Kansas City reportedly let Meta developer break diversity rules, then … – KCUR

While constructing an $800 million data center project in the Northland, one of the largest companies in the world refused to comply with Kansas Citys standards and requirements for including minority-owned and woman-owned businesses and did so with the support of high-ranking city officials.

Andrea Dorch, formerly one of the highest-ranking Black women at City Hall as the head of the Civil Rights and Equal Opportunity Department, was in charge of making sure Facebooks parent company Meta followed those city rules. But, over the course of about two years, Dorch was pressured to ignore her job duties.

She resigned from her position earlier this month, and alleges she was forced out for speaking up about Metas violations and refusing to stay silent.

I felt ambushed, she said. I believe that it was not correct. I felt like I was coerced.

The findings are detailed in a report from the citys Civil Rights office about the sprawling data center campus for Meta, the parent company of Facebook. The Northland facility is publicly called the Golden Plains Technology Park but referred to within Kansas City Hall as Project Velvet.

In April 2022, Kansas City Council approved one of the largest incentive packages in recent years for the data center, worth $8.2 billion over 37 years.

To sweeten the deal for Meta, city council approved a Chapter 100 industrial development plan, which provides exemptions on property and sales taxes for the facility and construction materials. The development plan for Project Velvet will allow Meta to pay no property taxes on the development for 25 years, amounting to about $2.8 billion.

Meta is also exempted from personal property taxes for five years and from sales taxes on construction materials.

A development project with such a high price tag that enters into a contract with Kansas City has to follow certain city rules, including using a certain percentage of minority- and woman-owned contractors, meeting baselines on wages for workers and agreeing to standards related to nondiscrimination and construction employment.

The requirements are intended to ensure that businesses owned by women and people of color have fair and equal access to contracting opportunities in Kansas City.

According to the report, which was published by Kansas Citys Civil Rights and Equal Opportunity (CREO) department earlier this month, Meta refused to comply with those provisions. But instead of losing its lucrative tax incentives, Meta was allowed to continue the project without issue because Kansas City Council waived the requirements when it executed its contract with the developer.

The Meta data center is a perfect storm (of) noncompliance and violations of local, state and federal laws for equal opportunity and protection under the law, the report states.

Under the citys requirements for projects that receive tax breaks, at least 14.7% of the businesses contracted with by developers must be minority-owned and 14.4% must be woman-owned.

However, the report found that only 5.5% of Metas contracts were with minority businesses, and only 11% with woman-owned businesses. Thats based on data submitted by Turner Construction, the New York City-based general contractor for Project Velvet, spanning December 2022 to March 2023.

That has to be one of the worst performances of a major project in Kansas City's history for minority participation, said Kelvin Perry, president of the Black Chamber of Commerce of Greater Kansas City. That's not something the City Council should be proud of. And it was all because of a dereliction of their responsibility to minority businesses.

CREO oversees the citys minority and woman-owned business enterprise program and is tasked with making sure developers are meeting those goals.

But according to the report, City Manager Brian Platt and several council members pressured the department to allow Meta not to comply.

In a statement, Meta said it is in compliance with all legal requirements and city ordinances applicable to this project.

Chris McFadden, vice president of Turner Construction, said in a statement that the developer is meeting its obligations for diversity and are voluntarily and transparently reporting progress to the City on a monthly basis. McFadden said the company is taking additional measures to increase diversity with minority and woman-owned businesses.

We are actively working to provide additional opportunities for MBE contractors and are identifying individuals for a workforce development program to increase the diversity on the project, he said in the statement.

Gabe Perez, president of Unified Contractors of Kansas City a local contractors association said the allegations in the report could set the tone for future development projects. (Disclosure: Perez is the father of one of KCURs employees.)

If we're going to do this for this particular owner, then why wouldn't we do it for others? Perez said. It's a selective way to go about enforcement.

Since the very start of the project, Kansas City officials have allowed Meta to ignore construction diversity requirements, the report alleges.

The report says CREO could not analyze the Northland project under its normal procedures because the City Council had waived Metas requirement to follow the citys goals for minority and woman-owned business participation. CREO found that limited or no opportunities remained for contracting MWBE (minority and woman-owned business enterprise) firms for participation.

A Kansas City Hall spokesperson said the City Managers office was no more involved with the Meta development than other projects.

The report says CREO received complaints from minority contractors saying they were discriminated against in the projects contracting process. The department also received allegations of racially motivated intimidation, including effigies hung in project facilities.

Economic development and construction groups like the Black Chamber of Commerce of Greater Kansas City and the Fair Contracting Alliance inquired about the Meta project but say they were not given any information or details about Metas contract. The report says the Fair Contracting Alliance was denied access to contracts and payrolls for the project.

