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DAIEDUE

DAIEDUE

DAIEDUE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6/07 p:lCIRC/Date0ue.indd-p.1

 

THE COMMUNITY DEVELOPMENT ACT OF 197“-
AND THE POTENTIAL OF BLACK CAPITALISM

By Stephen A. Collins

A Pien B Paper

Submitted to
michigen Stete Univereity
.in.pertie1 fulfillment of the requirement-
tbr the degree of

Master in Urban Planning

school of Urben Pienning end
Lendaoepe Architecture

June 21. 1976

  
 

§
\

. . (Q
A géfiglflg

. 0* 55“.-

' 4

' e- an“
”9.

 

rux.lnnlineticn..11:e.
W

Roving spent prectioelly my entire life in en urben
settinso smitioelly Detroit. Hichigen'e 'Bleck Bottom.“
1 here. since reeching edulthood. developed e need. no you
eight eey e peeeion towerds developing end directing a:
intellectuel. politieel minutiae: enbitione towerde e
goel. ‘rhet goel. though et first glance may seem exceedingly
breed end general. though I think not. is to serve ee e
eetelyet. e tool. e positive force in the struggle for power.
weged by the powerless.

the powerless. who in most instencee. ere eyetuetioelly
disenfrenohieed due to no other criterie except the reoe end
or creed of their perente. the powerless. who ere locked
within ertificiel bounderiee by eoeiel institutiene thet
operete Imder e neg thet euppoeively signifies liberty.
equelity. end the pursuit of heppineee. nong oflxer things.
for ell. And this treveety is implemented under the euepieee
of free enterprise. end it. ecconpmying profit eotive
conscious. end for the pecifieetion of individuelietio
cencer like reciel heng-upe. Who ere the Powerless? they ere
the Elect. lndien. Letino’e. poor White. end the old. ell of
when ere America-ts.

It's no eccident thet the vest nejority of the powerless
reside in the deeeying inner cities of Amerioe. or thet their

i

rents ere growing repidly. however. perheps the feet thet we
ere geogrephioelly eonsolideted sen be used es en esset. en
operetionel bese. e point of politicel end ecomsieel enlight-
lent end cultiveticn. perhepe not. Might it be thet e streter
of dispereel of ghetto inheMtents would bring greeter results.
Perheps.‘ e eoebinetion of both epproeehes is eppliceble.‘
However. I feel thet the eppropriete stretegy depends upon the
situetion thet is being encountered. for eech is unique within
itself.

.surely the choice should be open to every citisen to
live merever he/ehe wishes. however. .we ell know thet this
isn’t true! the . powerless ere systeeetieelly denied eeeess ~
to employ-em courtesy of the reel estete esteblisheent end
finenciel institutions not to nention the hendy tools of loeel
governeents. i.e. soning reguletions. Is it possible thet
the powerless cen eoquire the eeens to crests eeploynent
opportunity within reeeh of their brethen? In looking et the
present plight of our cities it seems es though this epproech
is one of the few elternetives thet we still heve.

Inspiteof itell. eslenberkuponeeereeresen
urben plenner I find eyesif somewhet optieistio ebout the
future of the powerless. Perheps the do: thet I invision is
sorely e nirege. nenifestetions of my motionel desire to deel
with end eredioete the forces thet neintein end proliferete
the plight of the powerless. Or Just wbe it is e dey thet
is within reech. e de: when Americas won't celebrete while
their brothers go without.

ii

The 'fight" must teke piece on every front. within
government egeneies. universities. public schools. privete
schools. dey cere centers. the street corners. the politicel
erene. end the totelecononic system. If the “fight“ isn't
won the poets-less won't be the only losers. Anerice stends to.
win or lose depending on the ewehening of her someious. if
in feet she hes one!”

iii

TABLE OF CONTENTS

I. Introduction. e e e e e s e e e e e e e s

ll. (C)
(b)
IIIe (‘)
to)

conclusion. e e e e e e e e e s e e e e e e e e e e e

IV. Ben Black Capitelicn Relieve the Economic Crisis
at th. Innsr'City e e e e e e e e e s e e e e s e

concluding BOBCrkle e e e e e s s e e s e e e e e e e

Bibliogrlphy. e e e e e e e e s e e e e s e e e e e e

com-unity Development Act of l9?b
A Summary. e e e e e e e e e e e e e

Community Development in Prentice. .
Rehabilitation vs Renewel. . . . . .
Case Studies of Proms Designed to

