was an offer from UNO to buy the building, and a refusal to take no for an answer.
Built in 1892, Thalia Hall has an interior theater modeled after an opera house in Prague. The auditorium is decaying--it hasn't been used for years--but until recently nearly all of the building's six storefronts and 15 upstairs apartments were occupied and in average condition for the neighborhood, home to many recent Mexican immigrants and small businesses.
ESDC staff paid several visits to Thalia Hall and brought along representatives from UNO. On one occasion, says Rodriguez, they pulled out drawings of the building. "They showed me these architectural plans, color--very nice drawings of what this could look like," he recalls. "I sensed where they were going." Rodriguez says UNO offered him $750,000 for the building, but he told them no. "I said, 'I'm not ready to sell it yet. This area's going to be worth more. And I like it here. I grew up in the area. What I want to do is fix it. What I want you guys to do is help me get free windows, help me get loans.'"
Rodriguez claims city inspectors showed up at Thalia Hall about two weeks later and cited him with 54 code violations. He says he'd been cited before and knew the routine: "I would go to court and ask for more time, make the repairs, and life would go on."
This time things were different. Rodriguez was slapped with a $10,000 fine, and he says the city's attorney immediately pushed for the building to be turned over to a receiver to be sold. In previous instances, Rodriguez says, he'd been allowed to correct violations without going through the time consuming and costly process of getting architectural drawings and permits, but not this time.
Rodriguez says he was close to meeting the repair schedule he agreed to in court. But on January 9, 2001, a fire broke out in his office, and the city ordered him to stop making repairs and update his permit application. It also ordered all tenants to vacate the building.
On the same day as the fire, UNO executive director Juan Rangel wrote Rodriguez a letter offering him a million dollars for Thalia. "In the best interest of Thalia Hall and the Pilsen neighborhood UNO highly suggests that you accept our final offer for the purchase of Thalia Hall," reads the letter, which was cc'd to Alderman Danny Solis. (Solis did not return phone calls for this story either.)
Rangel says it's no secret that UNO wants to turn Thalia Hall into a cultural center. "We were given a grant by the city to rehab that building," he says. Pending City Council approval, UNO will be awarded $1.5 million in empowerment-zone funds if the group can gain control of the site. It is also counting on a $277,000 grant from UIC's Neighborhoods Initiative program. That money was offered to ESDC for the project of its choice in 1995, but the group "just sort of fooled around--they could never find a building," says program coordinator Nacho Gonzalez. Now, says Gonzalez, if UNO and ESDC can't get the Thalia project in play soon, Neighborhoods Initiative will be forced to transfer the $277,000 to another neighborhood group. If it isn't spent by August 31, Pilsen will lose the grant altogether, and the money will be returned to the feds.
Near the end of February, with his building vacant, Rodriguez came to the end of his rope and put Thalia Hall up for sale. In three days he had a buyer who agreed to pay $1.1 million for the building "as is," but "the city blocked the sale," says Rodriguez, who claims city attorneys scared off the buyer by requiring even more repairs and improvements than the ones Rodriguez had been told to make (including the installation of an elevator).
Law Department spokesperson Jennifer Hoyle says city lawyers met with the potential buyer at his request and presented only the facts: Thalia Hall is awash in violations, its landmark status means special requirements apply when making repairs or improvements, and whoever purchases the property will immediately be named as a defendant in the court case.
If a judge decides next month that Rodriguez hasn't lived up to his agreement with the city, Hoyle says, a receiver will select the purchaser and Thalia Hall will not necessarily go to the highest bidder--it will be sold to a buyer with a concrete plan for redevelopment and financing.
"The receiver will probably sell it for half of what it's worth to UNO," says Rodriguez. "That's the way I see things going."
Rodriguez says he doesn't want UNO to get the building, "because of the way they went about it. I see real estate that I like and I call people. If they say, 'No, I'm not ready to sell,' then I respect that," says Rodriguez, who owns 11 properties in the Chicago area and others in Texas. "It's not fair when you can have the city behind you and have the inspectors target a businessperson in order to acquire his property. That just ain't right." Rodriguez says he can't understand why UNO didn't look for an abandoned building--or at least one that was for sale--or consider completing their project in partnership with him without buying the building, something that's not unheard of in community development.
Caught in the squeeze have been the tenants who were ordered by the city to vacate Thalia Hall. "To me, the building wasn't in bad shape," says Genaro Hernandez, manager of Muebleria Ely's furniture store, which relocated to a storefront on Blue Island. "We were beginning to jump-start the area, and we were doing all right." Hernandez had signed a lease with Rodriguez that locked in his $850 monthly rent until 2004. He says he was never approached by ESDC or UNO to see if he needed assistance in relocating his business; residential tenants, who Rodriguez says paid $350 a month in rent, didn't receive relocation assistance either. "There were so many dangerous and hazardous conditions in the building that we couldn't allow the tenants to remain," explains Hoyle, who cites absent smoke and carbon monoxide detectors in the commercial units as well as "debris and wood" stored in the theater that Rodriguez uses as a wood shop.
It's difficult to prove Rodriguez's assertion that UNO's bid for the building is the actual reason city lawyers are playing hardball, yet he insists the connections have been subtle but real. During a visit to Thalia Hall, Rodriguez recalls, "one of the girls from UNO said, 'This is a real nice building. Too bad you have to sell it.'" Representatives from UNO and Solis's office show up regularly for his court dates, and he claims he once heard a Solis staffer ask the corporation counsel, "What's taking so long? When are we gonna get the building?"
Ironically, if UNO does get Thalia Hall, the group will owe a debt to Rodriguez for its $1.5 million empowerment-zone award. As part of its proposal, UNO included a letter signed by Rodriguez in 1999 saying he'd be willing to "enter further discussions for the sale of this property to ESDC." That was before his housing court saga began. Rodriguez says, "At the time I thought, 'Well, if it helps this organization, I'll sign the letter. Maybe they'll come up with a good offer, and I will sell it to them. It doesn't cost me anything.'"
Art accompanying story in printed newspaper (not available in this archive): photos/Robert Drea.