NYC awarded less than 4% of contracts tominority- and women-owned business

By MEGAN MCGIBNEY| MARCH 15, 2022 03:00 AM ET

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Last year was a slow year for MWBEs, and Mayor Eric Adams said he wantsto grow the program.

When Gov. Kathy Hochul announced the state had reached its30% goal for minority- and women-owned business enterprises last year, Albany had a lot to be pleased about. But that news alsocame as a reminder that New York City has a lot of catching up todo. In fiscal year 2021, New York City awarded only 3.8% of city contract money to MWBE firms, and 84% of the city’s MWBEs “do not have access to city spending,” according to the city comptroller’s office. Although New York City’s certified MWBE firms have tripled since 2015 – from 4,000 to 11,000 – only about2,000 firms have received contracts from the city.

So why was the state able to reach its MWBE goal but the city struggled?

Both the city and state have different laws for certifying MWBEs.The state has Article 15-A, which requires state agencies to make sure MWBEs meet their employment and participation goals. Lourdes Zapata, who was the executive vice president of the Division of Minority and Women’s Business Development at Empire State Development, said that’s where the difference lies.

“It is very much a top-to-bottom approach and requirement in terms of MWBE engagement,” said Zapata, who now is the president and CEO of the South BronxOverall Economic Development Corp. “The agencies at the city level are very decentralized, and so there’s not one person within city government that has theCity Hall leverage to require city agencies to engage MWBEs in any real significant amount.”

Phil Andrews, the president of the Long Island African American Chamber ofCommerce, agreed that city agencies needed to be held accountable.

“There are a lot of agencies where people are maybe sitting behind a desk and not allocating the money to minority firms,” he said. “But I think (the money) definitely needs to be strictly monitored (so) that each agency reaches its goals.”

The city has had several challenges during the past six months: Along with the pandemic, there is also the concern of inflation, which is at a 40-year high, labor shortages and supply chain issues. Those issues have particularly hurt theconstruction industry.

Louis Coletti, the president and CEO of the Building Trades Employers’Association, said on top of the current issues, MWBEs struggled to obtain contracts from the city.

“MWBE contractors historically have not competed for the $40 billion to $50 billion project labor agreement money that’s out there between the city of New York and some of the airport work,” he said. “What COVID has done has just exacerbated the problem. The cash flow is horrible; opportunities are scarcer. So I think meeting the MWBE goal is going to be quite a challenge.”

But now, New York City has a new mayor, and Eric Adams has said that he will make the city’s MWBE program a major focus of his administration. What could the mayor do to make improvements? Zapata said adding some senior-level oversight and authority would probably be the most effective.

“City government, like state government, is a slow-moving ship. To get it to move is going to take a lot of power and a lot of pressure,” she said. “The bureaucracy is certainly moving in that direction. But it does require a lot of leverage and the kind of authority to make sure the agencies understand what the rules are and they apply it.”

Wallace Ford, a professor at Medgar Evers College, would like to see a mentoring program where MWBEs support each other in building their businesses. He also said the city should help facilitate those relationships and offer business opportunities, fiscal support for smaller businesses as well as technical assistance or partnerships.

“It’s not just about doing it because it’s the good thing to do,” he said about the city giving more contracts to MWBEs “It’s an economic generator with spin off effects that are incalculable.”

Magalie Austin, director of the Mayor’s Office of M/WBEs, told City & State:“Mayor Eric Adams has articulated his ongoing commitment to ensuring that there’s true and transparent accountability in the City’s MWBE program, providing customized support to M/WBEs wherever possible, leveraging technology where needed to advance our shared goals, and collaborating with partners at the State level wherever feasible to maximize M/WBE certification and utilization outcomes.

“Mayor Adams has been clear that he unequivocally supports growing the City’sM/WBE program.”