Help

0

Solve the Problems of Bleek end Other Hinority
Contractors. e e e e e e s s e e e e e e e e s

Th. Oeklend Californie.hodsl. e e e e e e e e e e e e e

0

[Pas-

la
15
21

22

35
26

10 W
This pepsr is two fold in focus. first i ’will look et the

Con-unity Develop-ent Act of 19?“. Title I specificelly. end
proceed to. present the direction in which this new lew hes
teken the mmunity development mu. 1 shell ettsupt to
investigete the degree of opportunity the not introduces for
einority contractors. presently end 'potentielly. pointing out
the obstecles end berriers thet Blech ecntrectore fees. In
the second helf of the peper I shell eddress the theoretieel
question of whether 'Blech cepitelise." of which the nicer
contrector is e newbsr of. cen in feet provide the inner-sit:
in gsnsnl end the "Ohettc" specifioelly with the econoeic.
hence. the politieel bees thet is so deeperetely needed.

while orgsnisine this peper I found inforeetion concerning
the theoreticel upset of this pepsr feirly plentiful end well
«mud. Reports of verious eeononic develop-eat stretegies
end progress cerried out in Wetts. Detroit. elevelsnd. hes-la.
end other highly Bleck end einority populeted erees ere well
documented. '

0n the other hend documented infomtion concerning the
rsleticnship between minority contrectors end projects fund“
by the CD Act of 1971». so well es promo under Urbsn Renewel
wss presticelly non-existent for the former end very difficult
for the letter. however. generel intonation concerning
problees feced by Blech end other einority contrectors wee
evsileble end through personsl interviews with lensing.

1

lichigsn city cfficiels I wee eble to gein sons velueble
insight in this eree. I'm-thereon. if nothing else cones free
this effort it hes become exceedingly epperent thet ressereh
concerning the reletionship between minority contrectcrs end
city projects deserve nuch sore ettention. Sons suggested
erees of sndssvor ere.

l. Develop-eat of profiles thet will eddress the leek
of cooperetion of finenoiel institutions with city effirIstive
ecticn program involving einority eontrectors.

2. it whet point cen e contrect be broken down so thet
eincrity ccntrsetors sen compete in city contrects without
iecperdising the completion of the Job. within the scheduled
ties period.

3. nut is the eultiplier effect within the inner city
seem-y when einority contrectors ere employed.

these ere only e few erees thet desperetely need ettention.
l'e positive thet nsny more funduentel end besie questions
deeend ettention. No doubt. this peper is not even the tip
of we iceberg"!

3

II. (I) W AM

the ccmunity Development Act of l97t is one of e long
list of rodersl logisleticn eieed et doeling with the ever
increesing decoy of our cities. It is the logisleticn thet
ssnctions s new epproech. on the bohelf of the Pederel govern.
nont. en spprcech thet focuses on piecing the control of the
spending of fedorelly elloceted funds in the hands of lccel
offioiels. with the expressed stipuletions thet those shell
be spent to improve the living enviroment for persons of low-
md soderets-incoeo.

signed into lew in mid-1975. the housing end conunity
Development Act signels s redicelly new epproech to the renewsl
of urbm erees in this country. Essentielly. the Act eboliehes
eost of RUD'o great progrns for the physioel dmlopeont of
cities. including urben renowel. the oldest end biggest of
fedorel oetogcrisel grmt-in-eid progress. In its piece.
the Act croetos e ccnsolidetod progron of fodorel essistsnce.
increase the enount of urten development subsidies flowing
into eommitios. end significontly expsnds the power of
Ieycrs end other locel chief oeoeutives et the expense of
fedorsl officiels.

'ritle I of the Act provides funding euthoriseticns of
sore than $11.9 billion for fiscel yeers 197$. l976. end l977.
institutes e completely new eechenise for commity develop-
wont funding. needs public housing lews. initietos s new
lens housing psogrse. end charges eortgego credit progress
to note it oeoior for nodoreto-end-siddlo income feeilies to

«if,

I.

buy house during periods of tight credit.“ (bong other
things. edditionel simificant titles in the Act cover '
euthorisstion of HUD gusrentocs to steto housing egenoios.
continuetion of ”Ni“ planning essistunco. end increased
oephesis on urben homesteeding programs. however. the focus
of this paper is on Title I. end more pertioulerly the 0D
provisionswprobebly the single-nest importent section of the
new legisletion.)

