Minority business plan may be tested

Mayor's effort runs counter to prevailing judicial rulings

March 30, 2001|By Neal Thompson and Gail Gibson | Neal Thompson and Gail Gibson,SUN STAFF

A push by Mayor Martin O'Malley to recruit more minority businesses comes as courts across the country have struck down government programs that are favorable to a specific race, gender or ethnic group - including Baltimore's minority contracting policies.

But city officials say the outreach plan introduced by the mayor this week should escape legal challenges because it offers no preferential treatment to minority-owned businesses, which still must compete against other businesses for public dollars.

Reaching out to minority entrepreneurs is part of O'Malley's effort to expand business and employment opportunities in a city where 64 percent of residents are African-American. Constitutional scholars disagree, however, on whether the law allows the city to make that effort.

Michael I. Meyerson, a constitutional law professor at the University of Baltimore, said there is room for government to acknowledge racial disparities, even as affirmative action programs face increased scrutiny.

"A mere recruitment and outreach program doesn't seem to be favoring members of one race over another," Meyerson said. "The government doesn't have to be colorblind in recognizing there are racial issues."

But other legal experts say O'Malley's plan could be vulnerable to a constitutional challenge.

"If the intent of the program is to benefit certain racial groups at the expense of others, then it's unconstitutional," said Todd F. Gaziano, director of the Center for Legal and Judicial Studies at the conservative Heritage Foundation in Washington.

City officials describe O'Malley's five-year Minority Business Inclusion Plan as largely a series of marketing and recruitment objectives that will be pursued by the city's new Office of Minority Business Development.

City Solicitor Thurman W. Zollicoffer Jr. said the mayor's plan is not a city-approved ordinance or a set-aside program. Instead, he said, it is an effort to lure minority-owned businesses to town - specifically to the redevelopment of the city's west side and the ongoing creation of office space for technology companies, the so-called "Digital Harbor."

"That's an aspiration, a goal," Zollicoffer said. "But we're not going to be giving businesses away. ... They'll have to go through the same [Baltimore Development Corporation] process as majority businesses."

The BDC is the quasi-public agency that negotiates on the city's behalf with potential developers. Under the mayor's plan, minority-owned businesses would still have to submit development proposals to the agency and compete with other businesses. During that process, business owners could request low-interest loans or tax incentives.

"The mayor has a vision of an inclusive economic environment," Zollicoffer said. "If we can support other businesses, we should be able to support businesses that are minority in nature."

Gaziano said government leaders across the country have tried to shift the discussion about affirmative-action programs by turning to outreach programs. But he said such programs raise legal questions if their intent is to force a change in the racial balance.

"Either it has absolutely no effect, in which case it's a fraud and a sham, or it does have an effect, in which case it's unconstitutional," Gaziano said.

O'Malley's plan calls for identifying and recruiting at least five minority-owned high-tech or biotechnology companies, with an objective of bringing at least two of those companies to the city.

"They're more like marketing goals," O'Malley said yesterday.

It is different, O'Malley said, from a new city plan that sets as a goal awarding 30 percent of city contracts to minority contractors. That effort followed a federal judge's ruling in December 1999 ordering the city to stop enforcing a 20-year-old law that gave 20 percent of public contracts to minority firms and 3 percent to women-owned businesses.

U.S. District Judge Andre M. Davis, in response to a lawsuit by the Associated Utility Contractors of Maryland Inc., said the city had not collected data to prove there was a disparity that warranted correcting - the so-called "strict scrutiny" test established by the U.S. Supreme Court.

The city's response, approved last month, was to set goals for minority contracts instead of strict set-asides. Based on a study conducted last year on discrimination against minority contractors, the city set as a goal awarding roughly 30 percent to minority-owned businesses and 5 percent to women-owned businesses.

Across the country, other minority contracting policies have faced similar challenges in recent years after a 1995 U.S. Supreme Court decision that federal programs containing racial preferences were constitutionally suspect.

The high court agreed this week to hear a challenge by a Colorado contractor to a federal law that allows companies owned by blacks and other minorities special consideration as disadvantaged businesses, possibly opening the door for a stricter ruling on affirmative-action programs.

In response to the various court challenges, a number of states and local governments have scaled back or dropped affirmative-action programs. But Maryland has bucked that trend. The legislature this month agreed to set a goal of doing one-quarter of all state contracting business with minority businesses.

That move was hailed by black lawmakers, as was O'Malley's new plan this week.

The mayor has repeatedly called Baltimore a city where "the minority is the majority" and has taken some steps to include minority groups in his plans for the city's future.

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