Preliminary Report To New York Governor Paterson Shows Sharp Improvement For Minority & Women-Owned Business

New York State MWBE Task Force Delivers Preliminary Report Outlining Sharp Improvement in the Rate at which State-supported Debt Issuers Empanel and Engage Minority and Women Owned Businesses

April 28, 2009 -- The New York State Minority and Women Owned Business Enterprise (MWBE) Task Force today delivered its preliminary report to Governor David A. Paterson. The Task Force, established by Executive Order No. 10, reviewed the debt-issuing practices of the five authorities which issue State-supported debt, and wrote recommendations designed to improve their performance in retaining MWBE underwriting firms. The Task Force’s final report is due to the Governor in January, 2010.

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Governor Paterson met in the Capitol with members of the Task Force who presented him with the Preliminary Report as required under Executive Order No. 10. The Task Force includes members from five State authorities, which issue State debt, including: the Dormitory Authority, the Empire State Development Corporation, the Environmental Facilities Corporation, the Housing Finance Agency, the Thruway Authority, and three members appointed by the Governor.

“These are extraordinary results and I commend the Task Force for all it has accomplished to date and I am looking forward to continued progress as this important work continues,” said Governor Paterson. “As a result of the efforts of this Task Force, New York State – the center of the global financial services industry – has once again established itself as a leader in innovation and diversity. By expanding the range of firms we use to perform this important work we spur growth in the financial services sector while also helping ensure greater competition, more creativity, and increased intellectual capital.”

The Preliminary Report highlights the use of various syndicate structures and designation policies by the State-supported debt issuers resulting in the use of MWBE firms in more senior roles in the State’s financings as well as an increase in designations to MWBE firms. Designations to MWBE firms as a percentage of total designations for all firms increased from 4 percent in 2007 to 23 percent in 2008. From January 1, 2009 through February 15, 2009, MWBE utilization was 24 percent. As such, designation fees paid to MWBE financial services firms increased from $507,000 out of $11.8 million in total designation fees in 2007 to $5.1 million out of $21.9 million in total designation fees in 2008. From January 1, 2009 through February 15, 2009, MWBE designation fees were $653,000 out of $2.7 million in designation fees.

Paul T. Williams, Jr., Chairman of the Task Force and Executive Director of the Dormitory Authority of the State of New York, said: “A bright and historic new era has emerged in New York State under Governor Paterson’s leadership for MWBE firms. Establishing a level playing field for competition, devoid of arbitrary or unnecessary barriers to participation in State procurement has resulted in dramatic gains for MWBE underwriting firms.”

The Preliminary Report also highlights the use of a new uniform Request for Proposal (RFP) for underwriters, which was developed by the Task Force. This RFP addressed barriers to entry by MWBE underwriting firms. Three of the five State authorities have selected underwriter panels using the new uniform RFPs. As a result, each of the authorities significantly increased the number of MWBE firms serving on their underwriter panels as Senior Manager and Co-Manager.

Other highlights from the Task Force Preliminary Report include:

1. All five State-supported debt-issuers have adopted the Common Request for Proposals process designed to reduce barriers to entry and create greater opportunities for qualified firms to compete for business with the State.
2. The five authorities have adopted an aspirational goal of 20 percent utilization of MWBE firms in issuances of state-supported debt.
3. State authorities will use common performance measures to provide uniform data for each financing to gauge the performance of the Senior Manager and the pricing and execution by the management team. These performance measures will work in tandem with the new RFP process which now requires a mid-cycle review of the performance of the firms on the underwriter panels. This will enable a more dynamic and systematic review of the firms to ensure that they continue to provide the strongest services recognizing that firms could move to higher or lower tiers depending on their performance.

Loop Capital Markets, LLC, an MWBE underwriting firm, said the Task Force: “...successfully created a climate of opportunity and an atmosphere of inclusion in the State that allows investment banking firms like ours to compete for business on a level playing field. Our continued growth will translate into the creation of new jobs in the State as we hire additional personnel in an industry that has contracted and we will reinvest revenues generated in the State as we expand our office space and purchase additional goods and services to support our expansion.”

Governor Paterson signed Executive Order No. 10 – “Establishing a Task Force to Increase the Utilization of Minority and Women-Owned Business Enterprise Underwriters for State Debt Offerings” – on June 26, 2008.

Source: New York Governor