The advent of community dmlopeent block greats sorts
both the end of one ere-wherestsrised by fodsrel essistmce
to cities through specislisod grentsoin-eid. end stoning
best to the urben rsnonl progru started 25 yoers ego-and
the beginning of en importent chellonge to locel commitios.

CD is now the bell genie. The epproech ocnteinod in this
197! logisletion wee to consolideto nine previous ostegories
of commity development promo-«urban ronowsl. wetor end
user grents. model cities. rehabilitation loms. public
fecility loans. open specs lend. neighborhood feoilitios.
urbsn beeutificetion. end historic preservetion progrensoo
into e lsrgs nocmmt for flexible use by governors eoyore.
end county officiels. Oloerly this new eppreeoh gives
mitios long needed letitudo in coping with rmowel end
rohebilitetion develop-lent problems .

 

130ml 0! Housing. we 32 "Os 9. Oct. 31. 1975s

5

u. (b) WW
Whet’s been hsppening. country-side. es e result of the

new codaunity development program thet wee euthoriesd in the
housing end Comunity Development Act of 19716?

NLHRO hes some ensure to thet question es the result of
e special monitoring“ project it has been conducting. the
first report was issued October 2nd. 1975. The four nejor
conclusions of the report erel

'l.-Iocelities have found little feult with the
sdsinistretion of the progree by HUD during the epplicetion
end plenning stege but eppeer to desire e greeter role for sun
in the provision of technicel essistenee in the inpleeenteticn
stege. Fewer locelitiss desire e HUD role in the eveluetion.
of eetivities end the epprovel or dieepprovel of some or ell
steps in proposed progrems.

2.-'1'he seJor problee eree co fer in the ieplesenteticn
of CD ectivities hes been confomh'xg with the enriromentel
revise procedures. which hevc burdened local staffs in sen:
locelities.

Lathes-e appears to be some effect on first-weer progrus
end on three yeer plens es s consequence of the yeer-bmeer
funding verietions thet comunities ere nos experiencing es
e trensition to e fomule ellooetion systee. especielly for
holdchemless loeeiitieo. Severel locelitiee eppeer to hm
stepped up some of the more costly activities during the higher
initiel funding yeere. while severel ’phececin' locelities
thet will experience increesed funding later on heve deferred

some estivities. fhose thet stetsd there see 'no effect“
indicetsd it see beceuse they hed not teken into consideretion
more then s three-year period. Whether or not the yeer-by-
yeer*fornule‘verietions influence the ehoics of estivities
rether then locel “needs“ in eny one yeer should be subject
to intensive reseerehfl'z
b.9ofhe most significent conclusiono-in regerds to the
theme of this peper-ois thet the on block grent progree. in
the first yeer. et leest. eppeere to be oriented toserd the
'eeintenence end improvement of the physicel hnfreetructure
end the existing housing stock. the use of block grent funds
es e.cetelyst for significent.nes'construstion (such es
scenerciel end industriel renesel ectivities) is lieited.
ensept where urban renewel projects ere being completed.
Severel feotors possibly ecoount for'thie trends
e) A depressed reel estete industry: deeend for
sites to build commerciel or industriel fesilities Mn
urben erees is probebly setisfied by undisposed of lend
in existing urben reneeel projectel
b) Lecel ettenpts to eeke block grents funds go es
fer es possible hes led some communities eeey free erees
or'ectivities thet sould result in.lerge relccetion
expenses.
e) A probeble need to cetch up on public sorts end

 

2Journel of Housing. V. 32 No. 9e NOV. 30- 1975.

7

site ispromsnts. es sell es their high visibility end
ismsdiecy. hes possibly resulted in significent ectivity
of this type. '

d) An epperent sidespreed feeling thet the rehebilite-
tion end eeintenenee of the existing housing stock end
preserveticn of neighborhoods is en effective sethod of
providing e decent hose end euiteble ‘ living snviroment.
in light of the stegnetion in the hooebuilding industry.
,risim energy end eons'u'uetion costs. end other feetore.

