Diversity playing a key role in Nashville’s new convention center

Monday, April 28, 2008 at 1:58am

Construction teams have been working for months building their partnerships in order to chase contracts to build the Nashville’s new downtown convention center, the largest construction project in the state's history.

The contract is valued at $338 million for just the convention center and bids for construction management services are due Wednesday.

Who wins will depend partly on minority participation in the teams.

The goal is 20 percent participation for small, women-owned and minority-owned businesses. But it's not just about participation. The teams will be scored on their qualifications and experience across the board and that includes the minority partners.

“It depends how they are used in the job and what their experience is,” said Phil Ryan, executive director of the Metropolitan Housing and Development Agency, on evaluating the minority partners on the teams.

In the case of the major minority partners in the three teams expected to bid, the experience varies from none to highly experienced. With one, Pinnacle Construction Partners, the construction industry has been buzzing because of who is involved. The founders lack construction experience but do have political influence, prompting questions of conflict of interest.

New partnerships

Darrell Freeman, founder of Zycron Inc. and chairman of the Nashville Area Chamber of Commerce, formed the company with entrepreneur Michael Carter and teamed with Skanska and American Constructors to vie for the convention center work.

As Chamber chair, Freeman played a major role in pitching the need for the convention center.

Each of the teams intending to bid on the project has spent the past year building their partnerships and recruiting minority subcontractors they can use should they win, each employing a different philosophy.

“Our objective was to get people on our team who have built stuff,” said Steve Campbell, director of business development at Bell & Associates Construction. Bell is teamed with Bethesda, Md.-based Clark Construction Group.

Their minority partner is a different partnership of three minority-owned companies. Harmony consists of Nashville-based firms Don Hardin Group, Hermosa Companies and Knoxville-based East Tennessee Mechanical Contractors. These companies and teamed up before the convention center was an option.

“We’ve worked projects together for years,” Hardin said.

They decided to construct an office building and be the tenants and pay rent to themselves, he said.

East Tennessee Mechanical Contractors has done work at Oak Ridge. Hardin has been involved with construction at Nissan in Smyrna and in Mississippi. Hermosa has been involved with the construction of medical office buildings.

“These guys have a pretty significant role in our group,” Campbell said.

Indianapolis-based Hunt Construction teamed with Nashville-based Hardaway Construction and took a different approach to minority partners in the team.

Hunt landed Atlanta-based H.J. Russell & Co., the largest minority contractor in the Southeast. In Nashville, Hunt brought in SRS Inc. of Gallatin.

“Our goal was to find four companies in Nashville that together were the size of SRS,” said Bill Palmer, vice president of business development for Hunt. “We couldn't find it.”

SRS isn't just along for the ride either.

“Everyone has a stake in the game,” Palmer said.

All of the partners are bonded and have risk.

SRS expects to do $40 million business this year. Most of its construction management work has been with Fort Campbell but also has done work for the U.S. Department of Veterans Affairs, Corps of Engineers and Metro.

For its team, Skanska created a minority partner company from scratch by working with Freeman and Carter.

“We thought about who large minority contractors are in the Southeast region,” said Joe Hatch, co-chief operating officer of Skanska.

Hatch said H.J. Russell was the only one and that Nashville needs a large, capable minority contractor. H.J. Russell has teamed with Indianapolis-based Hunt Construction and Hardaway Construction of Nashville.

“Nashville, Tennessee is ready for a company along those lines,” he said of H.J. Russell.

Hatch said he knew Freeman and Carter from non-profit work and chose to bring them together on the company.

“I know Darrell Freeman and Michael Carter don't have an ounce of construction experience,” Hatch said.

He said when he met with Freeman and Carter, he told them, “This is not a free ride.”

They have to contribute and work, Hatch said, adding that there have been monthly meetings in the chase.

Pinnacle hired an experienced construction industry veteran in Dale Randels Jr., who had previously been a vice president with Heery International and overseen $6 billion in commercial construction, mostly building schools.

Hatch said he and American Constructors helped review the candidates for Pinnacle's chief executive officer.

Music City Center conflicts

Hatch conceded his group did consider the issue of a possible conflict of interest concerning Freeman and the conventions center project.

Freeman is in his second term as chairman of the Nashville Area Chamber of Commerce, one of the most active participants in the Music City Center Coalition — the group that lobbied Metro and state government for the convention center project.

Hatch said they had talked about it and that Freeman talked to business and city leaders about whether would be. Hatch said Freeman was told it wouldn't be a conflict.

