The Daley administration helped put an influential African-American entrepreneur into business last year with a bargain-rate loan, and a few months later it awarded his company a multimillion dollar concrete contract after restricting bidding to firms owned by minorities or women.
The result: Taxpayers are spending nearly $3 million more for the concrete purchased from the firm, Speedy Redi-Mix, than they would have otherwise, according to city records.
The contract was granted at a time when Mayor Richard Daley was laying off employees, cutting worker overtime, trimming other expenses and generally tightening the city’s belt because of tough financial times.
City officials insist that Speedy was given no special consideration despite its connections.
The company’s chief executive is Edward Forte, a veteran businessman and leader of Black Contractors United.
Forte, 47, was in the news recently when he was arrested after guard dogs at his South Side headquarters attacked a young passerby. A few months before, he also was in the public eye, but for a much different reason.
On Feb. 10, several months after benefiting from the city loan and contract, Forte spoke at a news conference where Black Contractors United threw its political weight behind Daley, endorsing him in the Feb. 25 mayoral election.
Forte, chairman of the group, cited the mayor’s promise to involve the organization in several big new construction projects, as well as Daley’s legal defense of the city’s affirmative action contracting program. A suit challenging the program went to trial in federal court on Monday.
Attempts to reach Forte for comment were unsuccessful.
Documents filed with the city show that Speedy’s vice president/secretary is Julian Bertrand, while Jason Bertrand is its chief financial officer. The men are the sons of the late Joseph Bertrand, a one-time 7th Ward alderman who served in the 1970s as city treasurer under the late Mayor Richard J. Daley.
The company’s owner is listed as Cordia Morgan-Forte, wife of Edward.
In years past, one company supplied concrete for all sidewalk, alley and other construction projects citywide. But in 2002, officials decided to break up the work. The central and northern portions of the city were bid under separate contracts.
So was the southern section but–in another break with the past–that contract became part of the city’s Target Market program, a set-aside initiative that allows bidding only by companies owned by minorities or females.
Target Market is designed to create opportunities for firms that are typically small and therefore have a hard time competing, a goal strongly supported by Daley. The mayor has come under fire from critics who contend that minority companies, particularly those owned by African-Americans, don’t get a fair share of the city’s $1.5 billion-a-year contracting pie.
But the change in the concrete contract was costly, according to city records. Speedy won the three-year pact last October with a bid of $11.7 million, bettering a $14 million proposal by Aztec Material Supply, the only other minority company to seek the business.
One bid was rejected because it came from a non-minority firm not authorized to compete under Target Market. The Tribune learned under the Freedom of Information Act that the bid was for slightly less than $9 million.
Jessica Maxey-Faulkner, a spokeswoman for the city’s Procurement Department, declined to comment on the bid, submitted by Ozinga Chicago RMC, Inc.
“Because it was disallowed, I cannot legitimize it,” she said.
Ozinga previously held the citywide contract and bid on the south zone work even though it was designated for the Target Market program. Officials of the firm were unavailable for comment.
A number of social benefits stem from set-aside programs, from creating entrepreneurial role models to providing jobs to minority and female workers, said Dr. Robert Ethridge, president of the American Association for Affirmative Action and vice president of the equal opportunity program at Emory University.
Government should be willing to spend more for set-aside contracts, he said.
“Fifteen or 20 percent (higher) wouldn’t be out of the ballpark,” he said.
Speedy’s bid was more than 23 percent above Ozinga’s.
Chicago’s concrete contract was split “because there are very few vendors with capacity” to handle a citywide commitment, Maxey-Faulkner said.
“The project was divided into three areas to extend economic opportunity to other providers. One area was let [through] Target Market, and that was to further extend economic opportunities to a female- or minority-owned firm.”
But there are only three ready-mix firms, including Speedy, that are certified to bid under Target Market, Maxey-Faulkner said.
Speedy’s yard is on the South Side, but the south section of the city was selected “at random” for inclusion in the program, she said. Officials “just split the project up and chose one area and made it south.”
Political connections played no role in Speedy’s contract award, she said.
Several months before Speedy won the pact, the City Council approved a city Planning Department recommendation to grant the fledgling company $2.7 million in industrial revenue bond financing to help it build its concrete manufacturing facility at 100 E. 65th St.
Because interest paid to the lender is tax exempt on industrial revenue bonds, borrowers receive lower-than-market rates.
“The department issues these tax exempt bonds to finance new construction, renovation or acquisition of fixed assets,” said Peter Scales, a Planning Department spokesman. “It’s to foster growth. It is an incentive to build and create jobs.”
Ald. Arenda Troutman (20th) went to bat for Speedy, which is located in her ward.
“The opportunity for a company of this nature to expand would have a significant impact on our community,” Troutman said in an April 2, 2002, letter to Planning Commissioner Alicia Berg. “From an economic standpoint, five new people from our area would be hired full-time upon completion of this project.”
The letter was contained in the company’s application file for the financing.
Attempts to reach Troutman for comment were unsuccessful.
Any political connections “weren’t a factor” for the city, Scales asserted. “It was a company that was looking to expand on property they owned, and they were looking for financial assistance to do so.”
With tax exempt status provided by the city, Banco Popular made the loan to Speedy. A spokeswoman for the bank declined to reveal the interest rate, citing client confidentially.
Officials at City Hall do not know the rate that ultimately was set because the city is a merely a “conduit issuer” of the bonds and not involved in negotiations between lenders and borrowers, Scales said.
In Speedy’s application for bond financing, Forte cited extensive business experience. He was vice president of SureityTrucking Co. from 1979 to 1982 and as president of two other companies from the mid-1980s to the present. They are Jet Disposal Inc. and Chicago Asbestos Corp., an asbestos abatement firm. Records suggest that he has had problems meeting tax obligations. Since 1992, documents show he has been hit with more than $1.3 million in federal and state tax liens.
