(a) Each business, including the MBE partner in a joint venture, wishing to participate in City contracts as an MBE shall complete and submit an MBE application. Each entity wishing to participate as a joint venture MBE shall, in addition, complete and submit an MBE joint venture application. The application shall be signed by the authorized representative of the business entity and shall be sworn to before a notary public.
(b) The EEC shall apply the following standards in determining whether a business enterprise qualifies for MBE status.
(1) Bona fide minority group membership shall be established on the basis of an applicable individual's claim that he or she is a member of a minority group and is so regarded by that particular minority group.
(2) An eligible MBE under this part shall be an independent business. The ownership and control by minorities shall be real, substantial, and continuing and shall be beyond the pro forma ownership of the business as reflected in its ownership documents. The minority owners shall enjoy the customary incidents of ownership and shall share in the risks and profits commensurate with their ownership interests, as demonstrated by an examination of the substance rather than form of arrangements. Recognition of the business as a separate entity for tax or corporate purposes is not necessarily sufficient for recognition as an MBE. In determining whether a potential MBE is an independent business, the EEC shall consider the date the business was established, the adequacy of its resources for the work of the contract, and the degree to which financial, equipment leasing, and other relationships with non-minority firms vary from industry practice.
(3) The minority owners shall also possess the power to direct or cause the direction of the management and policies of the business and to make the day-to-day, as well as major decisions, on matters of management, policy, and operations. The business shall not be subject to any formal or informal restrictions which limit the customary discretion of the minority. There shall be no restrictions through, for example, bylaw provisions, partnership agreements, or requirements in articles of incorporation for cumulative voting rights or otherwise that prevent the minority owners, without the cooperation or vote of any owner who is not a minority, from making a business decision of the firm.
(4) If the owners of the business who are not minorities are disproportionately responsible for the operation of the business, then the business is not controlled by minorities and shall not be considered an MBE within the meaning of this chapter. Where the actual management of the business is contracted out to individuals other than the owner, those persons who have the ultimate power to hire and fire the managers can, for the purpose of this chapter, be considered as controlling the business.
(5) All securities which constitute ownership and/or control of a corporation for purposes of establishing it as an MBE under this chapter shall be held directly by minorities. No securities held in trust, or by any guardian for a minor, shall be considered as held by a minority person in determining the ownership or control of a corporation.
(6) Newly formed businesses and businesses whose ownership and/or control have changed since the date of the advertisement of the contract shall be reviewed to determine the reasons for the timing of the formation of, or change in, the business.
(7) A previous and/or continuing employer-employee relationship between or among present owners shall be reviewed to ensure that the employee-owner has management responsibilities and capabilities discussed in this section.
(8) Any relationship between an MBE and a business which is not an MBE, but which has an interest in the MBE, shall be reviewed to determine if the interest of the non-MBE conflicts with the ownership and control requirements of this section.
(c) A joint venture is eligible under this section if the MBE partner of the joint venture meets the standards for an eligible MBE as set forth in this chapter, and the MBE partner is responsible for a clearly defined portion of the work to be performed and shares in the ownership, control, management responsibilities, risks, and profits of the joint venture.
(d) A business wishing to be certified as an MBE, or joint venture MBE, shall provide such additional information to the City as the EEC shall request.
(e) If after review and applying the above standards, the EEC determines that the applying business enterprise is a bona fide MBE, he shall certify the business enterprise as an MBE and issue an MBE certification number to it. The certification shall be effective so long as the information in the relevant MBE application continues to be true, but no longer than for a period of twelve months.
(f) Once certified, an MBE shall update its MBE application annually. If at any time there is a change in ownership or control of the firm, the MBE shall then submit a new MBE application.
(Ord. 10710/94. Passed 9-28-94.)