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Understanding the role of Minority/Women-owned Business Enterprises (MWBE) 25% Participation Goal is crucial for 485-x program applicants. Unlike the old 421-a(16), 485-x mandates applicants demonstrate efforts to spend at least 25% of total applicable costs to MWBE certified firms throughout both the design and construction phases or to demonstrate reasonable effort was taken toward achieving compliance.

What is MWBE?

MWBE stands for Minority/Women-owned Business Enterprises. It refers to businesses that are at least 51% owned, operated, and controlled by individuals who are minorities or women. The MWBE certification gives these businesses the opportunity to compete for contracts that may have been historically harder to access

485-x 25% MWBE Participation Goal requirements

The new 485-x Tax Incentive program, mandates that at least 25% of the total applicable costs associated with the design and construction phases of a property must be allocated to contracts with MWBEs

his requirement is part of New York City's broader efforts to promote economic equity and inclusion, ensuring that small and minority- or women-owned businesses have a fair opportunity to participate in public-sector contracts.

485-x 25% MWBE Participation Goal compliance

To demonstrate compliance with the 25% MWBE participation requirement, applicants must submit an MWBE Affidavit along with their 485-x application. This affidavit serves as proof that the applicant has either met the 25% MWBE Participation Goal or made reasonable efforts to hire MWBEs. The affidavit requires the following key information:

• Total Applicable Costs: A breakdown of the total costs related to the design and construction of the property.
• Total amount for MWBE Contracts: The amount of those costs that were specifically contracted to MWBEs.
• Details of MWBE Entities contracted: Names, Employer Identification Numbers (EINs), and the total contract amounts for each MWBE involved in the project.

It is important for the applicants to have all contracts records preserved providing transparency and demonstrating that the proof that the applicant met the required MWBE participation goal.

What if the 25% Participation Goal is Not Met?

If a developer finds that their project has not met the 25% MWBE participation goal, the applicant must show that they have made all reasonable efforts to achieve it. Simply not reaching the goal is not enough, the applicants are required to demonstrate that they took substantial and timely steps to engage MWBEs but were ultimately unable to meet the target.

What Constitutes "Reasonable Effort"?

The term "reasonable effort" is defined by several actions a developer must take to show good faith in trying to meet the MWBE participation goal. Here are some examples of what qualifies as reasonable efforts:

1. Engaging with NYC Small Business Services (DSBS): Applicants should request assistance from the Department of Small Business Services (DSBS), describing how any help provided by the agency was applied to the project.
2. Partnering with Economic Development Corporation (EDC): Developers are encouraged to collaborate with the New York City Economic Development Corporation (EDC) to identify certified MWBEs through programs like HireNYC.
3. Direct Outreach: Timely and proactive outreach to certified MWBEs listed in governmental or quasi-governmental databases, with direct bid solicitations to these businesses.
4. Advertising in Relevant Media: Advertising contract opportunities in general circulation media, small business publications, or outlets specifically geared toward MWBEs.
5. Notification of Opportunities: Sending timely notifications to MWBEs about specific opportunities to participate in the design and construction phases of the project.
6. Responsive Communication: Demonstrating thorough and timely responses to any inquiries from MWBEs about the project.
7. Adjusting Scope: Identifying portions of the design or construction work that could be adjusted or substituted to accommodate MWBE participation, if necessary.
8. Pre-bid Meetings: Holding informational meetings before the bid or proposal deadline to explain the project scope and clarify how MWBEs can participate.

It’s crucial that applicants maintain thorough records of all the steps they’ve taken to engage MWBEs. Proper documentation—such as emails, meeting notes, advertisements, and correspondence with DSBS or EDC—is essential to demonstrate that all reasonable efforts were made.