18 Apr 2013
- Written by Tony Jones
One of the city's least known – but arguably most important – committees held its most recent meeting on April 10th.
Mandated by city ordinance, the Minority Business Development Oversight Committee is charged with assuring that the city's minority- and women-owned businesses (MWBEs) get a fair chance at gaining contracts from both the public and private sectors.
The meeting's agenda called for evaluating a report (from the city's financial management office) that outlined local and MWBE firms' inclusion in managing the city's pension fund. Also on tap was a review of the Memphis Police Department's business plan as an example of forward-thinking MWBE inclusion. A third item related to refining the committee's mission and vision statements.
Several private business owners were in attendance, including IronHorse Capital Management and Preserver Partners, two locally-owned firms vying for business from the pension fund.
Preserver is a minority-owned investment management firm. Its difficulties in earning work from the pension fund would later become the defining issue of the meeting.
Mary Bright and Joyce Douglas from the city's Contract Compliance Office began the meeting with a presentation detailing the $116 million the city spent with MWBE's from July 1, 2012 to February 29, 2013.
Sam Johnson, the city's investment manager, then took the floor, detailing the firms used and the resulting fees for their work in assisting the management of the city's pension fund. Roundly referred to in the meeting as currently valued at "$2 billion," several firms earned six figure fees for the fiscal year through Dec. 2012.
The total payout to MWBE firms for the period was $796,074.63. The highest fee listed was $327,793 to the Paradigm Asset Management firm, based in White Plains, N.Y.
None of the firms are locally-owned, the knowledge of which drew derisive comments that were immediately addressed by Chairman Ron Willis.
Willis then called on county government financial consultant Robert Longfield of CSG Holdings, LLC, to inquire if the county has local and minority firms assisting in managing its pension fund. CSG also counts Memphis Light, Gas and Water among its clients.
Longfield had earlier explained that the county has "about ten percent invested in minority businesses and eighteen percent in locally-owned business."
Elaborating, Longfield said, "Early in 1991 we did the first minority-only search for minority (businesses) in Shelby County. They've been very proactive in doing so. As has MLGW."
Willis asked why the city is not advancing in the same direction. He then allowed the local minority-owned firm Preserver, represented by President and Chief Investment Officer Dr. Floyd Tyler, to cite the company's history in trying to gain work from the city.
"You keep moving the goalposts," said Tyler. "Every time we meet one parameter you introduce another."
IronHorse Capital Management's representative, Kerr Tigrett, underlined Floyd's comment, repeating the "goalposts" reference.
"We thought as local businessmen that the city we grew up in, the city where we have our businesses, somebody from here would help us try to grow our business," said Tigrett.
Johnson answered every question, explaining the parameters guiding the awarding of the contracts so far. For example, Preserver is what is considered an "alternative" type of fund manager, but the city's policy does not prohibit the use of a firm of its type.
Another core issue: Preserver was relatively new on the scene, established in 2009.
At times, the discussion grew tense. Eventually, however, it was agreed that the city's finance office would work more diligently to find proper linkages that could benefit more MWBEs.
The representatives of Preserver and IronHorse said they would continue to pursue work from Memphis in good faith.
Chairman Willis summarized the value of the process in a follow-up interview.
"If we do our job right, we will be put out of business," said Willis.
"Think about progressive cities. One of the things they do is invest in their own first. When you invest in your own the return is a natural advantage to your economy. We will see dollars start to flourish into our own community instead of into others."
While the issue center stage at the meeting concerned the potential growth of a particular minority firm, Preserver Partners, Willis stressed that the Minority Business Development Oversight Committee does not push any individual business. It makes sure that the wider process is followed to locate them, he said.
"In the instance of this particular division, financial services represents a new area of growth in the minority business sector. There are not many that are experienced in pension allocation management. Our goal is to make sure the policy of the city division contracting for the work follows the city's stated mandate," Willis said.
"If we can keep $200 million out of the $2 billion in the fund working locally, imagine the jobs that will create.
"And when you support a small business it gives them a great reference. People respect you when they know your own city has confidence in you."