News Column

New Day, Old Challenges

November 2004, HISPANIC BUSINESS Magazine

Joel Russell

USHCC convention attendees, including Chairman David Lizarraga (left), hold a ribbon-cutting ceremony for their annual trade show.
USHCC convention attendees, including Chairman David Lizarraga (left), hold a ribbon-cutting ceremony for their annual trade show.

After two years of internal struggle, the U.S. Hispanic Chamber of Commerce is enjoying a new-found solidarity with a newly elected CEO and a newly elected chairman. "The message I ask you to take back to your chambers and corporations is that this is a new day at the USHCC," Armando Ojeda, the organization's CEO, announced at the group's 25th anniversary convention in Austin, Texas, in September.

The new leadership marks a second chance for the organization, which in recent years saw the departure of CEO George Herrera, the resignation of J.R. Gonzales as chairman to take over as acting CEO, and finally the selection of Mr. Ojeda, and newly elected Chairman David Lizarraga. But the new team confronts familiar obstacles to business development: corporate and federal procurement, political advocacy, and access to capital.

Mr. Lizarraga ranks procurement as the biggest issue. "We have to work with our corporate partners and Corporate America, but also hold them accountable in how they deliver opportunities and extend themselves," he says. "Of course, a partnership goes both ways. We also have to provide supportive services to make that possible."

The USHCC Procurement Council is developing a database of the chamber's member companies and their capabilities. Once the system is built, corporate buyers can find Hispanic suppliers and the USHCC can facilitate a match. On the government side, Frank Rivera, the new USHCC vice-chairman, says the council will start by looking at the 10 largest federal agencies' purchasing to assess whether they are unbundling contracts to include small business.

For his part, Mr. Lizarraga sees progress on federal procurement occurring in tandem with raising the USHCC's political profile. He envisions formulating a bipartisan national Hispanic economic agenda starting at the local-chamber level. To fully leverage Hispanic power, the local, state, and national chambers should have a consistent message, similar to the way political parties operate. "If we can generate 200,000 letters to Congress, we'll prove that we can show up in big numbers and we're a premium demographic that they need to pay attention to," Mr. Ojeda notes.

The new leadership also plans to organize a private equity fund to reach the middle market. "Through Hispania, we have access to capital for very large, growing organizations," Mr. Lizarraga explains. "But we also need to establish a fund that reaches to $3 [million] to $5 [million] to $10 million needs. … We're talking about the capital needs to get to the next step up." Story continued below …

STEADY CREW


Despite a raft of new leaders at the USHCC, two key professionals – counsel Tom Stahl and CFO George Lasnier – remain firmly in place from the previous administration. Mr. Stahl, the organization' attorney for its entire 25-year history, ran the elections again at this year' convention, just as he did two years ago amid protests over the legitimacy of the process.

"I think the process was there before – nobody hid anything," Mr. Stahl tells Hispanic Business. "But I think communication has improved."

In weathering the USHCC leadership change, Mr. Stahl retains a valuable client. Based on five years of the organization's Form 990 (the non-profit equivalent to a tax form), legal bills average $84,595 per year. In 2001, the total reached $134,551 (to review the Form 990s, visit www.HispanicBusiness.com/go/ushcc).

On the financial side, Mr. Lasnier remains on staff after barely a year on the job. He tells Hispanic Business he expects to have the 2003 Form 990 ready for public disclosure "earlier than in past years, but not early enough," noting that historically the USHCC has taken every possible extension. Because the organization's financial year ends on March 31, extensions can defer filing until November.



Strategically, the fund would provide an example for other public and private money to follow. "Right now there's a lot of Latino money going into pension funds," says Mr. Ojeda. "We need to ask: Where is that Latino pension money going? Is it being invested in Latino businesses? Is it going to private equity funds like the one we want to set up, so we can actually generate some compelling business models?"

The USHCC already has relationships with several large banks, but furthering access to debt capital remains an issue for the organization and its member chambers (see accompanying story, "The Florida Banking Challenge").

The fresh enthusiasm at the USHCC convention represents a dramatic turn-around from the 2002 convention, when state and local chambers mounted a public protest against the exclusion of chambers and candidates from board elections and the lack of transparency in USHCC leadership. But the question remains whether the organization can put internal politics behind it and get back to business.

"In the last two years we've gone through a period of growth and re-adjustment," Mr. Lizarraga concedes. "Our concern is that we need to be equipped as an organization to support our members in the effort to get a bigger piece of [the Hispanic] market and the national market."

THE FLORIDA BANKING CHALLENGE


In a spare moment during the USHCC convention, Chairman David Lizarraga met with a delegation from Florida to discuss the latest struggle in the long campaign for minority access to capital. The Florida issue centers on a group of 42 minority business organizations, including seven Hispanic chambers, that want Bank of America to commit to a $150-billion minority investment program over the next decade. While most of the money would go toward affordable housing and home mortgages, $32 billion would be small business loans.

"I have never witnessed a state such as Florida where minority community development organizations are treated as second-class citizens," Al Piña, chairman of the Florida Minority Community Reinvestment Coalition, said in a letter to Mr. Lizarraga and leaders of other national organizations.

Mr. Piña bases his Bank of America goals on a $21-billion agreement announced by Wachovia Corp. as part of its merger with SouthTrust in August. In the Wachovia case, Mr. Piña and other advocates leveraged the influence of public pension funds with significant stock holdings to lobby on their behalf. With B of A, Mr. Piña plans a similar strategy with the USHCC and other national organizations.

"We are asking for national support," says Mr. Piña, a former part-time employee of Mr. Lizarraga at TELACU. He wants the USHCC to act an an "intermediary," both in negotiations with major corporations like B of A, as well as in helping build local Hispanic chambers, which are often small and financially struggling. "The only way to catch up is get national organizations to come in."

For its part, Bank of America says that according to the most recent data available it is No. 1 in Florida in home-mortgage lending to minorities. "Bank of America is the No. 1 SBA lender in Florida, including the No. 1 provider of SBA 7(a) loans to minorities," says spokesman George Owen.

For now, the FMCRC has set up a meeting between Mr. Lizarraga and the corporate leaders at Wachovia next month. Discussions will center on Florida, but also include Hispanic opportunities throughout the bank's service area along the Atlantic seaboard. And Mr. Piña hopes to restart negotiations with Bank of America. In time, he believes Hispanics must use competitive pressure as a bargaining chip – a process in which Hispanic chambers can play a central role.

"Capital is the end goal – capital for homes that can eventually capitalize businesses," says Mr. Piña. "But it's going to take specific programs that drive business to these banks so they won't take our community for granted."



Read a transcript of Hispanic Business' interview with USHCC Chairman David Lizarraga>>



Source: HISPANIC BUSINESS Magazine


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