The Black Tax

City’s Black contractor numbers still too low, Council’s Black Caucus says

Chicago paid $763 million to prime contractors through July 31, but only 11% — $82 million — went to firms owned by African Americans. Hispanics fared better, at $109 million, or 14%. Asian Americans, Chicago’s fastest-growing ethnic group, got a 7% piece of the contracting pie.
By Fran Spielman
Oct 12, 2022, 2:58pm CDT



Mayor Lori Lightfoot’s administration paid $763 million to prime contractors through July 31 of this year, but only 11% of that total — $82 million — went to companies owned by African-Americans.

Hispanics fared better. Their share was $109 million or 14% of the citywide total. Asian Americans, Chicago’s fastest-growing ethnic group, got a 7% piece of the contracting pie or $51 million. Non-minority firms controlled by women got 4%, or $34 million.

The numbers were numbingly familiar to African American alderpersons, who have been railing for decades about the paltry contracting numbers for Black contractors.

No matter how much outreach the city claims to do and how many programs are created to speed certification, divide contracts into smaller bites and pay more promptly, the numbers seem stuck in the mud, the Council’s Black Caucus members said.

With Chief Procurement Officer Aileen Velasquez on the hot seat at City Council budget hearings, Ald. Jason Ervin (28th), chairman of the Council’s Black Caucus, turned up the heat.

“We’re hovering at literally, almost at single-digits,” Ervin said. “For a city with a population of our size of African Americans, those two things don’t” mesh.

Velasquez chose to focus on the 36% share of contracts that went to the entire universe of minority- and women-owned businesses.

“It’s actually a pretty good number,” she said.

She acknowledged African-American participation in construction is “not as high as we would like it to be.”

But she said she has created an “Office of Contracting Equity” to tackle “several challenges,” none of them new.

“Insurance, bonding, access to capital and prompt payment are issues that we need to tackle. We’re very much aware of that. ... We’re clear that we need to do better and we’re committed to doing better,” Velasquez said.

“How can we remove those barriers? Whether it’s … making sure we’re not awarding to one vendor, but multiple vendors with smaller pieces of the pie so that other small vendors can participate and hopefully having those vendors be minority vendors. But also looking at the other issue: the payment, the insurance. Are those requirements in line with the scope of work? All that is being reviewed.”

Ervin essentially said that talk is cheap.

“We’ve heard for years, ‘I’m gonna. I’m gonna. I’m gonna.’ But we’re still at a point where we’re less than” 12%, Ervin said.

“It’s a $16 billion concern here. The numbers that we speak of just seem to be paltry in relation to our proportionality here,” he said.

In the 2020 census, the Latino population grew to become the largest racial or ethnic group in Chicago, making up about 30% of the Chicago population.

Chicago’s Black population decreased 9.7%, however, in that same period, according to the census. Black residents now make up nearly 29% of the city’s population.

Ald. Gilbert Villegas (36th), chairman of the Hispanic Caucus, said he has a still-pending ordinance that would require the city to pay 1% monthly interest to contractors with invoices that remain unpaid after 90 days. The state has a similar program.

“It’s wrong that ... they’re not being paid in a timely fashion. They’re having to pay lines of credit in order to sustain themselves,” Villegas said.

Retiring Ald. Leslie Hairston (5th) homed in on the “relatively small number” of 109 minority business enterprise certifications approved through July 31.

Hairston was not appeased when Velasquez told her some of the applications for certification are “still pending” and require “additional information” from the vendor.

“Are those the ones where you accuse the Black vendors of being a cover for somebody? Would those be the ones that took like four years to do?” Hairston asked.

“This is why it is so concerning when I’m looking at these African American numbers going down. I’ve been here for two decades and this is almost back to where we were 20 years ago. … And every year, someone sits in that chair and tells us that they’re doing more. And now, I see what you have added … I’m gonna call it the `Black tax,’” she said, referring to a $250 application fee for minority business enterprise certifications.

“We keep nickel-and-diming people and we don’t have anything to show for it.”

Velasquez assured Hairston the $250 application fee applies to all contractors — not just to minority vendors. And there is “no longer a renewal process or fee” every five years, she said.

Dowell said that 109 certifications generated just $27,000 for the city.

“It’s nothing. Something that, I’m sure, the city could absorb,” the chairwoman said.

Velasquez said she would “look at the fee structure and see if that’s something that we can address and make a change to that.”

The stagnant Black contracting numbers were particularly surprising to many council members considering how many programs, incentives and outreach programs the city has created over the years aimed at sharing the wealth, building capacity and eliminating longstanding impediments to minority contracting.

Under former Mayor Rahm Emanuel, there were no fewer than 16 incentive programs — so many that then-Chief Procurement Officer Jamie Rhee developed a new guide book to help contractors keep track of them all.

In Chicago government, everything is about race. We really need colorblind leadership.  Then and only then, will we have equity.