June 13, 2014
State passes legislation to help M/WBEs compete for HPD-supported affordable housing development projects
NEW YORK—Mayor Bill de Blasio, New York State Senator Cathy Young, Assembly Member Keith Wright, and Housing Preservation and Development (HPD) Commissioner Vicki Been announced passage of legislation that allows HPD to create a pipeline of affordable housing development opportunities dedicated to increasing the participation of Minority and Women-Owned Business Enterprises (M/WBEs) in HPD's programs. The new law, sponsored by Senator Young and Assemblyman Wright, who chair the state legislature's housing committees, allows HPD to undertake path-breaking measures to increase participation by developers who have often faced credit constraints and other barriers.
"This bill accomplishes two purposes," said Mayor de Blasio. "Construction and rehabilitation of 200,000 units of affordable housing is a tall order, and we need a strong and diverse development industry, with new ideas, energy, and roots in all our neighborhoods, to accomplish our goals. At the same time, our affordable housing agenda is, at bottom, about promoting opportunity, and the opportunity to grow a business in development should be available to all those with entrepreneurial spirit and talent. This bill, like the Housing New York plan, is an ambitious and innovative effort to make development opportunities available fairly, by recognizing and squarely addressing some of the challenges faced by minority and women-owned development firms."
"This program addresses the lagging participation by many minority and women-owned businesses that want to take part in development projects but are oftentimes unable, due to unfair and cumbersome obstacles," Speaker Sheldon Silver said. "This is a strong, much-needed measure that will help break down barriers to success for M/WBEs. Programs like this are precisely what New York City needs to build on the progress that we are striving to make in New York and close the inequality gap once and for all."
"This legislation will authorize the City to address the disparity in opportunities afforded smaller, less capitalized developers in affordable housing," said State Senate Housing Chairwoman Cathy Young. "I am glad to be advancing this initiative to help level the playing field for women-owned and minority-owned businesses, and to create economic development and increase job opportunities within smaller business entities."
"As Chair of the Assembly Housing Committee and a longstanding supporter of equal opportunity programs, I am greatly encouraged by the passage of my bill to increase the participation of minority and women-owned businesses in New York City housing development projects," said Assemblyman Keith Wright. "This proposal will bring tremendous benefits to the local economy while creating pathways to greater opportunities for M/WBEs."
"HPD has worked with a terrific pool of developers who have been dedicated, innovative, and amazingly effective in preserving and expanding our affordable housing stock," said Commissioner Been. "In order to meet the challenges of the future, we need to ensure that we have an even deeper bench of talent, that we are building the next generation of industry leaders, and that our developers have connections to the wide spectrum of neighborhoods in which we will be working. To do that, we need to ensure that all developers have an opportunity to gain a solid foothold in the industry by breaking down and tackling head on some of the barriers that have limited the participation of minority and women owned developers."
The effort to expand opportunities for M/WBEs not only reflects the values incorporated in Mayor Bill de Blasio's Housing New York plan, it also will work to create local employment opportunities across the five boroughs. The program builds on an existing City initiative that promotes opportunities for M/WBEs to do business with the City.
The legislation gives HPD the authority to implement a program to build the capacity of M/WBE developers and provide opportunities for those developers to lead City-supported affordable housing projects. HPD will use its new authority to establish a pre-qualified list of M/WBE developers and joint ventures that will be eligible to compete for a designated pipeline of new construction and preservation projects supported by HPD. The firms on the pre-qualified list will be selected based on responses to a Request for Qualifications (RFQ) to be issued later in 2014 designed to identify M/WBE developers that show the ability to successfully take on the projects and the greatest potential to benefit from participating in the pipeline program.
Each entity on the pre-qualified list will be matched with a mentor who is a member of the New York State Association for Affordable Housing (NYSAFAH), the statewide trade association for New York's affordable housing industry. The pre-qualified M/WBE firms will then be given the opportunity to respond to a competitive Request for Proposals (RFP) to develop specific new construction and preservation projects.
