 Seven million people in this metropolitan area. Seven million black people, white people, Chicanos, Indians, Chinese, Japanese people. People on the move, working, raising families, building the city and their future. But in 1969, the minority businessmen in the construction industry found himself unable to build very much of the city, much less a future for himself. They have 870,000 identical contracting firms in the United States, not more than 8,000 are owned by either Negroes or Spanish-speaking Orientals or any other minority group. And this represents that they only have about 1% of $10 billion of construction opportunities. All they knew that they were not getting their share of the pie. Most of the minority contractors are concentrated in a minority area and we are not getting any work outside of the minority area. They don't have a regular means of communication that the majority developers have. Give our contractors an opportunity to be on bid on other jobs that now they know nothing about. They don't know that it's going on until they see the building going up. One of the most serious problems that Duke confront on a day-to-day basis of the minority contract is, of course, his inability to obtain bonding. As a consequence, this cuts him out of an opportunity to participate in any kind of a real way with any federal construction. He has been unable to handle anything except a single family or small unit developments. Minority contractors are capable of doing bigger things. They are well qualified. They need the opportunity. A simple problem, lack of opportunity. Yet a complex problem involving contracts, bonds, loans and more. To solve one, each of the others has to be solved. In 1969, a committee of officials from federal agencies became involved. I was Vice-Chairman of the Critical Urban Problems Committee of the Federal Executive Board in Los Angeles. And in the committee itself, the problem came up about bonding and bonding for minority contractors. Now, in exploring bonding, we found that it was more extensive than just bonding. It's lack of participation by the minority developers. The board met and worked for a year to identify all of the problems and to develop a plan to solve them. Now, we wanted to put some of the money into the minority community. And we failed. We met with John Brown of the Los Angeles Minority Contracts Association. We worked predominantly black. We also met with some of the Mexican-American general contractors in East Los Angeles to try and see if we could organize an association of Mexican-American contractors. Finally, that plan, the Los Angeles plan, was approved in Washington and announced in November 1970. The Department of Housing and Urban Development was given the responsibility for leading these efforts. The first step of the plan was to set aside federal contracts for minority businesses. Minority construction contractors would not be required to bid on contracts, which is the usual practice, but could negotiate directly with federal agencies for these awards. Contracting opportunities were set aside from minority contractors, which was, of course, the first step in the door of construction. Participating in what we feel is meaningful construction when you're about the business of putting up 80-some odd units. And you're getting into the arena of the million-dollar construction ballgame. Under this plan, HUD pledged 1,000 units of housing to be constructed at a total cost of $20 million, under the 235 and 236 programs. These programs enabled the construction of homes for purchase and rent by low-income families. In order to qualify for these contracts, projects had to provide opportunities for minority businessmen, not only contractors, but developers, architects, lawyers, engineers, and others. All the people necessary to plan and build housing. Marnez Batakit, Associate Director of the Housing Opportunity Center, a group which sponsors non-profit housing, sponsored a 236 project, Willowbrook Manor. We actually were the first to break ground under the Los Angeles plan. We pulled together a total minority team for building the project. The architect, the contractor, soils engineer, all were blacked. We also have a practically 100% minority team of subcontractors working on this project. It's a 16-unit project of two, three, and four-bedroom apartments. A small business administration program known as ATA permitted other federal contracts to be set aside for minority firms eligible under the program. Other federal agencies pledged contracts for minority construction companies, a total of $3.2 million worth, including demolition work for the Office of Emergency Preparedness, construction and rehabilitation of post offices, construction for Vandenberg Air Force Base, the General Services Administration, the Army Corps of Engineers, the Veterans Administration, and others. In addition, HUD reserved $13.4 million of construction work under Operation Rehabilitation to upgrade housing to meet standards for the 235 and 236 programs. And that effect of this means that contractors who have disadvantages such as adequate financing and adequate bonding opportunities do have a way about which of competing with the contractors, the more fluent contractors, shall I say, are fluent in the sense that these contractors have better cash flows, better lines of credits, better relationships with material and suppliers. Setting aside contracts for negotiation instead of requiring bidding was just a start. In order to make good this promise, in some cases loans had to be arranged for working capital for the contractors and sponsors. Money which would be used to purchase land, higher attorneys, and architects, undo the many things necessary before ground is broken and building is begun. Contractors in need of working capital were referred