Minority and women contractors stand to get $1.56 billion in contracts if the controversial Lincoln Yards — a project poised to reshape a portion of Chicago’s North Side — gets city approval.
Developer Sterling Bay has ambitious plans to turn 55 acres of the former industrial site along the Chicago River into a bustling community with thousands of housing units, retail and commerce. While Lincoln Yards is receiving criticism for being too dense, for being pushed too fast through City Hall and for pouring resources into a part of town that doesn’t need them, some are watching how the minority contracts will play out.
Today the community development commission vote is whether to designate the land a $900 million tax increment financing district. The total project cost is estimated at $6 billion. If the TIF gets city council approval, it requires 26 percent of the contracts go to certified minority-owned businesses and 6 percent to certified women-owned businesses, known as the MBE and WBE program. Those contracts wouldn’t be limited to construction — they could include everything from architects to pest control, from engineering to security businesses.
“We’re looking for this to be an opportunity to create great economic opportunities for minorities,” said Shelly Burke, director of community engagement and diversity compliance at Sterling Bay.
Sterling Bay said it has a broad platform around diversity and inclusion, including going beyond the required percentages for contracts with minority-owned and women-owned firms, engaging in workforce development and forming an advisory diversity council. Members of that group will be asked to help identify minority-owned and women-owned businesses and to monitor Sterling Bay’s progress.
Phillip Barreda is executive vice president of Chicago Minority Supplier Development Council and agreed to be on the Sterling Bay diversity council. The central question for him is: “How can we make sure we have our MBEs part of this program and make sure they have a strong supplier diversity program in their mix?”
He said he won’t accept excuses that qualified minority businesses couldn’t be found, a common refrain offered by developers to explain low participation rates of minority contractors.
“That’s the worst possible thing because there’s plenty of (minority-owned businesses) that can do the work they’re looking to do,” Barreda said.
The Chicago Urban League has engaged in early conversations with Sterling Bay and was said to join the diversity advisory council.
“We did not say yes. We actually requested to speak with them further to learn more about it,” said spokeswoman Calmetta Coleman.
But she said staffers are open to learning and discussing more given the Urban League’s advocacy around workforce development. Sterling Bay estimates 24,000 permanent jobs at Lincoln Yards plus 10,000 jobs a year for 10 years during construction.
“We know that the unemployment rates for African-Americans in Chicago is significantly higher than in the general population,” Coleman said. “And we know that includes whether they’re an entrepreneur or someone who is seeking a job as a laborer.”
The unemployment rate for black Chicagoans was an estimated 18.7 percent in 2017, the latest year available, according to data from the U.S. Census Bureau. That was more than double the citywide mark of 8.3 percent.
“When it comes to these opportunities, all you have to do is walk around the city and look at any construction site and you can see that there’s underrepresentation,” Coleman said.
Rachel Weber, an urban planning and policy professor at the University of Illinois at Chicago, said the minority contracting program has a long history in the city and others around the country as a way to spread the money around to businesses traditionally locked out.
But she said there’s a problem to look out for — front companies.
The city also has a long history of minority contracting scandals.
“Not actually being minority- or women-owned but putting the name of somebody up who’s a CEO who’s not really involved in the day-to-day activities,” Weber said.
Sterling Bay officials said they will monitor that. This large scale project falls under a mayoral executive order that requires the developer to show how they intend to do local hiring and meet a requirement that Chicago residents perform 50 percent of the hours worked.