Giving Black and Brown developers a fair shot - NEW YORK DAILY NEWS

By VALERIE WHITE - NEW YORK DAILY NEWS |- JAN 02, 2022 AT 5:00 AM

Inequity in access to public contracts for minority developers is a well-recognized problem, but as is made clear by the persistence of the challenge, recognizing a problem doesn’t make it any easier to address. Federal, state and city agencies set goals for enhancing opportunity, but systemic issues that box Black and Brown developers out from winning public contracts clearly remain. Just this past year, three of every four public development contracts in the city were awarded to non-MWBE firms.

Developers of color have faced this systemic inequity for decades in an already hyper-competitive New York real estate market. These minority developers lack access to the capital, networks and resources that the city’s most established developers don’t think twice about but that inevitably allow them to lead some of the city and state’s most consequential development projects.

It’s an inequity that is absolute in its impact, and it’s one that both the Hochul and Adams administrations must address head on if we’re to rebuild from this pandemic equitably. Fortunately, there are resources and networks at both administrations’ disposal to help get the job done.

A major barrier standing in the way of many minority-owned businesses when competing for city and state projects is that few of these businesses have the financial and institutional networks in place that allow them to successfully bid in the first place.

Why? Because public projects don’t repay contractors for their work until after the project is complete to safeguard against impropriety. However, this safeguard uniquely disadvantages minority developers who — despite having the expertise, experience and capacity to complete large-scale public projects — do not have access to lines of credit and working capital that such debt requires.

Public-private partnerships can fill that gap. Just recently, LISC NYC, the organization I lead, reached a partnership with the Dormitory Authority of the State of New York that provides minority developers bidding to participate in state contracts with the liquidity necessary to compete. A LISC fund called the Black Economic Development Fund has set aside $10 million to help minority firms bidding on DASNY projects pay for the material, workers and resources necessary to complete projects. A full-service insurance and surety bond brokerage, in this case The Cayemitte Group, then provides these contractors with back-office supports, including financial management and funds control, to ensure timely payments on all project-related expenses.

While this is one very specific example of a public-private partnership that can expand contracting opportunities for minority firms on public contracts, it’s a model that can be replicated across city, state and even national agencies.

While it’s essential that public-private partnerships provide experienced minority developers with the capital they need to bid on public contracts, it’s also critical that the city and state focus their efforts on growing the capacity of minority developers who are still trying to breakthrough in the industry. The city’s building industry is a large ecosystem of real estate firms, contractors and developers, but so many of the names that make up the market are those that have been at the top for generations.

Take for instance the recent news that a Black-led development firm, Peebles Corp., is planning to build the city’s next tallest skyscraper. Of course this is excellent news, and it’s a sign of progress, but the headlines also tell a different story: that a Black developer building a skyscraper is news, which, to me, seems the truest testament to the fact that more must be done to help MBE firms establish themselves. Industrywide, there’s been recognition of this reality and the need to diversify, but little has been effectually changed.

It’s why LISC NYC launched a pilot Developers of Color Training Program aimed at connecting MBE firms to the training, resources and networks needed to expand their portfolio of business and contracts. The program was informed by extensive market research conducted by R.F. Wilkins Consultants and is guided by a curriculum developed by Columbia University that provides one-on-one coaching by established developers in the industry, real-time assistance with deals in the project pipeline, networking support and access to equity capital.

It’s a program that could serve as a basis for a city-, or even state-sponsored, program helping minority developers grow their capacity to compete with the more established firms in the industry — because the fact of the matter is that if we don’t proactively foster opportunity for these MBE developers, change won’t come.

In some ways, the challenges and uncertainty heaped upon minority communities and businesses during the pandemic have given New York the opportunity to refocus its efforts on ensuring that historically disadvantaged communities are central to our recovery efforts. The opportunity in this instance is even more unique: As we look to rebuild New York State and New York City to their former selves, we have the opportunity to make sure that those rebuilding it are those communities and businesses most impacted by it.

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Gardner Rivera quoted in BisNow article on Latinx and Hispanic CRE Leaders.

Latinx and Hispanic CRE Leaders Determined To Open Opportunities For The Next Generation

*Thank you to Dees Stribling and the amazing team at BisNow for including me in this article!

National

October 8, 2020 Dees Stribling, Bisnow National 

As the population of Latinxs and Hispanics in the United States has grown in recent decades, their growth in leadership positions in commercial real estate has been less robust. The current generation of Latinx and Hispanic leaders in the industry is keen to change that. 

Formal programs are important, they say, but are not the entire picture. Equally important, if not more so, is to let young workers know that upper-end careers in CRE are possible for those with solid people skills and strong motivation to succeed. Current leaders are trying to be more visible role models, but also helping the rising generation form the connections they will need to rise in commercial real estate.

"Hispanic" refers to native speakers of Spanish or people in the U.S. with Spanish-speaking ancestry and is the term used by the Census Bureau. "Latinx" is a gender-neutral variation of Latino and Latina, and refers to anyone of Latin American origin or ancestry.

"Young Latinos should absolutely consider careers in commercial real estate," Paper City Investments Managing Member Gardner Rivera said. "For two reasons. One is that the industry is very entrepreneurial and rewards the focused and innovative, regardless of race."

New Jersey-based Paper City Investments specializes in market-rate and affordable multifamily development. 

