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Wall St. and Business Wednesdays: Minority Contractor Says Minority Contractors Are Too Expensive by Lynn Stevens

If they had bid competitively, Phyllis Watson would have hired Benton Harbor construction companies gladly. But they didn't.

Watson told city commissioners at their regular meeting Monday night that she tried very hard to use city companies as subcontractors. But their prices were too high for her budget for the low- to moderate-income houses, and their bids were not submitted on time.

Commissioner Etta Harper last week had called for an inquiry into why Watson's company, HER Construction, had not used locals to dig or pour foundations for the first of 54 houses planned for the Bellview neighborhood. Harper was concerned that Watson sold her plan in part because she is black, but she had no black Benton Harbor residents on her building crews.

"Costs have to be affordable so houses can be affordable," Watson told commissioners.

Watson said she came to Benton Harbor from her home base, Muskegon, with a clear plan for building and selling the 54 houses over five years. She said she predetermined costs and expected her subcontractors to stay within those bounds.

She calculated $57,000 per house in labor and materials. Watson said building inexpensively does not mean building cheaply. As an example, she said doors that might cost a custom builder $800 apiece cost her $200 because she buys in quantity.

Another savings comes from doing several houses at once. HER Construction hired a St. Joseph contractor to grade three home sites. He bid $1,000 for all three lots. She did not use the Benton Harbor contractor who wanted $4,200 for each one.

HER Construction ran into similar problems with the poured-concrete basements. One Benton Harbor contractor bid $13,000 each. Another said he could not do three at once, but would hire others to get it done at $7,000 each. Watson hired an out-of-town contractor who came in at her much lower limit.

She ran into different problems hiring laborers.

"I started with Michigan Works!," Watson said. "They couldn't find local people for me. They're not trained, not qualified.

"Then the trades! How many electricians and plumbers that are licensed are there in Benton Harbor? You've got to start developing the trades in the city. People aren't qualified or licensed."

Watson told commissioners she has not reneged on her promise to hire local companies whenever possible. However, they have to understand her team concept of construction and be willing to work as subcontractors rather than as general contractors.

She said she will continue seeking local laborers. She pointed out that she has a local recruiter, Kevin Hunter, who is a journeyman carpenter. She said her husband also is on site at least twice a week to make sure local residents who want to work get opportunities.

HER Construction is building the houses without any federal, state or city funding. A check before the meeting with a Benton Harbor engineering company indicated Watson went above and beyond what private developers ordinarily do. She solicited local bids, then twice extended the deadline when one contractor failed to meet it.

"If it's private money solely, they're not bound by any of a city's rules regarding contracting," said Chris Cook of The Abonmarche Group. "There's no requirement to even solicit any number of bidders or even to advertise for bids.

"The norm for private work is there isn't a norm, and it's pretty much whatever the owner wants to do."

Note: This article first appeared in The Herald Palladium under the title, " Minority contractors too expensive, builder says"

Copyright 2004 The Herald-Palladium

Wednesday, January 7, 2004

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