Having gotten beck the results of the first yeers'
operetion the question erises. “will the Rise! end other
sinority contrectors mm fros um eupheeie on mama-
tion insteed of new construction?" VIhet see the degree of
involvement of sinority contrectors in reletionship to projects
fundsdundsrurbenrensselfmding? whetsereendstillere
the problems of sinority contrectors in securing movement
contrects? Whet hes been done to help sinorities elleviete
these berriers? Hos successful heve these endeevors been?

I shell ettsspt to meser mess questions in the next section.

8

III. (e) W
In previous years the emphesis of inner-city redevelopment.

under the suspieee of Men Russel. wee pissed on site
cleersnce end lerge scele new construction. sleek contrectcrs
were notebly ebsent from the scene. so fer es obteining city ,
contreots were concerned. m some for the ebsence of
sinority contractors ere historicel end focus on tso extresely
isportsnt elements of the construction industry. expertise end
finenclnz. .» ,_

Bloch contrectors heve been the victiss of exolusionery
prectices of the construction oreft unions. shich heve. in
file pest. denied the: entry into the construction tredes.
fodey. beceues of their leek of experience end quelificetions.
too seny Bleok contrectore were in the pest. end ere still
todu. unprepered to perticipete in the benefits which flowed
free the construction industry during the 1960's end 70's.
“the 1960 level of $105 billion annually in nee construction.
seintenenoe. end repeirs hes rose to $180 billion in 1973. of
ehich e lerge shere is government projects."3

these exclusionery prectices hsve sede it elsost
ispossible for Blesh workers to sequire construction skills
M4 to enter the conetmction business through the norlel
ehml of gredueting m- skilled worker end forum a...
nell scele contresting end then. with the eccusuletion of
experience end cepitel. into lerger end sore cosplex work.

 

3U. 8. lndustriel outlook. 1970. Base. Deperhent of Comoros.

9

It hes also sede it impossible for Black contractors to heve
evsileble to then the quantities of skilled sorters needed for
lerge enterprises of the sise conducive to bidding for urben
m projects. When to this pettern is edded leek of
access to finencing. the result isen elncst total inability
of Block contrectors to quelify for surety bonds needed for
perticipetion in soot FHA insured projects end on public
construction sort. “A study of seven sejor cities by the
Netionel Business Leegue indicated thet 6? per cent of ell
sinority contractors heve been uneble to obtein e single
surety boner“

thus. also]: contrectors heve found the-selves in e hind of
circuler trap where their leek of experience in bonded work.
the nsture of projects mder urben renesel. sekes it virtuelly
ispossible to obtein surety bonds for construction work
resuiring such bonds and thereby gein experime on this type
of sort. even though in some cease they here the ability to
perfors.

Two ectuel ceses illuminete the nature of the probles.
”In 1967. despite the offer of the Osmond Snell Business
Development Center to‘put up the sum necessery to guerentee
perfom by e sinority subcontractor uneble to obtein e
surety bond. the. euboontreetor she hed subsitted the lowest
bid wee rejected for the sort bythe genersl contrsstor on en
oehlend public school construction project. when esked to

 

-:~.

I'ltetionel Business heegueoo'Prelisinery Anelysis of also}:
gent-{eggs fros seven Chloe." (Unpublished sessrendus)
pr s

10

intervene. the Oakland Board of Education refused to take
action. citing a provision of California law which gives a
prime contractor the discretion to reject a bid from a sub.
contractor unable to furnish a bond from an admitted surety. '5 .
The else problem faced a Black constructing company which had
received a contract to build a $587.000 multipurpose health
center in Watts for the University of Southern California. The
card was predicated upon the contractor's securing a surety
bond. After a dam rejections from surety companies. the
University was finally persuaded to permit the contractor to
proceed without a bond. It did so. but only after threats were
sede to burn down any building not constmctod by a Black
contractor. The health center was successfully completed by
the Black contracting firm according to contract and is
presently in operation.

But in all too many cases the minority firm never receives
the opportunity to perform and often. even if given the
opportunity does not have the experience or financial capacity
toengegeinlerge-scelework. Anduptothispointendtise
the major thrust of our national housing program has been to
rebuild ghetto areas. The need for qualified Black contractors
to work in these areas is greater then ever. however. we find
that there are very few Black contractors who are eligible.
'There are approximately 870.000 general and specialty
contractors in the United states. In 30 states eomprising l0?

 

50overment Code Section #108.

