When Rick Harris, owner of Ideal Commercial Interiors (ICI), moved to the Twin Cities seven years ago, he struggled to get the private sector contracts that had been his bread-and-butter during his three decades of business in California. 

"Coming here was totally different. I kept trying to get my foot in the door and instead would have it shut in my face," Harris said. ICI is certified by the North Central Minority Supplier Development Council and the Central Certification Program as a small, minority-owned business, but Harris noted that the greatest obstacle he faced was not discrimination, but inertia. 

"Businesses were not open to building relationships with new vendors. They preferred to maintain the same decades-long ties with people they knew and were familiar with — but that impedes access to the market," he said. "It’s bad for the economy when you have these small businesses that can’t grow because they’re consistently locked out of the market." 

For a city that struggles with staunch racial inequities in employment and poverty, these barriers to entry pose persistent challenges to the local economy. 

"The state says it wants to create more jobs for people of color, but to do that, you have to understand that minority-owned companies hire more employees of color, and so you have to focus on helping these companies grow," Harris said. 

That is precisely what the City of St. Paul is working to do. With the help of the city’s comprehensive efforts to foster racial equity in its municipal contracting, Harris has been able to fill the void of private sector work with city, county, and state contracts — which now make up 90 percent of his business.

According to David Gorski, a human rights specialist for the City of St. Paul, "The broader goal is to make the local economy more inclusive, to create a launching pad for small businesses," especially those owned by people of color and women.

Supporting entrepreneurs of color boosts local economies

St. Paul is a rapidly diversifying city; nearly half the city’s residents are people of color, and communities of color — especially Black communities — are leading population growth. But these communities continue to face persistent racial inequities in opportunity. Unemployment for people of color is 12.6 percent in the city, compared to 5.3 percent for Whites. For African Americans, unemployment skyrocketed from 9.6 percent in 2000 to 18.8 percent in 2014. Almost two in three people of color in the city are economically insecure — with family incomes below 200 percent of the federal poverty level — and one in five are working poor, struggling to make ends meet despite working full-time. 

In an attempt to combat these longstanding disparities, St. Paul launched its Racial Equity Initiative in 2014. This initiative includes numerous policy and practice reforms to make racial equity an explicit goal for the city — not only to foster inclusion and community justice, but as a necessary precondition for a prosperous, thriving local economy.

Connecting businesses owned by entrepreneurs of color to city contracts is a crucial lever in this work, because these firms represent key areas of growth in the local economy. Businesses owned by people of color in Minnesota are growing significantly faster than average, with 118 percent growth from 2002 to 2012, compared to 10.3 percent growth for all firms in the state. The number of small businesses owned by African Americans in the state grew by about 60 percent between 2007 and 2012, while small businesses owned by Whites declined 3.4 percent. Yet, many of these businesses are small and undercapitalized, with few employees.

Though the state government of Minnesota has recently received criticism for its inequitable procurement practices, St. Paul has been meeting and exceeding many of its racial equity goals. For example, the city aims to award at least 25 percent of public contracts to small businesses. Within that small business goal, the city sets further targets to reach 5 percent of firms owned by people of color, and 10 percent of women-owned firms. In 2016, more than 30 percent of the city’s total business went to small businesses, with 5 percent awarded to businesses owned by entrepreneurs of color and more than 12 percent awarded to businesses owned by women. 

St. Paul’s progress in upping contracting equity can be traced to concerted efforts to reform and innovate practices within the city’s Purchasing and Contract Compliance Divisions. This work began with the assistance of Bloomberg Philanthropies What Works Cities initiative, through which the Government Performance Lab at the Harvard Kennedy School helped the city better understand why it wasn’t adequately reaching small businesses and businesses of color. What they found mirrored the hurdles Harris noted in the private sector. 

"Vendors felt that we were closed off," said Jessica Brokaw, deputy director of procurement, contract compliance & business development for the city. "They felt we had preferred vendors and that was that." 

This led to a series of structural changes to the procurement process. The city rolled out a new online bidding platform that made the process more transparent and accessible, and ensured that any vendor could download bids free of charge. They also revised the language of bids — from PhD reading level to eighth grade reading level— so that most any vendor could understand them without an attorney.

