Monday, April 13, 2015

Black Institute slams city's M/WBE program; Atlantic Yards unmentioned (good news would've been hyped)

The Black Institute, the "action tank" led by former New York ACORN head Bertha Lewis, last week released Not Good Enough: The Myth of ‘Good Faith and Best Efforts’/Report on Minority- and Women-Owned Businesses (embedded at bottom).

The report, launched with a press conference including several prominent black elected officials, has been seen as a challenge to Mayor Bill de Blasio by a long-time and continuing ally, Lewis, a founder of the Working Families Party and former head of New York and national ACORN.

The report suggests several reforms, including:
  • hiring a Chief Diversity Officer assigned solely to such programs 
  • extending the M/WBE program to all 72 city agencies/bodies (from the current 34)
  • assistance to ensure prompt payment and thus cash flow
  • start-up capital from 1 percent of the state/city pension funds
  • increased data and statistics on M/WBE participation.
The report has been covered in the Daily NewsNew York ObserverCity & StateCapital New York, and on NY1’s Inside City HallCity & State TV, and Capitol Pressroom (note how Lewis talks over her interviewer).

What's missing: AY

Unmentioned in the coverage so far, however, is the absence of Atlantic Yards/Pacific Park Brooklyn as either a positive or negative example, Those with long memories may recall how, in 2006, Lewis's New York ACORN praised Atlantic Yards as the anomaly in a "Sweetheart Development" report about the lack of affordable housing in/around Downtown Brooklyn projects.

Presumably, if Atlantic Yards were a good example regarding M/WBEs, that would be highlighted. The new report includes quotes from three people (beyond Lewis) with ties to Atlantic Yards as supporters or contractors, so the absence of the Brooklyn project is glaring.

Notably, severe criticisms of Columbia University's Manhattanville project in the report--including use of eminent domain and lack of transparency--could be lodged regarding Atlantic Yards/Pacific Park. But Lewis is a signatory of the Atlantic Yards Community Benefits Agreement (CBA), describes herself as a "partner" of the developer, and raised $1.5 million from Forest City Ratner to bail out ACORN.

(She's also a member of the recently constituted Atlantic Yards Community Development Corporation, set up to oversee project commitments. She attended the first meeting but not the second.)

Moreover, the Atlantic Yards Community Benefits Agreement requires an Independent Compliance Monitor to report back on statistics--and that hasn't happened.

Some previous statistics suggest that, however the results exceed the low average reported by the Black Institute, they're behind the goals for Atlantic Yards, according to the state and the CBA.

As I reported 2/3/12, developer Forest City Ratner had a much lower M/WBE than previously reported. Initial statistics released by Empire State Development (ESD), the state agency overseeing Atlantic Yards, the MBE awards totaled about 16.3% of purchases, while the WBE awards totaled about 6.3%.

That suggested the combined M/WBE participation was 22.6%, about three-quarters of the way toward the goal of 30% (20% MBE plus 10% WBE) in the CBA. However, those statistics did not reflect the ESD's own analysis. ESD has a certified M/WBE contract goal of 20%, but the total was 15.4%. (Not all firms are certified.)

More recent statistics have not been issued. Who knows what the M/WBE role was in the factory and supplies for modular construction?

Beyond that, I'd suggest that some issues highlighted in the new report may apply to Atlantic Yards, such as "Concentration of opportunities in the hands of a few already long-established M/WBE contractors, some of which cannot be really considered disadvantaged any longer."

I've made that point regarding McKissack & McKissack, which is long-established. (Then again, company head Cheryl McKissack is a member of the Black Institute's Advisory Board.)

The coverage

The Daily News exclusive highlighted the fact that the criticism came from a de Blasio ally.

In 2014, only 4% of the city’s contracts were awarded to MWBEs, minority- and women-owned business enterprises. That was lower than the 5% under the Bloomberg administration in 2012, though above that administration's figure in 2013--actually 57% higher (which shows how percentages can skew from a very low base).

“In a city that is majority-minority, to have MWBEs get a pittance of contracts is outrageous on its face,” Lewis told the Daily News. The report criticizes the fact that the city lacks a Chief Diversity Officer, a role filled by counsel Maya Wiley.

The Observer noted the appearance at a press conference by allies including Public Advocate Letitia James, Congresswoman Yvette Clarke, Assemblyman Michael Blake, and Brooklyn Council members Laurie Cumbo and Robert Cornegy.

"I say to everyone, we’ve got a new bird in the City of New York and it’s called a crane—because cranes are everywhere," Clarke said, referring to construction.

"Boosting the number of contracts to over a third, as Ms. Lewis demands, also may not be feasible because the city is mandated by law to choose the lowest bidder or best proposer," the Observer noted.