Upon receiving a copy of the contract, and several communications between CREO and the Citys Law Department, it was revealed that the MWBE program requirements, prevailing wage, construction workforce program, and employment standards were not included in the Meta project, the city report on issues with the Meta project reads.

After learning that information, in October 2022, Dorch, who was head of CREO at the time, worked with the citys assistant attorney and economic development manager in late 2022 on an amendment to Metas contract that would include minority and woman-owned business enterprise goals and prevailing wage and nondiscrimination employment standards.

Dorch, CREO staff, Civil Rights investigators with the city, several City Council members (Dan Fowler, Kevin ONeill, and Lee Barnes), and Meta and Turner Construction representatives then met. At that meeting, Meta and Turner Construction agreed to voluntarily comply with the minority and woman-owned business enterprise program, implement a $15 minimum wage for workers and follow the provisions under the Construction Workforce Program designed to increase the retention, training and recruitment of residents, women and minorities on city construction contracts.

With Metas agreement to voluntarily comply, city officials asked the company to approve a contract amendment that would hold them accountable for meeting the Construction Workforce Program and minority and woman-owned business participation goals.

Then, according to the report, Meta changed course and did not sign the amended contract. Dorch says she received pushback from Meta and Council members Fowler and ONeill, who represent the Northland. The report says they contacted City Manager Platt to insist that CREO stop its compliance and auditing activities of Project Velvet.

An attorney for Meta said the company would not sign the amendment. The attorney requested that none of the agreed-upon goals like following the rules for minority and woman-owned business participation be legally attached to the project.

ONeill said the accusations are categorically false.

I work hard every single day to protect all working people and will continue to do so, ONeill said in a statement to KCUR. Furthermore, I've championed legislation ensuring that prevailing wage is enforced by the city. It's disappointing to see this play out in the media and I hope this issue is resolved swiftly."

Fowler said in an email that he did not participate in any of the project's contract negotiations, and said the allegations did "not reflect the facts."

I have never asked anyone not to follow city ordinances, policies and procedures. Neither have I ever observed another elected official or staff member make such a suggestion," he wrote. "In this instance, the developer volunteered to do more than was required...It should also be noted that the wages being paid on this project are GREATER than prevailing wage."

The report says Platt advised Dorch to accept an amendment to Metas contract that agreed the project would have no goals attached to it.

There's no question that they tried to muzzle CREO, said Perez.

Without any language in Metas contract holding them accountable to the citys rules, CREO could only work with the companys promise to voluntarily comply. Still, Dorch continued facing pushback from City Hall as CREO tried to hold Meta to its word and ensure Project Velvet developers were voluntarily complying with the departments requirements.

I was told so many times that I needed to not do our normal process, just accept this, Dorch said. Basically a stand-down directive, to the point that we just shut off all of our normal processes with Meta.

Dorch says she was being silenced.

I would not stand down, Dorch said. I just told the truth. Because I would not bend, I was targeted.

When asked about the City Managers alleged pressure on CREO to move forward with the Meta project without holding them accountable to the typical benchmarks, a city spokesperson said they did not have reason to believe that was correct, and that they did not understand or experience the situation to play out that way. When asked about the specific events detailed in the report involving the City Manager, a city spokesperson said they were unaware of the reports existence and could not speak to the documents contents.

When construction began in late 2022, Turner Construction refused to provide a list of the contracts awarded on the project, a normal procedure for any other project. CREO policies would have required Turner Construction to allow the department to conduct audits onsite and audits of contract payments and the construction workforce. Instead, Turner Construction submitted its own monthly reports to the city, from December 2022 through April 2023.

CREO found that Turner Constructions reports either had overinflated contract values or utilized minority and woman-owned business contractors as extra participants that would result in a non-commercially useful function being performed by the MWBE firms in violation of the City Code requirements.

In dollar amounts, the report found that Turner Construction distributed about $139 million worth of contracts as of March 30, 2023. Of that amount, white-owned businesses account for about $88.4 million, about 64% of the money. In contrast, Black-owned businesses accounted for $33.6 million of the contracts, or 24%. About 8% went to Hispanic businesses, the rest of the money went to businesses listed as other.

When companies are required to award a certain percentage of contracts to woman-owned and minority businesses, those calculations are based on the number of contracts, not the dollar amounts.

CREO also analyzes the diversity of construction workers onsite. Out of about 1,135 people, 67% are white, 5% are Black and 5% are Hispanic. The report says 19% of workers did not specify their race. Asian and Native American workers each made up 1% of the workforce, while 2% identified as Other.

Michelle Roberts-Bauer, president of Associated Builders and Contractors, said the city must investigate the allegations made in the CREO report.

These programs are in place to ensure that all in our community have equal opportunity to compete and win work on projects receiving public tax incentives, Roberts-Bauer said. No contractor can be expected to succeed if the rules are always changing.

