Arena Construction and Hill District Community Benefits

Yeah, yeah....sure, sure. Been gone for a week but not long enough to miss a sham in the arena deal. According to many reports, Hill District leaders and clergy (now, let's not conclude that these folks do or do not represent the Hill) have demanded:

• $10 million in local development funding
• Guaranteed jobs for minorities
  
• Other community benefits

I will ignore the important issue that was raised in several discussions in the burghosphere about the dangerous precedent that this development funding request may set. Indeed, while the Hill deserves the lion's share of such a fund, the city and region, as a whole, forewent the opportunity to use gambling revenue for infrastructure (transit, for instance) and neighborhood improvements and got the shaft on the deal anyway. Now, if the Hill gets this development funding, other neighborhoods in need (Knoxville, for instance) might see an opportunity, and rightfully so, to lobby for development funding as well. While all neighborhoods deserve to benefit, figuring out who gets what will become a big mess for Jesus (Ravenstahl) and the Holy Ghost (Onorato) while God, the Father (Rendell) stays out of it.

The point I will take issue with in this post is that of 'guaranteed jobs for minorities'. It is sad that this even had to be stated explicitly but it perhaps needs to be stated much louder. Together, construction of Heinz Field, PNC Park, and expansion to the David L. Lawrence Center reached almost 1 Billion dollars. The United States Commission on Civil Rights put out a very concise article entitled, "Barriers Facing Minority- and Woman-Owned Businesses in Pennsylvania" so pertinent to this discussion that I think its discussion of large public works projects in Pittsburgh warrants posting in full.

Large-Scale Construction in Pittsburgh

Large-scale projects create expectations of economic revitalization. As in Philadelphia, Pittsburgh has seen its share of projects that drew considerable attention to M/WBE utilization and development. Three projects in particular—PNC Park (the new Pittsburgh Pirates baseball stadium), Heinz Field (the new Pittsburgh Steelers football stadium), and expansion of the David L. Lawrence Convention Center—drew the most. Conceived in the late 1990s, they are easily the largest public works projects in city history, reaching almost $1 billion in combined costs.[16]

As these projects proceeded, M/WBE owners, state legislators, and Pittsburgh City Council members raised concerns about M/WBE utilization and sought assurances for minority contractors and employees.[17] Project managers and city officials committed to 25 percent MBE and 10 percent WBE participation goals for contractors and subcontractors on the sites.[18]

Beginning in 1999, events began to unfold attracting the Committee’s attention. The Pittsburgh City Council passed resolutions establishing a city goal of 25 percent minority and 10 percent female participation on city contracts over $250,000.[19] In July 1999, members of the African American Workers Union picketed the Pirates stadium site, claiming the group was blocked from participating in opportunities for construction of PNC Park.[20] Nine union members were arrested after having prevented access to a construction site.[21] That same year, a common pleas court ruled that a contract for work on PNC Park was improperly awarded to a firm that was not the lowest responsive bidder as specified under state law. This was an indication of problems to come. In early 2000, a women-owned steel fabricating firm, Industrial Fabricating Systems Inc., filed state and federal lawsuits against the Sports & Exhibition Authority and two steel companies, alleging that it was asked to accept “pass-through” payments from providers for steel for the stadium in exchange for not working on the project.[22]

Soon after, in June 2000, a three-month Pittsburgh Post-Gazette investigation uncovered allegations of wrongdoing on an even larger scale, namely that at least one-third of the $117 million in contracts purportedly going to M/WBEs actually went to firms owned by whites or to firms that no longer qualified as disadvantaged.[23] The Post-Gazette reported that minority- and women-owned contractors were asked to accept token payments for construction work on stadium construction jobs and “pass through” this work to majority-owned contractors.[24] After the story was published, the paper reported that the Allegheny county executive asked the FBI to investigate the awarding of project contracts as well as the county agency that certifies M/WBEs. The Pittsburgh City Council held hearings in June 2000 on problems with the city’s certification process. M/WBE owners, NAACP representatives, and other groups described difficulties in the bidding process for the stadiums, confusing certification procedures, and illegal business agreements.[25]

