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Shortly before 5 p.m. on a hot, humid weekday afternoon, waves of commuters are surging out of the Loop toward the Chicago & North Western station on their way to their homes in the suburbs.

A few blocks farther west in another world, the first of about 250 men who aren`t going much of anywhere are lined up along a tall wire fence in an alley, waiting for their evening meal of soup and bread.

A big, husky, white-haired priest is moving past them, toward the head of the line, where the food will be served.

He has a florid Irish face, and he walks with a slight limp from a bad right knee he picked up a long time ago playing sandlot football for his seminary team. Everyone on the street knows him as Father Mac.

Msgr. Ignatius D. McDermott came to this neighborhood in 1946, after spending the previous five years as an associate pastor at a nice, safe, prosperous parish in South Shore.

His assignment was to place children from broken homes, children who had been orphaned and neglected, in the proper institutions. He moved into a small apartment in the Catholic Charities building at the corner of Randolph and Desplaines and started to work. He`s lived there ever since.

It would be understandable if he had been discouraged by his new surroundings. After all, he was only a few hundred yards from the heart of Chicago`s largest, most infamous Skid Row, whose main drag was West Madison Street and whose chief products were drunkenness, poverty, crime and hangovers.

Today, much of West Madison has been radically altered, cleaned up and modernized so that it is almost unrecognizable from its tawdry past. Ironically, the monsignor`s job has become all that harder.

In the bad old days, however, Msgr. McDermott knew he was in the right place. He found the scene exciting; he felt energized by the challenge, by a sense of being where the action was, in the arena, by having an opportunity to help those who needed God`s love the most. He was constantly reminded of what Jesus had said in the Gospel of Matthew about the poor, the hungry, the sick: ”Inasmuch as ye have done it unto the least of these, my brethren, ye have done it unto me.”

Next door was the old Desplaines Street police station, now a parking lot. In those days, it did a land-office business in public drunks and the jack-rollers who preyedon them, and he got to know the cops, the state`s attorneys and, of course, their ”clients,” who regularly would be thrown into cells in the basement.

He also walked the streets when he could, which was almost every day and every night. He learned the language of Skid Row; he learned how to read faces and situations; he learned how to spot trouble and to head it off; he got to be on a first-name basis with bartenders, merchants, hustlers, jackals, the men on the bottom rungs.

He developed savvy and built a reputation as someone who cared and could be trusted. He preached by example.

As his confidence and experience grew, he began to expand his duties and extend his reach. More and more directly, he began to touch the lives of the destitute and the forgotten, especially those brought down by booze.

He helped organize agencies and programs in the Roman Catholic Church that deal with alcoholism and drug abuse. Through the Central States Institute of Addiction and Catholic Charities` Addiction, Consultation and Educational Services, he administers residential, employment and counseling services for those who are overcoming addictions; overnight shelters for the homeless; and education programs on alcohol and drugs for children, adults and professional counselors.

In 1951, he persuaded a few reluctant members of Alcoholics Anonymous to establish their program on West Madison, a locale that seemed destined to fail, and yet with patience, tenacity and time, it succeeded.

In 1966, sportswriter Bill Gleason made Father Mac the focus of his book, ”The Liquid Cross of Skid Row.”

Msgr. McDermott pushed for state legislation that in 1976 declared alcoholism a disease and required that public inebriates be treated in hospitals and detoxification centers instead of being sent to jail.

Today, at age 77, he is embarked on his most ambitious project, to secure a permanent home for his programs. Four years ago, the McDermott Foundation was created by friends and supporters, and in 1985 it paid $1 million for a six-story, three-building complex at Washington and Sangamon that once housed piano and casket factories.

Soon, Haymarket House, the city`s first social-service detox center, which is sponsored by the interdenominational Chicago Clergy Association, and Cee`s Manor, a residence for recovering alcoholics, will move from a nearby rental building to the McDermott Center.

Eventually, a 200-bed facility for transient men, a 24-hour food service and the offices of the counseling and rehabilitation agencies he oversees also will be contained there. The total cost for the renovation is $5 million, and a fund-raising campaign kicks off this Sunday with a $25 per- person soup line. (See the box on this page.)

The McDermott Center represents a strategy change in the Madison Street area that has been prompted by the virtual obliteration of Skid Row.

In a sense, Skid Row itself has fallen on hard times–by going upscale.