to the Small Business Administration. Through a program which guarantees banks against any losses from such loans, SBA was able to provide up to $350,000 lines of credit. Others helped too. The Nonprofit Housing Center provided loans for some 236 projects. The Minority Contractors Assistance Project, a national nonprofit organization, worked closely with one contractor. We found out that the first thing that was missing was working capital. So the most important role that MCAP did play in this was providing a loan of $50,000. Although the contracts and loans were available, the job still was not done. They remained the problem of bonding. By law, a contractor to work on federal construction must obtain from a surety or bonding company a performance bond which guarantees that the work will be completed. Minority Contractors had difficulty obtaining these bonds. One of the tactics seems to be just to take the application and then wait. And they usually try to out-wait the contractor and the nonprofit sponsor. And of course in this way, they just keep you from getting bonds. Some contractors thinking they had the necessary track record to obtain bonds found that they did not. They had been participating in joint ventures with more experienced and affluent white contractors. They had never participated jointly by having that name on a bid or a performance bond which is extremely important in building a track record with surety companies. To solve this problem, several things were done. For some contracts, HUD waived the bonding requirement. In cases where the bonding requirement could not be dropped entirely, HUD reduced the amount of the bond required. In addition, a small business administration program which guarantees bonds provided help for some small subcontractors. And some contractors were helped in other ways. We also played a role as a broker in arguing very favorably on the fact that the Thompson-Pickey Construction Company did indeed have an excellent track record in contract of building as attested to by the numerous of buildings that they had joint ventured successfully. In and all over the city of Los Angeles. We had to go back and construct a track record that would indeed satisfy the sureties. Now with contracts available and arrangements for bonding and for working capital, another idea was added. Raymond Carrasco, director of the HUD Area Office in Los Angeles. From there we went to getting established developers to assist the minority developers because we found that the technical know-how had to be really exploited or we would not be able to move the program. And we looked at it in this manner that they were participating in the programs and going quite wealthy from it. And as part of their social and economic assistance, they should provide this assistance to the minority developer. And Mr. Ray Watt organized a team of big brothers. I thought that if we sat down with certainly a portion of these major builders and told them what we were interested in doing and how sincere we were with regards to it being in the best interest of the country and the nation and the industry, why give these people an opportunity to build for themselves and develop this expertise, why it would all be better off. Nine companies joined Ray Watt in the Volunteer Management Assistance Committee and helped developers of the 235 and 236 projects. As we say, the new builder processed his project through the different steps. The experienced builder would assign someone to this builder in the particular area, whether it was how to buy the land, how to tie it up, how to write up the escrow with a contingency, how to approach the engineering problems, how to approach the market feasibility, how to prepare the FHA application, where they'd get complete knowledge of how to make money in this business and become self-sustaining. All of the pieces were now in place. Contracts, loans, bonds and technical assistance. But the people who gave the Los Angeles plan life were those who developed and built the projects. We realized at an early point in time that we needed to develop these packaging teams and this involved attorneys, the architects, the real estate brokers, the full team. It's amazing just how fast they started to develop their teams and actually kept them intact for many other projects, not only the LA plan. Joseph Avila, an attorney. We begin to understand the problems of the other professionals so that I as an attorney begin to understand some of the problems of Mr. Juarez as the architect and some of the problems of Mr. Baraza as the contractor. It also has introduced us to the idea of with three people out in the field that we can begin to discover more business opportunities that require the other two individuals. David Lockhart, William Lockhart Associates Housing Consultants. We've seen architects, attorneys, consultants and contractors brought together to put together a package that has been of a definite good nature and also we've seen them be able to move off into other programs and mainstream of the housing industry of utilizing the same teams. This was one of the biggest spin-offs that we got from the program and that we not only had or were enriching say one contractor or one developer but we're actually developing a full consortium of firms of different disciplines. Over 60 black and Chicano professionals worked on these teams. For some, the plan had a significant effect on their business. I think that there had been no recognition of a black civil engineer in this area and by having to really ferret out one, we found one and he has worked I think on 85% of all the set-aside programs now so he has benefited tremendously from it. In the beginning, it almost had a disastrous effect because in order to really understand the ball game, I've had to relinquish