"Clearing House" Sweepstakes
The voice on the phone had a tantalizing offer last week. The Insider had just published an article with a partial list of participants in the minority share of the Enron Field food services contract. Would he like to see confidential documents proving that politically connected blacks got three times the investment share of Hispanics in the deal?
"Anything happens in this city, we Hispanics get screwed," groused the caller. "It's time we spoke up."
Fax on, we replied. It's just the sort of proposition the Insider is incapable of refusing.
The tipster asked for anonymity because food services giant Aramark required that investors in the contract sign a confidentiality pledge. Obviously someone in the deal was unhappy that a local Urban League official and a group of black power players were amply rewarded for their help in making Enron Field a reality, while Hispanics got far less. The source was willing to risk a lawsuit to leak the information.
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By way of background, supporters of the downtown baseball stadium referendum were on a losing streak only days before the November 1996 vote. Polls predicted defeat. Then-mayor Bob Lanier, Astros officials and black leaders huddled in a last-minute crisis conference. At stake was the future of professional baseball and perhaps downtown revitalization in Houston, and the powers-that-be were ready to deal big-time.
Included in the group were familiar faces such as the Reverend Bill Lawson of Wheeler Avenue Baptist Church and NAACP president Howard Jefferson. Also at the table was Urban League chairman Darryl "Chicken Man" King. He already had a lucrative city contract to operate a Kentucky Fried Chicken concession at Houston Intercontinental Airport, and King was a key fund-raiser for Congresswoman Sheila Jackson Lee. The group came to the meeting to broker the black vote in exchange for promises that minorities would receive a fair share of the revenues generated by the stadium.
Following the session, Astros owner Drayton McLane and Enron CEO Ken Lay trumpeted an agreement that won the black leaders' endorsement for the endangered ballpark proposal. Minorities would get 30 percent of the work in building the stadium and that same amount of the valuable contract for stadium food and beverage service.
The alliance helped the ballpark and a future football stadium proposition gain a narrow victory. Of course at the time, no one knew which minorities would get the business.
King also played a starring role last year in negotiating with Rockets owner Les Alexander for a similar 30 percent guarantee on minority participation in the proposed downtown basketball arena. In a chapter almost identical to that of the 1996 playbook, former mayor Lanier flew King and Jefferson in a private jet to Alexander's home in Boca Raton, Florida, where the deal would be brokered.
A source familiar with both negotiations says King and Jefferson introduced themselves as "The Clearing House." Team owners could deal only with them, and they in turn would line up the political support in their communities.
True to form, after Alexander cut the deal, a black ministers group that had threatened to protest the arena did an abrupt about-face and endorsed it. But that didn't save the referendum, which lost to well-funded opposition organized by local Republican leaders.
Still, when and if the arena goes before voters again, it will likely feature the same 30 percent minority participation promise now in place at Enron Field and for the future Astrodome-area home of Bob McNair's National Football League franchise.
Keeping that in mind, consider who benefits from the Enron Field food service deal. Aramark itself, which will do all of the work in dispensing the concessions, has 70.20 percent ownership. But the minority investment set-asides show old, familiar names.
For King, it paid off handsomely in a personal way. His Quality Hospitality Consulting company received about 10 percent of the minority slice, the largest of any individual. Other minority ventures have larger percentages than King, but they consist of groups of investors. According to documents, King put up a little over a half-million dollars for his share of the deal.
King did not return an Insider call for comment on his role in the contract.
Blacks as a group didn't do badly either. Participants include the French Pea Joint Venture, made up of former judge and city councilman and Hotel Six bribery defendant John Peavy, who along with wife Diane and son Jason are teamed with Frenchy's owner Percy Creuzot III for about 14.2 percent of the minority contract. They're down for a $718,639 ticket to ride.
