by Anitra D. Brown
Back in February, the city of New Orleans released a draft report of its disparity study, an evaluation designed to take an honest look at just how well the city is doing at ensuring minority-owned businesses get their fair share of city contracts, along with how well those firms fare in the larger marketplace.
The 514-page report makes for interesting, but sometimes convoluted reading, while not offering much in the way of news. When it comes to economic development as it relates to city contracts, Black and other minority-owned firms are not doing as well as they ought to. According to the report, about 44 percent of the firms that are available for business in New Orleans are minority or women-owned business. The expectation is that those firms should receive 41 percent of the city contracts that are available.
And while it might, at first glance, appear that minority firms are getting an equitable piece of the proverbial pie (that’s the convoluted part), a deeper examination reveals that they are not, especially in many of the most lucrative areas, such as construction services.
For example, the report detailed “substantial disparities” between the utilization (11 percent) and availability (27 percent) of African American-owned firms in construction. Interestingly, among minority-owned and women-owned businesses, more construction work went to companies owned by White women (26 percent utilization). Another fact that is not as straightforward as it seems. It is a not-so-well-kept secret that firms that appear to be disadvantaged business enterprises or DBEs because they are owned by women on paper are many times little more than fronts for White male owners.
The report went on to point out that city government and even other government entities and agencies cannot make the strides needed to level the playing field alone. More should be done to prepare and train the workforce for employment opportunities that are available or on the horizon, according to the report. For example, fewer African Americans worked in the New Orleans construction industry “than what might be expected based on representation in the overall workforce” and “compared to Whites working in the construction industry, African Americans and Hispanic Americans were less likely to be first-line supervisors and less likely to be managers, according to the disparity report.
Furthermore, private companies and corporations must also actively and deliberately ensure that minority-owned firms are given access to opportunities available in the private sector as well.
In a city that is still majority Black, ensuring that minority-owned businesses, especially Black-owned firms, rise with every tide is important. With Black businesses remaining a top employer of Black people—second only to government—their success, their ability to hire people at competitive wages, offer benefits, provide resources for and otherwise strengthen the community is paramount.
Yet in 2018, 13 years after Hurricane Katrina and 300 years after its founding, disparate economic and social conditions in New Orleans that break down along racial lines are as prevalent as ever.
The 2018 Prosperity Index produced by the Data Center found that in 2016 nearly one-third of White households in New Orleans earned more that $114,632, while only six percent of Black households earned that much.
For the same year, nearly one-half of Black households earned less than $23,237. The same is true for only 14 percent of White households. Moreover, the report found that Black men in New Orleans are the only demographic to experience a drop in employment rates from 63 percent in 1980 to 52 percent in 2016.
And the rate of poverty among Black households in the city is more than twice that of Whites. According to the Data Center index, 71 percent of Black households, 56 percent of Hispanic households, and 31 percent of White households in New Orleans “did not earn sufficient income for one adult and one child to subsist without government subsidies” in 2016.
Meanwhile, as highlighted in a 2018 report published by the Kellogg Foundation titled The Business Case for Racial Equity in New Orleans and Louisiana, the economic disparities exacerbate inequities across the board in health, education, incarceration, economic development and employment opportunities and hinder the city as a whole. The Kellogg reports estimates that closing these gaps would generate more than $7 billion in additional earnings. And those earnings would result in the economic growth of a ‘more productive workforce with greater spending power and more financial security”. It would translate to an additional $20 billion in higher economic output, representing a 24 percent increase in New Orleans’ economy and an eight percent increase in Louisiana’s Gross State Product (GSP), according to the report.
In short, ensuring that all New Orleanians have access to opportunity, earn living wages and that fewer residents grapple with inequity is better for the whole city.
There is a good reason that detailing any of this is important. The disparate social and economic conditions in New Orleans are real. More to the point, they are still the reality in which lucrative plans and proposals for development at three of the biggest landmarks in the city of New Orleans are underway.
How can we and why are we talking about major, multi-million-dollar developments without seriously addressing economic equity?
Here at The New Orleans Tribune, we often lament what happens when those among us that lack opportunity and access come face to face with the conspicuous consumption and excess that surrounds them. Such inequity is the breeding ground for the challenges our city faces with respect to crime and violence. This reality makes building another luxury hotel, renovating a recently renovated football stadium, and turning what used to be a hospital for the city’s poor into anything else without addressing inequitable economic conditions at the top of a bad-idea list.
Before we build another 1,200 hotel rooms for conventioneers, let’s figure out how to build 1,200 housing units that hard-working New Orleanians can afford.
There are the plans for development along the Ernest N. Morial Convention Center Redevelopment District. It seems that redevelopment of Charity Hospital, whose doors have been shuttered since Katrina, is one step closer. And of course, the Mercedes Benz Superdome cannot be left out because every 15 to 20 years or so every major professional sports arena that already sucks up every public dollar it can get absolutely needs a renovation.
When all is done, billions of public dollars will be spent. Tax credits will be thrown around like cheap beads on Mardi Gras Day. And sundry public resources will be handed out all in the name of progress. Progress, indeed. But for whom? To many, it makes little sense to continue talking about economic development and to plan substantial investments of public dollars and resources into those developments without addressing economic equity . . . FIRST.