In late June 2000, the City Council passed an ordinance radically changing the city’s review and approval process for city contracts.[26] The prior ordinance mandated that all development proposals and all bids on city construction contracts over $250,000 include a plan for participation of minorities and women, and M/WBEs as contractors, subcontractors, and suppliers. All plans were reviewed and approved by the city’s Minority Business Enterprise Review Committee. The new ordinance created an Equal Opportunity Review Commission (EORC) to review and approve all construction contracts over $200,000 as well as contractors’ compliance with M/WBE policies.[27] The ordinance requires that 35 percent of all work performed on these contracts be performed by city residents and sets up mechanisms for contractors to report their compliance to the EORC. It also allows the EORC to impose monetary damages for noncompliance.

In September 2000, the Allegheny County controller released an audit of the certification and monitoring procedures of the county’s Minority, Women and Disadvantaged Business Enterprise Department. The audit reviewed outreach efforts to include M/WBEs on construction of the stadiums and convention center renovations. In his review, the controller found that (1) monitoring procedures failed to ensure that county departments and contractors were making good faith efforts to meet the county’s M/WBE goals, (2) the department did not follow-up with contractors that failed to meet the county’s 13 percent MBE and 2 percent WBE participation goals, (3) incomplete project information resulted in eligible firms being overlooked during the bid notification process, and (4) over $900,000 was spent by other government agencies to provide similar M/WBE certification and monitoring functions.[28]

A couple of things to note. (1) Dan Onorato was the controller during this fiasco and performed the audit of the county's Department of Minority, Women and Disadvantaged Business Enterprise office. He should be well seasoned by now. As I asked in a previous post, what has Onorato done to prevent this from REcurring? Enlighten me if you know. What controller candidate will take up this issue of enforcing the guidelines set for contracting minority-owned businesses?(2) What the Hill District leaders/clergy are asking for is already in place. The city and county are required to ensure that minority-owned businesses contract on these projects. The problem is oversight/enforcement. Back in 2000, Sala Udin said, "There is no really strong political will for [the Sports & Exhibition Authority] to be strident in their enforcement of the guidelines because the goal is to get these projects moving". Judging by today's press and the demolition of the site, it seems as though this is the case. There doesn't seem to be the political will to enforce the guidelines, especially when traveling to NYC is more important than to meet with Hill District leaders on the arena issue. What follows is that history will, again, repeat itself in all likelihood. (3) It's interesting that Payne and Robinson are now speaking up when Milliones' group had already done so (even though the Trib article Bram posted somewhere identified Millione's as Jake Wheatley's girlfriend). Seems like we oughta establish a consortium of community development groups, such as Hill House, who have a long track record of caring for the community rather than turn to politicos and opportunists.

Then again, we have a patronage system of politics here in western PA. Why wouldn't we see a corporatist arrangement on public works projects (think city energy consulting and Zappala here)? Who cares about ordinances and established guidelines? There's a history of not giving a shit. Would Lamb, as controller, enforce the guidelines?

April 12, 2007 UPDATE

Christian Morrow of The New Pittsburgh Courier does some careful journalism in his article, "Demolition clears way for development". Morrow writes that Clarence Curry, MWDBE coordinator for the SEA, said participation goals for the demolition phase of new arena project are already being met.

“We have $98,000 in (Minority-owned Business Enterprise) contracts and $82,000 in (Women-owned Business Enterprise) contracts out of $926,419,” said Curry. “That’s 11 percent and nine percent, respectively.”

“The demolition of the (former St. Francis Central) hospital and its parking garage is a separate contract and we’re looking at about 26 percent MBE and 12 percent WBE on that job,” he said. “The demolition design study is still going on though, so we won’t be getting started on that for a couple months.”

Curry said A & A Consultants, an MBE has 15 percent of the design study work, and Fullard Environmental and Sterling Contracting are slated to get 27 percent of the $1.48 million hazardous abatement work once demolition begins.

This article was a follow up to an earlier article on M/WBE contracting. The last paragraph is telling.

Thank you Mr. Morrow. At least there are some folks in the MSM paying attention to such an important issue.