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.