To: Andre P. Boursse CRA No. D THE AVAILABILITY OF MINORITY AND WOMAN-OWNED BUSINESSES FOR THE SAN FRANCISCO MUNICIPAL RAILWAY

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1 Memorandum To: Andre P. Boursse CRA No. D From: Mark Berkman and Timothy Savage Date: cc: Subject: THE AVAILABILITY OF MINORITY AND WOMAN-OWNED BUSINESSES FOR THE SAN FRANCISCO MUNICIPAL RAILWAY At your request, we have calculated availability estimates for minority-owned and/or womanowned business enterprises (MWBEs) using the Census Bureau s 1997 Surveys of Minority- Owned and Woman-Owned Business Enterprises, the latest year for which there is there is such data, together with data on San Francisco Municipal Railways (Muni) spending patterns by two-digit Standard Industrial Classification (SIC) for the federal fiscal year of We assume that the geographic area from which SFMR draws the bulk of its contractors is the San Francisco Consolidated Metropolitan Statistical Area (CMSA). This CMSA includes the counties of Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Santa Cruz, Solano, and Sonoma. At your request, we have calculated separate estimates for (A) Construction, (B) Professional Services, and (C) Construction and Professional Services combined, based on the SIC codes recently provided to us by your office. We have produced both weighted and unweighted estimates of availability. The unweighted estimates give equal weight to each industry when calculating average MWBE availability across industries. On the other hand, the weighted estimates of availability, when calculated across industries, give greater weight to availability in those industries that receive a larger share of Muni s federal contract dollars. We have calculated weighted estimates of availability for Construction, Professional Services, and Construction/Professional Services Combined. We have also calculated weighted estimates of availability for each of the six individual SIC codes that your office specifically identified. 1 The estimates for MWBEs are displayed in Table 1, together with the lower and upper bounds of a confidence interval. Table 2 displays similar information for MBEs only, while Table 3 displays similar information for WBEs only. The results displayed in these tables are discussed in greater detail below. Tables 4 through 7 display unweighted availability estimates by the relevant SIC codes separately for Blacks, Hispanics, Asians/Pacific Islanders, American Indians/Alaska Natives, and Women. 1 Because the share of federal dollars spent on various projects by SFMR may change from one year to the next, we expect the weighted estimates contained in this report may differ from those in prior years.

2 Page 2 Table 1 displays a summary of our weighted estimates of MWBE availability based on the 1997 Census data and Muni spending patterns for the federal fiscal year of For all SFMR Construction and Professional Service projects receiving federal dollars, our weighted estimate of MWBE availability is 26.5 percent. Accounting for irreducible survey error, we estimate a confidence interval around this 26.5% estimate to be 23.5% to 29.6 percent. That is, we have confidence that the true value of availability lies within 23.5 to 29.6 percent. For Construction projects only, we estimate availability to be 25.6% with a confidence interval of 22.5% to 28.7 percent. For Professional projects only, we estimate availability to be 32.6% with a confidence interval of 22.6% to 42.6 percent. Table 2 displays a summary of our weighted estimates of MBE availability based on the 1997 Census data and SFMR spending patterns for the federal fiscal year of For all SFMR Construction and Professional Service projects receiving federal dollars, our weighted estimate of MWBE availability is 18.3 percent. Accounting for irreducible survey error, we estimate a confidence interval around this 18.3% estimate to be 15.6% to 21.0 percent. That is, we have confidence that the true value of availability lies within 15.6 to 21.0 percent. For Construction projects only, we estimate availability to be 18.1% with a confidence interval of 15.3% to 20.9 percent. For Professional projects only, we estimate availability to be 19.5% with a confidence interval of 10.4% to 28.6 percent. Table 3 displays a summary of our weighted estimates of WBE availability based on the 1997 Census data and SFMR spending patterns for the federal fiscal year of For all SFMR Construction and Professional Service projects receiving federal dollars, our weighted estimate of MWBE availability is 10.2 percent. Accounting for irreducible survey error, we estimate a confidence interval around this 10.2% estimate to be 8.6% to 11.8 percent. That is, we have confidence that the true value of availability lies within 8.6 to 11.8 percent. For Construction projects only, we estimate availability to be 9.2% with a confidence interval of 7.6% to 10.8 percent. For Professional projects only, we estimate availability to be 16.3% with a confidence interval of 10.8% to 21.8 percent. Tables 4 through 7 contain unweighted estimates for the specific SIC codes identified by your office. These tables contain both estimates of availability (both as counts and as percents) and the lower and upper bounds of a confidence interval. The interpretation of the confidence intervals in these tables is identical to that in Tables 1 through 3. Please note that the 1997 Census survey has been improved since its earlier surveys. 2 In particular, C-corporations are now included along with proprietorships, partnerships, and S- corporations. Nevertheless, it is important for us to note that these estimates contain important caveats. Therefore, we would draw your attention to the Caveats for 1997 SMOBE/SWOBE Unpublished Data, a copy of which we understand was attached to a prior memorandum. 2 The Census has replaced the Surveys of Minority and Women Owned Businesses with the Survey of Business Owners (SBO). An advanced report was released in February 2005, but results by race and gender will not be released until late 2005 and 2006.

