Charlotte Black businesses are less likely to receive prime city contracts, study shows

Alex Slitz/alslitz@charlotteobserver.com

Black entrepreneurs are less likely to receive prime contracts with the city of Charlotte as compared with other minority- and women-owned businesses.

That’s the results of a nearly two-year long disparity study conducted by Colette Holt & Associates, a law and consulting firm specializing in business and contracting equity.

The Charlotte City Council voted 9-2 Monday to accept these findings. Members Ed Driggs and Tariq Bokhari vote no, citing legal concerns and the report’s methodology.

The vote comes as the city plans to update a 2017 disparity study’s findings set to expire in January. The study looked if any inequalities still exist so the city could determine whether to continue using race and gender conscious measures to remedy them.

The number of minority-owned businesses who with the capacity to handle city contracts was compared to how the city hires to determine what percentage of businesses are getting contracts.

The study used city contract and vendor records alongside over 90 interviews of business owners and city staff to review the Charlotte Business INClusion program— which seeks to enhance competition and participation of minority — and women-owned businesses in city contracting. It also analyzed city contracts between 2015 and 2020 worth $50,000 or more.

As the city’s market area, it drew from North Carolina and York County in South Carolina.

Census data from 2021 shows there are just over 3,000 minority-owned businesses and around 3,500 women-owned businesses in Charlotte. The city also has more than 13,000 non-minority-owned businesses , according to the data.

Darmel Lee, president of the Metrolina Minority Contractors Association, said his organization along with the Hispanic Contractors Association of the Carolinas should be included in collaborative efforts to create recommendations for any policy changes.

“A lot of the stuff in (the study) we deal with on the front lines as minority-owned businesses,” Lee said. “We appreciate you guys are taking it seriously, and we just want to let you all know we’re taking it seriously as well.”

Findings

Some of the study’s recommendations included developing performance measures for the Charlotte Business INClusion program and expanding supportive services offerings for minority-owned businesses

Additional recommendations also will be made with input from an advisory committee, and CBI staff, Shaunne Thomas, its assistant program manager, said.

“We will have stakeholders from around the community who really have skin in the game in the success of this program,” Thomas said. “We’re going to try to go in to retreat with them to make sure that we are open, transparent and listening.”

While Black-owned businesses showed the most disparity, the city still faced significant challenges with women-owned businesses, Councilwoman Danté Anderson said. She added the strength of the dollars spent in contracts as it relates to particular industries impacts some minority groups more than others.

“There’s some real work that needs to be done here as to how we are supporting minority owned businesses in the city,” Anderson said.

Council members also asked for an analysis of the costs of the CBI program, which was not provided.

Councilman Bokhari questioned the geographic scope, which included over 100 counties, and how disparity was measured in the study’s model.

“The question is are we truly being honest towards true disparity in these models, or have we essentially preconceived an outcome where we made the data tell us that story,” he said.

Legal concerns

The legality of programs like the CBI program have come under increasing scrutiny in recent years. Colette Holt, principal of Colette Holt & Associates, informed the council at a Sept. 12 meeting that the federal courts in recent decades have become more conservative on these issues.

Last year, a federal judge temporarily blocked President Joe Biden’s debt relief program for minority farmers, the New York Times reported. A COVID-19 relief fund for Black business owners in Oregon was similarly struck down, the Times reported.

On Monday, council member Driggs shared concerns the CBI program could face a similar fate.

“I realize our own legal team has advised us that the risk is manageable, but what we were told is that there’s been a number of cases that have been decided unfavorably when it comes to programs like this,” Driggs said.

Thomas Powell, senior assistant city attorney, said the city attorney’s office is comfortable for the council to adopt the new study. He added it was the office’s opinion they could defend it in a court of law based on current case law.

“I can not speculate at this moment as to how the courts will rule on all these issues, but I can commit that if there were to be an adverse decision we would immediately inform CBI as well as this council and the manager’s office,” Powell said.

CBI staff and its advisory committee are now expected to craft policy changes for implementation in 2023.