Building on Marriage

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Building on Marriage
Downtown L.A.’s Miguel Contreras Learning Complex

Like many executives, Rene J. Flores Sr. – president and 48 percent owner of Pasadena’s SGI Construction Management – is answerable to a boss. Unlike many, however, he can answer her over dinner.

That’s because the company’s chief executive and majority owner, Connie Flores, is his wife of 45 years.

When the couple started SGI – which plans and oversees the completion of bond-driven school improvement and construction projects – California law required that a percentage of public contracts be awarded to minority- and women-owned companies. The Flores’ already qualified as Latinos, but having a woman at the helm opened even more doors – so they gave Connie Flores a majority stake.

Not only was SGI poised to take advantage of the state’s hiring preferences, but the company also rode a wave of school construction that swelled after decades of neglect.

Over the past two decades, California voters have approved a series of school bonds, rejecting only one during the recession of 1994 when SGI Construction Management was born. In 1998, voters approved $9.2 billion to improve the state’s colleges and public schools, many of which had been built in the 1960s and were starting to show their age.

Then, in 2002, voters passed the largest bond measure yet, providing $13.5 billion to help ease overcrowding by constructing new schools and upgrading those that were old.

By then the Flores’ were already established in the business.

“Our first job was helping rebuild the California State University, Northridge, campus after the earthquake,” recalled Rene Flores, referring to the Northridge Earthquake of 1994.

Since then, the company has managed a host of new-school constructions and old-school renovations statewide. Among its past and present customers are the East Side Union High School District in San Jose, Sweetwater Union High School District in Chula Vista and West Contra Costa Unified School District in Richmond.

“They’re doing a fine job,” said Bill Fay, associate superintendent for operations at West Contra Costa, which has about 31,000 students on 40 campuses.

In the dozen years since the district received its first bond money, he said, SGI has been involved in the improvement or reconstruction of more than 30 schools and is planning several more.

Most projects follow a similar pattern, the couple says.

‘Orchestra leaders’

After a bond is approved, SGI submits a bid to oversee one or more of a district’s projects. Then, once it gets the nod, the company oversees the work from design to construction.

“We’re the orchestra leaders,” Rene Flores explained.

Beginning with its own team of architects and engineers, the company completes the initial planning. Then it hires an architectural firm to finalize the design within the district’s timing and budgetary constraints, oversees the permitting process and, eventually, hires contractors to do the construction.

Over the years, SGI – which bills clients at hourly rates based on the services it performs – has overseen hundreds of projects ranging in value from $100 million to $1.2 billion. At any given time, the couple said, they are involved in as many as 10 projects, each of which may require up to five years for completion.

While some question whether that can continue, the Flores’ are betting it will.

“There certainly was a boom,” said Hank Koffman, director of the construction and engineering management program at USC. “But many districts – including L.A. Unified – have run out of money. So until voters approve another bond, which is difficult in today’s economic conditions, it’s going to really be tough.”

The Flores’ say they’re confident, once the economy improves, that new school bonds will be forthcoming. To some extent, their confidence seems justified by conditions on the ground.

The company’s recent annual revenue has been around $20 million, and the Flores report it’s been growing about 15 percent annually. But in order to keep up the pace, the bond pipeline will have to be resupplied.

Fred Yeager, assistant director of the California Department of Education’s facilities planning division, acknowledges that there’s been a slowdown in construction.

“We’re at a different place now than we were three or four years ago,” he said.

Yet a recent study by his department predicts that California’s public school population will grow by nearly 61,000 students over the next five years. Accommodating that growth and replacing old classrooms, the study concludes, will require the addition of 12 classrooms – or 20 modernized ones – every day until 2015.

“We’re not just building new schools out on a field now,” Yeager said, “but revisiting existing stock in the inner cities and other areas that have aged. Most of these schools were built in the 1950s and ’60s, so there’s lots of stuff that needs to be done.”

Connie and Rene Flores said they will be poised to bid on those jobs when new bond money becomes available.

Their competitors are likely to be large firms such as Bechtel and URS Corp., both in San Francisco, as well as Parsons in their own backyard.

The Flores see an advantage in being a smaller firm with specialized knowledge of school construction in California. While the state no longer gives official preference to woman- and minority-owned contractors, it can still help.

“Did we notice that SGI was minority owned and did it act as a bonus? It most certainly did,” said Alan Garofalo, associate superintendent of student services and facilities at San Jose’s East Side Union High School District, for which the company has managed $727 million worth of projects. “We are a minority district, and while it wasn’t a criterion by any means, I’d be a liar if I said we didn’t note that the company was minority owned. It was a little extra scoop on the plate.”

For Connie Flores, another extra scoop is being able to act as a role model for students, especially girls. With a background in real estate development, she oversees the company’s administrative, financial and marketing ends while Rene Flores – who has lots of construction experience and handled governmental relations for Peter Ueberroth’s Rebuild Los Angeles project after the riots of 1992 – acts as SGI’s hands-on project coordinator.

“After so many years of marriage,” jokes Rene Flores, 66, “I have to succumb to the boss.”

Quipped Connie Flores, 63: “Either that or I threaten to fire him.”

SGI Construction Management

HEADQUARTERS: Pasadena

CHIEF EXECUTIVE: Connie Flores

FOUNDED: 1994

CORE BUSINESS: Managing school construction projects paid by public bonds

EMPLOYEES: 100

GOAL: Double the business in the next five years

THE NUMBERS: More than $20 million revenue annually, increasing by about 15 percent per year

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