Wherever possible, officials also streamlined certification processes. For example, a vendor can become registered as a minority-owned business enterprise (MBE), a woman-owned business enterprise (WBE), or a small business enterprise (SBE) through one-day Central Certification Program (CERT) community workshops that are hosted monthly. These certifications are recognized by Hennepin County, Ramsey County, Minneapolis, and St. Paul, making it easier for businesses to pursue public procurement and contracting work regionally. The increased community engagement is reflected in attendance at the annual procurement fair, hosted by the city’s Department of Human Rights and Equal Economic Opportunity. In 2017, 350 vendors showed up within the first three hours alone.

Perhaps most impressively, the city has made significant changes to open up public contracts to new businesses. Starting in 2014, the city has changed five-year agreements to yearly agreements whenever possible, and broken down larger projects into small subcontracts to increase opportunities for new and small businesses to bid. 

"We decided to not renew hundreds of master contracts — some of which we had held for 20 years," Brokaw said. "We got lots of pushback, because there were vendors who didn’t really have to compete for years upon years, and there were city departments who didn’t want to have to orient new vendors to how we operate." 

When the city opened up contracts to a more competitive market, however, "the city and the local economy benefited," Brokaw noted. "The bids are lower, so the city is saving several million dollars, and our relationship to the community is so much stronger because vendors can see that we are open to them." 

Bridging the public-private contract divide through mentorship

In addition to the structural and procedural changes noted above, one of the key facets of St. Paul’s efforts to promote small business growth among minority entrepreneurs is the Construction Partnering Program (CPP). 

Founded by the city and administered through the Metropolitan Economic Development Association (MEDA) and the Association of Women Contractors, CPP supports emerging small businesses owned by women and people of color by fostering long-term partnerships between these firms and larger industry experts in the region.

In general, the odds can be stacked against small businesses trying to expand: They don’t always have access to the same product lines or discounts because they don’t buy in large enough quantities. They often lack access to the kind of financing necessary to purchase the kind of bonds that are required to insure projects or to cover their costs for the months it can take for contracts to pay out. 

"It creates a catch-22 because the financials limit the size of contracts a business can take," said Salah Tarraf, participant in the CERT and CPP programs and owner of Tarraf Construction, a general contractor operating in the Twin Cities for 17 years. "We have so many fantastic contractors of color who want to grow, but are held back because they can’t take larger projects." 

The city has stepped in to remove some of the financial barriers: city projects up to $100,000 no longer require bonds, so they are now more accessible to small contractors. Through CPP mentorship, however, the city also hopes to start bridging the gap between public and private work. 

Tarraf Construction has been partnered with McGough, a large general contractor headquartered in St. Paul, for the past 13 years. This relationship has allowed Tarraf to benefit from the insight and experience of the larger firm, and McGough has helped them break into the private market by inviting them to bid on subcontracts for their work and including them in negotiations as an "equal partner." 

Though it remains an "uphill battle" to get the private sector to work with small companies, Tarraf said he gives "a lot of credit to St. Paul. The city has been really supportive of the minority community, and I think it’s been a success." 

By Alexis Stephens

As grassroots groups and community advocates across the country brace for increasingly anti-democratic and authoritarian opposition, organizers in the South bring a wealth of wisdom and experience dealing with such challenges.

America's Tomorrow spoke to Kali Akuno, co-director of Cooperation Jackson, founded in 2013 to promote economic democracy and worker-owned cooperatives in Jackson, Mississippi. Akuno talked about the organization's work and how it has dealt with a series of setbacks and trials, including the passing of Jackson's mayor — longtime activist and organizer Chokwe Lumumba — in 2014, ongoing state threats to local control of land and infrastructure, and the uncertainty of the new presidential administration. He also shared his analysis of the local context in Jackson and offered some advice to grassroots organizations around the country about how to both survive short-term threats and lay the foundation of long-term sustainability.

In the wake of Mayor Chokwe Lumumba's passing and his legacy of Black organizing, what has the landscape looked like for Cooperation Jackson?

The first six months of the [Yarber] administration were somewhat difficult for us. Cooperation Jackson had been tied to and identified with the legacy of Mayor Lumumba and the Malcolm X Grassroots Movement, and I think Mayor Yarber was initially very wary about any engagement with us. But over time we found some ways to collaborate on things that we all saw as mutually beneficial for us and the city.

