FOR IMMEDIATE RELEASE
November 9, 1995
For More Information: Kathy Tholin
Malcolm Bush
312/427-8070
FIRST CHICAGO AND NBD MAKE NEW COMMITMENTS
FOR CHICAGO LENDING
Community Reinvestment Accord Breaks New
Ground
The First National Bank of Chicago and NBD
Illinois have just agreed to an important new
community reinvestment agenda in Illinois in
connection with their planned merger. The
accord comes after a series of discussions
with a coalition of community and citywide
groups convened by the Woodstock Institute;
"The accord is an example for the entire
country," said Woodstock Institute president
Malcolm Bush. "It is a mature agreement that
is specific about key lending programs, has
concrete targets for small business lending,
emphasizes partnerships and mutual problem
solving on key economic development issues,
and builds the capacity of community
development groups. The accord lays out the
details of a $2 billion six-year agreement for
the Chicago area and includes:
Commitments to at least four new full service
locations on the South and West sides: Three
are in advanced stages of planning and a
fourth is being discussed.
At least an additional $2.5 million annually
in loans of less than $100,000 to businesses
of less than $1.5 million in sales in low- and
moderate- income communities in Chicago.
A 25 percent increase in the number of loans
to homebuyers at 80 percent or less of area
median income over three years and a $100,000
pool of funds to assist in closing costs and
downpayment for lower income borrowers in
targeted geographic areas of Chicago. In
addition, to expand options for low-and
moderate-income homebuyers, the bank will
offer loans for acquisition/rehab of 1-4 unit
buildings, cooperatives, and lease-to-purchase
programs in partnership with nonprofit
organizations.
Employ funds from the bank CDC (recently
invested with $3.8 million in new capital) to
make equity investments of up to 10 percent in
real estate projects with strategic locations
and job creation.
A pilot program to reduce equity requirements
for owner-occupied commercial and mixed use
real estate with six or fewer units and for
owner-occupied small multifamily buildings of
5-8 units.
A commitment of at least $250,000 in low
interest loans to community development
financial institutions lending to
microbusinesses.
Increase support for community and
neighborhood programs by 28-30 percent for
1996, which will result in support for Chicago
area community development organizations of
more than $1 million for 1996.
The coalition believes that this agreement
takes a new approach to community
reinvestment. "All too often, reinvestment
commitments are reduced to just a numbers
game," says Malcolm Bush. "But lending
commitments alone are not meaningful without
targeting programs to the most important
reinvestment needs and devoting appropriate
resources to implementing and marketing those
programs and assisting potential borrowers.
This set of commitments targets some of the
most difficult areas in community reinvestment
lending and those which will have the greatest
impact in Chicago communities."
One of the important components of the new
bank's commitment is the increase in branch
facilities for the south and west sides. "The
south and west sides of Chicago don't get
their fair share of banking services. These
commitments by First Chicago will bring some
needed services to our communities. We're
especially pleased that the new bank has
agreed to work with west side organizations to
solicit input on the identification of
potential west side sites," said Henrietta
Clemons, ACORN Banking Committee chair.
The new commitments target a range of
business lending needs and programs. "The
emphasis is on small business loans in
targeted communities where the need for
economic development is greatest, and on
training and technical assistance that will
produce more small business borrowers over the
long run," said Ted Wysocki, Executive
Director of the Chicago Association of
Neighborhood Development Organizations.
The new bank's commitment to increasing single
family mortgage lending in low-and
moderate-income communities and to low-and
moderate-income borrocwers addresses a critial
goal in many Chicago communities. "We need a
stronger commitment by all our financial
institutions towards homeownership for more
borrowers, but increasing homeownership in our
communities requires several approaches at
once. We're pleased that First Chicago/NBD has
recognized this and will increase its efforts
in homebuyer education and training, develop
some new products that meet our communities'
needs, and provide additional financial
assistance to homebuyers in targeted areas."
says Rev. Alvin Love, president of Christian
Ecumenical Development Corporation and
Developing Communities Project.
Both housing developers and the bank recognize
that the current constraints on public sector
funding and other factors provide serious
challenges to developers and lenders for
affordable rental housing. As part of its
commitments, the bank will convene a working
group to advise them on appropriate actions
and programs. "Addressing these challenges
requires creative thinking as well as
corporate leadership in the public arena.
The new bank's commitment to work seriously
with us on these issue is particularly welcome
and needed," said Aqhati Gibson, Associate
Director of the Chicago Rehab Network.
Increasing local ownership of multifamily and
mixed-use buildings has also been an important
goal in many lower income Chicago
neighborhoods. "First Chicago/NBD's new
multifamily and mixed use lending program,
unique in the city, will make it easier for
buyers who want to live in or operate their
business in small multifamily or commercial
buildings to do so," said Ms. Gibson.
Discussions with the bank focused in part on
strengthening its partnerships with community
based organizations. "In today's neighborhood
and banking environment, it's critical that
the interests of communities are heard and
responded to. We look forward to carrying
through with the implementation of these
commitments in the same way they were
developed--through frank discussion and
willingness to work through problems," said
Kim Zalent, Executive Director of Organization
of the Northeast.
Organizations participating in the coalition
which met with First Chicago and NBD officials
included ACORN, Centers for New Horizons,
Chicago Association of Neighborhood
Development Organizations, Chicago Rehab
Network, Chicago Roseland Coalition for
Community Control, Christian Ecumenical
Development Corporation/Developing Communities
Project, Greater North-Pulaski Development
Corporation, Lawndale Business and Local
Development Corporation, Little Village
Chamber of Commerce, Lawrence Avenue
Development Corporation, Organization of the
Northeast, South Austin Coalition Community
Council, and Woodstock Institute.
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+ Woodstock Institute is a nonprofit applied research and +
+ technical assistance organization focusing on issues of +
+ community reinvestment and economic development. +
+ 407 S. Dearborn, Ste 550 Chicago, IL 60605 +
+ (312)427-8070 woodstck@wwa.com +
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