After more than half a year of back and forth, Kansas City councilmembers approved increasing the city’s goals for hiring minority- and women-owned businesses.
The MBE/WBE (minority-owned business enterprise and women-owned business enterprise) program sets goals and guidelines for hiring small, minority- or women-owned firms on city projects or projects receiving tax abatements. It’s an effort to make sure that the workforce on city projects better reflects the city’s demographics.
The revision process began in the first few months of 2018 after a study found the city’s current program might be vulnerable to legal challenges.
Since then, disagreements over process and administration of the program have dragged on, yielding at least three different ordinances to revise the MBE/WBE program.
On Thursday, the council finally passed a revised version of the program. Not everyone left satisfied, which, councilwoman Jolie Justus said earlier this month, isn’t necessarily a bad thing.
“When everyone walks from the table a little bit upset, like they’ve lost something, it usually means that the public is in the best place because we’ve reached a compromise where no one side has gotten all of what they wanted,” Justus said.
Where city officials actually agreed
The council did reach consensus on a few things.
The annual city-wide goals for hiring minority and women-owned businesses will be 14.7 percent minority business participation and 14.4 percent for women-owned businesses.
The new rules will also allow minority women to register as both a WBE and an MBE.
That’s an important change, said Jeanette Hernandez Prenger, president and CEO of information technology firm ECCO Select.
Previously, women of color had to choose whether to certify as either a WBE or an MBE. “This city is the only one that makes you choose one or another,” Prenger said.
The changes also make it easier for minority businesses to get certified as a WBE or MBE. To qualify, a business must be in existence in the Kansas City area for at least six months prior to seeking certification. Previously, businesses had to be established in Kansas City for at least a year.
The new rules also add an additional category for socially disadvantaged businesses — that would mean businesses that otherwise have a diminished ability to compete for contracts, like people with disabilities or who face discrimination based on sexual orientation.
The revised measure also sets limits on how big an MBE/WBE can be — once a business is large enough that it does not struggle to get work, it graduates from the program.
Sticking point: Who sets project goals and decides whether they are met?
The city’s human relations department and the agencies that grant tax incentives have been at odds over who makes key decisions over the course of a project.
While city officials disagreed on a number of administrative issues, this was one of the biggest hurdles to overcome.
Some believe that the hiring goals — what percentage of the contract must go to MBE or WBEs — should be set by the human relations director without input from the incentive agencies.
The incentive agencies — like the TIF commission, Chapter 353, Land Clearance for Redevelopment Authority, to name a few — argue they should have some say in determining the goals for the project since they are a party to the contract with the developer.
They also argue that should a contractor fail or struggle to meet those goals, they should make the final call as to whether they made a “good faith effort” to do so.
Others argued the human relations department should make that call since they are the experts in administering the MBE/WBE program.
But incentive agencies said that puts them in a tricky position.
Say, for example, HRD and the incentive agencies disagree on whether a contractor has made sufficient effort to reach their goals for minority and women-owned business participation.
If HRD declares they have not made a good faith effort and imposes fines on the contractor, the contractor could then decide to file a lawsuit against the incentive agency.
That puts them in a position to defend themselves against a determination they didn’t even agree with.
To remedy that situation, the council decided that for city projects, the human relations director will make the final decision and for incentivized projects, the incentive agencies decide. If there is disagreement between the agencies and the human relations department, a city-appointed fairness board would make the final determination.
Lisa Rodriguez is a reporter and the afternoon newscaster for KCUR 89.3. Follow her on Twitter @larodrig.
