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By Nakia Magazine, NDG Special Contributor
Construction giant Skanska USA, Inc. is a well-known organization in the real estate industry as a lead developer of multimillion commercial building projects. However, the company’s ethical practices are in question as it potentially faces a lawsuit brought by a Dallas/Fort Worth-based minority contractor. The lawsuit stems from the construction of the Irving Music Factory (now known as the Toyota Music Factory).
The ARK Group, developers of the Toyota Music Factory, awarded Skanska a $94 million construction contract in February 2016 to build the entertainment complex. According to the press release heralding the deal, the project was slated to convert the 16.8 acres into an entertainment complex featuring the Pavillion for indoor/outdoor concerts able to seat up to 8,000 music lovers. Throughout a seven-building venue, visitors would enjoy a premier entertainment destination featuring more than 250,000 square feet of retail, restaurant and entertainment options. Plans included a six-level parking garage for 1,200 visitors.
Recent headlines related to ARK’s ongoing dispute with Billy Bob Barnett, the owner of Big Beats Dallas, a former tenant at the Toyota Music Factory relate to the Pavillion and parking. As the North Dallas Gazette (NDG) reported on June 21 in the article entitled “ARK Group Faces More Heat from Irving Taxpayers and the Honky-Tonk King”, the completed project did not include covered space for the Pavillion as initially planned or sufficient parking for guests visiting the five restaurants and indoor/outdoor concertgoers.
Barnett’s attorney, Attorney Larry Friedman, of Friedman and Feiger, LLP, accused the ARK Group of “shortchanging Barnett’s establishments for 500 parking spaces.” Regarding the Pavillion Friedman pointed out, “ARK Group signed a contract to build 50,000 square feet of mixed-use space. Instead, they built 27,000 square feet of mixed-use space.” The completed space lacks the promised canopy necessary to provide shade for hot summers like the record-breaking 109 degrees DFW has seen this week.
As a result of these and other allegations, the local taxpayer advocacy group, Irving Taxpayers Matter, launched a petition requesting the City of Irving not release payment of $44 million to the ARK Group to cover additional expenses for the building project. For more details read NDG’s July 3 article entitled “Irving citizens learn about concerns related to Irving Entertainment Center.” The article also includes allegations that during the construction phase, they played musical chairs with the accessories, including toilets, countertops, etc. to gain Certificate of Occupancy (CO).
Visit NDG’s website to view a video on NDGTv featuring Thurman R. Jones, NDG’s publisher, speaking at a recent meeting with concerned Irving citizens discussing Skanska’s half faith effort to meet the stated goal of 30 percent minority participation in the construction phase of the Music Factory. However, as NDG’s July 23, 2016, Irving’s Music Factory project is off key for minority businesses pointed out they were only at 8.45 percent. By the time of the publication of our follow-up story on Oct. 4, 2017, entitled, “New Irving entertainment complex construction falling far short of minority participation goals” showed the participation rate had increased to 13 percent with a final goal of 19 percent.
“I don’t believe the commitment was ever there,” Jones stated in the recent video. “We have real reservations about the certification of this 19 percent,” he said in light of learning about Skanska’s history of falsifying minority participation in earlier projects.
City of Irving and ARK Group dispute
A video is also linked in the July 3 story featuring City of Irving Mayor Rick Stopfer discussing his displeasure with how the city’s partnership with ARK Group has resulted in what he characterized as mistreatment of city staff and threats of lawsuits from parties representing the ARK Group.
NDG reached out to each City of Irving council member asking for their comment on the allegations of bogus inspections, minority contractor participation and if they plan to vote in favor of releasing the $44 million in TIF monies to the ARK Group.
We received a response from Susan Rose, the City of Irving’s Communication Director via email stating, “At this time, due to pending litigation, the City of Irving is not able to comment.” Otherwise, NDG received no response from any member of the council, including Dennis Webb, the only African American member of the council.
Also this week, CBS 11 aired a report indicating the City of Irving is considering rescinding their agreement with the ARK Group because it prevents the city from supporting any entertainment venue similar to the Toyota Music Factory. This contract clause potentially impacts plans to build an entertainment venue on the site of Texas Stadium, the former home of the Dallas Cowboys.
Council Members, local professionals, and residents have publicly expressed outrage and find the clause restrictive to commercial growth and revenue. Irving City Council Member Allan Meagher described the agreement’s clench on the development of similar businesses as “not right.” Meagher suggested Irving, which he referred to as the “heart of Texas” should be able to cultivate its own music culture without having the type of stronghold levied by the TMF agreement.
