Charles Wallace has a dream.
He dreams of a black business empire based on "black gold" - an oil refinery, a pipeline, a chain of gas stations, a whole new community built on the abandoned airbase at Tuskeegee, Ala., where black pilots trained in World War II.
The facility would cost $636 million to build and would produce more than haff a billion dollars worth of petroleum products a year. It would be the largest black business in the United States, the first minority-owned enterprise big enough to make the Fortune 500.
It is the kind of dream, Wallace admits, that some people laugh at.
"I don't mind that," he says. "I learned a long time ago that you can't laugh an run at the same time. And while they've been laughin', I've been runnin'."
In five years of dreaming and running, Wallace has obtained commitments for $6 billion worth of crude oil for his refinery. He's found a place to build it, obtained right of way for the pipeline, and put the bulldozers and earth movers to work.
He's also fought and lost a battle with Congress and the Federal Energy Admininstration for special subsidies that would have aided the project, and has failed, so far, to obtain government contracts and commitments that are crucial to its success.
Although Wallace's corporate headquarters is in Queens, N.Y., and his refinery site is in Alabama, the heart of his operation is in Washington. A 15-member Washington staff, headed by two young, black former congressional staff members occupies the sixth floor of the office building adjacent to the Christian Science Church at 16th and I Streets NW.
"The success or failure of this project depends on the United States government," Wallace said during a recent interview at his office near the White House. An entire alphabet of agencies is involved - DOD, EDA, EPA, FEA, FHMA, HUD and others.
Government subsidies for the foreign oil that goes into the refinery, government contracts to buy the products that come out of it, and government help in building and financing it all are required.
"I's not asking for any more than white businessis have been getting for years," he said. "But I'm not taking any less." All oil importers get entitlements or subsidies that bring the cost of their foreign oil down to domestic proces. And he noted, companies much richer than his get gevernment financing for projects that create jobs.
Acknowledging that he couldn't have brought the project as far as he had without government help, he declared, "I am a product of the SBA" - the Small Business Administration.
Wallace and Wallace Enterprises, Inc. - the other Wasllce is his wife Juanita - got its first loan through SBA in 1972. The loan was for $150,000 and enabled the Wallaces to expand the small fuel oil business they launched with one used truck in 1968, while they also ran a laundromat.
By some standards, just owning a truck and a bunch of washers and dryers ought to have been a success for someone with Wallace's background. Born in Florida and orphaned as a baby, he grew up in Georgia and was working as a sharecropper with his adopted mother when he was drafted.
Following his service in the Army, Wallace moved to New York, where he washed cars and went to high school. He was 27 when he got his night school diploma.
After the first SBA-guaranteed loan, two more, for $350,000 in 1973 and $1 million in 1975, provided the equipment and working capital to expand the fuel oil business.
The store-front that once housed the laundromat is now the main office of Wallace and Wallace, which Black Enterprise magazine says did $15.5 million dollars in business last year, making it the eight largest black business in America.
Wallce and Wallace's biggest single customer is and always has been the United States government. Through SBA's controversial 8a program, the company since 1970 has obtained government contracts for heating oil totaling $42,603,891, the agency's records show. The U.S. Military Academy at West Point and other government facilities in the New York metropolitan area are heated by fuel supplied by Wallace.
The 8a program gives minority businessman government contracts without competitive bidding, generally paying the average price paid on competitive contracts. By the SBA's reckoning, the contracts to Wallace and Wallace have included to $1.8 million in indirect subsidies, "business development expenses," as they are called.
An SBA spokesman explained that 8a is supposed to give struggling minority companies basic business to provide the cash flow and profits to allow them to, as the agency puts it, "graduate" into competitive bidding and non-government markets.
The 8a program, says Wallace, "is the best legislation to come out of the Congress for minority business. All it is an opportunity to sell a product to the government. It's an opportunity, they don't give you anything, but that's all the black man needs."
He complains, however, that SBA refuses to let its funds pay for lawyers and accountants, professionals who he says are necessary for minority entrepreneurs who know hwo to run successful businesses but need to learn "the white man's rules."