In the last decade, as the result of an urban renewal plan to erase what successive city administrations considered an embarrassing and unproductive blight, buildings that housed its principal establishments–the flophouses, saloons, day-labor offices, blood banks, used-clothing stores, greasy spoons, barber colleges and storefront missions–gradually have been demolished.

Sid`s Junction, Union Bar, Libby`s Famous Ten, the House of Rothschild

–joints where a man could get a drink–are gone. The Workingmen`s Palace, the Mohawk, the Grange, the McCoy, the New Madison, the Starr, the Desplaines –where a man could rest his head–are no more.

What once was home for the down-and-out has become a new enclave for the up-and-coming.

The core is the Presidential Towers apartment complex, which consists of four 49-story high-rises priced for middle-class tenants. Since its opening, it`s likely that yuppies now outnumber the drunks, the derelicts and the dispossessed who used to be the majority on this stretch of West Madison.

The transformation has not been applauded by Msgr. McDermott and other advocates for the latter groups, because, they say, the city plan didn`t make provisions for those who were to be displaced.

”No one from any administration came to us and asked what could be done to relocate the 3,000 men who were living in this area,” Msgr. McDermott says. ”There was no place set aside for them to be absorbed or welcomed.”

Only one hotel remains that caters to these men, and it`s scheduled to be razed, probably within a year. (Formerly the Major Hotel, 662 W. Madison, and known as the ”Skid Row Hilton,” the Expressway Towers is owned by the City of Chicago and operated by Catholic Charities.)

Thus, some of the poorest, least sober, most ill-equipped members of our society were, in effect, tossed out on the street, given the bum`s rush, expected to find other quarters on their own.

It`s not that most of them aren`t used to being left alone and ignored, and many, in fact, want it that way. It`s that all this tidying up has made an already difficult existence more complicated and more dangerous, for there aren`t many housing options for people who are broke or get by on next to nothing and are plagued by an array of other problems–emotional illness, alcoholism, unemployment, disability.

So while we may have wiped out the structures of Skid Row, its inhabitants are still with us. Critics of the city say that by remodeling West Madison we have, at the same time, increased homelessness and made it more visible by diffusing it more widely. We have, they say, created yet another group of urban refugees.

Msgr. McDermott stops, then walks toward a short man who is weaving against the fence, very drunk. The man is wearing two long-sleeved shirts, a pair of jeans, scuffed shoes and a grimy, green wool stocking cap.

It appears that the man`s face has been beaten. One eye is almost swollen shut, and there are cuts on the bridge of his broad, broken nose. His bruises are set in painful hues of lavender and lemon, depending on their freshness.

It`s hard to guess the man`s age. He could be in his mid-40s or late 50s. ”Jimmy, why didn`t you stay?” Msgr. McDermott says, putting a hand on the little man`s shoulder. ”We put you in for five days, and you were out in three hours.”

During one of his periods of sobriety, Jimmy had worked for Catholic Charities in an alcoholic rehabilitation program but had returned to his addiction soon after the death of Paul, his ”bottle buddy.”

The day before, Msgr. McDermott knew, Jimmy had been taken to Haymarket House, the detox center at 14 N. Sangamon, but had refused to stay.

”They told me to take a walk,” Jimmy says, slurring his words badly and almost falling against the fence.

”That`s not what I heard, Jimmy,” Msgr. McDermott says. ”They tell me you wouldn`t stay.”

All big cities have their West Madison streets, and while these areas can be ugly, brutish and exploitative, they also serve an important purpose and offer essential services, foremost among them being a roof over the head.

”Skid Row had a function,” says Douglas Dobmeyer, former board chairman of the Chicago Coalition for the Homeless. ”It provided shelter and a generally safer environment than having to sleep on the street.”

”Skid Row was what sociologists call a functional institution,” says Ron Vander Kooi (pronounced koy), the present board chairman of the Chicago Coalition for the Homeless and a specialist in housing and homelessness for the Salvation Army. ”It was a community, and even for the alcoholic derelict, it was functional.”

The lodging was far from deluxe; the rooms never smelled of lilacs, and sometimes they were literally lousy. ”Cage” hotels got their name from the protective chicken wire in rooms whose walls didn`t reach the ceiling, a feature not found in Holiday Inns, and the beds were usually only cots.

But it was cheap and affordable, and now this type of housing–known as single-room-occupancy hotels, or SRO`s–is disappearing.

”The main issue is a lack of housing,” Dobmeyer says. ”Low-income housing has been removed from the West Madison community. It`s been torn down or renovated and not replaced. And it`s not only Madison; the SRO`s on Clark Street are also disappearing. There`s got to be a plan to replace those units because the poor won`t magically disappear.”

