By Roy S. Johnson al.com
WWR Article Summary (tl;dr) Roy S. Johnson takes a look at how the city's black- and women-owned construction firms are positioning themselves to share in the city's billion dollar building surge.
Rico Washington was sad. Oh, he was ecstatic, too. His company, Construction Works, won the bid to construct a new aircraft rescue firefighting station at the Birmingham-Shuttlesworth International Airport.
The bid was the “lowest and best” offer -- in the language of the public bidding world -- among four companies vying for the $10.3 million project.
Washington’s celebration was tempered, though, when he learned it was largest ever such prime contractor bid awarded to an African American-owned firm on a Birmingham construction project.
“Really?” he asked. “That’s sad. Now, let’s fix it.”
Now, when Birmingham, Alabama’s largest city, is smack in the midst of an unprecedented construction boom.
Now, when more than $300 million in taxpayer funds will be spent to build a 42,000-seat stadium downtown and renovate outdated Legacy Arena.
Now, when private developers are on a giddy spending spree, too -- sprinkling hundreds of millions on the city’s core over the next three years like pixie dust, renovating and restoring long-neglected downtown buildings and structures like Carraway Hospital ($327 million) and building new ones like the Red Mountain Theater Company arts campus ($25 million).
Now, when the Birmingham Airport Authority expects to spend $117 million on capital improvements and $5 million on concessions over the next four years. “There will be no end to the work we do for our customers,” airport CEO Ron Matthieu shared last fall at a one-day conference for minority and women entrepreneurs. “It will never stop.” Now, just after ALDOT dropped $475 million to replace the massive I-59-20 downtown overpass.
Now, as the Housing Authority of Birmingham (HABD) prepares to spend $100 million in the next three years redeveloping five public housing communities.
Now, after the University of Alabama at Birmingham spent more than $100 million on construction last year and estimates spending another $100 million in the next two to three years.
Do that math: Easily, a cool billion could be spent on construction projects in Birmingham over the next three years, alone.
Yet, this is our shameful truth: Three decades after former mayor Richard Arrington launched the Birmingham Plan, a volunteer strategy to ensure minority-owned firms shared in the city’s construction surge, which included an estimated $800 million in commercial and public infrastructure spending between the late 1980s and early 1990s, few of Birmingham’s black- and women-owned construction firms are prospering.
Some are doing well, no doubt. But truly prospering -- as in, capable of standing bid-to-bid with the city’s biggest construction companies?
Nah, not now.
BONDS, BIG BONDS, NEEDED One measure of a construction company’s heft is its bonding capacity, the cost of a project that a bonding company is willing to insure. To have, say, a $175 million bonding capacity requires not only a lineage of successful large-scale projects but also $26 million to $35 million in the bank -- security representing 15-to-20 percent.
It is challenging to build those reserves without overseeing numerous big projects that produce positive cash flow, and it is a challenge to land those projects without a sizable bonding capacity.
Welcome to the classic chicken-egg question.
Earlier this month, Brasfield & Gorrie, the city’s largest construction company, won the bid to build Protective Stadium, which is projected to cost $179 million.
“No [minority-owned firm in Birmingham] can build a $50 million project,” says Michael Bell, executive director of the Birmingham Construction Industry Authority, an oft-criticized entity that was created in 1980 in response to legal actions taken against the Birmingham Plan. “It’s a sheer matter of cash flow. One could not even submit a responsive bid. They can build a building like anyone; most just don’t have the capacity to [bond more than] $5 to $7 million on a project.”
“In many ways, the whole system has failed the minority contractors,” says Tony Jones, founder of the Jones Group (The company generated $2.5 million in revenue in 2019, according to Jones.) “The decision-makers, who have largely been minorities themselves in this town, for some reason are not [committed] to help a minority company go from being a $100,000 revenue company to a $1.5 million company. The train’s off the track.”
“A lot of disadvantaged [firms] are starving,” says L’Tryce Slade, founder of Slade Land Use, Environmental and Transportation LLC, which possesses a $3 million bonding capacity. “I have projects in Nashville, Dallas, Atlanta, and Montgomery. I have projects in Birmingham but don’t feel the same respect here. Why?"
Some black contractors, simply and bluntly put, die from cash flow.
“We’re going to dump five hundred million into our city and if we have nothing to show for it, shame on us,” says Brian Hamilton, managing director of the A.G. Gaston Construction ($15 million aggregated bonding capacity). “It’s not anyone’s fault. It’s all of our fault.”
If not now, then when?
And why didn’t it happen before?
For a time, it did. Twice, in 1977 and 1989, the Birmingham City Council passed ordinances requiring minority firms get 10 percent participation in all public construction projects. Over time, minority firms reportedly gained almost a third of the contracts. But Arrington’s Plan was challenged in court, by the Alabama Associated General Contractors, and nullified by Crosson v Richmond, the 1989 U.S. Supreme Court ruling that declared the minority set-aside program for municipal contracts in Richmond, Va., unconstitutional.
The AAGC proposed the creation of the BCIA as an entity that would certify minority firms, provide industry oversight and foster continued growth. But it could seemingly do no right.
“We had some measure of success,” says Bell. “Some feel due to the voluntary nature, it isn’t strong enough; black contractors want [participation to be] mandatory. Non-blacks feel like they’re being forced into doing something. We don’t make a lot of friends.”
Efforts by minority- and women-owned companies to crack the Birmingham construction industry’s granite code are further stunted by Alabama’s stifling bid law. It requires any public expenditure of at least $15,000-- a ridiculously minuscule amount -- to be awarded to the “lowest responsible bidder” in a sealed-bid process that does not even have to be advertised. (Professional services are excluded.)
Now, here we are.
Has anything changed in 30 years? There are really two answers:
Somewhat and we’ll see.
Perhaps due, in part, to a new generation of leaders in the construction field, the climate appears to have actually warmed -- more conducive to building inclusive relationships between large, long-standing construction companies and growing minority- and women-owned firms.
Relationships built on trust, not court edicts.
On the belief that Birmingham’s rising tide should lift all boats. Finally.
“We have capable [minority-owned] firms here,” says Clinton Woods, owner of Prescott Contracting and the District 1 City Councilman. “There are a lot of good things happening, but we’ve got to get better. Our [city’s] role is to build capacity, awareness, and opportunity.”
Protective Stadium and the long-overdue renovation of Legacy Arena are a “unique” opportunity for public spending to break from its tainted history and boost the trajectory of black- and women-owned construction firms in the city, says BJCC Executive Director and CEO Tad Snider. “[They’re] not going to come around every 10 years,” he says. “So how do we refine and enhance the process and do what needs to be done to prepare businesses to grow?”
The BJCC strives for 30% inclusion by minority- and women-owned companies, Snider says, and is “clear” about the goal with bid-winning firms. “We try to find partners that share that commitment.”