11

cities for which information on Black contractors is available
it is estimated that no more than l.500~2.000 Black contractors
are in business. host of them are small scale enterprises
uploying four workers or less. with an average construction
contract value of $20,000.“

however. in taking into cons ideration the NLHRO monitoring
report on the use of CD funds. perhaps the plight of Black
contractors has tehan on a new look?

is I mentioned earlier. according to KARI-lo. the CD block
grant program appears to be oriented towards maintenance and
improvement of the phys icel infrastructure and the existing
housing stock. Also. it's also reported that some localities
appear to have stepped up seas of the more costly activities
that were initiated under the urban Renewal and nodal Cities
Progress. “Seventy-one per cent of the localities surveyed
out of 150 emphasised rehabilitation activities. Twentybnine
per cent of the localities emphasised the completion of urban
renewal projects.”

NAHRO reports that seat of the rehabilitation progress
have involved grants and loans to individual households.
The significance of these findings for minority contractors is
that they must make their bids to individual households who
are. of course. under no obligation to abide by affirmative
action Inmates! In the instances where the completion of

 

6hortune hagaeina. December l970-'The Unchecked Power of the
Building Trades'o-Thosas 0. fiction.

7’0““ 0’ ”00.1318. 'e 32 No. 9. Ofle 31. 197’s

12

Urban Renewal projects are being perfomed the Black contractor
must still find a way to deal with the obstacles mentioned
earlier.

In interviews with Lansing. Nichigan officials. it was
expressed that one way of ”cutting” Black and other minority
contractors in on the “action" is to break contracts down.
whenever possible. so that bonding is minimal (less than
$15,000). However. a problem arises in that if contracts are
divided in this manner there is a possibility that the quality
of the total performance of the contract will suffer. supposively
due to poor coordination of the contractors.

Thus. the plight of Black and other minority contracts is
only marginally improved. The Black contractor has a larger
marginal pool of potential clientele to render services to.
Unfortunately. more often than not Jobs that these contractors
are able to secure are scattered. This fact raises the cost
of energy for the contractor which depletes his already
ainiaal profits... It was expressed by one Iming official
that if the city was granted the autlwrity to take in bids for
deeimated areas of the city slated for rehabilitation and
code mfomment ninority contractors could then bid for an
area instead of approaching individual households. This say
serve the purpose of helping the Black contractor. however.
he quickly pointed out. and I agreed. that the political ‘
feasibility of this approach was slim and none.

more has been scattered att-pts to assist Blast
contractors in dealing with the dilsmas that they a... In
the following section I shall sunrise these pmgrus.

13

In. (In) W

.. a... . . h. .p.. U .... . ..-~..

it is soaewhat obvious that Commity Development Act
of 197% as it is being implemented now. offers no real break
through for Black and other minority contractors. Relief for
Black contractors. fram the obstacles that disallow than from
securing contracts. will have to come from improvements within
the minority construction companies. one of the scat
noteworthy efforts has been that of the Ford foundation.

to help solve the problem that Black and other ainority
contrac‘brs face. the Ford Pomdation. in May. 1968. initiated
discussions with surety companies in an effort to obtain their
assistance in developing a progrn to qualify minority
contractors for surety bonds.

i'he Foundation viewed the probles as one of devising a
prom to bring minority contractors up to a standard that
would penit than to engage competitively in the quest for
business. and qualify in the ordinary course for surety bonds.

contacts were aade with the Surety Association of America.
rhe Aaerioan Insurance Association. and with three major surety
companisso i‘he Travelers Indesmity Company. the Hartford '
Insin'ance Group. and The Aetna casualty and surety Company.
these companies expressed a willingness to cooperate in the
design of a program to develop increased Black contractors'
bonding capacity. they made it clear. however. that while
desiring to render every assistance. they would not bend a
contractor unless they felt reasonably certain that the

 

lb

contractor had the experience. organisational and financial
capacity to undertake and satisfactorily complete the project.
'In their view. the construction business was risky even under
the best of circumstances-with relatively high rate of failure.-
without encouraging inexperienced or undercapitalised
contractors to engage in in."8

they also believed that the problem facing minority
contractors. in addition to the one of insufficient financial
resources. was inexperience and lack~ of managerial capacity.
which could not be solved merely by making capital available.
this point of view. as expressed by professional surety men.
was succinctly stated in a position paper entitled. “the
Surety Industry md Minority Group Contractors.“ prepared by
the American Insurance Association in October. 1968.