Longtime Irving Realtor Lisette Caraballo referred to the restriction as “discouraging” and insisted it is impeding growth opportunities on the whole for the community.
Noah Lazes sent a statement to the news station acknowledging the non-compete clause in the agreement. However, he contends it does not prevent the construction of similar venues but does not allow the city or ARK to finance or support any future similar venues.
The city and the ARK Group are reportedly scheduled to go to mediation later this month to discuss this issue and other points of contention.
Skanska’s checkered past
With more than 11,000 U.S. based employees and 2017 earnings of $7.3 billion, the company prides itself on employing strong diversity metrics. Consistently, Skanska has shaped its corporate image to support its claim of fostering a culture of inclusion. This effort extends reportedly to their partners as well. For example, each year, the New York City-based enterprise hosts free training opportunities for minority contractors.
President and CEO, Richard Kennedy, has made strong, compelling public statements about Skanska’s commitment to safety and diversity. Partnerships with minority contractors and the Disadvantaged Business Enterprise (DBE) have been strategic and highly publicized. However, Skanska’s actual performance scorecard as it relates to contracts with minority channel partners is unimpressive.
Over the last decade, Skanska received two infractions related to unethical business practices aligned with contractual obligations to minority contractors. In 2011, Skanska USA was ordered to pay $20 million for using a bogus minority-owned firm to win a multi-million dollar bid. The company faced national scrutiny for engaging Environmental Energy, a minority-owned front company, to win New York City Metropolitan Transportation Authority and Port Authority contracts at the World Trade Center site and Kennedy Airport.
The NY Daily News reported prosecutors argued that while Skanska created the appearance a minority contractor was receiving a percentage of contract revenue, actual compensation was awarded solely to Skanska.
Four years later, Skanska was fined again for more minority-related misconduct. The company was ordered to pay $95,000 to settle a racial harassment and retaliation lawsuit filed by the U.S. Equal Employment Opportunity Commission (EEOC). According to the EEOC’s suit, Skanska violated federal law by allowing workers to subject a class of black employees to racial harassment and then firing the employees when they complained to Skanska about the misconduct.
Skanska’s familiar patterns persist in Irving
Skanska later had an opportunity to rectify prior dealings with the Minority/Women Business Enterprise (M/WBE) program and minority contractors when, after winning the $94 million contract from the ARK Group, it hired Butler Masonry to complete work at the Toyota Music Factory. The minority contractor claims Skanska did not honor the terms of their agreement. Other minority contractors reportedly have similar concerns NDG has learned and the company might face civil rights allegations.
Butler Masonry is a total service masonry company specializing in completing customized brick, block, stone, and cast stone construction projects on time, according to specifications. The company is a multi-generation family owned, minority entity respected for quality craftsmanship and precision. The company currently lists close to a dozen completed commercial projects in its portfolio.
After an extended period of waiting for revenue due under its masonry contract, Butler Masonry, represented by Dallas based construction litigators, Griffith Davison & Shurtleff, PC, is currently suing Skansa for unpaid debts surpassing the $1 million mark. The company describes the work performed at the Toyota Music Factory facility as complete and fit to contract specifications.
Both Butler Masonry and Skanska have elected not to comment publicly on this matter. Attorney Stewart Shurtleff, representing, Butler Masonry, offered a “no comment” statement to NDG regarding the case.
Shandra Colón, a member of the board for the Regional Black Contractors Association (RBCA), spoke earlier this week to Robert Ashley on KHVN Radio.
“Our concern is our members are informing us that it has been over a year since they have been paid. These are the type of issues that put our black contractors out of business for good. And I am not talking small dollars; I am talking million dollar contracts that have not been compensated to our members and our contractors,” Colón stated.
Colón who is also the Founder and CEO of The Catalyst Company, emphasized they are not only advocating on behalf of their member companies or even just minority contractors. She stressed the importance of all contractors who have completed their work in good faith should receive payment due.
“When they don’t get paid on time, their bond is jeopardized,” she stated. According to Colón the delay in payment is caused by disagreements between the developer, general contractor.
RBCA is encouraging the City of Irving not to issue the requested $44 million TIF monies while these substantial payments remain pending completion of a full investigation regarding the outstanding monies owed to the contractors according to Colón.