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THE CITY RECORD

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Where can I find DSBSs rules? DSBSs rules are in Title 66 of the Rules of the City of New York.
What laws govern the rulemaking process? DSBS must meet the requirements of Section 1043 of the City Charter when creating or changing rules. This notice is made according to the requirements of Section 1043 of the City Charter.
Statement of Basis and Purpose Pursuant to section 1301 of the New York City Charter the Charter, the New York City Department of Small Business Services DSBS is proposing to promulgate an amendment to subchapter B of chapter 11
of title 66 of the Rules of the City of New York. This proposed rule would establish criteria and procedures for determining the eligibility of a business for certification as an minority-owned business enterprise or women-owned business enterprise MBE and WBE, respectively, and M/WBEs, collectively when the full or partial ownership of the business is held by one or more trusts.
The Citys M/WBE Goals Program, authorized by chapter 56 of the Charter and section 6-129 of the New York City Administrative Code, requires the Commissioner of DSBS to establish and operate, on behalf of the City, a centralized program for the certification of MBEs and WBEs for the purposes of establishing their eligibility for participation in City procurement as a City-certified M/WBE, and authorizes the Commissioner to promulgate rules governing the M/WBE certification process.
This proposed rule amendment would add a new subdivision g to section 11-22 of chapter 66 of the Rules of the City of New York, allowing business enterprises to remain eligible for certification as M/WBEs in cases where the minority or woman owner or owners transfer their shares to a trust for estate planning purposes, and as a result, do not meet one or more of the criteria outlined in subdivisions b, b-1, or c of such section. DSBS uses these provisions in determining whether an applicant for certification meets the criteria for ownership of, contribution to and control of a business. In such cases, the Commissioner would be authorized to consider the factors outlined in paragraph 1 of the proposed subdivision to determine whether certification is in the interest of the program. An eligibility determination under this subdivision would also require the Commissioner to set forth how each criterion of subdivisions b, b-1, or c not satisfied is attributable to a bone fide estate planning interest.
The purpose of this rule would be to clarify the circumstances under which the City can certify M/WBE firms in which ownership is intermediated by trusts. DSBS recognizes that this ownership structure is common for estate planning purposes and that for M/WBE
firms where minority or women owners still effectively own and control the business, a transfer of shares to trusts would not frustrate the purpose of the program.
New material is underlined.
Deleted material is in brackets.
Shall and must denote mandatory requirements and may be used interchangeably in the rules of this department, unless otherwise specified or unless the context clearly indicates otherwise.
Section 1. Section 11-22 of Title 66 of the Rules of the City of New York is amended to add a new subdivision g to read as follows:
g Certification decision for firms held in trust. 1
Notwithstanding any other provision of this subchapter, the Division may determine a business enterprise that does not meet all of the eligibility criteria set forth in subdivisions b, b-1, and c of this section is nevertheless eligible for certification as an MBE or WBE if the business enterprise previously met all the eligibility criteria set forth in subdivisions b, b-1, and c of this subdivision, regardless of whether such business enterprise previously sought or obtained certification during the time period in which such business enterprise met all such criteria, and if the minority group or women owner or owners subsequently transferred some or all of such owners or owners shares into one or more trusts for estate planning purposes, provided that in determining whether to certify such business entity, the commissioner shall consider whether such certification would advance the purposes of this subchapter, based on the following factors:
i the degree to which transfers of shares to the trust or trusts resemble common estate planning practices;
ii the degree to which the former owner or owners have a bonefide estate planning interest in selecting the trust beneficiaries and trustees;
iii the degree to which day-to-day management obligations, including control of negotiations, signature authority for payroll, leases, letters of credit, insurance bonds, banking services and contracts, and other business transactions, and the ability to hire and fire employees, are retained by women or members of a minority group.
iv the degree to which voting shares are retained by minority group members or women;

TUESDAY, MARCH 28, 2023

v the degree to which the business entity has provided to the Division adequate and transparent documentation memorializing the trust relationship;
vi the degree to which the trust or trusts are revocable; and vii the degree to which the former owner or owners retain any liabilities or other legal exposure for the entity.
2 Any determination of eligibility pursuant to this subdivision shall be made in writing and shall include:
i a written statement that the Division has considered each of the factors set forth in paragraph 1 of this subdivision; and ii for each criterion set forth in subdivisions b, b-1, or c that a business enterprise does not satisfy, an explanation of why such business enterprises failure to satisfy such criterion is exclusively attributable to the transfer of shares into one or more trusts in furtherance of a bone fide estate planning interest.
NEW YORK CITY LAW DEPARTMENT
DIVISION OF LEGAL COUNSEL
100 CHURCH STREET
NEW YORK, NY 10007
212-356-4028
CERTIFICATION PURSUANT TO
CHARTER 1043d RULE TITLE: S
tandards for Determining Eligibility for MWBE
Certification of Businesses Held in Trust REFERENCE NUMBER: 2023 RG 014
RULEMAKING AGENCY: SBS
I certify that this office has reviewed the above-referenced proposed rule as required by section 1043d of the New York City Charter, and that the above-referenced proposed rule:
i is drafted so as to accomplish the purpose of the authorizing provisions of law;
ii is not in conflict with other applicable rules;
iii to the extent practicable and appropriate, is narrowly drawn to achieve its stated purpose; and iv to the extent practicable and appropriate, contains a statement of basis and purpose that provides a clear explanation of the rule and the requirements imposed by the rule.
/s/ STEVEN GOULDEN
Senior Counsel
Date: March 23, 2023

NEW YORK CITY MAYORS OFFICE OF OPERATIONS
253 BROADWAY, 10th FLOOR
NEW YORK, NY 10007
212-788-1400
CERTIFICATION / ANALYSIS
PURSUANT TO CHARTER SECTION 1043d RULE TITLE: Standards for Determining Eligibility for MWBE
Certification of Businesses Held in Trust REFERENCE NUMBER: SBS-18
RULEMAKING AGENCY: Department of Small Business Services I certify that this office has analyzed the proposed rule referenced above as required by Section 1043d of the New York City Charter, and that the proposed rule referenced above:
i Is understandable and written in plain language for the discrete regulated community or communities;
ii Minimizes compliance costs for the discrete regulated community or communities consistent with achieving the stated purpose of the rule; and iii Does not provide a cure period because the violations pose significant risks to public health and safety, environmental hazards, and/or arise from consequences of immediate events, which make a cure period impracticable under the circumstances.
/s/ Francisco X. Navarro Mayors Office of Operations
March 24, 2023
Date

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