'...Absoluts candor compels us to point out that the

chief and recurring difficulty which most mimrity

group contractors snemmter in applying for surety

bonds arises from their marked deficiencies in

experience. management and other skills in running

contraction Jobs of more than limited scope.

...we believe that it will serve no useful purpose.
eeonoaic or sociological. for surety companies to

issue contract bonds indiscriminately to all applicants.
qualified or not...“ will not only anger omere left

 

al'ord roundation list report on problems of minority
contractors. 1969e

15

with unfinished projects. but will also inflict a
mortal wound on the performmce reputation of

W.”

In addition to providing an understanding of the industry
viewpoints. these contacts with the surety industry have led
to the establisimmt of an informal channel for looking into
complaints by minority contractors who have been rejected for
sunty bonds. In one case. inquiry to a surety company which
had allegedly rejected the application of a New Orleans
contracting firm for a bond for a $2,700,000 nu Proiect.
revealed that the application had never been forwarded by the
local surety agent to the company. When made aware of this.
the company suggested the name of another local agent to
passes the application. The contractor had substantial
experience. a net worth in excess of $500,000 and an irrevocable
letter of credit from a local bank for $300.000. i'he bond was
written.

The Oakland Galifcrnia nodal

A threw-year Oakland demonstration progr. was sponsored
by the, (lateral and Specialty Contractors Association of.
Oakland. California in 1969. an organisation of some sixty
minority general and specialty contractors in cooperation
with the Oakland Small. Business Development Center. the
Management Council for Bay Area Employment Opportunity and
the Al-eda county Building and construction trades Oouncil.

 

9:: al-

16

The development of the progran was assisted by a
feasibility study conducted by Kaiser mineering and was
further refined as the result of processing a test case with
the cooperating sen Francisco surety company representatives.
It called for the formation of a Contractor’s Assistance Board
to supervise the operation of a supportive assistance progreu
for minority contractors and to engage an appropriate
professional staff and consultants necessary to service the
assistance progras. The pilot project had four elements:

(1) The organisation of general and specialty contractors
in the community into a trade association through which they
could be reached and aided. At the sane time the association
serves as a conduit for the dissemination of infomtion to
the contractors about progrus being developed to assist them.
and as an organisational vehicle for aenbership participation
in these programs. it plays a major role in:

”seeking out contract opportunities.

«referriu opportunities to eligible nesbers.

”cataloging the skills and capabilities of its subarea

msharing coal-on probless and providing assistance for

solutions.

”securing federal and other funds for educational and

training progress:

«bringing together consortia to perform contracts beyond

the unaided skills and abilities of a single neuberp
ooccntacting and negotiating with various goverxlsent
agencies about construction contract opportunities.

1?

mrepresenting the various interests of the contractors
t in the contractor assistance program and with other
construction industry trade associations.

The constructive roles which could be played are limitless.

(2) The provision of technical assistance at the level of

general instruction and at the level of supervising the perform-
ance of s particular job and. if necessary. being prepared to
actually take over its operation. This has been accomplished
through the establishment of a Contractor's Assistance Board
composed of minority contractor representatives and members
dram from the business and financial commity experienced in
the problems of the construction industry. Serving on the
board. in addition to representatives of the minority
contractors trade association. were: ‘

«a business executive who was the Director of a non-
profit organisation to promote economic opportunities
for minorities in the San Francisco Bay area.

“senior construction loan officer from the Bank of
American

”senior construction viceopresident of Kaiser Engineering.

"director of Oakland Small Business Development center.
Inca ‘

«the Business Representative of the Alueda County
Building and Construction Trades Council.

massistant Secretary of the Carpmters Bey Counties
District Council.

18

«Executive Director of the human Rights Commission in
San Francisco.

(3) The provision of adequate financing so that the
contractor has available a ready credit source to permit the
job to be properly financed and to enable him to have the
liquidity and 'quick assets“ which a surety company would
require for bonding. In a now-bonded job the sue cash
requirements would exist to insure that a proper flow of money
on the job would be available. This financim was supplied in
Oakland by a grant of funds to be loaned to the contractors on
a basis subordinate to the sureties.

(‘0) Through it paid expert staff of accountants. cost
estimators. construction specialist. its ability to engage
first rank consultants and the skills of its board members.
the Contractors Assistance Board can provide assistance to a
contractor on a particular job in.