"We were cautious about it," he said, adding. "We are not surprised that people are wondering about it and thinking about it."

Recently, the partnership involving Freeman submitted an unsolicited query letter to MDHA suggesting the city award a different contract for one company to be the overall developer of the convention center, an adjacent hotel and other ancillary developments.

Freeman said the effort was not an attempt to wield influence.

"We're a community of volunteers,” Freeman said. “…We are not trying to bring that to bear on this process. To think we could influence that would be stupid of us."

Getting over the fear

Going beyond the experience of the minority partners with the general contractors, each of the teams has been holding recruiting sessions with various potential small, women-owned and minority-owned businesses.

Hunt's Palmer said it's important with projects the size of the convention center help bring the subcontractors up and show them how to improve their business so they have more experience to chase future projects.

Joe Shaw with SRS said a lot of the subcontractors live check-to-check and struggle with cash flow. That is where the general contractors can help by showing the subs how to bid and how to improve accounting, Shaw said.

"That knowledge will help them get over their fear," he said.

Government tends to use public building projects to boost the local economy through helping minority contractors get work.

"The convention center will benefit a lot of smaller homegrown companies that we work with," Hardin said.

That can be a challenge, said Kirk Huddleston, director of corporate and community development for Knoxville-based Blaine Construction, which isn't chasing the convention center work and may go after the expansion at Gaylord Opryland Resort & Convention Center.

Huddleston is on the Knoxville Airport Authority. He said the airport tries to hit the goals of more diversity business enterprise but falls short.

"Sometimes it gets a little disheartening," he said. "It's hard to fit all the pieces together."

But he was in Nashville for he pre-bid conference on construction management services and said the room was half filled by small, women-owned or minority owned businesses.

"There were some sharp folks in there," he said.

Filed under: City Business
By: frank brown on 12/31/69 at 6:00

Anyone who thinks this city needs a new convention center at this particular time should not be considered "sharp"

By: producer2 on 12/31/69 at 6:00

Frank,what do you base that information on? I just spent a week with the CVB in Dallas going to a variety of different sales calls trying to attract meetings and conventions to come to Nashville. Guess how many of those parties are seriously considering either Gaylord or the new MCC? Before you ask It si not an either or situation but believe it or not many WANT to come downtown.

By: idgaf on 12/31/69 at 6:00

They are talking like this is a done deal. Does it not need council approval to spend that kind of money or are they going to wait until they can tell us its to late to stop it?

By: BigPapa on 12/31/69 at 6:00

Its done. They are already getting inquiries on the current convention center property.

By: producer2 on 12/31/69 at 6:00

The resolution passed by the Metro Council set the wheels in motion and allowed for expediture of funds collected by the Hotel/Motel tax be used to begin infrastucture and prep work on the site. The bids are due this week from architecural firms interested in this project and there whould be a dicision made by the end of next month.

By: shinestx on 12/31/69 at 6:00

The Freeman/Carter partnership with Skanska just does not pass the smell test. Freeman is much too politically involved to be accountable to a third party with a third of a billion of the taxpayers' dollars.

By: idgaf on 12/31/69 at 6:00

All these debts will bury us as a city that is a nice place to live.We will become another detroit occupied by the homeless,illegals and welfare recipiants.

By: Time for Truth on 12/31/69 at 6:00

"The largest construction project in the state's history

By: Time for Truth on 12/31/69 at 6:00

I notice producer2 said 'Gaylord OR the new MCC'. Which brings up the question; Why are the taxpayers giving a corporation that has more than maxed out its welcome at the trough more money to help them compete with the city facility? Wake up everyone. This thing is a bad joke that may really happen. Directly or indirectly everyone in the state will end up on the hook to pay for the gross misuse of funds this funding plan represents.

By: Magnum on 12/31/69 at 6:00

Correction T4T...it is (not may) going to happen. I hate it, but the wheels are turning.

By: girliegirl on 12/31/69 at 6:00

The wheels have been turning now for months....as per the politicos.

By: tv8527 on 12/31/69 at 6:00

I talked to my council lady last week & asked why the convention center couldn't be privately funded.I informed her convention centers are a loosing proposition & don't pay for themselves.She told me the new portion of the motel hotel tax will pay for it & that the old convention center paid it's self off a couple of years ago including the renovations.I am having a hard time believing the tax will pay for the project & it's upkeep.

By: Time for Truth on 12/31/69 at 6:00

To misquote Yogi Berra, "It ain't over 'til the fat Chamber guys stuff money into their pockets". But it is hard to stop a steamroller when those who have access to politicians are fueling it, and the sound of their spin drowns out the voices of citizens.

