News Column

A Model Chamber Tackles Complex Issues

July/August 2002, HISPANIC BUSINESS Magazine

By Joel Russell

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.”

The underlying motive behind the entire loan controversy, Ms. Correa and others maintain, was the growing power of Hispanics in the local economy. Odessa, a city of 90,000 located at the western base of the Texas panhandle, saw its Hispanic populace grow by more than 10,000 between 1990 and 2000, according to Census data. As a result, the Hispanic proportion of the city’s population shifted from 31.1 percent to 41.4 percent.

For a Hispanic community intent on wielding its new-found economic and political power, the MANO loan program became a flash-point issue. Several city council members sought to dispel the threat by questioning the need for a local Hispanic chamber. “We only need one chamber to work for the whole community,” council member Brandon Tate told the Odessa American last August. “We don’t need to be divided into separate entities.”

Added council member Jim Morris: “We only have one city. Why don’t we have one chamber?”

“It is impossible for general chambers of commerce to meet market demands they have ignored for years,” answers Ms. Correa. “MANO was not chartered to compete with other organizations; MANO was chartered to fill a void that had existed for years.”

MANO represents a model Hispanic chamber in part because other Hispanic chambers will soon confront the same situation, according to Ricardo Calderon, chairman of the Texas Association of Mexican American Chambers of Commerce (TAMACC). “There is friction among nonminority community members as their communities grow more Latino,” Mr. Calderon says. “I have consistently advocated that all communities benefit tremendously from having a Hispanic chamber of commerce, in addition to their regular chamber and economic development agencies. By having a Hispanic chamber, each community is represented in many more venues and forums than if they did not have a Hispanic chamber. … Having different chambers doesn’t dilute their strength, it only increases it.”

MANO also finds itself on the cutting edge because it has moved into new areas of economic empowerment. It offers certification assistance for Small Disadvantaged Businesses, 8(a) companies, and federal HUB Zone businesses. Mr. Calderon credits MANO as the first Hispanic chamber in the nation certified as a community development bank. Ms. Correa adds that MANO is the only Hispanic organization in the history of Odessa to receive city funding, and the amount – $60,000 for MANO, compared with $1 million per year for the mainstream chamber of commerce – reveals yet another battle against discrimination (see accompanying article, “Natural-Born Organizer.”)

For Ms. Correa, the solution in Odessa has a tinge of poetic justice. It appeared a stalemate, with MANO and a 3–2 majority of the city council fighting for control of the loan program. But in the May 2002 elections, Mr. Morris lost his re-election bid. “The country-club crowd is what we were up against,” Ms. Correa says. “The woman vote and the Hispanic vote defeated him.”

Cathy Herzog, the new council member, immediately pushed for reconciliation. “That changed the mentality of the council,” says Mr. Rodriguez. “That one person not getting re-elected was the difference.”

In the final settlement of the loan conflict, the City of Odessa will give the loan program back to MANO. In return, MANO will prepare an annual report on the program’s performance. The Odessa City Council approved the agreement unanimously.

Mr. Sambrano hopes to organize a “healing meeting” where all parties can participate in bringing the community together. But in other communities, the battle has barely started. Mr. Calderon notes that other Hispanic chambers plan to venture beyond their traditional roles into such areas as community development banking and affordable housing, and new tensions will loom. “If not for the extraordinary mediation by the Department of Justice, every Hispanic chamber in the country would have been subjected to the same kind of opposition [as MANO] from nonminority communities,” he says.

Ms. Correa agrees, pointing out the demographic shift that underpins the trend. “With the continued growth of the Hispanic population and the aggressive approach that is necessary to meet the demands of the underserved market, more resistance will evolve throughout different parts of the country,” she predicts. “Our experience will serve as an example for other communities whose leaders are of the opinion that there is no need for a Hispanic chamber.”


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