The report recommends that Metas contract for Project Velvet be amended to require that 15% of contracts are for minority businesses, 15% are for woman-owned businesses, and that the construction workforce includes 10% minority participation and 2% female participation.

The City Managers office said they plan to introduce an ordinance before City Council next week that would amend Metas contract with the city to include the goals of minority and woman-owned business participation, among the other provisions CREO initially recommended.

Dorch said the resistance she faced in trying to hold Meta developers accountable was emblematic of a larger problem at Kansas City Hall: an environment of fear and intimidation among staffers and executives that targeted employees of color.

It was very hard, she said.

Courtesy of Andrea Dorch

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The City Managers office said Dorch was found to be violating the citys residency rule, which requires all city employees to live in Kansas City, Missouri. The City Managers office cited a deed for a house in Lees Summit that listed Dorch as the owner, and said the city conducted an investigation and interviewed Dorch to verify that claim.

Dorch said she bought a home in Lees Summit in 2020 as an investment property, but her primary residence is in Kansas City proper. Dorch showed KCUR multiple government documents including tax filings and her government ID listing an address within city limits.

Dorch said shes lived at that same address since 1994. She began working with the city in 1997, and said shes always been aware of the residency requirement.

It's my principal establishment, Dorch said of her Kansas City home. It's my true, fixed and permanent residence. Why would I take a job at will and then violate a residency requirement? It doesn't make any sense.

Dorch said the city knew about the Lees Summit property as early as 2021 when she was first hired by the city to lead CREO. The city became aware of the property again early last year, but only approached her about violating the residency requirement earlier this month. According to Dorch, when she tried to explain herself during the investigation, City Manager Platt was unresponsive.

Dorch believes the city used the residency requirement as pretext to retaliate against her.

It was so venomous, she said. The retaliation stung.

Platt appointed Dorch to head CREO in 2021. Before then, she worked for the U.S. Department of Housing and Urban Development overseeing the region that includes Missouri. Dorch previously worked in CREO when it was known as the Human Relations Department, during the administration of Mayor Sly James.

As head of CREO, Dorch said she noticed an uptick in complaints coming from City Hall employees alleging discrimination based on race and ability. CREO cannot investigate those complaints; the department must refer them to a state or federal agency, like the Equal Employment Opportunity Commission or the Missouri Human Rights Commission.

City employees are supposed to file a complaint with Human Resources first, which investigates allegations of discrimination. Employees are not required to file a complaint with CREO, though Dorch said some would come to CREO as a last resort.

Usually by the time they get to our office, they have no other relief, she said.

As a Black woman at City Hall, Dorch said she noticed a stark difference between how she was treated and how people who werent Black or female were treated, like when she asked for funding to fully staff her department.

It was just all of this log jam, when they knew how much I really needed these positions, she said.

Dorch said she noticed many employees would not file a complaint even if they experienced discrimination. They feared retaliation.

Dorch attributes the resistance to CREOs enforcement efforts to an environment of structural racism at City Hall. Within that structure, Dorch says, high performers usually leave, not wanting to work in a toxic environment, while those who stay end up falling in line.

I can't tell you the number of times I've heard employees say, Well, that's just what they do. Well, that's just how it is. Well, I know I'm not going to get a raise, Dorch recalls.

Dorchs departure has been met with criticism from the Black Chamber of Commerce, Unified Contractors of Kansas City and the Fairness in Construction Board, groups that often worked with Dorch on the citys minority and woman-owned business enterprise program. All three sent letters to Mayor Quinton Lucas and City Council praising Dorchs leadership of CREO and expressing shock over her departure.

We believe the departure of Director Dorch of CREO will cause immeasurable damage to the efforts of the city in (providing) contracting opportunities to minorities and women owned businesses in a constitutionally defensible manner, said Ray Malone, chairman of the Fairness in Construction Board, in a letter to council.

The Unified Contractors of Kansas City said in its letter that they are unaware of any performance issues on her part or by her staff that would warrant such a termination. The group asked the mayor and city council to investigate Dorchs forced resignation and reinstate her as head of the department.

We can make a strong argument that this department is the most important department in the city, Perez said. It is there to make sure that Kansas City maintains a certain level of fairness for all.

Construction continues on the one million square foot data facility in the Northland Meta plans to finish the project by 2024. The Meta campus is the first in a line of data centers coming to Kansas Citys Northland. A company based in Overland Park last Fall unveiled plans for a 4 million square foot development encompassing 12 data centers. Construction on that project could begin in 2025.

City officials say they plan to hire a new director for CREO and advertise the job opening soon.

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Kansas City reportedly let Meta developer break diversity rules, then ... - KCUR