On City and State TV, Lewis explained that she tried to give the administration a head's up, but they didn't respond. She said she wanted the administration to succeed, but "here in a city that is majority people of color, for MWBE, to have to scrape and beg and grovel for only 4% of the city contracts is obscene and is disgraceful."

Interviewer Gerson Borrero, who noted his Puerto Rican heritage, said he'd heard from pastors that, despite de Blasio's black wife and children, he's not "feeling it."

Lewis said she'd heard that too, " but here's what I'm concerned about. I'm not concerned about one white man. Even though he's the Mayor. I'm concerned about a whole passel of white man that have the ear of this administration. I'm concerned about those white folks who are still in the administration who have been there for a while and you can talk about being progressive all you want to, but we're the permanent government. So when we go out, we do stuff the way we always do."

"I'm concerned about the 1%, who still have a grip on the real estate industry," she said, noting no requirements for MWBE participation in Hudson Yards.

On NY 1, Lewis appeared with Lou Coletti, President and CEO of the Building Trades Employers' Association. In response to the city's statement that hard goals are illegal, Lewis said "there are contracts in construction where they classify things as specialty, it's set aside for folks who can do that."

The obstacles

As stated in the report, M/WBEs still face many obstacles to their success and even survival, including:
  • Weak legal guarantees against discrimination in the absence of M/WBE’s mandatory inclusion in public contracting;
  • Lack of information transparency in the contract bidding process;
  • Certification hurdles;
  • Exclusion of so-called “sole source” or specialty contracts, from M/WBE participation requirements by New York State and City laws and Community Benefit Agreements;
  • Flawed contract agreements due to the lack of access to good legal counsel;
  • Barriers in access to start-up capital;
  • Payment delays by larger contracting entities;
  • Concentration of opportunities in the hands of a few already long-established M/WBE contractors, some of which cannot be really considered disadvantaged any longer;
  • Restrictive definitions of ‘minority’ in disparity studies and, consequently, in legislation, which exclude some disadvantaged groups, such as Arabs or immigrants from non-English-speaking countries.
  • Lack of a ‘central address,’ such as a Chief Diversity Office, in NYC Government for dealing with M/WBE issues, i.e. of an office with exclusive responsibility for them.
Potential solutions

After interviewing those involved in the issue, the Black Institute suggested solutions:
  • New York State and New York City governments must establish M/WBE contracting requirements of 35 percent M/WBE of the total contracting budget, as should subcontracting by larger firms that have contracts involving taxpayer dollars.
  • Chapter 862 of New York State Laws of 1990 and New York City Local Law 1 must be amended to provide equitable access for M/WBEs to ‘sole source’ or ‘specialty’ contracting opportunities.
  • Federal Government must encourage the establishment of Chief Diversity Officer positions, along the lines of the New York State and New York City Comptroller’s Office positions, in other cities and states that have set goals for M/WBE participation. 
  • NY State and NYC Chief Diversity Officers must monitor M/WBE contracts to ensure that they are being upheld by all parties and that M/WBEs are actually completing their assigned work to minimize the chances of contractors signing M/WBEs on to projects only to pass the contracts over to other businesses half way through to complete the job.
  • New York State and New York City contracting offices must revamp the bidding process to maximize openness and transparency in access to information about available government projects from the very start of the process, i.e. before their approval.
  • Any for-profit company that is granted tax privileges or breaks from city or state government must be subject to legal requirements of M/WBE participation in the subcontracting of any of its projects. (Thus, the definition of the “bidder” in NYC Local Law 1... must be amended..)
  • NYC Local Law 1 of 2013 must also be amended to establish M/WBE requirements for all city agencies, authorities, commissions, etc. (as opposed to the 34 mayoral agencies currently covered).
  • DMWBD and SBS must provide legal and other assistance to M/WBE contractors whose payments are delayed. The State’s Prompt Payment Law passed in 1998 seems not to be well implemented or not sufficient.... NYC should consider adopting the Los Angeles practice of withholding payment from prime contractors for non-payment of their subcontracting obligations.
  • New York State and New York City legislatures must address the lack of M/WBEs start-up capital by instituting the use of 1 percent of NY State and City pension funds to provide a funding pool for M/WBEs....
  • New York State and City authorities must include representatives of minorities’ and women research institutions among other key stakeholders in developing M/WBE policies....
  • NYC Mayor’s Office must establish an M/WBE Advisory Council comprising all key stakeholders...
  • Data and statistics on MWBE participation must be made more transparent and easily accessible to the general public, as well as more detailed...
  • In addition, New York State and New York City governments must include a larger educational component in their M/WBE assistance programs, to help new companies reduce their learning curve...
Better from Cuomo?

The report states:
In 2011, in his first State of the State speech, Governor Cuomo established MWBE participation goal for NY state contracts at 20 percent. By the end of the 2013-14 fiscal year, official data indicated that New York State jumped ahead of the rest of the country, with over 25 percent, or $1.96 billion in contracts awarded to MWBEs. For 2014-15, the goal is set at 30 percent, or $2.4 billion.
(So is the Atlantic Yards goal now 30 percent? If so, that's news to me.)

