Northwest Indiana Regional Development Authority projects are failing to meet the minority- and women-owned business goals contained in the RDA's enabling legislation.
An audit covering $54.2 million in projects released at last week's RDA meeting sparked almost an hour of discussion and a rare split vote among the board.
Board member Bill Joiner said those projects funded by the RDA must comply with its enabling statute, which requires that 15 percent of contracts go to minority-owned businesses and 5 percent to women-owned companies.
"It's not negotiable," Joiner said.
Of the $54.2 million the RDA handed out to 10 grantees, only $36,700 could be certified as having gone to minority- or women-owned businesses, according to a compliance audit prepared by consultant Tammi Davis.
Only one RDA contractor, Policy Analytics LLC, could show it had come close to fulfilling the goals outlined in the statute.
Policy Analytics has contracted out $22,815, or 13.5 percent of its work, to minority-owned firms and $13,100, or 7.8 percent, to women-owned businesses.
Other RDA funded projects either fell far short of the mark or had not provided complete information on compliance.
The Northwest Indiana Forum contracted out only $455 to women-owned businesses out of a $130,000 RDA grant. It spent none of that money on minority-owned enterprises.
Construction managers on the city of Portage's lakefront park and riverwalk project had classified some contractors as certified women- or minority-owned firms when the companies in fact were not, according to Davis' report. The RDA granted the city $6.62 million.
Gary/Chicago International Airport reported it had complied with federal requirements for contracting out work to disadvantaged business enterprises. Airport officials told Davis they thought that fulfilled the RDA's requirement.
Davis said she informed the airport a disadvantaged business is not always the same as a minority- or women-owned business.
The airport is now going back through its contractor records to see how many firms are minority-owed and women-owned, Airport Director Chris Curry said.
The RDA has been handing out grants since mid-2006.
The basic problem, as outlined by Davis and RDA lawyer Dave Hollenbeck at the meeting, has been the RDA's contracts with grant recipients.
Early RDA contracts did not contain any language dealing with the minority- or women-owned stipulations. In late 2007 and early 2008, the legislative wording was given mention in contracts. The most recent contracts list the requirement and also informs organizations they will be monitored for compliance.
At Wednesday's meeting at the Marquette Park Aquatorium, Joiner proposed a motion to suspend funding to all organizations that had not complied with the RDA's requirements. Funding would be restored once they submitted an acceptable action plan for getting into compliance.
The motion fell on a vote of 3-4.
Those voting for the motion were Joiner, Carmen Fernandez and Lou Martinez. Those voting against were board Chairman Leigh Morris, Harley Snyder, Howard Cohen and Gus Olympidis.
All four voting against the motion made it clear they consider the 15 percent minority-owned and 5 percent women-owned stipulations to be requirements. But they said they could not agree with the suspension of funding for grantees.
"If we have erred in not advising, or restricting, or requiring people ... of our expectations in the past, then that is on us," Snyder said. "I just don't think it's something where we can go back."
Davis was told to come back to the board in one month with a plan for bringing grantees into compliance.
Davis said that plan will include proactive steps, such as the presence of an RDA representative at pre-bid conferences with contractors. It also may require that all groups asking for RDA money submit a plan for hiring minority- and women-owned businesses.
She said enforcement is the key to getting the program on track.
"There needs to be a timeline because at some point, you have to cut off discussion and start holding entities accountable," Davis said.
