Big construction projects: Can they benefit local people?

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John Cabral, One View

In the March 3 Austin Weekly News the front page article [Networking the key to Wal-Mart jobs, group says] was about a local Austin business organization wanting to work with Alderman Emma Mitts (37th Ward) to get local building contractors to be involved in putting up the new Wal-Mart store that is going on North Avenue. It's good that they are bringing this up.

They could have also mentioned the new Menard's store and mall scheduled to be built on North and Kostner. Also in the 37th Ward, the project will involve tens of millions of dollars in construction work lasting more than a year. Several dozen building contractors and a couple hundred construction workers will be working on these projects at different stages.

A group in West Garfield Park is wondering about the new project to be built on the northeast corner of Madison and Kedzie. They're wondering not only "Will it be a Walgreens?" and "Will it serve the needs of the community that's here now?" but also "Will any of our people in the neighborhood be involved in the construction?"

The same question arose with the new Chicago Public School, Brunson Academy, built in 2000-2001 at Central and Augusta, and with two new elementary school buildings now being completed, DePriest on Central near Jackson, and Duke Ellington on Central and Fulton. And then there are:

?  the new 15th District police complex on both sides of Madison near Menard, now also nearing completion;

?  the renovation of Madison Street west of Central Avenue, completed in 2004;

?  the new two-story office building on the northeast corner of Lake and Pulaski, just now reaching completion;

?  the recently completed fire station at 16th and Pulaski in North Lawndale;

?  a new one-story office complex on Cicero and Washington, completed in 2004;

?  the new West Chicago Avenue Branch Library, now nearing completion at Chicago Avenue and Lavergne;

?  and the Austin Wellness Center building on Chicago and Cicero, completed last year.

Local contractors left out

It's not hard to figure out why everybody wants these big construction projects in city neighborhoods such as Austin to benefit local people first. People want the facilities to be built by locally-based building contractors. They want some of the high-paid workers on the project to be construction workers from the neighborhood. They want some of the dollars spent on these big projects to circulate in the neighborhood. They want local companies to grow and expand as they get into public works contracting.

In practically every one of the projects I have mentioned, the results have been pretty meager. Most local building contractors in Austin are too small, don't have access to capital, or can't get it together to participate in these high-paperwork projects. The few that are ready are often too busy on projects elsewhere in the city to bid on the local projects. Most don't even hear about the projects until the general contractor puts his trailer on the lot and the digging is about to start.

A couple may call the alderman hoping for help, but the train is already pulling out of the station. And the alderman doesn't know the construction business. The general contractor is not from the local area and wants to work with the subcontractors he already knows and trusts.

The results are almost always disappointing. The most disappointed are Austin residents who go by these building projects and "don't see anybody who looks like them" on the job. It strengthens their fears that all of these improvements in the neighborhood are for other people who will soon be moving into the neighborhood, not people like them (i.e. not for black people).

Ways to change the outcome

I would like to offer some practical ideas on how to change this outcome. They are a product of what I learned while working with the Westside Health Authority to build the Austin Wellness Center. An estimated 33 percent of the work to build that 29,000-square-foot facility was carried out by local black contractors.

Here are a few tips:

1) Neighborhood activists and agencies should contact the owners (whether private, public or non-profit) before the project is sent out to bid?"that is, before the owner publicly announces they are requesting proposals to build the project.

2) Ask them to tell the general contractors who will be bidding this project that, in addition to any minority set-aside requirements, there will be incentives or bonuses or preferences for bids that include locally-based subcontractors (plumbing companies, electrical companies, excavating and hauling companies, roofing, landscaping, etc.). A target of 20 percent of total subcontracting dollars might be a good objective.

3) Directly seek out and talk to the general contractors during the two-week window that the GCs (general contractors) are given to develop their proposals?"which include the total cost of building the project?"and talk to the estimating department in the companies that actually intend to submit a bid.

4) Contact and alert as many local building contractors in the neighborhood as possible and encourage them to "bid," i.e. to submit estimates to one or more of the GCs for the work that they will carry out (in their particular trade).

5) Once the apparent low-bidder has been identified, ask the owner to make sure the contract negotiated with the GC includes either a certain percentage of local subcontractors or a minimum number of local contractors?"5-7 might be reasonable

6) The owner may be local government, most often the Chicago Public Building Commission (PBC), the department that builds buildings for the library, for the police, etc. The PBC usually hires a "compliance and monitoring" consultant to make sure the general contractor really brings on minority and female subcontractors. Ask the PBC to set aside additional money to ensure that this consultant in turn hires a neighborhood-based specialist with knowledge of construction who will work closely with the locally-based subcontractors during the life of the project.

7) If the owner is a private concern (such as Wal-Mart), ask him to set aside funds required to hire a local minority contracting consultant with professional credentials and with roots in the neighborhood, also for the life of the project.

8) Local neighborhood banks can be asked to pool together small amounts of capital that will become a revolving loan fund, administered by a recognized underwriter such as ACCION Chicago or Chicago Community Ventures, with the specific purposed of lending to local minority building subcontractors who are awarded contracts for the project.

9) The community-based compliance consultant should attend all of the weekly construction meetings that take place on the site for the duration of the project, always monitoring how the local subcontractors are performing and how they are being treated by the general contractor; this consultant could give regular reports at monthly meetings where concerned citizens and agency representatives and aldermanic representatives hear reports on the progress made and how the local subcontractors are faring.

10) The general contractor can be asked to get each of his subcontractors to pledge to hire one or two neighborhood residents with experience in construction; in order to make it easier for this to happen, activists and concerned citizens can encourage the different employment and training agencies in the community?"in Austin there are at least five?"to form a consortium, during the life of the project, which will allow each one of them to cooperate with each other in responding to the employment needs of the subcontractors.

Understanding the system

In Austin, everybody in the community agrees there should be local contractors as part of the building process of any new project. But our economic system does not reward owners and general contractors who abide by this sensible idea. Instead the system works against everybody's good intentions. It also tends to drain neighborhoods like Austin of their best entrepreneurial talent; thus, in Austin, I don't know of more than three or four contractors who are set up to participate in public works contracting.

That's why activists need to understand local contractors, understand the construction industry, and directly approach the players, up front, before the architect's drawings are sent out to prospective bidders, actively recruiting the local building contractors who have the desire, the technical experience and the ambition to get in to the big construction projects.

 

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