activities in other areas so that I can concentrate my attention on this. If we were to compute it time-wise initially, I was probably working for about 35 cents an hour but I'm at that point now where additional contract opportunities are coming so which means that over the long run, I will make all what I lost back plus in about another year's time. I probably would make considerably more than I would have under my normal practice. It has changed my practice. I'm no longer the neighborhood divorce or criminal attorney. I'm an attorney that is specializing in construction, in financing, in dealing with other business people. We were able to get a taste of what it was like to be a developer rather than just have one specific role in the total housing packaging program. Almost 40 Chicano and Black general contractors worked under the Los Angeles plan and almost 1,000 Chicano and Black subcontractors worked with them, building 235 and 236 housing and employing almost 8,000 workers. Evan Williams, president of Evan's construction company. It also enabled us to gear our business around government projects and at the present time there's substantial amount of work where we have grown from a $100,000 business in a year's time to a $2 million business. It is estimated that a total of 11,000 jobs were provided by the Los Angeles plan. When the projects are completed, over 3,500 units of housing will have been built. Fernando Juarez, an architect. The buildings, they're good construction. They're first quality construction. We're not giving people anything inferior. Mr. and Mrs. Michael Walker are living in one of those houses. I heard about this 235 plan. I put an application for it and it took me quite a while to get it. But I think it's a pretty good deal and this is something I can afford. I expected like the kitchen here. That's the only thing different because it was three bedrooms. This one's four and I think we needed a larger room because we have four kids. It's a nice neighborhood and there's plenty of kids for the kids to play with. It used to be when I was living in the other place, I didn't care too much about the place because it seemed like landlord didn't. Now it seems like it's because it's my own place. I care a little bit more and all the people around here seems just to have the same attitude. So far, so good. Businesses are growing and housing is being provided for families in need of it. But something was happening in the minority communities. The investment group has been in operation for approximately two and a half years or three years. It was created with the idea that we needed an entity that would deal with economic development or vario renewal. Now the original conception of an investment group has been more or less evolving into a corporation. And a corporation which we are now forming is CEDA, which is Corporación Económica de Zarodiaslan, which will be dealing also with economic development but with its cardinal thrust in housing. Just last night I was at a meeting with about 10 local architects and we have decided that we will establish a regional association of black architects to assist each other in ferreting out and I guess in isolating some of the problems that have come to all of us. And something was happening between the communities. I think when Florence and I first met, Florence was representing a non-profit sponsor and I was representing the general contractor and that's initially brought us together and then Florence and I started talking and realized that it might be a good idea to try and join a black attorney and a brown attorney and take advantage of the specializing in housing. As far as we're aware of the firm will be the only firm in the United States that has a black lawyer and a brown lawyer as the principles. Some of our members are doing work for the black contractors and some of the black contractors are doing work for the brown contractors so we are really developing a real joint venture in many ways. And not only did it bring the black communities a little closer together and the brown communities a little closer together but I think hopefully it's going to bring the black and brown communities a little closer together and we're going to be able to make a concerted effort whether it's in housing or whether it's in employment and make this concerted effort together rather than against each other. What of the future? HUD has published a directory prepared by the Urban League of Minority Businesses active in the building industry in the United States. I think a complete up-to-date registry of who the housing professionals are is an excellent notion and it can obviously has its fallout benefits. Major white developers that want to do business with minority business firms will have and can have a place to go to identify the participants. But most important is the wish expressed by many including architect Carl Kinsey regarding the Los Angeles plan. I would hope that it would serve as kind of a model that it would formulate some kind of goals approaches and they would open the doors even wider to other architects, developers and the likelihood so that there's broad based participation in the economic life here in this country. To help achieve that objective, HUD announced the Minority Housing Goals Program this year requiring that targets be set by every HUD area office and FHA ensuring office in the nation. Targets for involving minority businesses in the production and management of HUD assisted housing. The Los Angeles plan proved that this approach can work. I feel that ultimately it's going to resolve a lot of our problems and it's something that we should do but there's nothing easy about it, you know, you still have to go out and find the project that'll stand on its own and there's no grant or anything given away here.