MSD eyes participation in Contractor Loan Fund

Critic asks how loan program fits in with mission of district

By Gloria Lloyd

The Metropolitan St. Louis Sewer District Board of Trustees has given preliminary approval to participate in a regional plan that will provide low-interest loans to minority- and women-owned business enterprises, or MWBE.

MSD would be the first public entity to sign on to a regional plan spearheaded by St. Louis County Executive Charlie Dooley and St. Louis Mayor Francis Slay to promote a Contractor Loan Fund with public and private money. MSD agreed to provide up to $250,000 to the fund.

The board voted 5-0 at its May 8 meeting to sign on to the plan, after a presentation from Dooley and Slay representatives at the district’s April Stakeholder Relations Committee meeting. Trustee Valerie Patton, appointed by Dooley, was absent.

MSD approved diversity requirements for its contractors last year, but contractors have had some difficulty meeting those goals, MSD Public Information Manager Lance LeComb stated in an email to the Call.

“We are starting to see this in some aspects of our capital program,” LeComb wrote. “Overall, and speaking for the capital program as a whole, we are starting to see what I would term ‘stress’ in the ability of the firms we do use having the capacity to fulfill the requirements.

“Ergo, we are being proactive on this issue before it becomes a problem/a larger problem in reality. We also know that other entities in the region are already seeing this as a reality in their activities and are seeing a lack of minority and female-owned firms in their work.”

Last year, the district set a goal that on its construction contracts worth more than $50,000, 30 percent of subcontractors selected by bidding companies should have black or Hispanic owners, or show that they made a good-faith effort to recruit such companies.

Otis Williams, the executive director of the St. Louis Development Corporation, the city’s economic development agency, said the city has strong minority entrepreneurs, but access to capital is a problem.

“We have strong support from a number of both private and quasi-governmental entities, all realizing we needed to do something to help with the minority and women contractors’ growth and access to capital,” he told the Call.

The night the board gave approval to participating in the loan fund, longtime MSD critic Tom Sullivan questioned what it had to do with the district’s mission.

“It has to be questioned why MSD will be involved in this. How would it work? Is it legal? How would it be decided who gets the loans?” Sullivan told the board. “It should be remembered that the long history of corruption and crooked dealings at this sewer district bears little reason to believe this would be operated any differently.

“I think the program needs some rethinking. MSD needs to focus on fixing sewer problems, which you’ve done an exceptionally poor job with, and not get into business development.”

The loan fund is legal, LeComb said.

“We wouldn’t do something that was illegal,” he told the Call.

The loans would not be administered by MSD, but instead by the Contractor Loan Fund, which is projected to reach $5 million in capital. Slay and Dooley are promoting the fund as a way to increase minority and female participation in the $10 billion of major construction projects the region will host over the next 20 years.

Requirements for loans will be relaxed compared to traditional bank loans, interest rates and fees will be lower and the amount of the loans from the $5 million fund will range from $5,000 to $1 million. Decisions on who receives loans will be made by a loan committee, which is yet to be designated by the working group overseeing the fund. MSD is part of the working group, along with other government agencies and companies.

In a letter to MSD about the fund, Slay and Dooley wrote, “The commitment and involvement of all the citizens, businesses, and institutions in our community is necessary to achieve, and surpass, the inclusion levels of other great cities. Through sustained effort towards the development and growth of our minority and women contractors and affiliated industries, we can stimulate economic growth, create jobs, spur investment, generate increased wealth, and enhance the quality of life for all in the St. Louis region.”