However, the report notes that there's a lot of fuzziness behind the numbers, such as the distinction among minority groups.

Concentrated results

The report notes:
Further, M/WBE spending remains heavily concentrated in a few agencies (topped by the School Construction Authority, which is not subject to LL1, and yet has spent 37.7 percent of all M/WBE money). Likewise, the largest chunk of M/WBE spending ended up in the hands of a handful of companies: top 10 prime vendors have received over 30 percent of all contract spending - incuding five WBEs, three companies owned by Asian Americans, one Hispanic/ Latino-owned, and one whose ownership has not been identified for security reasons. As for subcontracting, of the top 10 M/WBE subvendors, 4 were Asian-owned, 2 WBEs, 2 Hispanic/Latino-owned, and 2 owned by Blacks. (On the bright side, Black-owned firm, R & D Contractors and Builders, has been the largest city subvendor, with almost $478,000, or 10% of total M/WBE subcontracting funds.)
One reason for this is the state requirement to  award contracts to the lowest bidders only.

Beyond good faith

The report notes:
M/WBE participation goals in New York State and New York City laws and regulations are not mandatory. Instead, they limit agencies’ responsibilities with regard to identifying an M/WBE contractor to “best efforts” or “good faith efforts”:84 agencies and their contractors are required to show that they made just such an “effort” to attain the goals. In the view of many observers, this wording provides leeway for city agencies and their traditional contractors to circumvent the government-set goals for M/WBEs’ participation.
Note that the M/WBE percentages in the Atlantic Yards CBA are goals.

Recent public/private projects in New York region

The report states:
To get a better idea of opportunities still available for a substantial M/WBE participation in New York, it is worth reviewing at least some of the most recent and ongoing construction projects in New York State and the city.
Projects mentioned include LaGuardia Central Terminal Project,  JFK Airports Delta Terminal Redevelopment Project, George Washington Bridge Bus Station, Willets Point Development, and the sale of Long Island College Hospital. Also cited is Hudson Yards. Atlantic Yards is unmentioned.

Criticism of Columbia

Columbia University's Manhattanville project gets the most critical discussion.The Columbia section states:
To begin with, Columbia resorted to the use of “eminent domain,” i.e. basically the seizure of small businesses’ property, which was widely criticized but ultimately upheld by the Supreme Court; local critics, including the leadership of Community Board 9 (which tried to ban eminent domain and voted unanimously against a Community Benefits Agreement with Columbia in May 2009), had to accept it as a “reality.” The leadership of CB9 changed hands and adopted a more collaborative stance toward Columbia. NY State Assemblyman Keith Wright echoed the feelings of many at the time: “If my constituents can make some money off of it, it is good. If my constituents can benefit, it is good.”
The same criticism of eminent domain, of course, was lodged regarding Atlantic Yards.

The report notes Columbia's pledge to assign 35% of contracts to minority-, women-, and local-owned companies and notes that Columbia was supposed to fund the hiring of an Independent Monitor to review compliance.

The report notes:
However, some of those who acquiesced to the expansion soon found themselves protesting in the streets against what they saw as Columbia’s failure to live up to its CBA commitments. Black architects, in particular, felt that they were shut out of Manhattanville’s contracting. Arch527, a group of African-American architects in Harlem, said that they were offered contracts for such types of work as moving a piece of furniture a few feet.... Larry English, CB9 Chair in 2009-2011, who was initially viewed as a supporter of Columbia, sided with the protesters, stating that “local and minority architects have not been given a fair opportunity to work on that project.” He charged Columbia with reneging on CBA.... even after he ceased to be CB9 chairman, Community Board under the new leadership of Rev. Georgiette Morgan-Thomas – the third chairperson in 3 years – continued to be critical of CU compliance; in March 2013, it unanimously passed a resolution calling for a state audit of Columbia’s promises. 
The report notes:
“The West Harlem Local Development Corporation should immediately hire a law firm to audit Columbia’s compliance to the CBA and take appropriate action to bring Columbia into compliance. The community should insist the Empire State Development Corporation do the same with the GPP,” wrote Larry English in a moving post on his personal blog. “Today, the redlines no longer surround neighborhoods, but instead they circle the city’s mega projects such as Barclay, Hudson Yards, World Trade Center, Second Avenue subway line and Manhattanville like a medieval moat. A barrier built on a mixture of race and greed that says to professionals of color - you need not apply.”
That backhanded "Barclay" mention by English is the only Atlantic Yards-related reference in the report, as far as I can tell.

Similar criticisms of Atlantic Yards/Pacific Park could be lodged. But Lewis and her organization are not in position to do so.

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