Vander Kooi cautions against stereotyping the poor and the homeless who are the residents of Skid Rows. ”We ought to get away from thinking of them in terms of the bag lady and the alcoholic,” he says.

A former sociology professor at universities here and in Michigan, he first studied West Madison in 1961 and again five years later. ”I found that of the inhabitants of Skid Row, about a sixth were derelicts, people who could no longer support themselves; a sixth were teetotalers; another third to a half were alcoholics; and the remainder drank because they were living in such a terrible place. The only common denominator was that they lived in an area designated as Skid Row.

”I ran a comparable study with college students and found the men of Skid Row were less alienated. They professed a deeper belief in American norms –work, God, marriage, family–than the college students did.”

Dobmeyer, Vander Kooi and others are continually prodding the city to commit itself to SRO preservation, pointing to a study released in March, 1986, by the Jewish Council on Urban Affairs and the Community Emergency Shelter Organization as evidence of the need to do so.

”In terms of the West Loop, in the vicinity of Presidenitial Towers, we lost 3,500 SRO units,” says Alan Goldberg, a community consultant with the Jewish Council. ”Some of the buildings were pretty awful, but some were decent.

”Overall, in the last 13 years, the city has lost 23,000 of these units. We figured that as of a year ago, there were 11,500 inexpensive SRO units left and that we`re losing them at a rate of 1,000 a year.

”Our study showed that the average SRO tenant is not a transient,”

Goldberg says. ”Half had lived in their rooms for two years or more, 42 percent had permanent jobs, and 35 percent were either retired or disabled.” George Stone, first deputy assistant housing commissioner, says he agrees with the city`s critics that something must be done. ”I don`t feel at war with them,” he says. ”We`re feuding and fussing over scraps. Our problem is trying to do as much as we can with ever-dwindling resources. This city has a shortage of affordable housing from shelters for the homeless to SRO`s to dwellings for low-income families.

”The closing or tearing down of SRO`s is not part of some evil city plan. It`s economics. Without deep federal subsidies, SRO`s don`t pay. Owners can sell to developers for more money than they can make by operating these hotels.”

Msgr. McDermott complains about housing codes that he believes are unnecessarily strict. ”At our SRO facility in the new center, we`re required to have a window in each room,” he says. ”And we`re forbidden from having dormitory arrangements. They want us to build another Ambassador East. Colleges are permitted to have dormitories. What would be so detrimental to put homeless people together in a room that`s warm and clean?”

”I think it`s possible to make an SRO financially feasible with a reasonable subsidy program,” Dobmeyer says. ”Two things have to happen. First, there has to be a return of federal involvement in housing for the poor, both in SRO`s and family housing, and second, the city government has to follow a policy of replacing units that are removed for other types of buildings.

”The developers must realize that they must have a plan to replace low-income housing. I think a city program will spur interest by not-for-profit organizations. The model is a community-based, not-for-profit organization that receives public funds.”

There are some bright spots. Through pressure from several community groups, a Low-Income Housing Trust Fund has been set up by the developers of Presidential Towers.

And a class-action suit brought against the city by the Legal Assistance Foundation on behalf of residents of the Starr Hotel, a victim of the new West Madison, resulted in payment of damages and relocation fees and an order for the city to catalogue existing SRO stock, determine what condition it`s in and devise an SRO policy.

”This is commendable,” Vander Kooi says, ”but the city`s plan to level two SRO hotels on Van Buren Street for the new library plaza contradicts the good intentions it may have.”

There`s also a dispute between government planners and advocates for the homeless about numbers, which are crucial in formulating policy. The Chicago Coalition for the Homeless says there are 25,000 homeless in the city, which Dobmeyer concedes is ”a good-faith estimate.”

The only recent formal study was made by National Opinion Research Center, which is affiliated with the University of Chicago, in the fall of `85 and the winter of `86; a third of its $450,000 cost was financed by the Illinois Department of Public Aid and the rest by private foundations.

Published last September, NORC`s report stated that at any day in Chicago, there were 2,000 homeless and 5,000 to 7,000 over the course of a year.

”Whatever the number,” Dobmeyer says, ”the point is there are more homeless in the city than there are resources or plans to deal with them.”

Msgr. McDermott sees that Jimmy is fed, then he has two men take him by the arm and walk him to a car for the trip to Haymarket House.

