Advancing Opportunities for M/WBEs in Affordable Housing Industry
Louise Carroll, HPD Commissioner
During the height of the first big wave of this pandemic, we did a lot of soul searching about the deep economic and social disparities that this crisis and unequal policing underscored. We marched and called for change, and in response, many corporations and businesses promised to give the BIPOC community economic opportunities long denied. How have we all done?
At HPD, we took a hard look at our successful Building Opportunity Initiative, which has worked to address disparities in Minority- and Women-Owned Business Enterprise (M/WBE) participation in affordable housing since 2014. Under the leadership of Deputy Mayor Vicki Been, Mayor de Blasio, and the First Lady’s Taskforce on Racial Equity and Inclusion, on which I have been honored to serve as Housing Co-Chair, and with our public-private partners, we significantly enhanced the services and resources we offer to M/WBEs in the industry.
We Built Capacity for M/WBEs to be Competitive
Since 2014, we’ve trained 93 M/WBE developers through the Building Opportunity Capacity-Building Course, providing them with the skills they need to compete in the marketplace while also providing networking opportunities with key players and potential partners.
This year, in partnership with Local Initiatives Support Corporation (LISC), Enterprise Community Partners, and Goldman Sachs, HPD launched the Pathways to Opportunity initiative to help M/WBEs grow their business by training them to be marketing agents. More than 120 individuals from 61 firms received free compliance training to gain the skills to become marketing agents for the City’s robust pipeline of affordable housing developments.
“As a participant in HPD’s inaugural Building Capacity course I was exposed to other parts of the industry that I was not as familiar with. That has allowed me to be a more well-rounded sponsor as I’ve grown my business. I’m thankful to HPD for recognizing the need to open up the industry to more participants and fashioning programs like Building Capacity.”
We Increased M/WBEs’ Access to Capital
HPD recognized very early on that M/WBEs have a harder time acquiring the capital needed to build larger developments or develop more than one site at a time. To help address this challenge, HPD worked with the New York City Acquisition Fund to create favorable terms for M/WBEs and non-profits to reduce predevelopment costs, and in 2021, we joined Enterprise, LISC, and a coalition of public, private and philanthropic partners to announce that the New York City Acquisition Fund will now exclusively serve projects led by M/WBEs and nonprofit developers with a minimum 51% ownership stake in the project.
In a quest for more avenues for capital support, the City has been working with external partners to create a new guaranty facility that will help minority developers finance affordable housing projects. More details on this facility are to come.
“In 2014, I participated in HPD’s inaugural building capacity course. Since that time, my firm has closed two transactions with HPD. The second is nearing completion, and thanks to the Acquisition Fund, is our biggest project to date. It will provide 236 affordable homes to deserving New Yorkers, an organic grocery store, and community spaces dedicated to promoting financial literacy, housing assistance, healthcare, and the arts. With every project we develop, we’re thinking about how to improve the quality of life for New Yorkers and strengthen communities. In the midst of a very difficult pandemic and politically fraught times, it has been tremendously uplifting to see the City continue to invest in MWBEs and nonprofits and see real progress in the initiatives HPD has been rolling out.”
We Created Opportunities for M/WBEs to Gain Experience
In order to win jobs, developers must show they can execute large and complex deals with past performance. Before the Building Opportunity Initiative, many M/WBEs had limited past performance and found it difficult to progress to larger projects. To address the disparity in the firms competing to develop City-owned into affordable housing, in 2020, HPD instituted a new equitable ownership policy that requires all RFP development teams to include an M/WBE or non-profit firm with at least a 25% ownership stake, we and issued our second M/WBE-only RFP for two sites in Brooklyn this year.
“Participating in HPD’s M/WBE Developer Capacity Building Series and developing 1490 Southern Boulevard through the first M/WBE RFP launched our firm’s trajectory in NYC’s affordable housing realm. As a woman-owned firm and a small business, we know first-hand the barriers to entry into one of the most competitive real estate markets in the country. By prioritizing M/WBE firms and providing technical assistance throughout the development process, HPD is helping to level the playing field for a more equitable city. We are grateful for HPD’s sustained efforts to tap into the M/WBE community’s diversity of ideas and community-based connections, and their commitment to furthering M/WBE hiring across the development process.”
We Pushed for More M/WBE Contractors on Affordable Housing Projects
Through HPD’s M/WBE Build Up program, developers receiving more than two million in certain City funding must spend at least 25% of certain supported costs on M/WBE contractors. Since launching in 2017, Build Up has delivered more than $1.04 billion to 520 M/WBE contractors on HPD projects. And in order to help developers meet their Build Up goals and create opportunities for M/WBE contractors, HPD worked with NYC Small Business services to create the Build Out series, large networking events and seminars to foster partnerships and learning.
“Monadnock is committed to working with HPD and SBS on all their M/WBE participation initiatives. We share these goals. We have participated in the Targeted Matchmaking Event for several years running and it has been a valuable outreach opportunity for us. Recent success stories resulting from this event range from the hiring of a local MBE-certified contractor for small scale floor refinishing in our completed buildings all the way to the award of a multi-million-dollar contract for environmental transportation and disposal to an MBE-certified contractor and consultant.”
The Road Ahead
HPD has added to and enhanced the Building Opportunity Initiative by looking at every part of our process, and asking, how can we ensure M/WBEs have a seat at the table when it comes to building, financing, designing, marketing, and operating our housing? We have made significant strides in advancing economic equity in the industry, but the work must not and cannot let up. Since 2014, the City has dedicated $8.1 billion in City Subsidy, which leveraged four times that amount in spending from other public and private sources to finance more than 200,000 affordable homes — enough for half a million New Yorkers. The City’s robust affordable housing engine is also a powerful economic force, and as we look ahead to a new administration, we cannot overlook the importance of making sure our investments are distributed equitably and for the benefit of all. By looking at more of our processes and policies, we can we make a seat at the table for everyone.
