Engaging the Community on the Economy

Economy, Labor and Jobs

This is a hyperlink to a website documenting some aspect of the African-American experience in Champaign-Urbana. Copy-and-paste the below link into your browser to open the site. If the link does not work please contact us or try visiting the Internet Archive: http://www.archive.org/.

Illinois Times Newspaper Clippings

African-American Newspapers

Clippings from the Illinois Times Newspaper, an African-American newspaper published in Champaign-Urbana from the late 1940s to the late 1960s. IN PROCESS - check back for more clippings.

Illinois History, Philosophy and Newspaper Library

News-Gazette clippings, March 2010

Retiring, Built environment, Proposal

Stories on re-development of Eads Street Lots to fund B.T.W.; New Computer Labs in Douglas Library; and retirement of Les Stratton

Steve Bauer
Kevin Lee

News Gazette

20-23 March 2010

June 26 and the 29, 2010 from News-Gazette

Built Involvement

These are clippings from the News Gazette about building being established in the Champaign community such as the Garden Hills project and the Salvation Army's Shelter. It goes into detail about how they were helping the community or how the community helped them.

Patrick Wade
Meg Thilmony

News Gazette

2010

All Our Kin

civil rights, poverty and unemployment, genealogy and family, built environment, public art and urban renewal

Stack gives an in-depth look into the culture of blacks. She explains the roles of family members and the way they differ from other cultures.

Carol B. Stack

Harper & Raw, Publishers

1976

News-Gazette June 24 2010

News-Gazette June 19 and 20 2010

Three-part Daily Illini Feature on North First Street

North First Street

Pt. 1: City grants to boost North First Street development
Text: 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."

Pt. 2: Salons find success on North First
Text: On a cold, bleak November morning, North First Street sits nearly still.

Fog hovers over the many vacant lots, and the inactivity of the morning makes the area seem barren. Only the clatter of a man pulling aside the metal grates covering the windows of a beauty salon disturbs the quiet.

On the other side of those windows, inside the Locks of Glory Phase II beauty salon, 204 N. First St., the mood is much different. Natalie Knight and her mother, Moira Dukes, chat and joke as they cut, condition and straighten their customers' hair. The friendly talk and laughter make the room warm and welcoming.

Though only a handful of businesses operate on this stretch of North First Street, which became blighted over the last few decades, Locks of Glory and the street's other barbershops and salons are prospering - serving as hope that the area's redevelopment will be successful.

"They represent a successful minority business culture and ethic," said James "Casey" Rooney, economic development manager at the Champaign County Regional Planning Commission. His office administers funds that have been invested in North First Street businesses. "They've come a long way in such a short time. There's optimism and, of course, room for improvement. But the hope is that these businesses will expand, and new businesses will enter."

Beating the odds

Small business is risk, said Joseph Broschak, a business administration professor at the University.

Nationwide, one in three new small businesses fail within two years of opening, according to U.S. Small Business Administration statistics.

By largely serving the black community, the black-owned barbershops and salons on North First serve a very specific market, which allows them a greater likelihood of success than small businesses in broader markets that have to compete with chain stores, Broschak said.

"Chains tend to serve the general public, but niche markets tend to serve a specific segment of the general population," Broschak said. "When you're talking about niche markets for specific demographics, whether it's race, ethnicity, etc., there's lots of opportunity for (entrepreneurs).

"But that requires doing homework. Understanding that you offer a specific product and knowing how customers will respond to what's being offered," he added.

Beauty salons also hold a cultural significance to black women, said Noliwe Rooks, associate director of African American Studies at Princeton University. She is also the author of "Hair Raising: Beauty, Culture and African American Women," which focuses on black identity and culture in relation to hair.

"They are a social space where you learn to be a woman," Rooks said. "Growing up, it's a right of passage. In terms of business, it's also an entrepreneurial opportunity, especially if you're located in the black community. It's a service that's racially specific and it's certainly a viable business."

Rooks said black women spend a lot of money on their hair because the product and treatments they use cost more. The average black woman spends between $60 and $100 on her hair for each visit to a beauty salon, Rooks added.

"For black women, who have had a difficult time fitting in with accepted beauty norms, they can do all sorts of things with their hair to fit in," Rooks said.