And whether the proposals in question are state or local projects makes little difference to the working people of New Orleans as their tax dollars fill coffers at both levels of government. Meanwhile, under current circumstances, the city’s own disparity study indicates Black-owned firms will likely not get a fair shake in the billions that will be spent on these projects or any others like them unless changes are made in short order.
All or parts of the following proposals have been discussed to great degree. In some cases, RFPs have been issued and received. Others will be issues soon. Here’s a look at what’s being proposed, who’s making the decisions, and who stands to gain from the projects—the PLANS, the PEOPLE, and the PROFITS.
The state-owned Charity Hospital has been closed for 13 years now, with talk of redeveloping the one-million square foot facility into anything but a hospital swirling for nearly as long as its doors have been shuttered, a renewed use for the complex is now as close as it has ever been.
Two firms—1532 Tulane Partners, Inc., and Pres Kabacoff’s HRI Properties, LLC—have submitted proposals to the LSU Real Estate and Facilities Foundation.
Both companies claim to focus on the redevelopment of historic properties.
1532 Tulane Partners is a partnership between New York-based El-Ad US Holdings, whose portfolio includes the Plaza Hotel in New York, and the New Orleans-based CCNO Development LLC, which was founded in 2007 by Joseph Stebbins and Michael Lee Mattax in the aftermath of Hurricane Katrina. CCNO redeveloped the old McDonogh 16 school in the Seventh Ward into an apartment complex and is currently working on projects at McDonogh 31 and Capdau schools as well as he old Algiers bus barn.
HRI Properties redeveloped both the former St. Thomas and Iberville public housing units.
The redevelopment of Charity Hospital into a mixed-use urban center that will likely combine residential, retail and other commercial use is expected to cost $1 billion and will most assuredly involve the use of public money likely through some combination of tax breaks, incentives and direct payments.
The proposals are now under review by the LSU REFF, which is expected to make a recommendation to the LSU Board of Regents before its October meeting.
Working with the Foundation is the Greater New Orleans Foundation, which will, through the “Spirit of Charity” committee, “coordinate closely with the LSU REFF on securing a long-term development partner for the Charity Hospital building,” according to LSU’s website.
The GNOF is now led by former city of New Orleans CAO Andy Kopplin, who served in Mitch Landrieu’s administration.
THE ERNEST N. MORIAL CONVENTION CENTER
Businessmen Joe Jaeger and Darryl Berger are the developers behind plans to build a 1200-room hotel that connects to the Ernest N. Morial Convention Center. According to an analysis of the plan, the developments would generate more than $280 million in revenue annually. But the current plan also calls for $330 million in tax breaks, incentives and subsidies.
There is more. The cost to build the hotel and develop the surrounding area is projected $557.5 million, and the developers want $41 million of that upfront from the public Convention Center. The proposal also calls for a free use of the eight acres of city-owned land where the hotel and other structures will be built, complete exemption from property taxes, a rebate on hotel/motel taxes for 40 years and a rebate on food and beverage sales taxes for 40 years.
The Convention Center Board is touting the proposal’s prospect to bring more than 1900 permanent jobs to the city.
Mayor LaToya Cantrell recently announced that she is not happy with the details of the plan and contends that the city cannot afford to donate land or offer tax exemptions and other incentives to allow developers to build the hotel.
“It’s not a win for New Orleans,” she said in an interview with The New Orleans Tribune. “The city of New Orleans has to begin to benefit for the resources (generated) off her back so she can invest in infrastructure and people.”
She doesn’t consider the plans a done deal and cautions that developers will still have to come before the City to request height waivers and other public subsidies.
“I am not afraid of using the bully pulpit,” Mayor Cantrell said.
Despite intense public outcry against the proposed development and the mayor’s points of contention, the Ernest N. Morial Exhibition Hall Authority appears poised to move forward with a Request for Qualifications to developers for the 40-acre mixed-use development that will include retail, residential, dining and entertainment components to surround the hotel.
THE MERCEDES BENZ SUPERDOME
Although it underwent a $376 million renovation after Hurricane Katrina, it seems plans for further development of the Mercedes Benz Superdome are on the horizon.
In May 2017, the Louisiana Stadium and Exposition District (a seven-member board appointed by the governor) approved a $422,000 contract for an architect to develop a master plan for possible future renovations to the stadium. The San Francisco-based Gensler, with another 29 offices across North America and 16 more across the globe, was chosen to develop the plan. Earlier this year, the LSED approved $400,000 for an architectural survey to be conducted by Trahan Architects.
While the projected budget for a proposed Superdome renovation has been estimated at anywhere from $150 million to $500 million, the plan still appears in its early stages. According to the LSED website, no-bid specifications or requests for proposals are available or have been released for a stadium renovation project. They are most certainly on the way, considering that already more than $800,000 have been expended for master plans and architectural studies alone.
The Superdome is owned by the state and managed by the Pennsylvania-based SMG. The New Orleans Saints organization receives millions each year in direct and indirect subsidies from the state through its agreement with the state, including Superdome revenue, bonuses, tax breaks and direct cash payments.