How far New York still has to go on MWBEs
City and state officials weigh in on efforts to award contracts to firms owned by women or minorities.
From Black Lives Matter to the #MeToo movement, diversity has been dominating the national political discourse.
Here in New York, hundreds of thousands of New Yorkers have participated in the Women’s March on New York City the past two years, a pro-women’s rights protest organized in part by New York City residents. Hollywood producer Harvey Weinstein is under investigation by the Manhattan district attorney over allegations that he sexually assaulted multiple women. And the case of Eric Garner, a black Staten Islander who died in a police stranglehold in 2014, continues to be a rallying cry for advocates of criminal justice reform.
Diversity is a critical policy issue in the halls of the state Capitol and City Hall. The state program to support businesses owned by women and minorities has drawn scrutiny over the past year, and a key law underpinning the program was renewed only for a single year – and will be up for debate once again in 2019. State legislators are also drafting legislation to build on efforts to increase the representation of women on corporate boards.
This week, City & State reached out to key officials to get the latest on city and state efforts to increase diversity, and how far they have to go to reach their goals.
Senior Adviser and Director, New York City Mayor’s Office of Minority and Women-Owned Businesses
Are you on track to award 30 percent of the value of all New York City contracts to MWBEs by fiscal year 2021?
Absolutely. We started out in 2015 with an 8 percent utilization rate. We’re at about 19 percent. We doubled – more than doubled – that number and are right within our projections of where we should be on the second year of that 30 percent announcement. We’ve got three years to get to 30 percent, and we are right on track.
What more can be done at the state and city levels to keep the progress up?
Specifically on the state level, we do need some additional tools. We went to (the) state last year for an increase in our discretionary funding. We’re going back for a higher discretionary threshold. We know when we have more discretion, we are able to have more MWBEs participate. The second thing we are going after them for is mentorship programs. We need state authorization for specific types of mentorship programs we would like to do. And one last thing is a prequalified list, meaning that we can have lists of MWBEs that we prequalify and attach specific projects and/or requirements to them.
You’ve received additional funding recently. How has that affected the program?
There are some market, systemic and strategic barriers that MWBEs face and one of those is access to capital. What we have done is try to alleviate some of the market issues that MWBEs and small businesses face by providing them resources to help build a capacity in those particular areas. One of the things we’ve done is create a contract finance fund. If you have a contract with us, you can get a series of loans totaling up to a million dollars at 3 percent, which is the lowest in the market. We also went out to our depository banks and told them, “Hey, can you join us in our effort?” The banks came and put up $41 million. So we have a total of $71 million in three funds that we’re making available to MWBEs.
What are those funds being used for?
So they’re all loans to some degree. There’s a bond collateral assistance program, which helps MWBEs on contracts that require bonding. They can get up to a half a million dollars in collateral assistance. We were finding that MWBEs were putting up their houses, cars and retirement accounts as collateral just to get bonding. The market treats these businesses differently and they tend to pay more for the same products that others get for less – just from inherent discrimination in the marketplace. The last fund is for developers. We found that MWBE developers have the projects, expertise, skills and resources – but there’s a gap in funding that is needed. And so we administer the developer’s fund through the Economic Development Corp. to help MWBEs get the financing that’s critical to moving their development deals forward.
What response have you been getting from MWBEs?
They are very excited about the fund. We are giving them the lowest rate in the marketplace and with every one of our programs, MWBEs get technical assistance. They’re not just getting money. They’re getting assistance on their business plan, their finances, their organization, and on what it would take for them to be financially solvent, what their projections are for their loan payments, etc. All the things they need for their business to be successful, they also get that from us for free with every loan that we give.
Chief Diversity Officer, New York City comptroller’s office
How would you describe the state of New York City minority- and women-owned business enterprises right now?
We have seen that out of the city’s $21 billion spent on goods and services, a small percentage is going to women- and minority-owned business. If you look at last year’s numbers, it was 4.9 percent. That’s out of total contracts.
How does that percentage compare to what the mayor’s office has reported?
There are two very distinct philosophies that we have around tracking. The mayor’s office tracks the dollar amount of contracts they’ve agreed upon on any given project. What we then do on an annual basis is track how much money was actually spent on that contract. Part of the work of a chief diversity officer is really just to have our office track the spending that is going on with women and minorities. We take the overall budget, which was $21 billion last year, and then we look at how that budget does up against the utilization of MWBEs. That’s how we get the 4.9 percent.
Why do you track spending specifically?
We believe that tracking spending is important and critical because that is sort of the bottom line as to whether you bought a pillow or not. A good example of that is if you look at construction, for example. If you go in with a $20 million contract, that construction could go on over time and it could be that the $20 million turns into $15 million. So while you agreed on a certain contract amount, you’ve actually spent less. So we believe that spending is the best way to track the growth of the city and to see where it goes. Let me give you another example because this can be tricky. What the mayor's office does is say, “We have made an agreement to spend 30 billion for the building of a project.” What we then do on an annual basis is track how much was actually spent on that project. While you’ve agreed to $30 billion on that project, the truth is that you’ve actually only spent $15 billion.
What do you hope can be done at both the city and state level to help increase the spending on MWBEs?
We believe that the city of New York should have a chief diversity officer – not just in City Hall but at every single agency. We have seen in our office that having a chief diversity officer is helping ask all the right questions. We’ve spoken to MWBEs across New York City and everyone is pretty clear that having a CDO creates a sustainable structure that allows for equity and inclusion in the long term. We’ve also recommended streamlining certification between the city and the state and creating a front-facing portal that allows for the city and MWBEs to access both city and state certification. We’ve also said that it’s time to debundle contracts. Right now, the city has a host of contracts that are long term that have to come up for renewals and we know that the way MWBEs will be able to compete is if we open up those opportunities.
