by Angela Caputo on 2012/01/10
By: Angela Caputo / January 02, 2012
From the January/February 2012 issue of the Chicago Reporter, Subsidized Housing
One fall morning, Leon Finney Jr. speeds from block to block pointing out each of the townhomes and high-rise apartment buildings he’s built in the Woodlawn community in the past four decades. With his personal cameraman in tow, the community organizer turned real estate developer and pastor pulls his Lexus sedan to the side of the road every few blocks and hastily jumps out with his keys still in the ignition. At most stops, he hikes forward 30 or so paces and then turns around, flashing a wide grin as he walks toward the camera. It’s a windy day, and his trench coat flaps in the wind, exposing his pink sweater vest and signature bow tie.
At 73, Finney shows no sign of slowing down. If you could sum up his style in a couple of words on a bumper sticker, it might read: Keep up. There’s hardly a major corner in Woodlawn that he hasn’t left his mark on over the years. By Finney’s count, the nonprofit he founded, the Woodlawn Community Development Corp., has overseen $300 million in real estate investment since 1971—in a community that was red-lined by major banks just a few decades ago.
Most of the developments were nudged along with government assistance—through a grant, a deep discount on land or a direct cash subsidy. Finney’s ability to snag those resources only affirms the clout he’s built over the years among government officials at all levels.
For as many buildings that his nonprofit has turned into a success, there are others that are failing. In December, the City of Chicago added Finney to the list of seven scofflaw landlords after a handful of subsidized buildings his nonprofit manages racked up more than 100 housing code violations, including no heat, no hot water and chronically broken boilers.
The condition of those buildings raises questions about how the nonprofit—along with its sister agency, The Woodlawn Organization, better known as TWO—manages the steady stream of anti-poverty money it collects each year. Independent auditors found that their ledgers continue to come up short, and meeting basic expenses, including payroll and building maintenance, has been an ongoing challenge.
Despite those financial problems, few cutbacks have been made on expenses that benefit Finney, who has cashed in on lucrative vacation payouts, unloaded properties owned by his church and his late father on the nonprofits, and charged them a premium for consulting and other services his private companies have provided, The Chicago Reporter found.
After 40 years, local opinion of Finney is mixed. It’s as if he’s two different people—either an overextended do-gooder who operates with an unorthodox style or a political rainmaker who spends his nonprofits’ money as if it’s his own—depending on whom you ask.
Yet, Finney plays up his image as a man of the community and a reverend at every chance he gets—even if it requires hiring a personal cameraman and making his own promotional videos. “I’m a complicated guy, but at the end of the day, my intent and my motives are always to improve and strengthen and fulfill,” Finney said. “The Leon Finneys in urban America are not the problem. We have been the solution.”
* * *
Finney’s star began to rise in the 1960s as the Civil Rights Movement hit its stride. Two years out of the U.S. Marine Corps, he was hired by Saul Alinsky to work alongside a handful of local clergy who were organizing to bring political power to Woodlawn. One thing that the South Side community had going for it at the time was its robust population. More than 80,000 African Americans lived in the lakefront community—which stretches from Lake Michigan to Martin Luther King Jr. Drive between 60th and 67th streets. The nonprofit Temporary Woodlawn Organization, which would later become The Woodlawn Organization, was formed.
Finney grew up in Woodlawn. He lived in a four-flat on South Rhodes Street and graduated from the local Hyde Park High School. Being the son of a prominent businessman—his father owned the famed barbeque chain Leon’s BBQ—helped open doors. He took a block-by-block approach to organizing the community and, by the mid-1970s, he helped set up a network of block clubs that became his local power base.
But it was a series of housing deals that Finney was able to cut with federal officials that helped propel his stature as a major player in Chicago politics.
Grove Parc, a community of squat, two-story red-brick buildings near 62nd Street and Cottage Grove Avenue, was the first development that Finney’s emerging economic development organization pulled off. With 504 units, Grove Parc was one of Chicago’s largest buildings receiving the “project based” subsidy under Section 8 of the federal housing act. The nonprofit would go on to develop more than 1,400 units of Section 8 housing in the following four decades.
Alan Cravitz, a mortgage banker who has helped the nonprofit structure loans for a series of the federally backed properties, attributed Finney’s ability to cut deals and wield influence to two factors: He’s a charmer, and he never backs down.
“He’s always calling me up, blowing smoke in my face, giving me compliments—which is always nice,” Cravitz said. “People do things for him because they like him, and the system plays into the way he works.”
Finney was tapped for a number of high-profile public positions over the years. He was a member of the Chicago Plan Commission, for which he served for more than 30 years and helped carry out former Mayor Richard M. Daley’s development agenda. He also served as the Chicago Housing Authority’s vice chairman in the 1980s. And he was a trustee at Chicago State University until his term expired in 2011.