Investing in hair

Inside Locks of Glory, the smell of heated hair fills the room as Natalie Knight, the owner of the salon, pulls a heated straightening comb through her customer's frizzy hair, transforming it into sleek, smooth hair. Two women on the opposite side of the room sit under hair-drying machines that seem to swallow their heads. Another woman, Kim Roberson, flips through a magazine, then watches the television while she waits to get her hair styled by Moira Dukes.

Roberson has gotten her hair styled by Dukes since 1995, and she didn't let moving from Champaign to Nashville, Tenn., stop her from returning for hair appointments. She would drive to Champaign for nearly six hours.

"My friends back home ask, 'Why would you drive all that way for your hair?'" said Roberson, a plump young woman with round cheeks. "When you find someone good, that's where you want to go. And with black hair, you don't want to take the chance. It's hard to find a beautician who takes care of your hair. You need a lot of maintenance for black hair."

Knight said she believes other customers return for that same reason: They know the hairdressers not only style their hair but also care for it.

"We do a lot of hair care," said Knight, a tall woman with curly chin-length hair pulled back by a colorful orange ribbon. "We do styling too, but also our hair - black hair - needs a lot of maintenance. I feel as if (chains) don't give (blacks) the maintenance that our hair needs."

"They know what they're doing," said Terrya Miller, senior in applied life studies who has come to the salon for four years and gets her hair done nearly every week.

"It can get expensive but our hair is an investment," Miller said. "You have to take care of it like a car. To make it look good, you have to take care of it with regular maintenance."

Joe Taylor, who has operated his barbershop, Rose and Taylor, 124 N. First St., in the area for 25 years, said while his barbers can cut any type of hair, his shop specializes in cutting black men's hair.

"We have barbers who can cut the same styles as Supercuts (and other chains)," said Taylor, a soft-spoken 60-year-old man. "We do cut hair for minorities better than anyone else. We've been doing it so long."

Taylor expanded his business when the city started redeveloping the area. He bought land on First Street and obtained a grant to finance construction of the building that houses his shop. Taylor's narrow, long shop, with its walls lined with posters displaying different hairstyles, shares space in the building with two other salons. On most days, the shop is packed with people waiting for their turn to get their haircut by one of Taylor's five employees or Taylor himself.

Taylor estimated that 99 percent of his customers are black and return for a haircut about every two weeks.

"A black barbershop is predicated on the knowledge of black hair and styles," said John Lee Johnson, whom the city had hired to work with North First Street businesses looking to redevelop their properties. "It's essential for business to know their clientele and understand their clientele."

"Business is going well," Taylor said, while counting receipts, his gold-frame glasses drawn down low on his nose. "No problem in the barber business."

Personalized service

Natalie Freeman, owner of Anointed Hands Beauty Salon, 124 N. First St., believes her key to success has been not only the work she does on hair, but also her personality and the salon's atmosphere.

Freeman's secret?

"You don't have to sell yourself, just be yourself," said Freeman, a slim woman with cropped hair, squared glasses and high cheekbones.

Ted Adkisson, the retired owner of TeRo's Beauty and Nail Salon, said interpersonal skills are necessary in the beauty business. Adkisson said that's what kept him in business for 18 years.

"You need to know how to keep your client base, and that's treating them well and keeping them satisfied," he said.

Broschak, the business administration professor, echoed the sentiment. Hair salons are considered a personalized service, he said.

"The more personalized the service, the more important the relationship," he said. "You're going to continue to go somewhere even if a place opens next door that's cheaper. There's a great personal relationship aspect. People tend to want to do business with people they know, like and trust."

Freeman said many of her customers have stayed with her since their first appointments. Many stayed with her even when she left her old location.

Freeman also described her salon's atmosphere as Christian, which comes from her identity as a Christian woman and the way in which she began her business.

Freeman said she had just returned to Champaign from Chicago after attending beauty school. She had three daughters and had just left an abusive relationship. When she decided to start her salon, her mother's friend donated old equipment, and her original landlord did not charge rent for the first few months.

"People would say it was a miracle," she said. "I didn't have anything. I was a struggling mother on public aid. If you keep faith and trust in God, he'll make opportunities for you ... I said God, if you bless me with a shop, I'm going to dedicate it to you."