Wallace clearly has learned to play the game. The contractors he has lined up are the white business establishment - Chicago Bridge and Iron, one of the biggest steel fabricators to build the tanks and iron works: Ford, Bacon & Dvis, an international engineering firm headquartered in New York to do the pipeline; Universal Oil Products of Des Plaines, III., to design, build and manage the equipment that turns crude oil into finished products.
Arthur Young & Co., one of the "Big Eight" accounting firms, keeps his books. And this month he hired Dr. Andrew Brimmer, former governor of the Federal Reserve Board and Under-secretary of Commerce as his economic and financing consultant.
Wallace's strategy in assembling the refinery project is to line up commitments, one at a time, each contingent on the others, until the last link falls into place.
He has an agreement with Venezuela and other unspecified oil producers to supply $6 billion worth of crude oil - if he has a refinery to use it. He has an agreement with Alabama Gas Co. to buy a $1 billion worth of propane over the next 20 years - if he can produce it. He has contracts to build the refinery - if he can finance it.
Brimmer said his job will be to prepare the financial data needed to get private capital for the project. Wallace is seeking loans and loan gurantees from the Commerce Department's Economic Development Administration and the Farmers Home Administration (which finances businesses in rural areas) for part of the $630 million construction cost.
"My bunch is he will still need a sizeable block of money, at least half of it from the private sector," explained Brimmer. "My job will be to attempt to assure lenders that it is economically feasible."
The government plays a critical role in the private financing plan. Wallace is seeking a major Department of Defense contract - neither he nor the Pentagon will say how major - to supply JP-4 jet fuel.
"If he gets that contract, we then have a bankable proposition," said Brimmer.
Wallace hopes to become the military's first minority fuel contractor, but is up against a 'Catch 22" situation, said John Adams, special assistant to Wallace and head of his Washington office. The Pentagon will not award a contract to an unbuilt refinery, and the refinery cannot be built without the contract. A Pentagon spokesman said negotiiations with Wallace are continuing.
Tackling such bureaucratic blocks is the job of Adams, former minority counsel to both the Senate Small Business Committee and Sen. Jacob Javits (R-N.Y.), and Keith Jackson, who was legislative aide to Rep. Charles Rangel (D-N.Y.) and on the staff of the Congressional black Caucus.
Wallace's lobbyists are good enough that last year they won Senate approval of a proposal that would have provided $1 million a month in special subsidies to the company and would have, Adams said, gotten the refinery operating at least a year faster.
Wallace planned to start importing crude oil before the refinery was built and have Mobil refine it for him. Because he wasn't refiner was built and have Mobil refine it for him. Because he wasn't refiner oil entitlements. With the support of Javits and Sen. James B. Allen (D-Ala), an amendment allowing refinery builders to qualify was passed by the Senate. After oppositon from FEA, theamendment was killed by a conference.
In addition to lobbying the Pentagon. Wallace's Washington office also is seeking assurances from the SBA that the company can retain its favored 8a contractor status at least until the refinery has been in operation for a couple of years. The government heating oil contracts would provide another major outlet for the refinery's production.
The catch with SBA is that a company successful enough to build a $630 million fefinery doesn't meet the usual definition of "disadvantaged enterprise."
Wallace describes the situation with the SBA as "like them telling me they're going to help me get to Europe. They put me on the boat and take me out 200 miles in the ocean, then they tell m 'Well, we brought you this far, now you're going to have to swim the rest of the way.' I caould drown two feet from the shore just as easy."
Promining an 8a contractor he can remain in the program would apparently be an innovation for SBA. Wallace has already broken ground with the agency by getting it to lease government surplus construction equipment to him to prepare the site for the refinery.
Bulldozers and earth movers worth $4.6 million - the kind of military leftovers usually sold to foreign governments at salvage prices - are leased to Wallace for 1.5 per cent of their value per year.
The site of the refinery is also government surplus, the airbase outside Tuskeegee where the Army Air Corps trained its segregated black pilots. It is now owned by the city of Tuskeegee and used as an industrial park. The improvements - grading, utilities, and other facilities - at the abandoned base will save millions of dollars and months of time in developing the refinery. Wallace says. CAPTION: Picture, Charles Wallace and drawing of his proposed $660 million oil refinery in Tuskeegee, Ala. The Washington Post