That clout brought in more public resources, driving his nonprofits’ budgets to nearly $7 million last year alone. In addition to developing and managing Section 8 buildings, the Woodlawn Community Development Corp. manages a string of properties on both the North and South sides under a contract with the Chicago Housing Authority.
It’s like the more money Finney’s groups have brought in, the more clout he’s amassed, said Leah Levinger, a housing policy activist who cut her teeth as a community organizer at Grove Parc. “When there’s a political forum,” Levinger said, “TWO will pick people up and deliver them.”
* * *
On first impression, it’s hard to know if Finney is still the same grassroots community organizer that Alinsky trained in the early 1960s or if he’s gone—as one former executive at his nonprofit puts it—“over the edge” by the power that comes with having millions in public money to spend each year with very little oversight.
From his office, which sits on the ground floor of one of the high-rise subsidized buildings he developed in the early 1980s, Finney clacks away on a refurbished computer. His glasses hang on the end of his nose as he finishes up a report on the stifling jobless rate in black communities on Chicago’s South Side. He speaks with a wonky enthusiasm as he rattles off stats and talks about authors who’ve written more extensively on economic parity.
Finney’s enthusiasm is so well-received that well-resourced lenders have thrown millions behind his proposals to rebuild in distressed communities. The last major private investment his nonprofit snagged was in 2008, when the Local Initiative Support Corporation and the Chicago Community Loan Fund funded him and another developer for their ambitious plan to create the Southside Preservation Portfolio, which was poised to be one of the largest networks of low-income apartments in Chicago.
One year after the 25 buildings with 587 units were purchased, they were named in a $26.3 million foreclosure lawsuit. The city sued Finney’s nonprofit and its partners for $166,000 in housing court violations related to the buildings, the Reporter found. And the properties fell behind more than $194,575 on their taxes. Barbara Beck, the director of financial services and underwriting at the Local Initiative Support Corporation’s Chicago office, chalked up the project’s failure to poor planning and a weak housing market.
“We wanted to develop affordable housing without the layers of government,” Beck said. “Their approach seemed sound.”
Finney added: “One could arguably say that we should have exercised more care, but this was a great opportunity to create affordable housing.”
For as detail-oriented as Finney can be, he has a habit of clamming up when it comes to recalling specifics, particularly when it comes to subjects he’d apparently rather not discuss.
For instance, a former TWO employee, who lives in one of his nonprofit’s Section 8 buildings, told the Reporter—on the condition of anonymity because she feared retribution—that, before she left the nonprofit for a new job in November, she did not get paid for more than a month. Just weeks earlier, federal and state officials filed two liens against the nonprofit for failing to pay $88,360.86 in employer taxes.
Why? “I don’t know the answer to that question,” Finney said. “That’s something for the executive director of TWO to express.”
TWO’s Executive Director Georgette Greenlee-Finney happens to be his wife. When pressed further, Finney follows with a dose of charm. “Are you married?,” he quipped. “Well, I’m going to leave it right there.”
Two things are clear from public documents: The nonprofits that Finney and his wife oversee comingle money, which makes it virtually impossible to know exactly which funds have been tapped to write off the organizations’ debt. And, despite cash-flow problems, few expenses benefiting Finney have been cut back.
The audit reports show that they have been billed for more than $1.5 million on consulting, rent and catering services provided by companies owned by Finney between 2004 and 2010. Those businesses include Lincoln South Central Real Estate Corporation, a property management and consulting firm; Tre’s Celebrity Catering; and the Metropolitan Apostolic Community Church, where Finney preaches each Sunday.
The auditors have repeatedly chided the nonprofits, both of which Finney has headed up at different times in the past five years, for playing fast and loose with basic accounting principles—allegedly playing a shell game to transfer property, money and government resources back and forth, sometimes without the approval of their boards of directors that include some of Finney’s relatives and employees.
The audits only tell half the story, according to a whistleblower lawsuit filed in federal court last spring by Virgil Savage, former chief financial officer at the Woodlawn Community Development Corp. Savage went to the nonprofit’s board and attorney to lay out a pattern of what he saw as misappropriating funds under Finney’s leadership. The board dismissed Savage’s claims. He filed the lawsuit months after he was fired.
“Look at all the money he’s pulled out of the organization for his own benefit,” Savage said. “Just pile up the money, and it will look you in the face.”
Finney has little to say about the way the organizations transfer assets. “I’ve been instructed by my attorney not to talk about anything with finances because I have a lawsuit pending,” he said.
* * *
Finney’s latest pet project is opening a community-oriented media production studio next door to his church, known as the Met, which sits at the corner of 41st Street and Martin Luther King Jr. Drive. The state cut checks worth $350,000 to get the project off the ground. But six years after the first check was cashed, there are few signs of life at the boarded-up greystone.
The church is one of Bronzeville’s oldest and most historically significant. Eleanor Roosevelt railed against the racial segregation of World War II troops from its pulpit. A. Philip Randolph and other labor leaders organized railroad porters in its chambers. And Ida B. Wells-Barnett and Gwendolyn Brooks worshiped there.
