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REAL ESTATE: A Home Court Advantage

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The new American Airlines Center in Dallas sets a new standard for minority participation in construction and operations.

For Adam Trevino, a successful bid on a project tied to the new $420 million American Airlines Center in Dallas was a significant milestone. The $2.5 million contract for the center’s parking garage amounted to approximately 10 percent of Trevino Mechanical Contractors’ revenues last year.

“It helped us tremendously. It was a big-profile job,” says Mr. Trevino, who at the time was vice-president of the company. “I think it exposed us to a lot more business opportunities.”

Mr. Trevino, now president of Vortex Construction, was among more than 105 minority business leaders whose firms participated in construction of American Airlines Center, a 20,000-seat sports and entertainment arena. The 840,000-square-foot arena’s construction and operation have been hailed for their landmark commitment to minority- and women-owned businesses. The project’s original minority participation goal, set at 25 percent, was quickly surpassed, and minority firms won contracts for 37 percent of the total work on the facility and its current operations. In all, contracts worth $94 million were awarded to minority- and women-owned businesses during the building and development phase, excluding the cost of land and improvements, according to officials.

The center, which opened in July, is home to the Dallas Mavericks basketball team and the Dallas Stars hockey team. It also is a venue for concerts and other entertainment and serves as anchor to the mile-long, 72-acre Victory development, which will eventually house up to 8 million square feet of entertainment facilities, shops, homes, and businesses. Like most venues in the country, American Airlines Center has grappled with a new emphasis on public safety. “We have taken steps to increase security for all events,” says Dave Brown, general manager of the center. The measures include more police officers, no backpacks, inspection of personal articles, and elimination of curbside parking.

The project first launched in 1998, when Dallas voters approved the city’s participation in the development of American Airlines Center. Officials established a minority participation goal of 25 percent as part of a fair-share agreement between the city and the Center Operating Co. (COC), the organization responsible for developing and managing American Airlines Center.

Two years later, minority participation is evident in every phase of the project, from construction to concessions. Moreover, the fair-share agreement extends to the entire Victory development, and minority firms have been encouraged to bid on a variety of contracts.

Diversity was an essential component of the center from its inception, says Minerva Hernandez-Hinkle, assistant vice-president in the office of minority affairs at COC. She credits the originators of the arena, Ross Perot Jr. and Tom Hicks, for setting the project on its path.

“We were successful because we had the commitment of the ownership,” says Ms. Hernandez-Hinkle. “When the leadership understands the importance of having minority diversity, then you will have success.”

Martin Burrell, vice-president of the office of minority affairs, agrees. “A lot of people say things, but they only provide lip service and don’t follow through,” he says. “In this case, the owners supported the program.”

Mr. Burrell emphasizes that the community’s support was essential to the project’s success. “We had to convince the community that this was what they wanted – and we made a commitment that the minority community would benefit,” he continues. “It has had an impact. Anytime you put $90 million in the hands of a community, you have a tremendous impact.”

Another important element was the understanding that the diversity goal was a floor, not a ceiling, adds Ms. Hernandez-Hinkle. “We wanted not just to hit that mark, but to go beyond it,” she says. “The underlying theme in all this is that you need to reach higher than your expectations. You need to push that envelope.”

To ensure the recruitment of minority contractors, the COC created a 40-member Minority Business Advisory Committee, which included members of minority chambers of commerce, the League of United Latin American Citizens, and the National Association for the Advancement of Colored People. The committee’s efforts helped the project reach minority groups throughout Dallas.

Representatives from the COC met with minority groups every quarter to make sure firms knew about upcoming bid opportunities. Minority contractors who participated in the project remember that outreach at the bid stage. “They were open to input from the community,” says Art Robles, president of the Hispanic Contractors Association of Dallas. He recalls that officials from the project met with his association’s vendors to discuss the impending project. “When they went to that length to reach out to us, I knew that the program would be very successful,” Mr. Robles states.

Lopez Electric received a $1 million contract to perform electrical work at the center – a significant sum, given that the family-owned business usually does about $7.5 million worth of business annually. “We had to bid everything competitively. It wasn’t a set-aside,” says CEO Ernesto Lopez. “I’ve been involved in other programs like this, and this was one of the most sincerely implemented.”

Integration of minority firms into the project has had an enormous ripple effect on the community. “We estimate that 80 to 88 percent of our [construction] work force in the Dallas area is Hispanic,” Mr. Robles explains. “However, many companies see us as laborers and not as contractors or subcontractors. That’s why this project was unique.”

Many people in the construction trade credit Austin Commercial, the general contractor on the job, with a genuine commitment to minority participation. Among its innovations is a mentor-protege program, implemented five years ago, in which 12 minority construction firms annually receive free training and specific guidance on how to succeed in the business. Since 1983, Austin Commercial has had a self-imposed minimum goal of 10 percent minority participation in all its projects, according to Eugene Walker, director of diversity affairs at parent company Austin Industries.

“This didn’t just start with this project,” Mr. Walker declares. “Austin Commercial has been a leader in diversity in this market for years. … The majority of our projects are in the private sector, where there aren’t [mandated] goals.”

Austin Commercial imposed the minimum participation requirement on all prime nonminority firms involved in the project, according to Mr. Walker. It was written into their contracts.

Mr. Walker emphasizes that his company’s policy on minority participation is a practical approach to business. “We realize that the minority community consists of taxpayers just like us. We get these huge projects and we target only 25 percent to go to minority groups and women,” he says. “That means there is another 75 percent out there that is allocated to nonminority firms. We look at it as an opportunity to tap into that other 75 percent and include women- and minority-owned businesses.”

Officials at American Airlines Center say the construction phase has demonstrated what can be accomplished when everyone works to increase minority participation. The same philosophy applies to operation of the complex. In May, COC formed a committee to ensure minority participation in the vendor side of the sports industry. “Part of our job is to serve as a community liaison by targeting new firms to add to the existing qualified base of contractors,” says Ray Quintanilla, president of Sierra Concessions and a member of the Minority- and Women-Owned Business Development Committee. The COC encourages minority vendors to visit their Web site at www.americanairlinescenter.com.

Mr. Robles believes the open participation policy makes it more likely that minorities will frequent American Airlines Center. “I take great pride in going to the center. I’ve been four times since it opened,” he says. “We feel we helped to build it, and not just as a labor force but as part of the decision-making process. It gives us a different sense of pride to say we were a part of this.”

In an ideal world, large public projects such as American Airlines Center wouldn’t need special efforts directed toward minority participation. In the meantime, the Dallas sports arena serves as a worthy model for other cities. “I’m hoping in the future that we won’t need these programs,” says Mr. Robles. “But until people look at us as equal players, the programs are needed.”

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