There have been a number of issues this year where there has been a high level of agreement between our organization and the mayoral administration — primarily the threats that have been coming down from the Republican supermajority at the state level and some very targeted threats against the City of Jackson. One example is the state legislation that is allowing a governor-appointed regional board to take over operational control of the airports in Jackson. A broad, united front came together [to fight that], which included the Coalition of Economic Justice, city council, and our county legislative delegation. I would say the overall legacy of the plans that brought Lumumba into office is very much alive.

In which programs and initiatives are you seeing the most success?

We're seeing success in the development of our three co-ops: Freedom Farms Urban Farming Cooperative, Nubia's Place Café and Catering Cooperative, and Mississippi Waste Alternative, a recycling and composting cooperative. The core membership of each is under the age of 25. There's a youthful willingness to try something new and a healthy optimistic attitude when they encounter people or dynamics that tell them that they can't do something. Our own analysis of why these co-ops are moving faster than others has revealed that youth leadership is a factor. To outside observers, the most concrete measure of success is the actual operation of a co-op — if the farm is able to increase its productive yield, for example. And that's grown each quarter. But young people are also acquiring skills and certifications, and putting in hours. Those are all things we're looking at objectively as measures of our success: how many people we're able to train, recruit, and bring into the process.

Cooperation Jackson is still very much a baby as an organization. In a short period of time, we've been able to build several functioning and emerging cooperatives and to acquire a community center and 20 parcels of land in West Jackson. We have three houses that are the core basis of our housing co-op and emerging eco-village. When Chokwe passed away so suddenly, many of us were in doubt in the first couple of months about where we were going and what might be possible. From that dark place to where we are now, I would argue that we've done fairly well.

What advice would you give to other grassroots economic development organizations that might be facing preemption at the state level over the next two to five years?

Your basic organizing principles don't fundamentally change. In fact, they become even more important than ever before. The first thing is you have to build your own base; and, if you are trying to build a transformative business like the co-ops that we're trying to build, you have to work to communicate your own values to your network very clearly. Outside of building your own base, you have to make connections and links and build allies with other folks who share similar interests. I don't think everything has to be in complete alignment, but I think there's a critical synergy where you have to agree on some things. But don't compromise your mission or settle for short-term, expedient gains. That's a critical piece.

Sometimes we become too fixated on immediate victories and results, and this doesn't really lead us to building strategic allies and strategic relationships in the way that is most helpful. There are not really any shortcuts. A lot of people are counting on — or have built a lot of their strategies and programming around — new technology, particularly social media as a way of reaching people. That's good for mobilizing people, but it's not a tool for organizing people. We have to make that distinction. In order to organize people, you have to build relationships. You have to make sure that you're creating the context and bringing people into situations where they can see each other face to face, to engage in dialogue and exchange about their issues, about their concerns, about their aspirations.

We have to be very intent on rebuilding social solidarity. I think a lot of the angst that is there now — particularly in light of Trump's victory — is based upon a deepening sense of social isolation. Folks feeling that they're more alone, and more exposed, now and more siloed than ever before. But our counter is not to retreat further into small and local. I think our counter is to go deeper, build more connections, reach out more. I think we're over-emphasizing and stressing too much about what's going to happen this first year. That could lead us into a number of traps, as opposed to us digging deep and building the relationships that are necessary, coming up through that process of organizing people, and then developing a program and a vision that will enable us to build, to push back, and to create a whole different set of policies to complement our vision down the road.

Could you say more about your vision for deepening relationships?

At present, our state politics break down fairly consistently along racial lines. But we know that we can make some inroads, particularly with younger, college-educated White folks — and there are about 250,000 to 500,000 of them in the state. We feel that we can and must do a good job recruiting, organizing, and reorienting them in a more left and progressive direction. And if we can just move the bottom end of that number, we change the politics of this state profoundly and we can end the Republican domination of the state. This is something that's practically doable, but you have to be willing to stand back a little bit, look at the long-term view, assess what's really needed, and then develop the strategy to go out and reach those communities and build a relationship with them. And not see everything as lost or totally out of our reach, when it's really not.