The Missouri Housing Development Commission (“MHCD”) recently established an additional condition that applicants must meet to qualify for MHDC funding on projects with more than six units. This requirement is identified as the Emerging Business Initiative (the “Initiative”). The intent behind the Initiative is to encourage involvement in MHDC funded projects by businesses certified as a Minority Business Enterprise (“MBE”) and as a Woman Business Enterprise (“WBE”). The Initiative includes two components: the Participation Initiative and the Partnership Initiative.
The Participation Initiative requires that a minimum percentage of project hard and soft costs, which MHDC refers to as a “participation goal,” be allocated to MBE and WBE firms. The participation goal is set at a minimum of ten percent (10%) for MBE companies and five percent (5%) for WBE companies for both hard and soft project costs. When submitting an application for funding to MHDC, the applicant must include a utilization plan indicating the applicant’s plan to use MBE and WBE firms along with those firms’ certification certificates. If the certifications for the MBE or WBE firms are still in progress at the time of application, the applicant will need to demonstrate that the certification process has been initiated.
The MHDC 2012 Developer’s Guide provides direction as to the type of services and materials that may be provided by MBE and WBE businesses to satisfy the required participation goals. Examples of hard costs, which relate to the physical costs of construction, include:
- General contracting
However, general requirements, overhead, bond costs, and contractor’s profit should not be included when calculating project hard costs. Examples of soft costs include:
- Developer fees
- Consulting fees
- Title company
In calculating the participation level for soft costs, developer fees may be, but are not required to be, included.
Unlike the Participation Initiative, the Partnership Initiative is not a requirement to receive funding. However, MHDC will give preference in funding to projects that fulfill the Partnership Initiative. This initiative requires that a project either (a) involve a mentor/protégé relationship or (b) exceed the minimum participation goals required by the Participation Initiative.
A mentor/protégé relationship is a partnership between an experienced developer and an inexperienced developer who is not yet able to fulfill MHDC and project investors’ financial and experience requirements on its own. To qualify as a mentor/protégé relationship, the protégé must be an active participant in the development process and be compensated for its participation. When applying under the Partnership Initiative, a developer who will be working with a protégé must provide MHDC with a plan detailing the terms of the relationship
An applicant who applies under the Partnership Initiative for the MBE/WBE preference must commit to include project participation by MBE and WBE business that is above minimum participation goals. To qualify under this initiative, the applicant must provide a detailed utilization plan identifying how the project will exceed the minimum participation goals. This plan should include any history of working with MBE or WBE firms.
Additional information about MHDC’s funding programs and how to qualify for funding is available on MHDC’s website.