Minority Business Enterprise and Contracting goals and Contractors and Project Management and Real Estate & Retail

Minority-owned contractor Mezzetta Construction downsizes dramatically

September 25, 2006

Mezzetta Construction Inc., one of the city's largest minority-owned businesses and a contractor on the Lucas Oil Stadium project, is downsizing its staff and auctioning off its office and construction equipment while struggling with financial difficulties.

If Mezzetta is unable to complete its work on the new home of the Indianapolis Colts, it could jeopardize the state's mandates to fill 15 percent of the contracts on the stadium project with minority-owned business and 5 percent with women-owned business.

But Mezzetta President and majority owner Darlene Mezzetta said her company has no plans to walk away from the stadium project. Mezzetta has a $1.41 million contract to provide management services for the $625 million project. Because Mezzetta is Hispanic, her firm's involvement counts toward both of the state hiring goals.

"We've downsized drastically, but we're still here," Mezzetta said. "We plan to continue with the stadium project, then go on to even bigger and better things."

The construction industry has been abuzz with rumors of Mezzetta's downfall.

"I've heard so many rumors, some even scare me," said Mezzetta, who runs the company with her husband, Remo. "We're not out of business, and we're not going bankrupt."

Mezzetta said the company accrued a lot of debt working on some "difficult" projects, but she wouldn't elaborate. The company, which reported having 33 full-time employees in July, is now down to 11, Mezzetta said. The company last month moved from its West 71st Street office and is conducting business out of Mezzetta's home just a few minutes away.

The company, founded in 2000, reported $9.6 million in revenue in 2005. Its business has been split between construction management and facilities maintenance, but it will concentrate on the latter going forward, Mezzetta said.

Company equipment--from drills to hard hats--were to be auctioned off Sept. 21.

"A lot of it was stuff we just don't have room for now that we're running the business out of our home's basement," Mezzetta said.

David Sease, Indiana Stadium and Convention Building Authority spokesman, said construction will continue unabated despite Mezzetta's financial difficulties.

"Of course, we have concerns about the state's goals for [minority-owned businesses] and [women-owned businesses] for our project," Sease said. "Our contract is with Hunt, and we have confidence in their ability to get the job done."

The Stadium Authority hired Indianapolis-based Hunt Construction Group to oversee the project. Hunt in turn hired Indianapolis-based Smoot Construction LLC, which brought on Mezzetta as a subcontractor. Mezzetta has a safety coordinator, project engineer and superintendent on site daily. The trio is part of a 40-person team composed of Hunt, Smoot and Mezzetta personnel in charge of management services for the construction project.

Hunt and Smoot officials said they became aware of Mezzetta's financial difficulties in the last month.

"We understand the construction part of their business is in financial difficulty and the bank is coming in to liquidate their construction sector," said Terry Parrott, Smoot executive vice president. "But it hasn't affected the work they've done on this project. Their people are out there every day, doing what they should. They're providing the people, so they'll continue to get paid on this project."

Parrott said his firm and Hunt do all the background checking allowed by law before a subcontractor is hired. He said there was no indication Mezzetta would have any difficulties.

The Indiana General Assembly in 2005 passed legislation directing the Stadium Authority to grant 15 percent of stadium project contracts to minority business enterprises and 5 percent to women business enterprises.

The Stadium Authority has been able to meet the mandate with respect to minority business enterprises, but has struggled to meet its targets for hiring women-owned contractors. This spring, authority officials said they were just over halfway to their goal, and with the Indiana construction community stretched to its limit, that makes Mezzetta's presence even more important to fulfilling the mandate.

Although Sease said there is no penalty for missing the mandate, it is one state and city leaders take seriously.

Construction managers and authority board members have plenty at stake, said Matt Stevens, president of Florida-based construction management consulting firm Stevens Construction Institute Inc.

"These types of public projects are very politicized, and meeting these [minority- and women-owned] quotas is very important," Stevens said.

He added there's more to the quotas than political correctness.

"These quotas are set up to help these companies grow, and that strengthens the industry within the state," he said. "That's a very worthy cause."

Mezzetta's predicament isn't unusual in the high-risk construction business.

"Construction is the second riskiest business in the U.S., next to operating a restaurant," said Stevens, who authored "Managing a Construction Firm on Just 24 Hours a Day." "With the average construction contract making less than 5 percent net profit, a contractor today is taking on more risk than they ever have.

"I don't know Mezzetta, but a lot of companies have come through tough financial times to go on to become very successful construction companies."

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