March 21, 2019
Proposal could increase awards to M/WBEs by approximately $500 million annually
NEW YORK––Mayor Bill de Blasio, business leaders, advocates, and elected officials today announced a State proposal that would create more economic opportunity for minority- and women-owned business enterprises (M/WBEs) in New York City.
The City is calling on the State to increase the discretionary spending limit for M/WBEs to $1 million for goods, services and construction. Increasing this limit would ease the contracting burden on M/WBEs by significantly reducing the amount of time and paperwork that is normally required as part of the bidding process, providing more flexibility for agencies to contract directly with M/WBEs and at higher dollar values. This proposal could potentially increase the value of contracts awarded to M/WBEs by $500 million annually. The call for this legislation comes at time in which the Administration is making historic investments in M/WBEs. Last year alone, the City awarded $3.7 billion to M/WBEs, up from $1.6 billion in 2015.
In 2017, the City successfully gained the authority to award contracts of up to $150,000 to City-certified M/WBEs for goods and services without requiring a time-consuming, formal, competitive bidding process. Before this change, the discretionary spending limit for all vendors, including M/WBEs, was $20,000 for goods and services and $35,000 for construction.
“Our City only works best when everyone – regardless of race, gender or ethnicity – can participate in our economy,” said Mayor Bill de Blasio. “We want to take our commitment to that idea further and urge the State to give us more tools that expand economic opportunity for minority- and women-owned businesses. With the State’s help, we can continue building an economy that truly works for all New Yorkers.”
“Through our M/WBE outreach, we have learned from our advocates that this discretionary spending limit presents a compelling alternative to the status quo,” said J. Phillip Thompson, Deputy Mayor for Strategic Policy Initiatives. “We want M/WBEs to focus on maintaining and growing their businesses and to have improved access to more opportunities. This is a good move for our M/WBEs and for the local workforce in their communities as we strive toward a more level playing field.”
“Raising the discretionary spending limit to $1 million will allow improved access to opportunities for minority- and women-owned businesses which in turn allows M/WBEs to build capacity and thrive in NYC,” said Jonnel Doris, Senior Advisor and Director of the Mayor’s Office of M/WBEs.
“Through programs like our Contract Financing Loan Fund, we’re making it easier for M/WBEs to increase their capacity and take on the lucrative contracts that boost their businesses,” said Gregg Bishop, Commissioner of the Department of Small Business Services. “With our help, M/WBEs are ready to succeed and we’re asking the state to ensure that they have every opportunity to efficiently do business with the City.”
Over the last year, since the City was allowed to increase its discretionary spending from $20,000 to $150,000 for awards to M/WBEs for goods and services, agencies have awarded M/WBEs more than 840 contracts totaling over $61.3 million. Prior to this, agencies awarded M/WBEs roughly 450 contracts totaling $28 million. The State law change doubled M/WBE participation in this dollar range.
Increasing the City’s discretionary spending limit to $1 million for goods, services and construction would help the City continue this unprecedented investments in M/WBEs.
In addition to increasing the discretionary spending limit, the City also will increase accountability to protect tax payer dollars and maintain the integrity of the program. For example, the City already conducts thorough background checks to ensure that M/WBEs are majority minority owned. Furthermore, the City would publish public reports tracking contracts awarded under this new discretionary spending limit. Lastly, the City also would solicit quotes from multiple M/WBEs to compare prices and the quality of work for goods, services and construction.
In 2015, Mayor de Blasio outlined his plan to create a more resilient, sustainable and equitable city in his OneNYC Plan. Within this plan, the Mayor set a goal to award $16 billion to M/WBEs by 2025 to help level the playing field for M/WBEs. Since then, the City has awarded over $10 billion to M/WBEs and increased the goal to $20 billion by 2025. This goal includes Mayoral and non-Mayoral agencies, such as the Economic Development Corporation and the Department of Education.
In 2016, when the Mayor announced the creation of the Office of M/WBEs, the Mayor set a goal to award 30 percent of the value of mayoral agency contracts to M/WBEs by 2021. By the close of 2018, these same agencies alone awarded more than $1 billion to M/WBEs, or 19 percent of the value of City contracts subject to the M/WBE program.
