§ 11-82 Eligibility Criteria.
RCNY § 11-82
The following standards will be used to determine whether a business enterprise is eligible for certification as an EBE.
(a)Nexus. In order to be eligible for certification as an EBE, a business enterprise will have a real and substantial business presence in the geographic market for the city of New York. An EBE which meets one of the following conditions will be deemed to have a real and substantial business presence in the geographic market for the city of New York: (1) the business enterprise's principal office or place of business or headquarters is located within the City; or (2) the business enterprise maintains full-time employees in one or more of the business enterprise's offices within the City to conduct or solicit business in the City the majority of their working time; or (3) the business enterprise's principal office or place of business or headquarters is located within the geographic market of the City, and (i) has transacted business more than once in the City within the last three (3) years, or (ii) has sought to transact business more than once in the City within the last three (3) years; or (4) twenty-five percent (25%) of the business enterprise's annual gross receipts for the last three (3) years were derived from transacting business in the City; or (5) the business enterprise's principal office or place of business or headquarters is not located within the geographic market of the City but the business enterprise has demonstrated two or more of the following indicia of a real and substantial presence in the market for the City of New York: (i) the business enterprise has maintained a bank account or engaged in other banking transactions in the City; (ii) the business enterprise, or at least one of its owners, possesses a license issued by an agency of the City to do business in the City; (iii) the business enterprise has transacted or sought to transact business in or with the City more than once in the past three years.
(b)Ownership. For the purposes of determining whether an applicant should be certified as an EBE, or whether such certification should be revoked, the following rules concerning ownership will be applied: (1) The equity interest of socially and economically disadvantaged individuals must be proportionate to the contribution of the socially and economically disadvantaged individuals as demonstrated by, but not limited to, contributions of money, property, equipment or expertise; (2) A sole proprietorship must be owned by a socially and economically disadvantaged individual; (3) A partnership must demonstrate that socially and economically disadvantaged individuals a fifty-one (51%) percent or greater share of the partnership; and (4) A corporation must have issued at least fifty-one (51%) percent of its issued and authorized voting and all other stock to socially and economically disadvantaged individuals.
(c)Control. Determinations as to whether socially and economically disadvantaged individuals control the business enterprise will be made according to the following criteria: (1) Decisions pertaining to the operations of the business enterprise must be made by socially and economically disadvantaged individuals claiming ownership of that business enterprise. The following will be considered in determining whether the socially and economically disadvantaged persons are making such decisions: (i) whether socially and economically disadvantaged individuals have experience and technical competence in the business enterprise seeking certification; (ii) whether socially and economically disadvantaged individuals demonstrate the working knowledge and ability needed to operate the business enterprise; and (iii) whether socially and economically disadvantaged individuals show that they devote time on an ongoing basis to the daily operation of the business enterprise.
(2)Articles of incorporation, corporate by-laws, partnership agreements, business certificates, corporate tax returns, unincorporated business tax returns, partnership tax returns and other agreements, including, but not limited to, loan agreements, lease agreements, supply agreements, credit agreements or other agreements must permit socially and economically disadvantaged individuals who claim ownership of the business enterprise to make those decisions pertaining to operations of the business enterprise without restrictions.
(3)Socially and economically disadvantaged individuals must demonstrate control of negotiations, signature authority for payroll, leases, letters of credit, insurance bonds, banking services and contracts, and other business transactions through production of relevant documents.
(d)Additional eligibility provisions. The following provisions apply to all applicants seeking certification as an EBE: (1) Where the actual management of the business enterprise is contracted out to individuals other than socially and disadvantaged individuals, socially and economically disadvantaged individuals must demonstrate that they have the ultimate power to hire and fire these managers, that they exercise this power and make other substantial decisions which reflect control of the business enterprise; (2) Documentation of one (1) year's business activity will be required in order to provide sufficient information upon which certification can be reasonably made. The commissioner, in his or her discretion, may permit documentation for a lesser period; (3) DSBS may grant eligible status to any business enterprise eligible under 66 RCNY § 11-82, and certified as an EBE or disadvantaged business enterprise by another governmental or other certifying entity whose emerging business enterprise or disadvantaged business enterprise certification criteria are determined by the commissioner to be consistent with the certification criteria set forth in these rules. Unless otherwise determined by the commissioner, the maximum period for which any certification granted by DSBS pursuant to this subdivision is valid will be the period during which the business enterprise is certified as an EBE or disadvantaged business enterprise with the original certifying entity; (4) Any business enterprise that satisfies the eligibility criteria as set forth in 66 RCNY § 11-82 is presumptively eligible for certification under these rules; provided that the commissioner may decline to certify, or revoke the certification of, any business enterprise on the ground that there is not a firm basis for believing that there is a compelling state interest to justify certification of that business enterprise under these rules.