Second is that the Spanish-speaking community is underserved, Rivera said. 

"Being a bilingual real estate professional allows you to bridge a gap in service and helps you grow communities because you understand firsthand their needs," he said. "There are so few minorities, especially Hispanics, in commercial real estate that your success will be an example for others looking to enter the business." 

Hispanic employment in the real estate industry as a whole isn't far behind the number of Latinxs in the U.S. population as a whole, according to Equal Opportunity Employment Commission data. 

In its 2018 survey of more than 3,500 real estate businesses with more than 100 employees, the EEOC found that about 16.9% of all workers in the industry (NAICS-2 Code Sector 53) are Latinx or Hispanic, roughly comparable to the total Latinx or Hispanic share of the U.S. population, which is about 18%.

Yet the overall numbers mask a disparity in the industry. Leadership positions in the industry still skew heavily White, with most Latinxs or Hispanics in lower-end, less-skilled jobs. The number of Latinxs or Hispanics in executive positions is about 4.3% of the total, compared with 88% White, while Latinx or Hispanic midlevel managers total about 10.2%. By contrast, about 37.2% of laborers in the industry are Latinx or Hispanic, while 26.4% of service workers are Latinx or Hispanic.

The hotel industry is a particularly stark example of that disparity, according to Reveille Hospitality Chief Investment Officer Marco Roca Jr., who notes that less than 1% of hotel owners in the country are Latinx, while the workforce is about 40%. His company specializes in developing hotels.

"Young Hispanics that I meet often believe the hotel industry is limited to being housekeepers," Roca said. "It's a little sad. They don't realize the vast array of rewarding positions in the industry. You get work in great buildings in interesting parts of the world."

Changing that kind of perception is one of his goals, Roca said. That involves a lot of effort, but he says it is worth it. Introducing the next generation of Hispanics to opportunities in CRE involves both formal programs and informal mentorship. 

"Hispanics benefit greatly from internships and college programs specific to the commercial real estate industry," State Street Realty President George Pino said. "No student should ever be trapped in a failing school or job that doesn't meet his or her individual needs."

For its part, Pino said, State Street works to increase economic opportunities for Hispanics or Latinxs by providing internships that often are pathways to commercial real estate jobs.

Often formal programs to recruit Hispanics to CRE come in a wider context of increasing the participation of all minorities and women in the industry, both through organizations as well as large companies.

"We want to cast a wide net to attract talent," BOMA International President Henry Chamberlain said. "We've organized a diversity inclusion committee with BOMA International because want to reflect the markets we're in."

The committee has been tasked by the organization to provide specific recommendations on how to facilitate industry diversity and inclusion through policy development, education and training, Chamberlain said.

Those kinds of initiatives are well and good, Hispanic and Latinx industry leaders say, but it is up to CRE companies themselves to make the most difference by providing role models, helping the rising generation create industry connections and persuading them that CRE is a good place to be.

Through his and his father's participation in the Latino Hotel Association, Roca said, they provide high school students help with college applications, recommend hospitality programs for them and otherwise act as mentors.

"We made ourselves as accessible as possible," Roca said. "They can call us. We want them to know that the industry might be a  good fit for them since hospitality is part of the DNA of Hispanics."

Because of systemic racism and unconscious biases, Hispanic or Latinx workers, like Blacks, are underrepresented in architecture, engineering and construction, McKissack & McKissack CEO Deryl McKissack told Bisnow in an email.

"That's even as concern grows in our industry over a shrinking qualified labor pool," she said. "We must be active participants in developing creative strategies to attract, hire, train, retain and promote Hispanics. That includes fostering internships and mentorship programs to recruit at colleges and universities that attract Hispanic students."

Encouraging the younger Hispanic or Latinx generations to pursue a career in architecture starts with representation, HKS Director of Justice, Equity, Diversity & Inclusion Yiselle Santos Rivera said. 

“While mentorship and sponsorship are essential aspects of our engagement, representation within our own firm is critical," she noted. "You need to be able to see yourself seated at the table and in leadership positions. We’re always evaluating how we can do better in that regard.” 

As part of its more formal recruitment effort, HKS has partnered with Cristo Rey Dallas College Prep, a Catholic high school that serves a diverse student body whose families have limited financial means. Through a corporate work-study program, HKS contributes toward students’ tuition fees and pairs them with HKS employees to expose them to the design field, along with other areas that may draw their interest, such as accounting and information technology.

As for persuading rising young talent that CRE is a good place to be, the bottom line is certainly economic gain, but it is about more than personal enrichment for minority groups.

"Once you get your foot in the door, it takes a ceaseless work ethic to succeed," Lee & Associates-North San Diego County Associate Alma Miluso said. "That should come naturally for young Hispanics who are used to overcoming barriers and working hard to achieve their goals."

Being in real estate is like running one's own business, Miluso points out, and many times it is precisely that, and a goal worth pursuing in and of itself.

"And just like any other business, with the time and effort requirements, comes many benefits," she said. "I personally enjoy a large amount of freedom and flexibility to pursue work and clients that I care about."

Ownership is a form of economic equality, Rivera said. 

"Purchasing property with others in your network is a proven way to create sustainable wealth," he said. "Several immigrant groups used this method of pooling resources to get a foothold on the American dream. Passing along assets and how they were built ensures that the community thrives over generations." 

Contact Dees Stribling at dees.stribling@bisnow.com