Freeman named the shop "Anointed Hands" and tries to preserve a gossip- and profanity-free salon. She also hosts a prayer breakfast at the salon.

"I love this salon," said LaTanya Cobb, an Urbana resident who goes to the salon every two weeks. "There's no drama ... Natalie is a good business person just because of who she is. I see her take care of people in the community. She's a good soul. It's from her roots. She's a good Christian woman."

Growing business

Freeman can tell her business is succeeding because her customer base is growing. The salon is quickly outgrowing the space in its current location.

In November, Freeman worked with John Lee Johnson to try to obtain a city redevelopment grant to construct a new building and expand her hair salon into a multicultural full-service salon that would offer manicures, pedicures and tanning beds. New grant money rules, however, prevented the city from granting the money.

Taylor, owner of the Rose and Taylor barbershop, thinks another building would be a boon to the area, allowing more diversified businesses to set up shop in the area.

"It's not through," Taylor said of the area's redevelopment. "We need an insurance office or some other professional offices, maybe even a laundry mat. Don't you think we've got enough barbershops?

"It may be a lot of black-owned businesses, but it's not just for the black community," Taylor said. "Everyone's welcome. We treat everyone the same."

Pt. 3. Council faces lodge loan woes
Text: When the Lone Star Lodge #18 applied for a city of Champaign grant to construct a new building, the city and the lodge's members thought the project could spur further development of the North First Street area and benefit the black community.

The lodge, 208 N. First St., was a black fraternal organization with ties to First Street for about 50 years. The city sought to restore the area as a black commercial corridor.

"It was their business center years ago and the idea was to bring the area back to its vitality," said Dennis McConaha, a consultant whom the city hired to help with the redevelopment project. "The lodge was part of the fabric of the community."

The project called for razing the lodge's weathered, narrow building and replacing it with a grand, 6,000-square-foot building that would house a bar and a banquet hall. The Lone Star Lodge had promise to be a shining beacon for North First Street's future.

Five years after the project was started, the promise has faded. The lodge defaulted on a loan, and the city has started the process to foreclose on the property and could lose about $300,000. The fiasco serves as a cautionary tale of how the city and others must be vigilant when exploring ways to revitalize an area and evaluating a business's chances of success, some say.

"There's a good lesson to be found," said James "Casey" Rooney, economic development manager at the Champaign County Regional Planning Commission. The commission administered a Community Development Corporation (CDC) loan to the lodge. "We all need to do a better job in evaluating the chance of success for the business," Rooney said. "We all learn from mistakes."

Struggling business

Much of the lodge's current problems stem from slow business and its failure to repay equipment and construction loans, according to city documents.

The lodge has had monthly shortfalls in both sales and profits in 2004 and has been operating at a loss, according to a financial report submitted in May to the city by the lodge's accountant, Daniel E. Setters.

The lodge also failed to make loan repayments on time and, in April, defaulted on a $125,000 loan owed to the CDC, which held the first mortgage on the lodge's property, according to a city report.

"Becoming current (on the CDC loan) will be a challenge considering (the lodge's) current cash crunch," Setters had written.

The city bought out the CDC's position on that loan because of a previous agreement between the two, said Veronica Gonzalez, the city's implementation planner. The city declared the entire loan immediately due.

The city staff recommended that the Champaign City Council declare the loan in default because the lodge's financial report showed it didn't have a sufficient revenue stream to pay off its debt.

At its July 13 meeting, the council voted to declare the lodge in default of the loan and directed city staff to foreclose on the mortgage. The lodge was given a 90-day period to pay $9,962.44 in order to reinstate the mortgage and prevent foreclosure.

"It's like an alcoholic brother-in-law," said Tom Bruno, a city councilman. "You feel compassionate at first, but you can't go helping them. You have to cut your losses."

David Johnson, the president of the lodge's High Twelve social club, said that the reason the lodge struggled from the start was because the lodge's original contractor went bankrupt.

"He went belly-up and had told us he purchased equipment and materials, but he didn't," Johnson said. "We had to take out loans twice."

Other lodge officials did not return several phone calls.

Business decisions

"The deadliest business to be in, in America, is small business," said John Lee Johnson, whom the city hired to work with North First Street businesses, including the lodge, looking to redevelop their properties. "But (the lodge's) product hasn't become obsolete and their clientele hasn't shifted. They've made unbelievable decisions that put them in a hole."

