A program meant to help local construction companies in the San Francisco area has now caused many black contractors to lose everything.
When the city made the decision to redevelop a former Navy base, the Bayview Hunters Point Shipyard, into a new neighborhood, the idea seemed like a win/win. The new development would provide more affordable housing for local residents, and small businesses based in the area would have the opportunity to be contracted for the project.
But working on the Shipyard actually turned out to be a poor decision for many of these local contractors.
Astron Development, just one of the companies working on the development, suffered when their invoices went unpaid or were rejected. To date, the company has around $500,000 in outstanding debt, and because they were ultimately removed from the project, their contract is no longer valid. The company is unable to take on other projects due to the financial strain, and they’re close to declaring bankruptcy.
While many businesses choose to outsource their billing to help speed up their receivables (typically by one to three days) and improve cash flow, that’s not always an option for contracts like these. And Astron isn’t the only company dealing with these economic issues. Many other contractors have struggled with the same problems, including slow payments, work delays, and limited access to capital. Hercules Builders, Three Brothers Electrical, and Precision Drywall, among others, have reported that their businesses have taken a huge hit.
Clyde Miller, owner of Astron Development, says that the project not only damaged his business, but it destroyed his personal life, too. Miller is currently living in a friend’s garage, as he says his marriage fell apart as a result of the financial loss.
The Shipyard contracts ranged from $815,000 to $4 million for these local companies. Shipyard developer Lennar has a history of having float periods of up to 90 days, which can have a severe impact on smaller businesses. Despite the fact that many of these business owners have expressed their issues directly about the issue, Lennar spokesperson David Satterfield responded that the company “would be surprised and a little unsettled that people are complaining about the late payments. We’ve been trying to help these businesses grow and provide them both resources and some capital to help them do it.”
The city keeps passing the buck, as they’ve stated that if the business owners — all of whom are African-American — have questions about the local contracting program, they’d need to meet with OCII. When contractors have met with OCII, they’ve been told that since the land has been given over to the developer, it’s now a private project. Subsequently, OCII won’t handle any of the disputes stemming from the Shipyard project.
While it’s unclear who exactly is to blame for these issues, one thing is clear: these black business owners are now having to suffer the consequences that stem from a program that didn’t work the way it was intended.