Hochul seeks $150M shift in federal funds tofi nancial institutions in underserved areas

BY JAMES RAMSAY

PUBLISHED FEBRUARY 24, 2022(/STAFF/JAMES-RAMSAY)

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In an effort to give small business entrepreneurs in underbanked communitiesmore access to capital, New York Gov. Kathy Hochul announced Thursday that she plans to ask the federal government to approve a $150 million shift to community development financial institutions.

Those federal dollars, which she said would represent the largest investment of its kind in state history, would come out of a larger pool of money New York was earmarked through President Joe Biden's American Rescue Plan. CDFIs are alternative financial institutions focused on lending to people and businesses in low-income communities as a way of building wealth.

The governor made the announcement at SoBro, a non-profit in the South Bronx that's certified as a CDFI, following a roundtable meeting with local leaders.(https://twitter.com/i/broadcasts/1yNGaYAXmnDGj)

"I believe that there has been systemic discrimination and racism inherent in our financial institutions for far too long," Hochul said. "So we have these CDFIs as the alternative to say, 'No, we can’t just allow the status quo,' to say that these people are going to languish and never have this access. Let’s create another fundingsource. Let’s find another way to achieve those objectives."

In the Bronx, which is the most underbanked borough in New York City, 40% of businesses closed during the pandemic, according to SoBro President and CEO Lourdes Zapata. A 2020 report from the Center for an Urban Future found that not only did many minority-owned businesses lack the banking connections to receive aid from the initial round of federal Paycheck Protection Program funding, but also that money from New YorkCity’s own relief fund went disproportionately to small businesses in Manhattan.(https://nypost.com/2020/09/02/covid-threatens-gains-for-nycs-minority-ownedbusinesses-study-says/)

"Our CDFIs are the tip of the spear when it comes to the wealth gap in the UnitedStates," said Adrienne Harris, the superintendent of the New York State Department of Financial Services, who joined the governor at the roundtable meeting. "We know today that Black women have 90% less wealth than white men, which is simply unacceptable. Our CDFIs and [Minority Depository Institutions] are here to help close that wealth gap, which will benefit everybody."

Hazel Dukes, head of New York’s chapter of the NAACP who endorsed the governor’s re-election bid, also spoke at the event,emphasizing approval of her approach to equity.(https://nypost.com/2021/10/18/hazel-dukes-head-of-nys-naacp-endorses-hochulfor-2022/)

"I make governors, make presidents of the United States, borough presidents —and we can get rid of them too, if they don’t do the job," said Dukes. "I’m here today because this young woman, Gov. Hochul, is making things happen, including all of us, not just some of us. She wants to raise the boat tide for all of us to come together."

Hochul celebrates New York meeting its 2021MWBE goal

By MEGAN MCGIBNEY| MARCH 15, 2022 03:00 AM ET

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The governor wants $11 million to clear the certification backlog to meet its target again this year.

When Gov. Kathy Hochul gave her State of the State address, she spoke about rebuilding New York’s economy. One way she said that would help was to make it easier for New York’s minority-and women-owned business enterprises, often referred to as MWBEs, to be certified with the state. A proposal in her briefing book included allocating up to $11 million to improve the efficiency and timeliness of processing applications from businesses seeking that designation. This came just weeks after she told the state’s MWBE community some thrilling news: In2021, the state had reached its contract target goal by giving 30.5% of its contracts to MWBE firms and awarding them $3 billion in state contracts.

“We surpassed our nation’s leading goal of 30% utilization,”Hochul told the attendees at an MWBE forum. “We’re at 30.5%, Ibelieve it is. Yes, we did it. We did it together.”

The news was equally exciting for many involved with the state’s MWBE program, such as Hope Knight, the president and CEO-designate of Empire State Development, which oversees the MWBE program.

"We were striving to achieve the goal, so we were ecstatic about it,” Knight said.“I think there was a lot of interest in seeing whether or not we would or would not reach the goal, but we did. And we did it in a year of unprecedented economic challenges, due to COVID-19. So, we’re especially proud of that."