In 2003, the Met beat the wrecking ball when Finney’s congregation stepped in to buy the church, the parsonage and another building next door along with a stretch of vacant lots on the next block for $1.45 million.
One piece at a time, Finney unloaded the debt from his church onto his nonprofit. First, it took on the debts for the parsonage and the building next door for $372,000. Then, for $750,000, the vacant lots in the back that he planned to turn into condominiums. “The church is not in the development business,” Finney said. Those lots remain vacant and were slapped with a series of code violations in early 2010 because of unkempt conditions.
All told, the nonprofit was on the hook for $1.1 million in new debt by 2007. That same year, the nonprofit, along with TWO, began paying rent and other fees to the church—$232,420 between 2007 and 2010—as well. It also transferred the ownership of a commercial building at the corner of 63rd Street and Cottage Grove Avenue—which had been generating some rental income until the main tenant, a Rainbow clothing store, moved out—to the church for $10.
As the nonprofit was taking on the new debt, conditions at a handful of subsidized buildings it manages began to slide, federal records show, while its operating expenses, including payroll, were covered using subsidies received for the buildings, according to the nonprofit’s internal financial documents obtained by the Reporter.
Despite the cash crunch, Finney also cashed out on $25,576 in unused vacation time, when he quit his $267,795-a-year job at TWO in 2008 and transitioned into the role as CEO of the Woodlawn Community Development Corp., shortly after it bought the four-flat at 6121 S. Rhodes Ave.—where Finney was raised—from his late father’s estate for nearly $366,000. At the time, Finney said, it looked like a good deal. “Frankly, we thought the Olympics were coming,” he said.
There was something in it for Finney too; a series of tax liens against his father’s estate were also released in the sale, property records show.
The transactions put into focus the sort of deals that critics have long said are the problem with Finney’s business style: He blurs the line between doing community development work for the common good and doing what’s good for himself.
And when Finney has come under fire for crossing the line, he has no qualms about flexing his political muscle to execute a vision—or to get himself out of a jam.
When the city’s Office of Inspector General caught his nonprofit ghost-payrolling the Chicago Housing Authority in 2003 for labor that was supposed to be done on public housing units but instead was done on Finney’s church, he told the investigator that then-Mayor Daley and CHA’s then-CEO Terry Peterson knew that he was using the staff to complete non-CHA projects. He then warned that the investigator “might not want to write anything that may be subpoenaed later,” according to the inspector general’s report.
Ultimately, the CHA recouped the $50,000 in lost wages. Still, in 2005, the CHA awarded Finney’s nonprofit $4 million worth of new property management contracts. In 2009, those contracts were renewed again. The nonprofit was awarded a similar contract by the Gary Housing Authority, but it was pulled; federal officials are currently investigating whether the nonprofit engaged in similar ghost-payrolling practices by billing the housing authority for employees who were actually working in Chicago.
* * *
It was just after 9 a.m. on one of the last days of summer when more than two dozen TWO supporters started showing up to a local community center with banners and signs in tow. TWO was not part of the new $30 million plan to overhaul the area surrounding Grove Parc—building a community center and providing social services for area residents—that local congressmen, Mayor Rahm Emanuel and HUD Secretary Shaun Donovan were there to promote. But that didn’t deter the supporters from setting up in front of the podium. Leading them was Finney, looking determined to edge his way into the occasion.
Ironically, it was under Finney’s leadership that the property was so financially mismanaged that federal officials stepped in to make sure that property changed hands in 1988.
Finney’s move was taken straight from Alinsky’s “Rules for Radicals,” the community organizer’s handbook for grabbing power. He’s spent the three decades building two nonprofits, which are synonymous with Woodlawn. And he wasn’t about to be cut out of the next big deal—at least not without a fight.
As Mattie Butler, the executive director of another community organizing outfit, Woodlawn East Community and Neighbors, sees it, Finney was making it clear that he doesn’t back down. Butler, who barely tops 5 feet, is like the yin to Finney’s yang. While he focuses on rubbing shoulders with elected officials and big businesses, the 68-year-old, who has been a Woodlawn organizer for almost as long as Finney, draws her power base from a dingy office at 64th Street and Stony Island Avenue.
“From TWO’s beginning, they were going after political power that would be good for the community,” she said. “How [Finney] has used that political power, I’ll leave that for someone else to answer.”
While Butler is the first to criticize Finney for being driven more by money than by doing what’s right for the community, she’s often the first to defend him. That’s likely because—whether she agrees with him or not—she knows he’s connected.
And if there’s one skill that Finney has mastered, it’s playing up his image—even under unfavorable circumstances.
“Dr. Finney,” U.S. Sen. Dick Durbin said in Finney’s promotional video from the Grove Parc press conference. “You are the best. Glad to see you here.”
Emily Gowing and Sachiko Yoshitsugu helped research this article.