«accounting and record keeping.

«cost estimating.

«locating proper subcontractors and skilled labor.

«preparing and subunitting bids.

«organising the job site and supervising the job.

«determining the cash flow requirements of the job.

«administering job me. through a blocked account.

«establishing proper relationships with trade unions

and government agencies concerned with the job.

«finding and hiring proper skilled foreman. supervisors.

and craftsmen.

l9

«insuring that job proceeds are properly received and
applied to the job. etc.

In short. the project aimed to help in the performmce
of every conceivable function that could be required for a-
successful job. In its role as the supplier of sssletmce.
the board also served to screen out obviously ”unsuited"
contractors and attempts to guide contractors towards jobs
within their aided capacity and which sill permit ”reasonable‘
and orderly growth.

The Board also is constituted in a maruner that sill
generate confidence on the part of surety companies that might
bond my of the contractors. This was done by assuring that
proper business management and experience sill be available
to assist the contractor in carrying out the job. which is
important if the contrschrs are to be helped in performing
bonded work. The Oakland project was fmded by the Ford
Foundation (75%) and the Economic Development Administration
of the Department of Cameras for the strengthening and support
of the General end Specialty Contractors Association. the '
minority contractors trade association.

within six months after operations begun the Oakland
program loaned or counted to contractsrs $ll0.000. which
aided in securing construction work valued at $1.5 million«
most of which involved bonded sort and none of which would
have been possible without the assistance provided by the
bonding program. Some of the other «complishssnts of the

20

project include .

«obtaining a bond on a $250,000 contract for a general
contractor whose previous largest bond had been $80,000.

«obtaining a bond on an $80,000 job for an electrical
subcontractor who had never been bonded before.

«assisting eight contractors who had never bid on public
work before. to obtain bonds and submit bids (these
contractors having been shown how to proceed are now
bidding on their om without assistance).

«arrangements were made to have contractors qualified
to bid on local university construction and to receive
notice of prospective work. and

«lines of communications have been opened with local
surety company representatives which have resulted in
bonding acceptance on every application submitted by
a contractor who has used the facilities of the project
to develop a set of books and records and a current
financial statement.

On the basis of the encouraging signs from the Oakland
project and the positive response from the Surety Industry
regarding the approach to the approach to the problems of
Black and other minority contractors. the Ford Foundation has
initiated similar projects in three other cities.“ Cleveland.
Boston. and New Tort. they have met with similar degrees of
involvement by both the construction industry and the
financial establishment accompanied with the same degree of

21

Conclusion

It is obvious that the construction business is very
complemed and the emergence of the Community Development Act
of 19'”. by its self will have no great positive impact on
Black constructionenterprises. however. if efforts like the
Oakland project can become commonplace there is justifiable
cause for optimism. Unfortunately. it is unrealistic to
believe thatprivate enterprise will carry the ball for the
whole game. Further improvement in the area of construction.
demands a greater commitment by federal. state. and local
gevement. The Oakland project clearly points out that it is
one thing for government to state emphatically that minority
business shall be used in the reconstruction of the inner~city.
whenever possible. however. it's quite another ball gne when
large contracts. in a high risk business such as construction.
which calls for the interaction and cooperation of profit
conscious institutions. such as banks and surety companies.
are involved. especially in cases involving Black contractors
who sometimes lack funds md experience. Perhaps the Small
Businessmen Administration can serve. as well as the Department
of Commerce. as a leading force towards creating more Oakland
Models. At any rate this is one area where the “fight“ must
be carried on if the economic well being of the powerless is
to be achieved.

22

 

Implicit in the first half of this paper was the idea
that alleviating the barriers that confront Black contractors
specifically and Black enterprises in general can be the spring
board to economical and political prosperity for the inner
city" this belief in ‘Black Capitalism“. “Black entrepreneur-
ship“. 'compensatory capitalism'. end the like have been the
vehicles that supposively are to bring instant economic and
political viability to the “ghetto". '

These approaches all have one thing in couch-om effort
to increase economic capability and the financial resources
of the Black residents and other deprived populaces of the
urban areas. This is seen as a partial solution to the
recurring problems of the ghetto.

i'he weaness in this approach. however. is that it attacks
basically on a portion of the problem. Economic development
of the ghetto is desirable and laudable. But it must be
tied into a network of infrastructures and super~structures
which makes the development elements a productive function.
rather than merely a distributive function. Black economic
development must be tied into the main economic system of the
nation. or it will be meaningless. the development of manage-
ment skills. the development of ccpital~accumulating
institutions. the development of markets-wall of these are
items of great importance. but they achieve their importance
only insofar as they become part of an entire economic

23

system~i.e. insofar as they contribute to the economic
development and growth of the ghetto.