(e)Evidence of social and economic disadvantage.
(1)(A) Evidence of individual social disadvantage must include the following elements: (i) At least one objective distinguishing feature that has contributed to social disadvantage, such as physical or mental disability, long-term residence in an environment isolated from the mainstream of United States society, or other similar causes not common to individuals who are not socially disadvantaged; (ii) Personal experiences of substantial and chronic social disadvantage in United States society, not in other countries; and (iii) Negative impact on entry into or advancement in the business world because of the social disadvantage. DSBS will consider any relevant evidence in assessing this element. In every case, however, DSBS will consider education, employment and business history, where applicable, to see if the totality of circumstances shows disadvantage in entering into or advancing in the business world. (B) Education. DSBS will consider such factors as denial of equal access to institutions of higher education, exclusion from social and professional association with students or teachers, denial of educational honors rightfully earned, and social patterns or pressures which discouraged the individual from pursuing a professional or business education. (C) Employment. DSBS will consider such factors as unequal treatment in hiring, promotions and other aspects of professional advancement, pay and fringe benefits, and other terms and conditions of employment; retaliatory or discriminatory behavior by an employer; and social patterns or pressures which have channeled the individual into nonprofessional or non-business fields. (D) Business history. DSBS will consider such factors as unequal access to credit or capital, acquisition of credit or capital under commercially unfavorable circumstances, unequal treatment in opportunities for government contracts or other work, unequal treatment by potential customers and business associates, and exclusion from business or professional organizations.
(i)Each individual claiming economic disadvantage must describe it in a narrative statement, and must submit personal financial information supporting the assertions contained in the narrative statement.
(ii)An individual claiming economic disadvantage who is married or a member of a domestic partnership must submit separate financial information for his or her spouse or domestic partner, provided that such financial information will not be required where the individual and the spouse are legally separated. (B) DSBS evaluation of diminished capital and credit opportunities. DSBS will examine factors relating to the personal financial condition of any individual claiming disadvantaged status, including personal income for the past two years (including bonuses and the value of company stock given in lieu of cash), personal net worth, and the fair market value of all assets, whether encumbered or not. DSBS will also consider the financial condition of the applicant compared to the financial profiles of small businesses in the same primary industry classification, or, if not available, in similar lines of business, which are not owned and controlled by socially and economically disadvantaged individuals in evaluating the individual's access to credit and capital. The financial profiles that DSBS compares will include total assets, net sales, pre-tax profit, sales/working capital ratio, and net worth. (C) Transfers within two years.
(f)Net worth. For EBE eligibility, the net worth of an individual claiming disadvantage must be less than one million dollars. In determining such net worth, DSBS will exclude the ownership interest in the applicant and the applicant's equity in the primary personal residence (except any portion of such equity which is attributable to excessive withdrawals from the applicant). Exclusions for purposes of determining net worth are not exclusions for asset valuation or access to capital and credit purposes. A contingent liability does not reduce an individual's net worth.
(g)Graduate EBE determinations. The division will, upon reviewing applications for certification and recertification, determine whether a business enterprise qualifies as a graduate EBE. The division will make such determinations in accordance with the following procedures: (1) In the event that the division determines a business enterprise seeking new certification as an EBE qualifies as a graduate EBE pursuant to 66 RCNY § 11-81, the division will provide a written notice of such determination to the applicant business enterprise stating the reason(s) for such determination and the procedures for challenging the graduate EBE determination.
(4)In the event that the division has determined a business enterprise to be a graduate EBE, and the business enterprise has not made a timely challenge to that determination, or has made such a challenge and the department has affirmed its determination, the business enterprise may not apply to have the designation lifted for at least two years from the date of the original determination notice. The division will lift the designation if the firm demonstrates that: (i) it has not been awarded contracts by one or more agencies within the past three years where the total city funding from the expense and capital budgets for such contracts was equal to or greater than fifty million dollars; and (ii) it has been below the size standards established by the United States small business administration for its industry for a period of two years or more.
