PDC warns developers about hiring
South Waterfront - Developers say they can't find qualified minority contractors to meet a 20 percent goal
Wednesday, November 22, 2006
RYAN FRANK
The Oregonian
The Portland Development Commission says developers building Portland's new South Waterfront district have failed to meet their goals to share construction work with minorities, women and small businesses.
Developers North Macadam Investors and Oregon Health & Science University agreed in 2003 to try to send at least 20 percent of the work to small firms or those owned by a minority or woman. But a study of the first six South Waterfront towers shows they've done no better than 10 percent. Minority-owned firms are faring the worst, registering less than 2 percent.
The developers and their builder, Hoffman Construction, say they've hit a wall: The Portland market doesn't have enough qualified contractors to give the work to. Given the available pool, "10 percent is pretty darn good," said Bart Eberwein, vice president at Hoffman Construction.
But Bruce Warner, the PDC's executive director, told developers in an October letter he expects better.
Warner's letter came after the City Council began to scale back its attention to major redevelopment work, such as the South Waterfront, and amid growing calls from African American leaders that the city's redevelopment agency must do more.
Among their concerns, they asked PDC to make sure minorities get their fair share of the construction work that's partially driving Portland's economy. The line among African American leaders has become: "Everybody except the brothers."
"I just don't know why they are so resistant to minority firms participating," said Faye Burch, a consultant who works on diversity in contracting and is a member of the National Association of Minority Contractors Oregon chapter.
John Jackley, a PDC executive, said South Waterfront developers -- led by Homer Williams -- agreed to a 20 percent contracting goal in 2003. At the time, it was a footnote in the $2 billion deal that opened South Waterfront for the biggest economic development project in city history.
The deal will provide about $126 million in taxpayer help to turn the former warehouse district into a garden of condo and medical office towers.
In early October, Jackley said, PDC got its first look at how well Hoffman Construction had done at hiring small, minority and women subcontractors for the first five condo towers and one OHSU building. "It wasn't consistent with promises made in the past," Jackley said.
Warner sent letters to Williams and Steve Stadum, OHSU's chief administrative officer, in mid-October to alert them to what he saw as a problem. The letters went out a month after African American leaders crowded a PDC board meeting to make a public call for improvements.
Warner followed up with several meetings with South Waterfront developers. "Bruce was very direct," Jackley said. "He said, 'You know what, you can do better.' "
But there seems to be a disagreement about that.
Williams of North Macadam Investors said: "That letter is not reflective of what the real situation out there is."
Eberwein of Hoffman Construction said: "Hoffman's take on South Waterfront is that it's mostly good news."
Small, minority and female subcontractors have accounted for $35 million worth of work in South Waterfront. No other project matches that, Eberwein said.
Besides, Eberwein says the 20 percent goal was never firm. "Let's be clear, PDC knew it would be an aspirational goal," he said.
Williams said they struggle to find enough minority contractors given the vast number of condo projects under way, and some minority firms, which tend to be smaller, struggle to afford enough insurance for big projects.
Williams and Eberwein said they try to reduce barriers for minority firms, breaking up work into smaller jobs and handling insurance for them. Williams said his partner, Dike Dame, also is recruiting high school juniors into the business. Eberwein said the developers are doing the best they can. "It'd be wrong to trash these guys," he said.
The best option, Eberwein said, is to build a bigger pool of qualified contractors through the apprenticeship programs. He said the developers have done much better at recruiting minorities and women into the workforce training program.
But James Posey, an African American subcontractor, isn't convinced things are getting better. He said Hoffman sees minority contracting as "social penitence to the community rather than good business." Posey called Warner's letter the most powerful response he's seen on the issue in more than two decades. But "the question is whether or not there will be any teeth in that letter," Posey said.
The 2003 South Waterfront deal doesn't give the PDC authority to force changes. But Jackley said they've requested documents that prove Hoffman Construction made a good faith effort to recruit minority contractors.
The PDC board plans a public hearing on the issue Dec. 6.
For more about Portland politics, visit The Oregonian's City Hall blog at portlandcityhall.blogs.oregonlive.com. Ryan Frank: 503-221-8564;
ryanfrank@news.oregonian.com.
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