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February 26, 2004

A community success

The next frontier facing African Americans in their quest for full equality is the acquisition of wealth. Individuals must transform themselves from being simply consumers to becoming investors. Wealth is necessary to buy a home, pay for the education of children and support the family in times of financial crisis.

While many are envious of the comfortable lifestyle available to those who have been successful in business, few fully appreciate the enormous skill and courage of those who venture into the world of business. And it is even more important that few understand how the success of the black entrepreneurs benefits everyone.

Right here in Boston is a prime example of how the interplay between political action and entrepreneurship inures to the benefit of the community. In the 1980s, several real estate development groups were vying to acquire from the city the rights to develop various parcels of land. A group of black businessmen stepped up to acquire the rights to develop what is now Renaissance Place in Roxbury and a parking garage on the edge of Chinatown.

The partnership, called Ruggles-Bedford Associates, was formed in 1986. They merged with a group of Chinese businessmen to form Columbia Plaza Associates. As is the custom, they brought in a well-financed partner capable of undertaking the project. Metropolitan Structures, a subsidiary of Metropolitan Insurance Company, arranged for the financing and managed the construction of Renaissance Place.

The project failed, however, when the Mass. Registry of Motor Vehicles refused to occupy the building because of an allegedly defective air conditioning installation. The black investors in the project were pilloried in the press for the assumed flaw even though Metropolitan was responsible for construction. Within a short time after the building was sold at a loss to Northeastern University, the city issued a certificate of occupancy, despite the supposed existence of toxic air.

Then there was an effort by Metropolitan to sell off Columbia Plaza’s rights as the developer for the Lincoln Street project. Once that challenge was defeated, Columbia Plaza Associates formed a partnership with The Gale Company, which brought in Morgan Stanley Real Estate Funds and State Teachers Retirement System of Ohio as investors.

The president and four of the directors of the Ohio Fund are African Americans. They were especially eager to invest in sound projects developed by minority entrepreneurs.

Recently, the 1,050,000 sq. foot office tower, which cost $350 million to build, was sold for $705 million. After 18 years of struggle the black investors will realize a profit. And what is more, 10 percent of their profit is committed to non-profit organizations in the community including the Urban League, Roxbury Multi-Service Center, LaAlianza Hispana and Whittier Street Health Center.

Ken Guscott, OneUnited Bank, John Cruz, Edward Dugger and all the other black investors are to be commended for their competence and their courage. Unlike a lucky lottery ticket, this was not an overnight success. Their efforts generated more than $4 million for community non-profit organizations, and another $16 million in the linkage payments which went to Chinatown, Roxbury and citywide projects.

When black businesses prosper, it lifts the economic status of the whole community.

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