John Lee Johnson said members of the Danville Business School helped write a business plan for the lodge that detailed how the business could sustain itself; the business plan was required in order to get the city grant. The lodge's business plan, John Lee Johnson said, should have prevented the lodge from falling behind on loan payments.

David Johnson, the lodge official, said the lodge's problems haven't resulted from mismanagement.

"For the small budget (the lodge managers) had to work with, they did good," David Johnson said. "Whatever money we had, we used to open the place. But we had no operating capital. That prevented us from having supplies on hand and doing advertising. We weren't able to tell public that we exist."

But Rooney, whose office administered the CDC loan, said the lodge had the additional problem of being a fraternal organization.

"When you're talking about a fraternal organization, who is accountable?" Rooney said. "In that situation, there is no such person as there would be in a for-profit organization who is responsible for paying the bills, for marketing, etc. The board is constantly changing.

"What's important to the bank is that you have a good businesses model and a good business structure that's sustainable over time, that won't deviate from year to year," Rooney said. "That doesn't appear to be the case in terms of the lodge."

The lodge also rebuffed the city's inquiries about the health of the lodge's business, said Gonzalez, the city's implementation planner.

"Time and time again, we asked for information about the status of the business," Gonzalez said. "But with the lodge, it's always been a mystery. Every time we met with them another issue would surface ... They would come to council and would tell us it wasn't our business. But it is because we lent them money."

Lending lessons

In 1999, the city loaned the lodge a total of $296,000 to help finance construction of the building - $150,000 of which the city would forgive if the rest were paid back on time.

The city loaned an additional $150,000 in 2002 to fund the completion of the lodge's building. At the time, the lodge had fallen behind on its loan from the CDC because the construction of the building had been stalled. When the city made the 2002 loan, it also agreed to buy out the loan from the CDC if the lodge were to default on the CDC loan. The CDC, in return, agreed not to hold the lodge in default of its loan at that time.

Champaign Mayor Jerry Schweighart said the city could have offered more business help, rather than loaning money.

"It's the old saying: Give them a hand instead of a handout," Schweighart said. "In the case of the lodge, I think we gave them too much of a handout."

By the time the lodge defaulted on the CDC loan in 2004 and the city took over the loan, the lodge's debt had ballooned to $703,000, according to a report to the city council. The city also appraised the building, which it valued at $360,000.

"Their business projections were supposed to work," Gonzalez said of why the city continued to loan money to the lodge. "Their business plan was sound. We knew it would be risky - what business isn't? But it was the execution of the business plan that's the issue."

Future development

Meanwhile, the 90 days the lodge had to pay the city to reinstate the mortgage expired on Nov. 17, according to a city document. The city is waiting for a judge's decision, though the lodge is trying to come up with the money to pay off the loans.

"We're going to lose money, there's no doubt about that," Gonzalez said. "Besides money, we lose credibility from both the business community that thinks we've done too much (for the lodge) and the black community who will want to know why it didn't succeed. If they aren't informed correctly of what happened, it could hurt future development."

Bruce Knight, the city's planning director, said there were circumstances surrounding the lodge that wouldn't be met again. Nevertheless, the city should be more careful in the future when determining the financial capability of a business, he said.

"Each one of these cases are unique, and we have to handle them uniquely," Knight said.

Rooney thinks putting a more thorough focus on future lending would help businesses avoid the lodge's predicament.

"I hate to think there won't be any more investment on First," he said. "It's all going to boil down to their business plan and financial projections. People will be a little more cautious. But we'll still be here."

Jonathan Mendes

Daily Illini

January-February 2005

North First Street Revitalization Project

North First Street

Two volume report on the proposed revitalization of North First Street, prepared by Urban Planning students under the direction of Leonard Heumann for the City of Champaign. In two volumes.

