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Minority business may lose its edge

The City Council will discuss broadening small business participation, which could hinder advantages for women and minority owners.

By PAUL SWIDER
Published September 20, 2006

ST. PETERSBURG - The city is considering eliminating one aspect of its small business assistance program that is designed specifically to help women and minority business owners.

The City Council will talk Thursday about changing the city's Small and Disadvantaged Business Enterprise ordinance to simply a Small Business Enterprise ordinance in order to encourage greater participation and generate economic growth, according to briefing documents.

By removing mention of businesses with any cultural hardship, the ordinance moves yet further from its origins as a law to improve opportunities for businesses owned by women and minorities.

"Basically, there was no advantage to apply for the disadvantaged category," said Shrimatee Ojah-Maharaj, manager of the city's Business Assistance Center.

Applying for disadvantaged status required revealing information about the owner's personal finances, Ojah-Maharaj said, and few were willing to do that.

Even minority businesses were applying for benefits as small businesses, she said. Gaining either status gives a business discounts on its bids for city contracts to make the businesses more competitive with larger established players.

Other proposed changes to the ordinance include:

- Waiving the requirement that businesses be located in the city to qualify for competitive benefits.

- Allowing businesses that have up to 50 employees to qualify, up from the current 25.

- Raising the annual sales cap to $5-million.

Qualifying businesses also would get mentoring and training help from the city's Business Assistance Center while fulfilling city contracts, Ojah-Maharaj said.

"It's almost like an incubator," she said. "It's to grow businesses."

The proposal has been met with some skepticism.

"I don't think the city is very genuine when it comes to minority-owned businesses and professional participation in the economic prosperity of St. Petersburg," said attorney Darryl Rouson, former head of the city's chapter of the NAACP. "You can walk into St. Pete and do business as if black folk don't exist."

The city had an ordinance in the past that specifically focused on businesses that were owned by women or minorities. Federal law required that the city prove the necessity of such preferences, Ojah-Maharaj said, but a 1998 study showed there was equal access for women- and minority-owned businesses.

The study showed that very few minority- or women-owned businesses even applied for city contracts at that time. The city kept no data on whether any of those disadvantaged businesses worked as subcontractors to those companies that received city contracts, so the disparity study could not show if those businesses were underrepresented in city work.

"The finding of no disparity does give one pause," said Alma Ayala, a senior vice president with the St. Petersburg Area Chamber of Commerce, who was newly hired in part to emphasize chamber involvement with the minority business community. Ayala said once the study found no evidence, the city had to act or face legal action.

After the study, the city changed its ordinance to the present form, which includes the race- and gender-neutral disadvantaged category. The present ordinance also imposed the restriction that businesses be based in the city, while the earlier law had not.

In a briefing meeting Monday, city staff talked to Ayala and others about the basis of the ordinance changes and how it will be applied. Ayala said she believes the city is sincere in aiming to aid disadvantaged businesses, even if the ordinance no longer specifies that.

"Our concern is that minority and female businesses are not left behind," Ayala said.

"You have to engage all sectors of the business community because that impacts the overall health of the business community. We take this very seriously."

Ojah-Maharaj said requiring that businesses be based in the city was ineffective because out-of-town contractors that receive city work often either hire local subcontractors or open an office here.

The present law limited participation, Ojah-Maharaj said, which prevented it from affecting economic growth. The original minority- and women-owned business law had 230 businesses qualified, while the present law only has 51.

Ojah-Maharaj said the new ordinance also re-emphasizes bidding advantages for construction as well as professional services contracts. She said the city spends $100-million a year on construction contracts, so reopening that to small businesses will greatly enhance their opportunities.

In 1998, the city awarded almost $10-million in contracts to minority- or women-owned businesses, 27 percent of the total. In 2005, there were just more than $1-million in contracts to small or disadvantaged businesses, 6 percent of the total spent locally.

Ojah-Maharaj said many cities nationwide are making the same shift from race- or gender-based laws to those that simply target small businesses. She said other regional governments are watching what St. Petersburg is doing and may develop similar laws and apply them reciprocally across boundaries, meaning a business qualifying in one jurisdiction would qualify in all.

Rouson said he would not be surprised if the ordinance passes quietly.

"The black community in St. Petersburg is a beggar community," he said. "We've rarely stood up and demanded our rightful portion."

Paul Swider can be reached at 892-2271 or pswider@sptimes.com or by participating in itsyourtimes.com.

[Last modified September 19, 2006, 23:05:56]