3 Page 3 Table 1. Estimated Availability of Minority-Owned and/or Woman- Owned Business Enterprises with One or More Paid Employees in the San Francisco CMSA, 1997 Level of Aggregation Estimate Lower Bound, Upper Bound, (%) (%) (%) Construction & Prof. Svcs [1] 26.5% 23.5% 29.6% Construction [2] 25.6% 22.5% 28.7% Prof. Services [3] 32.6% 22.6% 42.6% SIC 15 - Building Construction 18.6% 12.8% 24.4% SIC 16 - Heavy Construction 19.8% 13.2% 26.4% SIC 17 - Special Trades Contractors 29.2% 25.1% 33.2% SIC 87 - Engineering & other Prof. Services 32.6% 22.6% 42.6% Note: [1] Estimated availability for Construction & Prof. Svcs is calculated by weighting SIC Codes with SFMR Federal Contract Dollars from [2] Estimated availability for Construction is calculated by weighting SIC Codes with SFMR Federal Contract Dollars from [3] Estimated availability for Prof. Services is equivalent to SIC Code 87.

4 Page 4 Table 2. Estimated Availability of Minority-Owned Business Enterprises with One or More Paid Employees in the San Francisco CMSA, 1997 Level of Aggregation Estimate Lower Bound, Upper Bound, (%) (%) (%) Construction & Prof. Svcs [1] 18.3% 15.6% 21.0% Construction [2] 18.1% 15.3% 20.9% Prof. Services [3] 19.5% 10.4% 28.6% SIC 15 - Building Construction 13.3% 7.7% 18.8% SIC 16 - Heavy Construction 10.1% 5.9% 14.4% SIC 17 - Special Trades Contractors 21.1% 17.5% 24.7% SIC 87 - Engineering & other Prof. Services 19.5% 10.4% 28.6% Note: [1] Estimated availability for Construction & Prof. Svcs is calculated by weighting SIC Codes with SFMR Federal Contract Dollars from [2] Estimated availability for Construction is calculated by weighting SIC Codes with SFMR Federal Contract Dollars from [3] Estimated availability for Prof. Services is equivalent to SIC Code 87.

5 Page 5 Table 3. Estimated Availability of Woman-Owned Business Enterprises with One or More Paid Employees in the San Francisco CMSA, 1997 Level of Aggregation Estimate Lower Bound, Upper Bound, (%) (%) (%) Construction & Prof. Svcs [1] 10.2% 8.6% 11.8% Construction [2] 9.2% 7.6% 10.8% Prof. Services [3] 16.3% 10.8% 21.8% SIC 15 - Building Construction 6.2% 4.1% 8.3% SIC 16 - Heavy Construction 10.8% 5.5% 16.0% SIC 17 - Special Trades Contractors 10.3% 8.0% 12.5% SIC 87 - Engineering & other Prof. Services 16.3% 10.8% 21.8% Note: [1] Estimated availability for Construction & Prof. Svcs is calculated by weighting SIC Codes with SFMR Federal Contract Dollars from [2] Estimated availability for Construction is calculated by weighting SIC Codes with SFMR Federal Contract Dollars from [3] Estimated availability for Prof. Services is equivalent to SIC Code 87.

6 Page 6 Table 4. Tabulation of 1997 SMOB/WOB Data: San Francisco CMSA Firms with Paid Employees SIC Code 15 - Building Construction Lower Upper Lower Upper Level of Aggregation Number Percent Bound Bound Bound Bound (N) (%) (N) (N) (%) (%) Universe 5,526 Black - owned % % 1.9% Hispanic - owned % % 8.7% Asian - owned % % 11.3% Am. Ind. - owned 6 0.1% % 0.3% MBE - owned % 425 1, % 18.8% Female - owned % % 8.3% MWBE - owned 1, % 709 1, % 24.4%

7 Page 7 Table 5. Tabulation of 1997 SMOB/WOB Data: San Francisco CMSA Firms with Paid Employees SIC Code 16 - Heavy Construction Lower Upper Lower Upper Level of Aggregation Number Percent Bound Bound Bound Bound (N) (%) (N) (N) (%) (%) Universe 612 Black - owned 6 1.0% % 2.0% Hispanic - owned % % 12.5% Asian - owned 4 0.7% % 1.7% Am. Ind. - owned 0 0.0% % 0.0% MBE - owned % % 14.4% Female - owned % % 16.0% MWBE - owned % % 26.4%

8 Page 8 Table 6. Tabulation of 1997 SMOB/WOB Data: San Francisco CMSA Firms with Paid Employees SIC Code 17 - Special Trades Contractors Lower Upper Lower Upper Level of Aggregation Number Percent Bound Bound Bound Bound (N) (%) (N) (N) (%) (%) Universe 9,313 Black - owned % % 2.1% Hispanic - owned 1, % 1,044 1, % 17.3% Asian - owned % % 6.4% Am. Ind. - owned % % 1.3% MBE - owned 1, % 1,627 2, % 24.7% Female - owned % 750 1, % 12.5% MWBE - owned 2, % 2,338 3, % 33.2%

9 Page 9 Table 7. Tabulation of 1997 SMOB/WOB Data: San Francisco CMSA Firms with Paid Employees SIC Code 87 - Engineering & other Prof. Services Lower Upper Lower Upper Level of Aggregation Number Percent Bound Bound Bound Bound (N) (%) (N) (N) (%) (%) Universe 11,194 Black - owned % % 1.1% Hispanic - owned % % 4.4% Asian - owned 1, % 511 2, % 20.5% Am. Ind. - owned % % 8.1% MBE - owned 2, % 1,161 3, % 28.6% Female - owned 1, % 1,211 2, % 21.8% MWBE - owned 3, % 2,534 4, % 42.6%