By Megan Sayles
AFRO Business Writer
msayles@afro.com
Real estate veteran Gina Merritt and construction consultant Michael Karnes have joined forces to establish NREUV Contracting and Mechanical. The D.C.-based company specializes in designing and installing HVAC systems for new and existing construction properties.
Together, Merritt and Karnes bring decades of experience in HVAC, project management, real estate development and finance. Through their new venture, the duo aims to work with Black and Brown communities.
“We’re a new company. We’re still very small, but our goal is to create an opportunity for people from underserved communities to get training, apprenticeships and create a career pathway,” said Merritt, CEO of NREUV Contracting and Mechanical. “Our goal is to grow the company in a way that brings high-value jobs to the communities we serve and build in.”
The company also intends to team up with minority subcontractors on projects. Part of Karnes interest in partnering with Merritt was the opportunity to ease capital challenges for minority firms.
“One of the reasons I shifted away from consulting to starting this company with Gina is because there’s a very big disparity in access to capital when it comes to minority firms versus White companies,” said Karnes, president of NREUV Contracting and Mechanical.
Before going into business with Merritt, Karnes ran a consulting business following 28 years in the HVAC industry. His goal was to help minority subcontractors grow from exclusively supplying labor to general contractors on projects to providing materials and equipment.
However, the costs associated with construction materials and equipment are steep.
“The number one biggest issue in construction right now is that the subcontractors finance the job, not the banks. Even though the banks say they’re financing the project, they’re delaying payment for 30, to 60, to 90 days in some cases,” said Karnes. “When you’re a small, minority contractor that has $100,000 in the bank, you can’t carry a job for four months before you get paid.”
“We had an idea to hire these subcontractors and make them labor-only,” said Karnes. “Then, we can help them grow their capital to self-finance and help them get their credit up in order to obtain financing.”
Merritt is no stranger to connecting underestimated communities to employment opportunities. The New York native started her career on Wall Street before venturing into real estate development.
In 2002, she started Northern Real Estate Urban Ventures (NREUV), a community development firm focused on serving low-income communities. The firm has supported the construction of more than 7,000 multifamily units and has $600 million worth of projects in its pipeline today.
Merritt, herself, lived in affordable housing as a child—a reality she didn’t realize until her 20s. She said her Bronx neighborhood was a beautiful community, and she loved growing up there.
With real estate development, Merritt thought she could create and maintain communities like the one she grew up in. She wanted to ensure they had longevity and investment. In 2008, she established another business, Project Community Capital, to leverage her industry relationships to connect underserved individuals with employment, subcontracting and entrepreneurship.
“There are so many people in Black and Brown communities who just need access to economic opportunity, and if they had the access, they would kill it,” said Merritt. “Our platform has proved that. We place all kinds of folks in jobs that they would otherwise not hear or know about, and we leverage our social capital to make those connections.”
As interest rates have skyrocketed in the housing market, Merritt is hoping NREUV Contracting and Mechanical will help offset cash flow for NREUV.
“Development has slowed down because interest rates are so high. We can’t borrow as much,” said Merritt. “I needed another way to throw off cash flow to run my development business.
NREUV Contracting and Mechanical secured its first $2-million contract with Brookfield Properties in Delaware. The townhouse development is about 152 units.
“We hope we’ll be awarded another seven-figure contract— close to $3 million— in the next 30 days,” said Merritt. “My hope is that we wind up being a $100-million HVAC company one day.”
Megan Sayles is a Report for America corps member.
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