At the front passenger door, Jimmy pushes the men away. ”I`m a man, I can stand,” he says.

”You should stand for no drinks,” Msgr. McDermott says. ”That`s something to stand for.”

Msgr. McDermott helps Jimmy into the front seat, between himself and driver Bill Bartley, an employee of Catholic Charities.

”I so messed up now, it`s not even funny,” Jimmy says.

”You were messed up before, Jimmy, and you turned it around,” Msgr. McDermott says. ”You can do it again. Why don`t you try?”

Jimmy`s head slumps forward. ”Where we goin`?” he asks.

”Haymarket House,” Msgr. McDermott replies.

”Haymarket House? They`ll throw me out!”

”No, they won`t, Jimmy.”

Skid Row has always been a sight to behold, if only from a perverse perspective. Decent middle-class folks who wanted to impress on their children what could happen to them if they didn`t follow the rigorous dictates of virtue and hard work could always load their brood into the family car, roll up the windows, drive to West Madison and gawk at the poor souls lying in the gutter.

The descriptive terms for such people have been varied: hobos, tramps, bums, winos. ”They`re an extension of God`s family,” Msgr. McDermott says.

”You`re negating them as human beings when you call them bums. We all should identify with people who are hurting.”

Even as a boy on the South Side, Ignatius McDermott wanted to become a priest. ”The most powerful thing in the world is the power of example,” he says. ”I saw the priests in my parish. They were good priests because they were good men, and I wanted to be like them.”

He was born at home on West 48th in the Back of the Yards, the youngest of eight children of Ellen Bradley of Ottawa, Ill., and Michael McDermott of Castlerae, Ireland, who delivered milk from a horse-drawn wagon. The oldest, James, would become a person of standing in the Democratic Party, serving as alderman of the 14th Ward and later as a circuit judge.

The family moved to Visitation Parish, where young Iggy, who developed a passion for sports that he still holds, wrote a column in his school paper called ”Sid the Predictor.” An avid White Sox fan, Msgr. McDermott today drives a white Olds with a SOX 4 license plate.

After attending Quigley and Mundelein seminaries, he was ordained in 1936. ”I`ve always been motivated by gratitude,” he says. ”I was blessed by a good family and a good life, and when I see men who are not as fortunate, I always think to myself, `There but for the grace of God . . .` ”

If he had been looking for a demanding assignment, he had found it. In the words of a 16-part series in the Chicago Daily News that appeared in 1949, West Madison ”was the rottenest Skid Row in the country.”

The city cracked down on many of the worst abuses cited by the newspaper, but 12 years later another squadron of Daily News reporters returned, discovering conditions had worsened. They counted 92 saloons in 10 blocks, observed gangs of thieves assaulting drunks and pensioners and yet found

”there is not a single policeman walking a beat in that area, where 16,000 men live.”

Again, reforms were made, but West Madison was always resistant to improvement. Nor did it ever overflow with hope. Over the past 41 years on Madison Street, Msgr. McDermott says, he has learned to live with low expectations and a batting average to match.

”We strike out a lot,” Msgr. McDermott says. ”We can only get 3 or 4 out of 100 to give up alcohol, but in my view the world`s a richer place for those four. And those four will motivate other guys. It won`t be me. It`ll be one of their peers.”

His secretary, Fran Lamb, who`s assisted him for 40 years, makes certain he doesn`t have to talk on the phone except in rare emergencies–”You can waste a lot of time on telephones,” he says–and so Father Mac keeps advancing, battling the odds, hitting the streets, talking sports, cracking jokes and caring for the least of these, his brethren.

There are 21 cots in Haymarket House. At 5:30 p.m., four are occupied by men who are sleeping off drunks.

A sign on the wall says, ”God Doesn`t Make Junk.”

On the other side of the room is the reception area. Jimmy is signed in and given a cup of black coffee.

He agrees to stay for five days. He shakes hands with Msgr. McDermott, then puts a hand on his arm. ”Thank you, father,” he says.

Two weeks later, Jimmy is sober and enrolled in Father Mac`s rehabilitation program, serving supper to the men in the soup.

SOUP TO RAISE FUNDS

On this Sunday, from 11 a.m. to 3 p.m., ”Chicago`s Greatest Soup Line”

will be held at the McDermott Center, 332 W. Washington, to raise funds for the center`s renovation and its housing, food and alcoholic treatment programs. The public is invited. Tickets are $25. Other contributions may be mailed to The McDermott Foundation, 120 W. Huron, Chicago, Ill. 60610.