2018 New Orleans Disparity Study

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1 2018 New Orleans Disparity Study Annette Humm Keen, Principal David Keen, Principal Keen Independent Research LLC 100 Fillmore St, 5 th Floor Denver, Colorado info@keenindependent.com Corinne Villavaso, The Villavaso Group Cleveland Spears, Spears Group Morgan Ballard, Spears Group Lucas Díaz, Independent Consultant Dr. Silas Lee, Dr. Silas Lee & Associates February 28, 2018

2 Why conduct a disparity study? 1989 U.S. Supreme Court decision in City of Richmond v. J.A. Croson Company established strict scrutiny standard of review for race-conscious programs Disparity studies examine whether there is evidence of discrimination against minority- and women-owned firms in the marketplace If so, what remedies might be appropriate Outside, independent review of City practices is useful for the public 2

3 Examined City contracts, availability of firms for City work, marketplace data and qualitative information City construction, professional services, goods and other services contracts for (focusing on ) Survey of firms available for City contracts and subcontracts (contacted 5,000+ firms in metropolitan area) Data about the New Orleans metropolitan area marketplace Census data Revenue data collected in Keen availability survey Contracts going to MBE/WBE design and construction firms Data on loans Other information Interviews, focus groups, public meetings and other qualitative information from business owners and others within the New Orleans marketplace Analysis of current and potential City programs and other local assistance for small businesses and minority- and women-owned companies 3

4 Firms available for City contracts 44% of businesses in New Orleans metropolitan area available for City contracts are minority- or women-owned African American (22.6%) Hispanic American (4.9%) Majority-owned (55.5%) Asian American (1.6%) Native American (1.1%) White women-owned (14.3%) 4

5 Not a level playing field in New Orleans marketplace Disparities for people of color and women in metropolitan area Entry and advancement as employees Business ownership Access to capital Other barriers to growth and access to opportunities Business success Substantial disparities in utilization of MBE/WBEs in the marketplace Low revenue based on Census data Low revenue based on Keen availability survey data Low utilization of MBE/WBEs as design and construction firms in non-city public and commercial construction Qualitative evidence of discrimination against minority and female business owners within the New Orleans marketplace Conclusion: Without City action, there would be disparities in MBE/WBE utilization in City contracts 5

6 Example: Disparities for MBE/WBEs in ability to access capital Has your company experienced any difficulties in obtaining lines of credit or loans? Percent responding yes MBE (n=358) 42% WBE (n=167) 19% Difficulties obtaining lines of credit or loans Majority-owned (n=647) 7% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: 2017 Keen Independent Availability Survey 6

7 Need for City efforts to assist MBE/WBEs To avoid being a passive participant in marketplace discrimination, a need for City efforts to assist MBE/WBEs in its procurement But, race-conscious programs are subject to legal challenge based on the equal protection clause in U.S. and state constitutions City enacted the SLDBE Program (fully operational in 2014) City certifies SLDBEs for the Program based on social and economic disadvantage, not just race and gender 7

8 Because of SLDBE Program, overall MBE/WBE utilization on City contracts exceeded share expected from availability ( ) 100% 80% MBE/WBE 60% 40% 47% 41% 20% 0% Utilization Availability 8

9 Disparities between City utilization and availability for some MBE/WBE groups ( ) Utilization Availability Disparity index African American-owned % % 115 Asian American-owned Hispanic American-owned Native American-owned Total MBE % % 104 WBE (white women-owned) Total MBE/WBE % % 116 Disparity index = Utilization/Availability multiplied by indicates parity 9

10 When SLDBE Program not applied, substantial disparities 7% MBE/WBE utilization for City goods procurements ( ) substantially below availability (21%) Even with Program, 11% utilization of African American-owned firms on City construction contracts substantially below availability (27%) 10

11 Retain and strengthen the City Program Continue to set contract goals for certified firms Change name to the Socially Disadvantaged Business Enterprise Program (SDBE), or similar title Strengthen eligibility requirements, including local area location Promote centralized, unified certification for local programs Employ new measures for firms directly bidding on City procurements Use of limited competition procurement methods for small purchases Further investment in capital and bonding programs New rules that allow billing in advance for mobilization Accelerated payment of primes and subs Reach out to underutilized businesses, especially to Asian Americanand Latino-owned firms Track participation on all City procurement and report progress 11

12 Next steps Attend a public meeting in March (see noladisparitystudy.com for more information) Send comments to Keen Independent study team: Study website: noladisparitystudy.com Study NOLADisparityStudy@keenindependent.com Study hotline: (504) Fax: (928) Mail: Keen Independent Research 100 Fillmore Street, 5 th Floor Denver, CO Public comments accepted through March 31 Keen Independent will prepare final report for the City after reviewing all comments 12

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