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Minority firms seek pay for HOPE VI work

D.C. Housing Authority tries to mediate dispute

(Published March 24, 2003)

By JOHN DeVAULT

Staff Writer

Payment delays of more than two months – in amounts up to $500,000 – are forcing subcontractors at the Henson Ridge public housing redevelopment in Congress Heights to lay off workers and borrow substantially in order to survive, according to Robert Green, president of the National Association of Minority Contractors’ D.C. chapter.

"This is a HOPE VI project, so there’s no excuse for these delays," said Green, naming the federal housing program that is financing much of the work on the $100 million project.

"The city should be looking out for these local contractors, not creating this situation where they could be put out of business," he said.

Green also accused the city of failing to ensure that local minority firms and workers are hired in substantial numbers at the site, where the city’s partners include developer Mid-City Urban and builder Beazer Homes.

Because Henson Ridge – rising on the site of two former public housing complexes near Alabama Avenue and Stanton Road SE and featuring both subsidized and market-rate housing – is largely funded through the federal HOPE VI program for rescuing distressed public housing tracts, contracts and jobs at the site must go to local and minority businesses "to the greatest extent feasible."

Green accused Beazer of bringing in laborers from suburban Virginia to work at the site, while turning local workers away. He also cited the case of a local minority-owned company that, he said, was promised a long-term contract but was summarily replaced by a bigger out-of-town company after working only a few months.

"They come in and hire a bunch of minorities to make their numbers look good, but then they push them to the side," he charged. "They use who they wanted to use in the first place."

Mid-City official Dan McCahan said the company would not answer questions about issues at Henson Ridge. Beazer officials did not respond to calls for comment.

Green provided The Common Denominator with a copy of a letter he has sent to the District’s inspector general, asking that financial dealings and hiring practices at Henson Ridge be investigated.

The inspector general recently released a report covering the first part of a continuing investigation of financial and contracting practices at the D.C. Housing Authority’s several HOPE VI sites. That report charged that the agency has failed to adequately oversee its multimillion dollar HOPE VI-related monies.

Green said an investigator from the inspector general’s office responded to his letter and indicated that the office would look into his complaints.

An official in the inspector general’s office last week acknowledged receiving Green’s letter but would neither confirm nor deny that an investigation is in progress.

In interviews with The Common Denominator, owners of several local minority-owned businesses backed up Green’s complaint that payment delays are hurting their companies.

Arrow Construction President Lorenzo Karate said late payments forced him to lay off seven of the company’s 10 plumbers.

Karate said his company waited for almost three months for its first payment for work at Henson Ridge. Arrow is currently owed more than $50,000, he said, and that bill is also more than two months overdue.

"I almost went broke," Karate said. He said that firing workers was the only way he could stay afloat.

"We’re a small company," he said. "We don’t have the big cash volume to keep operating for three months without getting paid."

General Manager William Custead of C&F Construction, which has been installing water and sewer mains at the site since construction started last October, said his company has also faced payment delays.

Custead said C&F recently got its first payment – a partial one, mostly covering work from 2002 – in early March, by which time the bill totaled more than $500,000.

"Ninety days is pushing ridiculous," he said. "We’re not a bank."

The company has had to borrow large amounts of money to keep operating, Custead said.

"When our suppliers threaten to cut us off, we need to borrow money to pay them and to cover payroll," he said.

Currently, C&F’s $125,000 bill for work at Henson Ridge is "six or seven weeks past due," Custead said.

"The HOPE VI program is supposed to revitalize the community and, hopefully, give local firms a chance to grow," he noted. "But you’ve got HUD, DCHA, the developers – all kinds of fingers in the pot."

An official at the federal Department of Housing and Urban Development (HUD), which distributes HOPE VI funds, said HUD officials hope to organize a meeting soon with representatives of the contractors and developers, as well as D.C. officials, in order to address the contractors’ complaints.