Now, with the possibility of using $11 million, which Knight confirmed would help process certifications as well as create a new unit meant to process appeals, the state might be able meet its MWBE goal again in 2022. There are some challenges standing in the way, including the ongoing pandemic, which did not stop the program last year but could still cause ripple effects in the MWBE community.

We were striving to achieve the goal, so we were ecstatic about it.

– HOPE KNIGHT, EMPIRE STATE DEVELOPMENT PRESIDENT AND CEO-DESIGNATE, ON THE STATE MEETING ITS 30% MWBE CONTRACTING GOAL

Lourdes Zapata, the president and CEO of the South Bronx Overall EconomicDevelopment Corp., said the pandemic harmed MWBE firms, which tend to be smaller than other businesses. And because of that, those firms could continue to struggle as long as COVID-19 is slowing down the state’s growth.

“I think we’re going to see the ramifications of COVID,” she said. “The labor issue is affecting all businesses, not just minority- and women-owned businesses, but for-profit businesses in general facing labor shortages. All of those challenges that come with labor being able to find qualified folks, being able to pay those competitive salaries that you’re going to need to pay to attract employees are magnified when you’re talking about smaller firms that already are having challenges competing with the big guys.”

There were other problems that emerged as a result of the pandemic, such assupply chain issues, inflation and the labor shortage.

Phil Andrews, the president of the Long Island African American Chamber of Commerce, said one example of the labor shortage being an obstacle was thatthere were not enough state workers to clear the backlog in getting such firmscertified. Knight confirmed that was an issue but said Empire State Development would be able to address the problems with additional funding.

The construction industry got the most MWBE state contracts, making up about two-thirds of the state’s MWBE utilization last year. With the need for improved infrastructure and other construction demands, this sector could be kept busy this year.

Lu Engineers, a Rochester-based engineering firm that was certified as an MWBE in 2017, told City & State that the labor shortage in its industry was not a new problem.

Gov. (Kathy) Hochul is right on the money in trying to help our businesses get through the certification process.

– LOURDES ZAPATA, SOUTH BRONX OVERALL ECONOMIC DEVELOPMENT CORP. PRESIDENT AND CEO

“In our industry, we are affected by labor shortages, but not much else,” said Marketing Director Judy Beckwith. “Professional engineers are in high demand, as are experienced construction inspectors, but these issues are always ongoing and should not hold the state back from reaching these goals in 2022.”

According to Zacha Tuttle – an MWBE specialist at the Women’s Enterprise Development Center, which serves Westchester and the Hudson Valley region –the pandemic has not slowed down anything.

“(New York) reached (its goal) last year, and a lot of things wouldn’t be as bad as they were in 2021, as far as the supply chain demand,” she said. “You never know, but I do think the state is making all these resources more accessible to people; they’re probably going to certify even more businesses.”

Tuttle added that not enough business owners fully grasp the importance of having an MWBE certification and how to make sure their MWBE applications would not be incomplete. While her role is to help them, she said there needed tobe more resources and more awareness of people like her who can help minority-and women-owned businesses.

Andrews would like to see a pipeline to develop smaller firms so they could have access to capital and technical assistance that would help them evolve and compete with larger firms. He also said minority firms were hurt the most from the pandemic because of poor access to capital.

Despite the improvements that still need to be done, there was optimism that the state would reach its MWBE contract goal again this year.

“I do think that the table has already been set,” Zapata said. “The expectations are there. I think Gov. Hochul is right on the money in trying to help ourbusinesses get through the certification process. I think the focus is there, andthere’s going to be a lot of work to do to try to get there.”

Optimism was particularly strong in regard to the state’s aim to fix its infrastructure – and the business opportunities that will come with the many related projects.

“There will be increased opportunity to engage new firms with more opportunities,” Beckwith said. “The new state budget has targeted infrastructure that, along with the federal infrastructure bill, will see a positive impact on the economy and have a positive impact on both the design, engineering and construction sectors.”

Knight said the state will continue to build on what it has accomplished through its MWBE program.

“There is also tremendous opportunity to do business with the state,” she said.“And we will continue to advance.”