Urban Planning students

Fall 1993

Designing Educational Programs for Minority Entrepreneurs

Entrepreneurship

Abstract
The study analyzed why minority contractors were not bidding on federally-funded jobs. The objectives were to find out why, what were their needs and to design an educational program. Data included a survey completed by 22 minority contractors. Literature was reviewed and local resource persons were interviewed. Conclusions were that minority contractors faced racial discrimination, lacked successful role models and a networking system, had little training in business skills, and lacked knowledge concerning banking. They lacked capital, equipment, workers, insurance and bonding. Recommendations were for professionals to receive diversity training and host a reception to meet minority contractors. Contractors should attend educational workshops to enhance their business and management skills. Formation of a coalition for minority contractors was also recommended.

Full text:


Michelle L. Pride
Educator, Community Leadership and Volunteerism
Cooperative Extension Service,
University of Illinois
Champaign-Urbana, Illinois
Internet Address: pridem@idea.ag.uius.edu

Bruce Stoffel
Community Development Manager
City of Urbana, Illinois

J.C. van Es
Laboratory for Community and Economic Development,
University of Illinois Champaign-Urbana, Illinois

The Problem
The Community Development Department of the City of Urbana has not been successful in recruiting minority general contractors or subcontractors to bid on federally-funded housing rehabilitation programs. In order to retain federal funding, the city needed to increase participation of minority contractors. They approached the Cooperative Extension Service (CES) to aid them in finding out why minority contractors were not bidding on these projects.

Purpose of the Program

The purpose of the program was to determine the reasons minority contractors were not bidding on the housing projects and to develop an Extension program which would enable them to do so in the future.

According to the U.S. Census Bureau, 12 percent of the U.S. population is African-American (Boyd, 1990). Smith (1993) found that 3.1 percent of businesses in America are owned by African- Americans. His study also showed that only "one percent of revenue generated by U.S. businesses came from black-owned businesses. Forty-nine percent of all black-owned businesses were concentrated in lower pay service industries and the service sector accounts for nearly one-third of all black-owned business revenues"(Smith, 1993: D12). Mescon (1987:62) reports that "service industries and retail trade businesses comprised 68 percent of black firms and 59 percent of their gross receipts, with more minority firms concentrated in these industries than was true for firms overall". Although minority interest in business ownership is increasing, minority businesses continue to fail at a higher rate than businesses owned by whites.

History

Reviewing the history of African-Americans, one begins to note some reasons for the large discrepancy between the levels at which African-Americans are self-employed compared to members of other races. African-Americans have been hindered in business because of conditions they have endured that are inimical to successful business enterprise.

Although there have been situations where a black business class developed (Drake-Clayton, 1963), white-owned businesses ultimately dominated the trade in profitable consumer goods because of prejudicial restrictions for African-Americans in acquiring bank loans, developing sound business management, securing favorable business locations, and even insufficient patronage by fellow African-Americans (Boyd, 1990).

During the Nixon Administration, in 1969, the Minority Business Development Agency was established providing would-be minority entrepreneurs with technical and managerial assistance, direct loans and loan guarantees, financial grants, and set-aside procurement from federal agencies (Task Force on Education and Training for Minority Business Enterprise, 1974).

Under the Reagan administration, public policy became less interventionist (Black Enterprise, 1992:210-1). The Small Business Administration shifted away from the predominant use of affirmative action as a tool to equalize economic opportunities for African-Americans and other minorities on grounds of reverse discrimination. As a result, programs awarded to African- Americans dropped significantly (Frazier & Gupta, 1993:R1). Under the current debate on affirmative action, further decline in governmental incentives can be anticipated.

Because government agencies use general hiring standards, such as civil service exams, "blacks have gravitated to public service" (Boyd, 1990:263). Socialization literature indicates that as African-Americans hold more government jobs, the chances that there will be more African-American entrepreneurs diminish. A scarcity of African-American businesses within their own communities reduces the possibility of "power and status necessary to reduce prejudice and break down barriers to black economic progress" (Boyd, 1990:269). Yet, the long-term health of the African-American community will be significantly strengthened by the development of an African-American community (Mescon, 1987; Mann, 1990).

Educational Programs for Minority Entrepreneurs

On the basis of reviewing other educational programs that had been successfully designed for African-Americans in business, it was decided that developing a face-to-face workshop for this audience was a viable format. The next step was to identify the specific educational content needed for this audience.

