Big Money For Small Businesses
New funding makes possible local participation in the conversion of Fort Ord.
Thursday, November 19, 1998
The closure of Fort Ord in 1993 devastated many local businesses. The creation of a new Cal State University Monterey Bay in 1994 was viewed as critical to the economic recovery of the area and its opening has helped address some of those problems. But for small contractors and vendors, there was still a huge dilemma: how to compete with the high-rollers for the multi-million dollar contracts being awarded for the creation of CSUMB.
Without the capital, performance bonds, and adequate insurance necessary to competitively bid on these massive government projects, local small disadvantaged businesses could not even enter the bidding process. It followed then that the only beneficiaries would be the large outside firms with the deep pockets and experience necessary to successfully secure the projects--and the much-needed dollars would leave the area with the contracts. This was precisely what was happening.
Nearly all of the $15 million grant for the Phase I conversion on CSUMB was awarded to firms based outside the tri-county area, with the lion''s share of $11.9 million going to S.J. Amoroso for work completed on the 21 buildings that make up the campus today.
An effort to level the playing field was spearheaded by Seaside-Sand City Chamber of Commerce Executive Director Jackie Lambert.
"A government contract is an entirely different animal," says Lambert, "There are inherent difficulties for small businesses to overcome, and so few of these businesses have the capital to even bid on projects of such scope."
With Lambert''s leadership, the Tri-County Minority Business Association (TIMBA) and the Monterey County African-American Collaboration (a consortium of African-American educators and community organizers) filed a complaint to the U.S. Economic Development Administration, charging CSUMB with contracting and procurement policies that discriminated against local, small and minority-owned business interests. As a result, nearly $14 million dollars of federal funding intended for CSUMB Phase II were withheld in August 1996, pending a resolution of the conflict.
A "settlement agreement" was mediated after nearly one month of negotiations. Out of that agreement came several initiatives, but the largest concerned the creation of a Community Contractors Committee composed of representatives from CSUMB, FORA, TIMBA, Monterey County, as well as local small business interests. The function of this committee is to identify so-called "small disadvantaged businesses" and to assist them in meeting the qualification to become successful contractors.
"One of the more important results is we''ve gotten so many different organizations to communicate," says Lambert. "We''ve worked hard together for two long years."
Recently, the hard work and cooperation of all the parties, with a particular emphasis on the participation of CSUMB, culminated in a solution so innovative that the U.S. Department of Commerce is interesting in modeling it throughout the nation.
The Community Contractors Committee has secured through the Economic Development Corporation of Monterey County a $500,000 grant to be used expressly as a revolving loan fund targeted towards those local business interested in participating in the development of Fort Ord, but not able to qualify for adequate commercial financing. The amount of these fixed low-interest loans may vary between $5,000 to $100,000 and the terms are set for a period of no longer than six months.
Qualifying recipients will be provided with immediate seed capital, a solution that will both open doors and raise the competitive standard.
As part of the program, CSUMB must guarantee that 23 percent of the contracts funded by the current $14 million federal grant will be apportioned into projects of $100,000 of less. The school must also forgo all bonding requirements--except those required by federal and statestatute--in order to facilitate participation by the target groups. The university has also signed on to an education and outreach component to further ensure a capable local workforce necessary for sustained and long-term growth.
"We all have high expectations for the project," says Rich Taylor, co-chair of the Contractors Committee. "We believe that it will greatly help the local economy."
The program has also sounded what may be a rare note of accord in Seaside--a city often plagued by disagreements over development privileges. With that kind of support, it would seem that the program is destined for success.
"I envision that over the next 50 years, this program will bring long-term gains in the form of developing and sustaining a local workforce," says Fred Harris, community contract specialist at FORA.
The Contractors Revolving Loan Fund is now up and running. Workshops are being held to instruct interested businesses and individuals. Contact the Economic Development Corporation of Monterey County at 384-0386 for more information. cw