If objectives are limited merely to placing a few Black
men in business or to improving or slightly expanding the
business of those Black persons who already have businesses.
then the obJectives are too limited to achieve the goal of
making the inner city viable living environments. No less a
goal can be defined than that of a realistic commitment 'to
empowering the ghetto masses to grow selfvsufficiency through
self-directed growth. creative changes. and increased product-
ivity. is so defined. it then becomes possible to see that
the goal cannot be achieved unless the piecemeal purely
sociological cosmetic approaches are discarded. at least
inanuch as they cannot address the economic aspect of ghetto
problems.

The weakness in most ghetto economic development “plans“.
is that they are piecemeal approaches towards solving only a
part of the problem. They fail to come to grips with such
total problems of restructuring of the economy as the following:

mu’l‘ransferring ownership from absentee owners to local

minority owners in an orderly manner. thereby retaining
the economic input within the comunities. Item:

‘A recent report shows that 82 per cent of the business
volume in Harlem is done by white non-residente'tm

2“

“Developing an overall economic plan or framework through
which the community can participate in the planning
and systematic development of the community. while
leaving the individual business development in the
hands of “Ghetto stock holders“ or individual
entrepreneurs:

«Diversifying. strengthening. and espanding the economic

‘ base of the ghetto so that it can compete in the wider
economic mainstream. and

“Increasing the "Ghetto National Product“ (CNP) by
increasing ghetto owned industries that produce. as
opposed to businesses that merely distribute 'foreign“

goods and services.

Pull employment is a desired goal and must be vigorously
pursued. but it alone will not insure a healthy. viable.
minority business community. there was Black full employment
on the plantation. Yet it insured only the growth of the
white owner! flew industry is needed in the putts. Manpower
training is vital. Discrimination. as American as apple pie.
must come to a halt. now. But alone those are not the true
routes to economic growth.

For without ownership and control of production .and
distribution. employment means little. the Black man; remains
a straight man for the flow of money through him directly
back into the white comunity. the minority business. ‘
eommunity must be helped to diversify and develop its capacity

I
o

 

 

25

to own and m the economic mechanisms. to retain the
money once it is earned. and to circulate the money within the

comun ity.

W
the plight of the Black contractor is in more cases than

not typical of the dilema that all‘aspiring Black businessmen
must encounter. There's no doubt that America has the needed
resource to undo the injustices that serve to negate Black and
other minorities right to a quality life. the Oakland project
shows what can be accomplished. On a broader contest the
omnm. Harlem Commonwealth council. ete.. show what
positive programs can accomplish. In relating back to my
opening personal views. 'm can win the “fight" if she
has a conscious. she certainly has the know how and the
resources.“ One need but look at Japan and west Germany to
see American know how in helping to redevelop foreign
countries. li‘he ghetto’s of America are in need of that same
assistance.

m M

26

Bibliographic

Allen. Louis L. ”Making Capitalism Work in the Ghettos.“
Harvard Business Review'b7. 3 (May 1969).

Altman. Edward. “Financial Ratios. Biserim t-Analysis
and the Prediction of’Corporate Bankrupfi Journal of
FWO. 23. 1. (S‘ptmm 1968)... . -. 1.
%&_“..

Becker. Cary. the Economics of’Disorimination. Chicago.
University of Chicago Press. 1971.

Black Enterprise. (January 1973).
Black Enterprise. (October 1972).

Boone. Bernard H. and James E. ugrd. ”the Cons of Black
Capitalism.“ Business Horiscns 12. 5 (October'l969).

Carmichael. Stokely and Charles Hamilton. Black Power
the Politics of Liberation in.America. New York:
Random.flouse. 196?.

ushersie Robert B. 'Vitalise Black Enterprise. Harvard
Bus ss Reviowib6 (September 1972).

“How to even the Odds“ the Saturday Review 52. an
(August 23. 1969).

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