Chairwoman, Assembly Oversight of Minority and Women-Owned Business Enterprises Subcommittee
In the past fiscal year, state contracts with minority- and women-owned businesses reportedly increased. What is responsible for that growth?
I think it depends on how you slice and dice the numbers. So by what percentage did it increase? Was it just one particular contractor who got more contracts and (a) higher contract value. So I don’t have the data to actually slice and dice to see actually how it was increased. But I know there’s been some push around outreach, more programs around access and I think lobbying and more MWBEs getting involved on the legislative front, coming up to Albany, making their voice known.
I can speak a little bit more on the city because I know the city has increased its certification by a large margin. And so, you know, the more certification, the more people that you have in the pool who can apply to the contracts. And at the state level, we are still struggling with the certification process; it’s taking way too long. However, there have been some big deals going on, in particular with the Port Authority, JFK, LaGuardia. There may have been some movement, although there’s been some complaints about MWBEs being able to participate in the subcontracting work.
I think overall, just the industry identifying a little bit more participation depending on, again, how you split the numbers because people have gotten a little more aware. And that’s our job as legislators and my role as the MWBE chair. I put out these newsletters; I send it out. I get in touch with every person I meet. Get in touch with me if there’s any issue around their cases, they’ll call my office. Anywhere, whether it’s in Brooklyn or in Buffalo or Rochester, I’m working diligently to make sure that whatever the issue is that it’s addressed. I think my load is to try to get people engaged in every sense possible.
We still have a long way to go. We’re still battling the personal net worth that has been stifling – in particular MWBEs in the construction field – to grow, expand and actually even be in the program. We’re still battling the license certification that’s taking, in some cases two years. Or even the appellate portion of it, where some people may want to appeal a decision that (Empire State Development) made on why they’re not eligible to be part of the program.
We are still dealing with challenges on capacity that has been a big issue where many of the private contractors are saying that the MWBEs that are in the pool don’t have the capability to take on the work, which is not necessarily true for all cases. But there is an opportunity to roll out programs … very similar to the state agencies, we do have a bill on that.
There are a lot of mentorship-type programs where it takes that one MWBE that knows how to do business with that particular agency; there’s some in-house training on how to keep their business growing and growing: marketing, building estimations, things of that nature. If we had those types of training across the state then – and yeah, we’re pushing that in our legislation.
Are you looking to pass another bill that eliminates the personal net worth cap on minority- and women-owned businesses? Or has Gov. Andrew Cuomo effectively ended that venture?
No, I’m still looking to eliminate it again. There have been times when bills have been returned and then finally they passed them. So we’re still trying to squash it. We’re trying to look at different ways that we can eliminate the personal net worth (cap) and substitute it with some other limitation, because that’s what their concern was. I have a bill that does that where we actually model what New York City is doing. They eliminated the personal net worth. They put a cap on the spending of the government contracts in a certain amount of years. If a company is getting contracts for let’s say $50 million over the course of two years, then they’ve reached their capacity. And I don’t think there’s any company who’s actually reaching $50 million over the course of two years on their balance sheet. So there’s different ways that we can still, not only, tailor the program but the personal net worth, I think, is hurting and it’s hurting the ability (of the program) to work. So yes, will be looking to reintroduce the bill – maybe in some different form but yes.
If you do manage to eliminate the personal net worth cap, do you think that will take care of a lot of the capacity issues? Or is there still more to be done?
I think it will help because you have a number of MWBEs that may have a higher personal net worth who run companies with high capacity who could participate. And I think there are a number of MWBEs that are not even participating because they are restricted with the personal net worth. I do think that it could certainly put a dent in the number of people who said, “Oh we don’t have any capacity.” We’ll have a larger pool, a larger number of people in that pool. I still think that there are other aspects other than personal net worth that still need to help with the capacity issue. And it’s more like knowing how to do business with the government, knowing how to get funding, knowing how to unionized … these are the bigger projects. You still need to undergo a number of trainings in anticipation – an internship with companies and with agencies – to get that capacity.
Are there any other major diversity initiatives that you’re working on?
So on the health care side, we’re looking to address the black women mortality rate, the black infant mortality rate. There has been a disparity in terms of the way black mothers or women of color have been treated and as a result have died or their infants have died. I’m a victim of that; my baby died two years ago. Columbia hospital sent me home while I was having my baby; they didn’t want to take me in. So we have those disparity issues that deal with black mothers in particular. And those are big initiatives that we’re going to launch. I’m working with the city and the state to create a task force. There are a lot of disparities within the health system.
Obviously there’s a lot of criminal justice reform stuff that we want to do.
I don’t know if you recognize that there was an incident where a young boy in my district was accused of sexually assaulting a woman. He was with his mom in a store. I am going to be introducing a bill, actually this week, to address that because young boys of color have been racially profiled. You see incidents where someone picks up the phone to accuse a black person – in particular a boy.
A situation like that with no camera, and no parents, that boy would have probably been picked up – who could not even defend himself – and be detained in the juvenile system. So there’s something that needs to be done to protect minor kids.
What this bill will do is anyone who files a false report against a minor will be charged with a felony. So they could go to jail. Even though this bill is to protect all minors, in our society there’s no law that is applied – or the way that the law is applied – it does not protect black children. So they would never have done that to a white kid. White kid is passing by and it’s no big deal. But a black kid – yes, it’s a big deal.
So this bill will protect all kids including black kids. So that’s actually on the dockett already. It’s been drafted already. We’re just making one last change. It should be introduced Monday or Tuesday.
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