"This is a critical program, not only for our members but for all minority and women-owned affordable housing developers in New York City," said Jolie Milstein, President and CEO of the New York State Association for Affordable Housing. "NYSAFAH has had a longstanding dedication to and a proven track record of supporting M/WBEs across the state. On behalf of our more than 300 members, we applaud HPD and the State legislature for their commitment to increasing opportunities for these firms. This will have a significant impact on our efforts to strengthen the future of affordable housing in New York City and beyond."
Each year the City provides millions of dollars in subsidy in the form of low-cost loans and City-owned land to a pipeline of projects that preserve and create affordable housing. The projects that HPD has selected for the M/WBE pipeline program encompass a range of building types, technical requirements and financial challenges that will allow the developers selected for the projects to hone their experience and skills so that they will be better positioned to participate more fully in all the City's development opportunities.
In addition, HPD is rolling out a suite of policies and programs aimed at increasing opportunities for M/WBEs to compete to participate in HPD-financed development projects. The New York City Acquisition Fund will offer low-cost financing options for site acquisition and predevelopment costs. HPD will design a capacity building and business development course in conjunction with the City Department of Small Business Services (SBS) that will launch later this year. HPD also will take steps to encourage all developers that receive HPD subsidy to employ M/WBE contractors and professional service firms.
Increase Access to Capital:
The New York City Acquisition Fund, LLC offers acquisition and predevelopment loans to developers committed to the creation and preservation of affordable housing in the five boroughs of New York City. In the past, these low-cost loans have been available to small, nonprofit developers. The Fund has now extended these favorable terms to qualifying M/WBE developers that do not otherwise have access to much needed capital. M/WBEs interested in applying for an Acquisition Fund loan should contact one of the Fund's four Originators: CHS, Enterprise, LISC, or Capital for Healthy Families & Communities.
"To execute Mayor de Blasio's ambitious Housing New York plan, the City will need all hands on deck. To do their part, M/WBE developers, many with limited access to capital or land, need improved access to tools and opportunities to remain competitive and help meet the City's call to action," said Bomee Jung, interim director, Enterprise Community Partners, Inc. "The State Legislature's timely passing of this bill will provide M/WBEs with more opportunities to compete for City projects and create housing, jobs, and economic investment in communities they work in every day."
Build the Capacity of MWBE Developers:
HPD has partnered with SBS and the Minority Business Development Institute to launch a capacity building and business development course to meet the unique needs of M/WBE developers. Developers who choose to enroll in this course will have the opportunity to learn effective business planning, financial management, and strategies for successfully participating in HPD affordable housing programs and the broader industry.
Enrollment will open later this summer; in the coming months, detailed information will be posted on HPD's website ( www.nyc.gov/hpd ) as well as the agency Twitter feed ( www.twitter.com/NYCHousing ) and Facebook page.
"Mayor de Blasio's Housing New York plan opens up important new opportunities for M/WBE companies," said Maria Torres-Springer, Commissioner of the NYC Department of Small Business Services. "Working in collaboration with HPD, SBS will continue to tailor and expand the capacity-building services our agency provides to M/WBEs to ensure they can compete effectively for City contracts and participate in the construction of affordable housing."
Encourage Developers to Use M/WBE Contractors:
HPD has also begun requiring all developers receiving HPD subsidy to inform HPD of any voluntary goals they have set for including M/WBE contractors in their development teams, and to submit semiannual updates listing the M/WBE general contractors, subcontractors, and professional services providers they have hired and the amounts that have been paid out under contracts with those entities. This program will enable HPD to better track the involvement of MWBE businesses in the development process and assess additional ways that HPD can enhance participation. It also is intended to encourage all developers to think harder about ways they can include qualified M/WBEs in their development team wherever feasible. The program builds upon similar initiatives such as New York State Homes & Community Renewal's MWBE program.
"As co-founder of a M/WBE firm, I am grateful for the creation of Building Opportunity and the passage of legislation that will allow this important program to begin assisting Minority- and Women-Owned Business Enterprises across the city," said Meredith Marshall, Managing Partner and Co-founder of BRP Development. "With a renewed emphasis being placed on affordable housing in New York City, it is critical that we expand opportunities to allow qualified minority and female developers to compete more effectively within the industry, ensuring that these businesses – as well as our city's affordable housing stock – will be able to grow and thrive for years to come."