HispanicBusiness

Trailblazers always face obstacles. For the Hispanic chamber of commerce in Odessa, Texas, the opposition comes from an unfriendly city council, other chambers of commerce, the media, and even the federal government. But the organization, called the Mexican American Network of Odessa (MANO), has triumphed to become a model Hispanic chamber. MANO’s victory shows how the growing power of the Hispanic market can overcome entrenched interests – a scenario replaying across the country, according to experts in economic development.

The trouble in Odessa traces back to 1996, when MANO conducted a survey of local Hispanic entrepreneurs. The research indicated that access to capital ranked as a major stumbling block. In response, MANO offered in 1998 to take over a failing business loan program run by the city government. MANO ran the program successfully until last year, when an audit by the Housing & Urban Development Department, whose grant underwrote the program, turned up lax record-keeping on outstanding loans.

HUD ordered the city to take full control of the loan program pending compliance with documentation rules. In fact, the paperwork problems began long before MANO took over the program, according to MANO Executive Director Iris Correa.

“The city had failed [the program] for so many years,” she says. “We took it without administrative costs, and we gave [the city] the interest it generated. It showed we were filling a void. … We asked for technical assistance, and the city wouldn’t move on it, and HUD wouldn’t either because we were the subcontractor.”

Jaime Rodriguez, a member of the Odessa City Council from 1986 to 1990, says the program produced “zero return” during the five or six years the city managed it. The program’s first three loans lost nearly $100,000. When MANO took it over, regular interest payments started coming and the loan program gained new life. “The city council thought [MANO] would mishandle it, and they could end the program,” says Mr. Rodriguez. When the program turned around, the council “wanted it back, to do away with it or get the payments. Either way, it was going to be egg on the council’s face.”

“Both parties [MANO and the city] were not counting on such a successful program in such a short time,” states Hiram Hubert, a Texaco executive who served on the program’s loan committee. In particular, Mr. Hubert remembers the city council’s approval for repayment on the loans.

Richard Sambrano, a Justice Department mediator involved in several Odessa disputes, says an investigation into the loan paperwork couldn’t determine who bore blame for non-compliance with HUD rules, but MANO received most of the resulting bad publicity. “People should be more vigilant in defining where they receive money from,” he says. “In this case, MANO received money from the city. The city should have done more training. HUD should have been there. It seems MANO got the rap, and they didn’t deserve this. It is well known among chambers as a trend setter.”

Negative publicity adversely affected some of MANO’s operations, specifically in the banking community. “The loans were never make-it or break-it funding for these businesses, but it could get them over the size threshold to go to the banks,” explains Mr. Rodriguez. When the program turned into a public issue, the bankers “played politics,” in the words of Ms. Correa.

In August 2001, “the loan program was performing at optimum level and the loan program leadership planned to graduate performing loans to local banking institutions,” Ms. Correa recalls. “It became apparent that the city council members applied pressure to some of the bankers, [who] rescinded their original decision to assist the loan program. Some of the bankers were candid enough to admit that they based their decision on negative publicity.”