Group sues Milwaukee over minority-preference ordinance (UPDATE)

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The Hispanic Chamber of Commerce of Wisconsin is suing Milwaukee to kill an ordinance that sets race-based preferences and goals for city construction contracts.

The preferences fall under ordinance 370, which took effect Jan. 3 after the city hired D. Wilson Consulting Group LLC, Jacksonville, Fla., to conduct a disparity study. The company examined closed construction contracts between 2005 and 2008 between the city and minority- and women-owned businesses.

The study helped the city break down who received set-aside money on projects and guided the city’s development of the ordinance. According to the study, Hispanic and Native Americans obtained the highest percentage of set-aside money on projects, so the city adjusted the percentages.

Ordinance 370 establishes specific percentage set asides for companies certified as owned by African Americans, Asian Americans and women. There also is a 12.05 percent set aside for all companies certified as small-business enterprises.

The overall set aside for each project adds up to 25 percent, but Hispanic and Native American contractors only can bid as SBEs. Before ordinance 370, all minority- and women-owned contractors, including those owned by Hispanics and Native Americans, were eligible for the full 25 percent.

But the city shouldn’t have broken down the set asides based on specific races, said Maria Monreal-Cameron, the Hispanic Chamber’s president and CEO, during a news conference Tuesday announcing the lawsuit.

“Ordinance 370,” she said, “ignores the voice of all small-business owners who feel there is no need for race-based quotas.”

To fight the ordinance, Monreal-Cameron said, the chamber hired Milwaukee-based Michael Best & Friedrich LLP to determine whether the disparity study legally is sound.

It’s not, said Paul Benson, a Michael Best attorney who is working on the lawsuit. In fact, he said, the $350,000 study is filled with inaccuracies and bad data.

“The law firm,” Benson said, “conducted an in-depth analysis and concluded ordinance 370 is not based on a compelling interest and is not narrowly tailored.”

The chamber notified the city of the lawsuit Thursday, said Deputy City Attorney Linda Burke, and the city is reviewing the case. She declined to comment further.

The study doesn’t even prove there is racial discrimination, Benson said. While reviewing the disparity study, he said, his law firm found that 7.1 percent of survey respondents used in the study claimed to have been discriminated against in city contracts.

The study also included professional service contracts based on eight counties outside of Wisconsin, Benson said.

Some of those counties, he said, are in Illinois, California, Texas, Arizona and Washington.

“For the life of me,” Benson said, “I can’t figure out why a disparity study included these counties.”

A woman who answered the phone at D. Wilson Consulting on Tuesday said company representatives were not immediately available to comment.

Alderman Jose Perez said he understands, but opposes, the lawsuit. He said it should be resolved through discussions between the city and minority contractors.

The chamber tried that route, Monreal-Cameron said, and the city refused to budge, she said.

“We hoped to reach a solution without litigation,” she said, “but after months of dialogue, it’s clear the city has picked sides.”

Ossie Kendrix, manager of the city’s Office of Small Business Development who attended some meetings between the city and chamber, declined to comment Tuesday.

The chamber’s lawsuit, Benson said, seeks a permanent injunction and invalidation of ordinance 370. The lawsuit also requests the city pay the chamber’s attorney fees, he said.

The city has 20 days to respond to the lawsuit, Benson said.

Even one more day working under ordinance 370 is too long, Monreal-Cameron said.

“It just continues,” she said, “to further endanger small businesses.”