By: Dragon on 12/31/69 at 6:00

I just don't trust Freeman, the man who lobbied for this thing and who wants his company (Pinnacle Construction) to run it. I'm sure that he would also push for Zychron to supply the IT portion."We're a community of volunteers,” Freeman said. “…We are not trying to bring that to bear on this process. To think we could influence that would be stupid of us."Right. It's only coincidence that Freeman would profit most handsomely. Oh, by the way, Mr. Freeman is a minority. Point, set, match.

By: Magnum on 12/31/69 at 6:00

I think it would be cheaper to just pay Freeman a few million to drop the idea. At least we wouldn't be left with a failing convention center and the enormous hole it will generate in operating expenses.

By: girliegirl on 12/31/69 at 6:00

Awesome job, Dragon! Knocked that one right out of the park! Freeman's just loading his pockets on a sure bet since the economy has "slowed".....

By: NewYorker1 on 12/31/69 at 6:00

Oh well, life goes on with or without Miss Convention Center. I don't think any of us will be taking our last breaths because they build this thing. Besides, I'm still beautiful and that's really all that matters.

By: idgaf on 12/31/69 at 6:00

This thing is going over a BILLION before its completed.

By: dnewton on 12/31/69 at 6:00

Are we going to have to put together a guilt program to make it up to all of the minorities who buy into this fiasco and either lose their business or end up with less cash in their pockets than they were promised? The old convention center receives a subsidy every year for operations. To say that the new convention center will be paid totally from the users is nothing but an old Jedi mind trick to fool the weak minded. In 2007, the old convention center was budgeted $3,561,300. $2,155,300 was debt service. The principal has been paid off but I noticed that there is still payment of interest going on in the 08 Metro Budget(?). Even though there is a lot of money generated from the motel tax, estimated at $25 million this year, it is already divided six ways. The convention center had to have tax transfers of $4,264,700 budgeted for the years 06,07,08 to make up for the differences in expenses and income. Total Revenues, including subsidies for the old convention center is only about $6.3 million per year. It takes a yearly revenue stream of $25 million per year for 40 years at a discount rate of 5% to justify an expenditure in the present of $428.9 million dollars. This project needs over 4 times the income(all kinds) that it is currently getting to justify just the cost of the structure. Even though the motel tax produces income to the general fund, nearly $4 million dollars a year, those revenues are not profit. They should reflect the incremental increase in the government costs of coexisting with the burdens of a convention center. When a tourist flushes a toilet or gets arrested for soliciting a prostitute, is the cost to metro different or even less than anyone else? If the yearly cost of public safety, sanitation, transportation and other infrastructure costs associated with the convention center are not met then the taxpayer has to make up the difference. This convention center is a huge financial risk. If it were not for legal loopholes for large population cities, the borrowing for a project this size would be illegal in the state of Tennessee because of the ratio of total debt to the value of property. Even if you pretend that this is a revenue generating project, bonding agencies are free to attribute this debt to a governments general obligation debt. This could degrade the quality of the risk to potential loaners and cost the taxpayer even more money. If that happens everything including schools and other legitimate government operations financed with debt will cost more. This convention center can not be privately funded because it will lose money and the banks and lending organizations know that it is not viable without government money.

By: nashbeck on 12/31/69 at 6:00

I'm excited about the convention center. I hope a beautiful and tall convention center hotel is built as well. I think it would be great for downtown Nashville.

By: Time for Truth on 12/31/69 at 6:00

Let's see, 700 mil divided by 25 mil equals 28. So assuming the cost overruns are minimal, the MCC at least breaks even every year, the MCC gets 100 percent of the hotel motel tax applied to its budget and Nashville can secure interest-free loans to build the big turkey, it will only take 28 years to pay it off. Hahahahahahahaha. Clown Jewel indeed!

By: Time for Truth on 12/31/69 at 6:00

Producer, people may want to come downtown for a concert, a hockey game, or a meal but how many locals are actually going to hang out at the convention center? Raise your hand if you've actually spent two hours in the current convention center in the last year (not you, producer, we know you work in that business). A dwindling supply of bizgeek yokels with bermuda shorts and black socks will use the place for a few years while producer counts his money. Then as the convention industry fades into the sunset the majority of citizens who will never have set foot in the place will end up paying for it. Twenty years from now- still not paid for- it will be razed to build the needed income producing property and roads that are on the drawing board now, or it will be sold to the Union Mission for ten cents on the dollar to house transients.