Winston-Salem yanks back marketing contract over diversity concerns

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The Dixie Classic Fair will do its marketing through the city of Winston-Salem's in-house department.

The city of Winston-Salem withdraws marketing contract for the Dixie Classic Fair from local firm, heeding concerns by council members about a private firm’s lack of racial diversity. 

Concerns about racial diversity and sensitivity by some members of Winston-Salem led to official action on Monday to yank a marketing contract for the annual Dixie Classic Fair from a local firm on Monday.

The finance committee voted 3 to 1 to reject all bids for marketing the fair, including the winning bid from Wildfire, and assign the work to the city’s marketing and communications department instead.

Concerns about Wildfire’s proposal to handle marketing for the fair at a cost of up to $230,000 initially snagged on a concern raised by Councilman Derwin Montgomery that the firm’s lack of racial diversity could result in a communications misstep. Montgomery cited the backlash against a recent Dodge Ram commercial that ran during the 2018 Super Bowl featuring oratory by Martin Luther King Jr. as an example of the kind of marketing stumble that can be avoided with the cultural sensitivity that comes with having a diverse staff.

City Manager Lee Garrity echoed Montgomery’s concern during a city council meeting last month, noting that Wildfire met all the goals under the city’s minority women business enterprise program, “but all of the subcontractors here are women and there aren’t any minority subcontractors involved in the proposal. And probably 30-40 percent of the people who attend the fair are either African-American or Hispanic.”

By the time the contract came up for a vote by city council on Feb. 20, Montgomery had another concern. The councilman said Wildfire identified the Winston-Salem Chronicle “as one of the individual contractors that they would be doing ad placement for” in its application. The Chronicle is a weekly newspaper that targets the African-American community in Winston-Salem that is published by Councilman James Taylor. Montgomery, who co-owns the Chronicle with Taylor, said during the Feb. 20 meeting that the newspaper would not accept any payment from Wildfire for ad placement to market the fair if the firm received the contract.

“The purpose of my statement is to make it clear that the Winston-Salem Chronicle has no financial interest in this contract,” he said. Montgomery added that he was concerned that Wildfire’s reference to the Chronicle as a recipient of advertising spending might be “a methodology that is used to silence a voice from being able to engage on an item” before council.

Taylor blasted Wildfire for its handling of the contract bid.

“I do not like the way in which this matter was handled,” he said. “To simply just list the Chronicle and then silence two voices, it was completely inhumane and uncivilized. And I don’t know that we should continue to tolerate that sort of thing.”

City council voted 5-4 on Feb. 20 to remand the contract back to the finance committee.

The committee vote on Monday to pull the marketing contract back in house fell along party lines, with Democrats DD Adams, Vivian Burke and Jeff MacIntosh in favor and Republican Robert Clark opposed.

“Twice, this company has legitimately, honestly, above board played-by-the-books-rules won this contract, and I will not vote for anything but awarding that to them,” Clark said. “If you want to do something different, change the rules before the game starts.”

The proposal submitted by the city’s marketing and communication department budgets $209,791 for marketing the fair, compared to the $230,000 budget proposed by Wildfire. The two proposals include roughly the same amount for advertising buys — about $140,000. The city proposes spending only $3,100 on social media, compared to $26,450 by Wildfire, and also undercuts the private firm’s proposed spending on strategy and creative development, public relations and production. The one area where the city proposes spending more money than the private competitor is a $28,000-line item for a “media placement commission.”

City asked to forgive loan to allow short sale of daycare

The Mudpies Downtown East daycare near the Innovation Quarter is on the market. (photo by Jordan Green)

In other business on Monday, the finance committee heard a request to forgive a $108,300 loan to the Northwest Childcare Development Centers for the Mudpies East daycare on East Seventh Street adjacent to the Innovation Quarter. Forgiveness of the loan would allow a short sale of the daycare to a local investment group managed by Matthew Marceron of Clemmons and Howard J. Kaplan of Lewisville. Marceron said the investors build and lease Head Start facilities, and that they plan to lease the East Seventh Street location to Foundations Early Learning Center, which operates daycares as Sunshine House.

Under the current terms of the city loan, the owner is required to use the property for a non-profit daycare for 25 years. The prospective buyers are requesting that the city lift that restriction after 10 years. As a guarantee of good faith, the new owners would pay the city $55,000 if they closed the daycare before the 10-year period elapses. City staff is also recommending that the new owners agree to retain at least 50 percent of current employees for five years and ensure that at least 33 percent of families served are low- to moderate-income for at least 10 years.

Council members Adams and Montgomery proposed forgiving the $108,300 debt incrementally to enforce an agreement to preserve daycare slots for low- to moderate-income families. Adams said the reason she voted for the series of loans to Northwest Child Development Centers from 2011 through 2014 was to ensure that affordable childcare was available African-American and Latino families along the Patterson Avenue and Martin Luther King Jr. Drive corridors, and she’s concerned that they could be displaced due to a housing boom around the Innovation Quarter.

Councilman Clark warned that the city’s investment in the daycare is subordinate to $2.6 million in loans from other creditors that would have to be satisfied before the city was repaid.

“The guy holding all the money is BB&T,” he said. “They could foreclose on this loan tomorrow. We would lose 100 percent of what we have…. There’s $2.6 million debt in front of us, and I think the best thing we can do is find someone who’s committed to working with a daycare center. We’re writing off $108,000 versus we have roughly $400,000+ that we could write off. And the daycare center stays there. I understand that this could go away in 10 years. If this thing doesn’t work for them, they may have to bulldoze it down and put apartments there. I think we have an operator who wants to work with us, but we have very little leverage here.”

The item was on the agenda for information purposes only and the committee took no action.

Tony L. Burton III, the CEO of Northwest Child Development Centers, is a candidate for Forsyth County Commission in District A. Northwest Child Development Centers sold its other Winston-Salem daycare, located on Poplar Street, to Foundations Early Learning Center in 2016. With the potential sale of the East Seventh Street facility, the nonprofit would be left with only two facilities — one in King and one in Mocksville. Burton’s salary was $96,898, according to the nonprofit’s 990 report on file with the IRS for 2015.

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