D.C. Housing Authority (DCHA) official Lawrence Dwyer said his agency might join with developer Mid-City Urban to create a $500,000 contingency fund to make sure payment backlogs don’t exceed 30 days. He said he expected Mid-City Urban to contribute $300,000 and DCHA $200,000.

Dwyer did not explain why a solution to the problem of late payments by Mid-City Urban to its subcontractors should include the expenditure of D.C. funds.

Other contractors faulted Mid-City Urban’s and Beazer’s minority hiring records.

George Rodgers Jr., an owner of Rodgers Brothers, a hauling and demolition firm, charged that Beazer unfairly removed his firm from the job and brought in an out-of-town, non-minority-owned firm to replace it.

Rodgers said that after working successfully with Beazer on the Oxon Creek housing project in the District, his company was asked by Beazer to supply a specially painted dumpster as a visual backdrop at the ceremonial Henson Ridge construction kick-off last August, at which Mayor Anthony A. Williams presided.

After that, Rodgers said, Beazer offered Rodgers Brothers the hauling contract for the Henson Ridge job. Rodgers said his company installed 10 dumpsters and hauled debris at the site from October until the end of last year.

But then, he said, dumpsters from another company, EAI of Clarksburg, Md., showed up at the site.

"They’re a massive company, a virtual monopoly" in the area, asserted Rodgers.

He said that an on-site Beazer official told him EAI had submitted a lower bid – and that he should call Beazer’s head office with Rodgers Brothers’ offer to try to meet EAI’s price. Rodgers said Beazer officials never responded to his calls.

He acknowledged that though he had worked under a written contract on the earlier Oxon Creek job, he had proceeded on the Henson Ridge work with only the promise of a formal contract.

Green also charged that Beazer and Mid-City are bringing in workers from outlying areas for cleaning and basic laboring jobs, instead of hiring from the community, as HOPE VI and Section 3 regulations envision.

The housing authority’s Section 3 program pamphlet says that the program was created "to ensure that the employment and other economic opportunities generated by federal financial assistance for housing and economic development shall, to the greatest extent feasible, be directed toward low and very low income persons, particularly toward those who are recipients of government assistance for housing."

"There are guys begging for jobs out here, and I’m saying to Mid-City to hire these guys – that’s what the dollars are for," Green said.

D.C. Housing Authority official Dwyer defended the rate of minority hiring at the site.

"The rules require contractors to aggressively hire from the Section 3 program, but not to take everybody," he said.

Still, he said, his agency’s Section 3 program has succeeded at placing numerous local minority hires at the site.

"We just referred 20 or so people in the past two weeks," he said.

Green reacted explosively to that claim.

"There’s no way there are 20 Section 3 workers at that site, unless they’re invisible," Green said. "The District has a terrible Section 3 program."

He pointed to the example of Harold Thomas, once a resident of the Frederick Douglass public housing project that formerly stood at the Henson Ridge site.

Thomas, who said he participated extensively in the community-involvement planning process for Henson Ridge, said Mid-City Urban officials promised him that his new Section 3-registered security business would get the job policing the Henson Ridge site.

"I asked if I could announce it at a Henson Ridge planning committee luncheon, and they said, ‘Absolutely, go ahead,’" Thomas recalled.

So, Thomas said, he told the gathered development team and community members that he expected to be able to hire several local residents as workers, as he said the deal envisioned.

Thomas said last week he also hoped to benefit. "That’s how I planned to buy a house in Henson Ridge," he said.

But, he said, the promised contract never materialized. Instead, he recently agreed to accept a no-benefits $15 per hour job as a security guard at the site.

He said buying a home at Henson Ridge is now out of his reach.

"Things don’t look too bright right now," Thomas said.

"I’m 62 years old. I was looking forward to having something to pass on to my family," he said.

Green said he holds the Williams administration ultimately responsible for what he said is a failure to hire local minority-owned firms and workers, and treat them fairly, at Henson Ridge.

"The mayor of Washington, D.C., is not looking after minority contractors," he charged. "You have developers who beat up on minority contractors, and the mayor doesn’t do anything."

Copyright 2003, The Common Denominator