Mayor Lori Lightfoot’s City Council floor leader said Thursday he wants to raise or remove caps on gross income and personal net worth that have forced construction firms owned by women and people of color out of Chicago’s set-aside program.
Companies are now forced to “graduate” from the set-aside program when their average gross receipts exceed $33 million over the previous three fiscal years and when the owner’s personal net worth tops $2.4 million.
But Ald. Gilbert Villegas (36th) branded those caps unrealistically low at a time when a $30 billion bonanza of construction contracts is coming down the pike from mega-projects like Lincoln Yards and “the 78” and public projects like a Chicago casino, O’Hare Airport expansion and the state capital plan.
“Just when we’re having minority and women owned firms that have capacity, we’re gonna be kicking them out of the program. I don’t think that’s the right thing to do,” he said.
Villegas noted that the state of California has no caps and awarded “north of $20 billion” worth of business to minority firms last year. In capless Miami, minorities and women got $4.1 billion.
“In Chicago, we have limits and thresholds and we only did $680 million…The barrier is the thresholds that we’ve put in place,” he said.
Villegas chairs the City Council’s Committee on Economic and Capital Development.
He plans to hold hearing to determine what the new limits on personal net worth and gross income should be — or whether there should be any limits at all.
In 2012, the city initiated a “Phased Graduation Program” that allows “established” minority contractors that have exceeded the program’s size standards to “gradually exit” over a three-year period.
During that time, companies get a 75% credit the first year, 50% in year two, and 25% in year three. This utilization rate applies to the life of the contract.
Villegas was not appeased.
“But we all know that prime and general contractors are not gonna utilize MBE’s unless they’re getting 100 percent of the credit. So why are we playing this game? Let’s either get them to a number that makes it where we have minority and women owned firms that can compete or just remove the caps altogether,” Villegas said.
Wouldn’t removing the caps entirely run contrary to the mayor’s war on poverty by benefiting wealthy black, Hispanic and female contractors?
Not according to Villegas.
“When you graduate, you’re still black or Hispanic. What are you graduating from? We’re looking to have diversity within our procurement process. If that means that there’s more successful African American, Latino or women firms that participate and they meet the criteria of being African American, Hispanic or women, why are we gonna penalize them?” the mayor’s floor leader said.
Villegas isn’t the first aldermen to suggest lifting the caps established in 2001 and adjusted upward annually to coincide with the rate of inflation.
Three years ago, the chairman of the City Council’s Black Caucus also demanded higher caps or none at all.
“When you graduate from the program, that means no more work from the city. The problem for those people . . . is that there also is no private work because they’re not big enough to compete with the McHugh’s, the Paschen’s and the larger companies of the world,” Ald. Roderick Sawyer (6th) said then.
“Then they’re stuck in this forever purgatory. They’re too big to get work from the city. They can’t compete with the larger companies. And they end up losing money to the point where they get back in the program again. It’s almost a form of discrimination. Just because you’ve made a modicum of success, you didn’t all the sudden become not black anymore or not Latino anymore.”
The mayor’s office had no immediate comment on Villegas’ proposal.
Lightfoot has made no bones about her desire to create set-asides for gay business owners in addition to the 26% and 6% of city contracts already earmarked for minorities and women.
Last month, the City Council launched a study that could lay the groundwork for earmarking contracts for gay and transgender-owned businesses in Chicago.
It happened after an angry and emotional Lightfoot admonished a handful of black aldermen for “demonizing” the gay community and openly complaining that gains for gay contractors could come at the expense of blacks. The mayor argued that the “pie is big enough to slice it in a lot of different ways.”
