The chairman of the City Council’s Black Caucus proposed Wednesday that Chicago lift the cap on gross income and personal net worth that has forced black construction companies out of the city’s minority set-aside program, only to continue to suffer “discrimination.”
Currently, companies owned by minorities are forced to “graduate” from the set-aside program when their average gross receipts exceed $27.5 million over the previous three fiscal years.
That ceiling was established in 2001 and adjusted upward annually to coincide with the rate of inflation.
Participation in the set-aside program, which gives minorities and women a leg up in city contracts, is also confined to individuals whose personal net worth is less than $2 million “adjusted annually for the rate of inflation.”
At Wednesday’s City Council meeting, Black Caucus Chairman Roderick Sawyer (6th), proposed that both requirements be dropped.
A companion resolution also demands City Council hearings aimed at determining ways to strengthen a set-aside programs that continues to give African-American contractors short-shrift.
Sawyer said there need to be higher caps or none at all.
“When you graduate from the program, that means no more work from the city. The problem for those people . . . is that there also is no private work because they’re not big enough to compete with the McHugh’s, the Paschen’s and the larger companies of the world,” Sawyer said. “Then they’re stuck in this forever purgatory. They’re too big to get work from the city. They can’t compete with the larger companies. And they end up losing money to the point where they get back in the program again. It’s almost a form of discrimination.”
Sawyer acknowledged that a higher cap may be needed “to pass court muster.” But he firmly believes the city could make a strong legal case for having no income caps at all.
“Just because you’ve made a modicum of success, you didn’t all the sudden become not black anymore or not Latino anymore. And they’re not getting the work,” he said.
“The program is for people that have historically been disenfranchised. That’s black and brown people.”
Procurement Services spokesperson Catherine Kwiatkowski noted that the city initiated a “Phased Graduation Program” in 2012 that allows “established” minority contractors that have exceeded the program’s size standards to “gradually exit” over a three-year period.
During that time, companies get a 75 percent credit the first year, 50 percent in year two, and 25 percent in year three. This utilization rate applies to the life of the contract.
Last year, 43 percent of city contracts went to companies owned by minorities and women. But only 10 percent or $155.2 million went to African-Americans. Hispanic contractors got 18 percent or nearly $296 million.
Still, the overall performance far exceeds the city’s set-aside goals of: 26 percent and 6 percent respectively for construction contracts; 25 percent and 5 percent for non-construction and 16.9 percent and 4.5 percent for commodities and other services.
Chief Procurement Officer Jamie Rhee could not be reached for comment.
Last year, the City Council came within one vote of blocking a $3.5 billion O’Hare Airport bond issue, delivering a powerful message about the lack of minority participation on the airport gravy train.
At the time, Sawyer warned that future alliances between the Black, Hispanic and Progressive caucuses could someday create a political roadblock that would force Emanuel’s hand.
He followed up by joining forces with both of those caucuses to demand that minorities share 66 percent of the bonanza of jobs and contracts triggered by Mayor Rahm Emanuel’s plan to redevelop the North Branch corridor.
But they were forced to settle for a requirement that developers of Chicago’s largest private projects sign affidavits spelling out their efforts to share the wealth with minorities.
Planning and Development Commissioner David Reifman has said the affidavit requirement will pave the way for the city to “start a process of collecting data and thus, establishing the baseline that may allow us to do a more rigorous requirement.”