Data Collection

Data were acquired through a survey of minority general contractors and subcontractors in the Urbana-Champaign area. A questionnaire was developed by CES in close consultation with key informants including two minority contractors. Local governments, the University of Illinois, and referrals were used to acquire the list of minority construction businesses. A few names on the list were women. Interviews were conducted by an African-American female hired by the City of Urbana. Questions on business management background, insurance, licensing, general contracting, subcontracting, financial management, and educational seminars were asked to ascertain the objectives for the educational programs.

During the months of August and September 1991, 22 interviews were successfully completed from the list of 35 contractors. While a few refused to be interviewed, the majority of those businesses not interviewed were no longer in existence.

Survey Results

The survey revealed that painting was the most common business among the respondents (See Table 1). Only two of the respondents identified themselves as currently being or having ever been a general contractor.

Table 1
Reported Participant Construction Trades
Painting 6 Construction (general)5
Hauling and General Maintenance 5 Masonry and Carpentry 5
Electrical 3 Plumbing 3
Concrete 2 Roofing 1
Landscaping 1 General Maintenance 1
Excavating and Demolition 2
Total 35*

*The total number of businesses exceeds the number of respondents (N=22), because some respondents listed multiple business areas.

The most common job performed in dollar amounts was between $1,001 to $5,000, which was also the most common category for the largest job performed. However, there was one job reported at $3,200,000.

Among the contractors, 15 worked alone and only seven hired one to three people per job. Yet, as many as 15 of the construction contractors indicated they would like to hire one or more employees. Lack of money was the main obstacle to expansion. Lack of business leads and work were mentioned by about one-third of the respondents.

While 77 percent of the minority contractors indicated that they were interested in participating in the federal housing renovation programs, Table 2 indicates that they had trouble meeting the requirements (59%) and learning about specific opportunities (45%).

Table 2
Reported Reasons For Non-involvement in Champaign-Urbana Federal Housing Projects
Reasons Frequency Percent
Can't Meet Requirement 13 59
Don't Get Information 10 45
Too Busy 4 18
Don't Work With Contractor 3 14
Too Much Paperwork 2 9
* The total number of businesses exceeds the number of respondents (N=22), because some respondents listed multiple reasons.

The contractors reported that only 7 (23%) carried any liability insurance; only 2 contractors carried at least one million dollars worth of liability insurance.

The respondents did not indicate that they had trouble obtaining insurance, although two contractors indicated that they could not afford insurance and five of the contractors indicated that they had not tried to obtain insurance. Since carrying insurance is a requirement for participation in city contracts, the majority will need to obtain insurance to participate in federally-sponsored projects.

Over half of those interviewed do not use banks for any of their business operations. Reasons cited for not doing so included: "bank staff possesses prejudice or racist attitudes", and "extreme credit checks are done on Minority Business Entrepreneurs (MBE) so as to discourage returning." However, the bank employees attitudes may at least be partly attributed to the fact that the respondents did not maintain good up-to-date records (see Table 3).

Table 3
Frequency of Updating Business Books
Frequency Percent
Weekly 13 14
Monthly 10 23
Quarterly 2 9
Don't Keep Books 11 50
* The total number of businesses exceeds the number of respondents (N=22), because some respondents listed multiple reasons.

Respondents were asked to indicate their interest in attending seminars concerning business management and expansion. Table 4 indicates the level of interest from the 22 participants. When asked if they would be interested in the workshops if offered at a low cost, twenty-one of the twenty-two responded, "Yes".

Table 4
Expressed Interest in Attending Workshops on Business-related Subjects
Understanding the Federal System 21
Getting Credit 18
Advertising and Marketing 18
Preparing Bids and Proposals 18
Keeping Books 18
Insurance 18
Financial Management 16
Pricing Your Services 16
Preparing a Business Plan 16
Law and Legal Matters 15
Expanding Your Business 13
Hiring Employees 12
Licensing Application 9
Setting Up Vendor Accounts 9
* The total number of businesses exceeds the number of respondents (N=22), because some respondents listed multiple reasons.

Recommendations

As a result of the research, both the survey results and the review of the literature (Pride, 1993), the following recommendations were presented for use in developing programs for minority business entrepreneurs.

1. Organize training for professional persons, such as bankers, insurance sales persons and lawyers to increase sensitivity to potential clientele.

2. Provide the opportunity for minority business people to tour a bank and interact with bank personnel in order to become more aware of services, and procedures.

