Revised City of South Bend Disparity Study Letter

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was corrected in this final version. Let me stress this was in no way caused by any action of the City. To the contrary, CHA takes full responsibility for our mistake, and we deeply regret our error. The reassessment involved the determination of the City's geographic market. CHA's methodology to determine an agency's geographic market entails two steps: first, we determine the product market by assessing which North American Industry Classification System ("NAICS") codes contain an overwhelming majority of an agency's spending. Next, we observe where the firms receiving these contracts are located. In the 2019 report, we determined the geographic market of the City to be the State of Indiana; Berrien County in Michigan; and Wabash and Kankakee Counties in Illinois. In the course of correcting the error with the Hoovers' downloads, we decided to review the entire quantitative analysis. Our re- assessment concluded that we should have eliminated the Illinois counties from the geographic market because: 1) the two counties were not close to South Bend geographically; and 2) each of the Illinois counties contained only one contract and this activity did not reflect sustained involvement in those counties by the City as would be the case if firms in those counties were a regular and repeated part of the City's geographic footprint. Given that we were revising the report, we have added additional information to Chapter V, which provides several data sources to evaluate the economic outcomes for M/WBEs in the overall South Bend and Indiana economy. We have included the results of the credit surveys conducted by the Federal Reserve Board and the U.S. Department of Commerce's Minority Business Develop Agency. These research results provide a stark picture of the significant barriers faced by M/WBEs in accessing commercial credit and the advantages enjoyed by White men in interfacing with the financial markets. This is precisely the type of "passive participation" evidence courts have looked to in considering whether, without affirmative intervention in the market failure of discrimination, a local agency will unwittingly help to perpetuate the continuing effects of race and sex discrimination in its contracting and procurement activities. This is especially important for a market like South Bend's, where the low business formation rates and the earning of M/WBEs from the businesses that are able to overcome barriers to formation have depressed the number of firms currently available to do business with the City. The City is not helpless to address these effects; it can make measurable progress through the use of the types of narrowly tailored remedies we describe in our Recommendations. We stand ready to assist the City in any way to explain the changes and the basis for our recommendations. Please let us know if there is any way we can support you in moving forward to create opportunities for M/WBEs in South Bend. Very truly yours, Cc: Stephanie Steele, Corporation Counsel