These historic investments are the result of policy changes that have prioritized the implementation of programs and services that help businesses succeed in our local economy. For example, the City – through the Department of Small Business Services and the New York City Economic Development Corporation – invested $20 million in two revolving loan funds that allow M/WBEs and small businesses to access affordable loans to help them perform on City contracts. In 2018, Amalgamated Bank, Bank of America, TD Bank and Union Banks together invested an additional $41 million in these loan programs, expanding the loan pool to $60 million dollars. The loan funds include: the Emerging Developer Loan Fund, which provide developers with low-interest loans that range from $100,000 to $2.5 million, and the Contract Financing Loan fund which gives M/WBEs and small contractors access to loans of up to $1 million at a 3 percent interest rate. The Contract Financing Loan Fund has successfully connected City contractors to $10 million in capital to help them better perform on over $50 million in City contracts. Over 90 percent of Contract Financing Loan recipients are M/WBEs.
Since its implementation, the EDLF has approved and closed on $5.49 million worth of loans, impacting nearly $48 million worth of projects. These loans bridged gaps in financing during the predevelopment and acquisition phases of projects in the Bronx, Brooklyn and Harlem for M/WBE developers. As a citywide program, the EDLF is designed to meet these gaps to help developers acquire sites and construct projects.
In 2017, the City also launched the Bond Collateral Assistance Fund, which supports M/WBEs and small businesses facing market barriers in accessing surety bonds, by offering affordable bonds that provide collateral to ensure businesses have the opportunity to perform on City construction contracts. The program allows eligible businesses to apply for collateral assistance of up to $500,000 or 50 percent of the Contract amount, whichever is lesser, in order to meet cash collateral bond requirements. No contributions are required of contractors.
More on these loans can be found here.
“SCA and DDC both have extensive programs to promote M/WBEs to help meet the Administration’s ambitious goals,” said Lorraine Grillo, President and CEO of the NYC School Construction Authority and Commissioner of the NYC Department of Design and Construction. “We fully support this proposal which further assists these emerging businesses.”
“This proposal widens the playing field for M/WBE’s, and that will have a positive effect on how we build our parks and improve our green spaces, said NYC Parks Commissioner Mitchell Silver. “If this plan is adopted, it paves the way for increased equity and access for these businesses and for the communities that will reap the benefits.”
Senator Brian Benjamin said, “M/WBEs are a valuable resource within our communities and City. They provide a wide range of greatly needed and highly valued services and products to our communities. Raising the discretionary spending limit to $1 million will help to create greater access to opportunities for our M/WBEs, which will help them to grow and thrive while aiding our local and community-based economies and furthering equality in our City”
Senator James Sanders Jr. said, “As the chairman of the Senate Taskforce on MWBEs, I know all too well the struggles these entrepreneurs face in securing contracts for goods, services, and construction. I think we should be doing everything possible to help these businesses thrive and grow because it’s good for the economy and good for New York. I support this latest step by the city and will work with my colleagues in government to ensure that this continued effort is made possible.”
“The program for Minority and Women-Owned Businesses was established to help level the playing field for business that were disproportionately excluded from gaining contract with New York,” said Assembly Member Rodneyse Bichotte. “We should be cautious with the restrictions imposed on these businesses and ensure that it does not interfere with the very thing that the program is intended to do – help to level the playing field. I commend Mayor de Blasio in looking further advance the removal of barriers that help accomplish this goal by increasing the discretionary spending limit and look forward to furthering that on a state level.”
“I support the increase in the discretionary limit for contracts to M/WBEs. We have to ensure that our minority and women owned businesses have a fair shot at construction contracts, the current limit is too low and unrealistic. Our MWBEs are ready and qualified to bid on many contracts, and it would create incredible impact if we increased the discretionary threshold,” said Assembly Member Robert Rodriguez.
Council Member Robert E. Cornegy, Jr., Chair of the Council Task Force on MWBEs said, “MWBEs serve as indispensable contributors to our economic vitality. Increasing the discretionary limit for contracts granted to MWBEs would mean a step towards strengthening that vitality, creating a more inclusive economy, and taking full advantage of the entrepreneurship in our shared communities. We need to build on a track record of breaking down barriers to MWBE success and increase this discretionary spending limit.”
“As chair of the Committee on Women, supporting our minority and women-owned businesses is one of the most important parts of my job – they are critical to the economic empowerment of our communities. Raising the discretionary spending limit to $1 million will substantially increase access to contracting opportunities for M/WBE businesses, benefiting neighborhoods throughout the five boroughs. Thank you to Mayor de Blasio, M/WBE Director Doris, and Commissioner Bishop for their ongoing leadership and partnership on economic empowerment for all,” said Council Member Helen Rosenthal.