Creuzot's wife, Cheryl, is also an investor, though she came in under the umbrella of Women Stadium Investors, along with Paula Arnold, a lobbyist and former HISD school board member; lawyer Zinetta Burney, who collects delinquent taxes for the city and is a key supporter of mayor pro tem Jew Don Boney; and Metro board member and South Texas environmental law professor Olga Moya. They are teamed with LaTrelle's Management Corp., a black-owned food service, and Faith Broadcasting Service, owned by Anthony Chase, under the appropriately named Triple Play Joint Venture. They have about 23.6 percent of the minority stake and a $1.2 million investment share.
Named in the same spirit is Grand Slam Joint Ventures, a black consortium represented by investment banker Gerald Smith, and including Houston Defender publisher Sonny Messiah Giles, whose paper strongly supported the stadium. Also in the mix is influential minister Kirbyjon Caldwell and barbecue restaurateur Harlon Brooks. These heavy hitters got about 7 percent of the minority portion with a $359,320 investment.
The Hispanic contingent is represented by Hispanic Sports Group L.P., featuring former city councilwoman Gracie Saenz and including eastside restaurant owner Irma Galvan, who publicly campaigned for the stadium. Others on board are Sergio Davila, the brother of former state representative Diana Davila; and Nancy Berkman, the wife of City Hall lobbyist Larry Berkman. The group put up $600,000 and received about 11.7 percent of the minority contract.
Merida's owner Rafael Acosta leads Houston Partnership L.L.C., a group that includes six Asian-American partners, which received about 18.4 percent of the contract, worth $934,231. Texas Asian Sports Investments L.P. is represented by Melanie Wong, daughter-in-law of former city councilwoman Martha Wong. Others on the team include Harry Gee Jr., Ghulam Bombaywala and Tri La. They have about 14.2 percent minority share and a $718,639 investment.
The Aramark documents indicate the African-American investors make up roughly 15 percent of the total investment pie, three times that of Hispanic groups, who received approximately 5 percent. The remainder went to Anglo women and Asian-American investors.
Richard Torres, president of the Houston Hispanic Chamber of Commerce, gives credit to black leaders for seizing an opportunity. "Traditionally, the African-American community has been very good about being aggressive in taking advantage of those opportunities, and I think the results speak for themselves as far as the minority participation in this particular contract."
The disparity between black and brown investors disappoints Sonny Flores, president of PEC Corp., an engineering and construction firm. He worked with Brown & Root to make sure that 30 percent of the work building the $248 million ballpark was equally apportioned among minorities. Flores teamed with African-American architect Ruben Brown in that effort, which he says resulted in an equitable split. But early on he heard concerns that the food service contract assignments were under the direction of a black law firm, Wickliff & Hall.
"I did get a lot of calls from Hispanic businesspeople saying, 'Hey, this thing is skewed the wrong way,' " recalls Flores. " 'You need to go ask about parity.' "
Flores talked with Aramark and Astros officials and was assured that the investment would be equally divided among minorities. He now says their promises were not fulfilled.
"Obviously the numbers speak for themselves," concludes Flores. "They didn't come out with parity in there."
Wickliff & Hall partner Alton Hall says that despite meetings and advertisements, there were only 28 investment applicants -- 17 of them black groups and only two Hispanic. He says he cannot explain the imbalance. Aramark picked from a final pool of 12, which included seven black groups.
"I dealt with the process, but I didn't select," says Hall. "My goal was just to maintain the best process that we could."
Hall says there was no preferential treatment for Urban League official King. Asked whether Aramark provided financial backing for King, Hall declined comment, calling the matter "a confidential business relationship."
Hall also declined to comment on whether minority partners could sell their shares back to Aramark or other non-minorities. "The parties are supposed to discuss it before there are any assignments or transfers," he says. That possibility recalls the boondoggle in the '70s when City Council allocated a share of cable franchises to minorities, only to see them cash in by selling their interests to national firms.
With similar minority pledges for the football stadium and a future downtown arena, Flores says, the next food concession contract for minorities should not repeat the Aramark pattern.
"It better not," warns the engineer, "because [otherwise] there are going to be a lot of angry Hispanics in this town."
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