3. Offer an educational program to minority contractors to develop skills for successfully bidding on federally-funded jobs in housing renovation.

4. Organize and support a coalition of minority business entrepreneurs for the purpose of networking, collaboration on construction methods, and business management.

Implementation

The University of Illinois CES and the City of Urbana invited other representatives from the public and private sector to help implement the recommendations and form an organizing committee. The goal of the committee was to increase the number of minority subcontractors working in the local government housing rehabilitation programs.

In addressing the first recommendation, an educational session was organized and 30 loan officers from local banks attended a sensitivity training about diverse cultures.

The second recommendation to introduce minority contractors to banking personnel and banking operations has not yet occurred. The committee decided that a bank tour may be demeaning to the contractors and it was difficult to choose a bank from the many institutions in the area.

The third recommendation was carried out on three consecutive Thursday nights in January 1993. The name of the workshop was "Getting Ahead: Increasing Your Construction Business in Hard Times." Topics included licensing, insurance and bonding, legal considerations, financing, record keeping, business planning, and mentoring. The classes were taught by local experts including one attorney who is African-American.

Personalized invitations were sent to all contractors registered with the cities of Champaign and Urbana for construction work. The workshop was held in an African-American neighborhood during the month of January when the work pace tends to be slower.

During the three workshops, eighteen people attended, ten of whom were African-Americans. There was one woman present at the first workshop. Fourteen persons attended all three workshops. All evaluations indicated that the information was considered helpful and that the participants reported receiving information applicable to their business; the range of experience of the participants proved to be a challenge.

After the last session, three-fourths of the participants said they wanted more workshops. A coalition of minority contractors and subcontractors has been formed by one of the African-American workshop participants.

Epilogue

In January 1995, the City of Urbana and University of Illinois Cooperative Extension Service offered another series of workshops to minority contractors. Twenty minority contractors successfully completed the course. Topics were modeled after the first workshop in 1993. Extension educators and instructors from the Cosmopolitan Chamber of Commerce, Chicago, were used.

A series of successful workshops for 30 minority contractors and small business owners was held in Danville, Illinois, in the Spring 1996. The Vermilion County Unit of CES worked with a committee composed of bankers, the Small Business Development Corporation Director, the Vermilion County CES Unit Leader, a CES Community Leadership and Volunteerism Educator, an alderman and other City of Danville personnel. This committee ensured a revolving loan fund of $50,000 for small business persons who had not been successful in attaining loans through traditional banking procedures. The Vermilion County Community Development Committee will award loans to applicants who have successfully completed the course and have developed a sound business plan.

The series of activities has been well-received by local minority contractors. It has provided CES an opportunity to work with an audience that traditionally has been hard to reach. It also provided CES at the local level with functional contacts to local government and the local business community. CES has been influential in helping these activities get started. Over time, local committees are taking on leadership and CES has been providing educational input.

References

Boyd, R.L. (1990) Black and Asian self-employment in large metropolitan areas: a comparative analysis. Social Problems 37: 258-272.

Drake, S.C., & Clayton, H. (1962) Black metropolis. New York: Harcourt, Brace.

Black Enterprise (June, 1992) BE 100s: A 20-year overview: 210-214.

Frazier, E.F.,& Gupta, U. (February 19, 1993) Cash crunch. The Wall Street Journal

Mann, P. H. (1990) Nontraditional business education for black entrepreneurs: observations from a successful program. Journal of Small Business Management, 28, (April): 30-6.

Mescon, Timothy S. (1987) "The Entrepreneurial Institute: education and training for minority small business owners." Journal of Small Business Management 25. 61-66.

Pride, M. L. (1993) Designing educational programs for small business minority contractors; Unpublished master's thesis, University of Illinois at Urbana-Champaign.

Smith, J.(February 21, 1993) Black and blue." Hamilton, Ohio Journal-News. D12.

Task Force on Education and Training for Minority Business Enterprise (1974). Report of the Task Force on Education and Training for Minority Business Enterprise. Washington: U.S. Department of Commerce, Office of Minority Business Enterprise: xxi, 1-179

Michelle L. Pride, Bruce Stoffel and J.C. van Es

Journal of Extension

December 1997 // Volume 35 // Number 6