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Best of Liz Benston

Gaming Guru

Liz Benston

Minority Contractors Finding More Opportunities in Vegas

1 July 2005

LAS VEGAS -- There was little doubt that the National Association of Minority Contractors would hold its annual convention in Las Vegas this year for the first time in the group's more than 30-year history.

"Las Vegas is an anomaly in construction," Ruben Vasquez, president of ADT Construction Group in Las Vegas and the association's national secretary. "There are more construction projects going on here than in other cities by far. We've seen that other parts of the country have slowed or are even depressed."

The association's convention runs through today and includes information on applying for a state contractor's license and a chance to network with casino executives at host property MGM Grand.

Members of the Washington, D.C.-based association descended on Las Vegas for more than just a piece of the building boom.

"A lot of companies are looking at relocating to Las Vegas," said Vasquez. The NAMC represents about 4,400 minority-owned contractors in 35 states.

MGM Mirage, a company that began aggressively courting minority suppliers and contractors about five years ago, is welcoming them with open arms.

MGM Mirage executives say the convention comes at a fortuitious time for the company because it expects to break ground next week on the first piece of Project CityCenter, the country's largest privately funded construction project.

The $4.7 billion project will include a 4,000-room resort and casino as well as several boutique hotels, around 1,600 residential units and more than half a million square feet of retail space.

As local contractors have discovered in recent years, encouraging minority-owned companies to apply for contracts isn't merely a public relations exercise for the state's largest employer, taxpayer and casino operator.

Two months after MGM Grand's historic acquisition of Mirage Resorts in 2000, the combined company began requiring all of its construction bids from general contractors to include participation by a minority-owned firm.

That doesn't mean all of the final bids will ultimately contain minority companies, said Debra Nelson, vice president of corporate diversity and community affairs of MGM Mirage. All other things being equal, however, those bids with minority participation will end up getting the contract, she said.

"There's an inherent expectation that there's real minority participation," she said.

By definition, minorities include women and economically disadvantaged firms as well as racial and ethnic minorities.

Hundreds of contractors will likely be jockeying to work on CityCenter, a massive undertaking that's expected to cost more than $5 billion upon completion at the end of 2009.

The project's general contractor, Perini Building Co., is setting up a Web site that will contain information on where contractors can become certified as minority businesses. MGM Mirage requires certification of minority firms and will also check monthly reports to make sure that those firms are contributing their fair share of labor and resources to the project.

At the conference, Perini Chairman Richard Rizzo encouraged association members to pitch the company and participate in upcoming public workshops that aim to pair big, deep-pocketed contractors with smaller firms, many of which may be minority-owned.

"Give us your name and we'll get back to you. I promise," Rizzo said.

MGM Mirage executives said they don't have a quota system or keep out qualified, nonminority applicants.

"This is about leveling the playing field," said Ben Mammina, senior vice president of construction for the company's MGM Grand Resorts subsidiary.

Historically, the big contractors that did all of the major casino projects in town used the same group of subcontractors that they had always done business with, locking out other companies, Mammina said.

MGM Mirage "made history" last year when it completed four casino construction projects on the Strip using contractors that had formed joint ventures with smaller subcontractors that included minority firms, he said.

The projects were worth more than $100 million and included the construction of several upscale loft suites, a race and sports book and a poker room at MGM Grand.

The joint venture setup was new in Nevada because the state had an onerous licensing procedure for subcontractors involved in big projects, he said. Those rules were simplified, allowing larger firms to more easily bid out and partner with an array of subcontractors, he said.

The process has resulted in general contractors opening up each subcontractor slot for bid, creating more competition and ultimately lowering costs for MGM Mirage, he said. Both general contractors and subcontractors have partnered with minority-owned firms.

"We've had to overcome a lot of myths that minority companies would slow down a project or that they wouldn't produce the same quality of work," he said. "Our joint venture projects have been some of the best projects we've done in Las Vegas. They were very high quality and under intense scheduling. We blew apart a lot of myths."

The company is ultimately seeking contractors with "a strong desire to grow their business," Mammina said.

"We're kind of like incubators," he said. "These companies can work with the best designers in town. And they can see how a big project comes together. With one project they probably get 20 years' worth of experience."

Several minority contractors have grown along with MGM Mirage in recent years, becoming major firms in their own right, said Vasquez, whose own firm finished a $9 million high-limit gambling area at Mirage and is now at work on a nightclub.

Another case in point is TBL Construction of Las Vegas, a small demolition company that began working with MGM Mirage in 2001 and is now licensed to work on contracts worth up to $10 million. Owner Al Barber is now president of the National Association of Minority Contractors.

MGM Mirage has "gone out of their way" to encourage mentoring of smaller companies, Vasquez said.

The mentoring process will be put to the test again with CityCenter.

"It's not an intuitive thing," Mammina said. "That's not a thing that guys with tools do. We don't typically communicate a lot."

Next week the company will begin construction on a 10-story, 17,000-car parking garage that will be complete in July 2006 for use by Bellagio employees now using surface parking on the site as well as construction workers. The rest of the project will begin soon after the garage is complete.

CityCenter's components have been split into three parts, each managed by a design and architecture team and help from more than 30 consultants. Global architecture firm Gensler will manage the design teams and Tishman Construction Corp. of New York, will oversee dozens of contractors involved in the project.

MGM Mirage has scheduled a meeting next month with 18 county agencies to coordinate the processing of planning and construction documents for CityCenter. More than 3,000 drawings a month are expected to go through county departments while the project is underway.