ACRA has submitted comments to the U.S. Department of Transportation in response to their notice of proposed rulemaking (NPRM) that makes changes to the DOT Disadvantaged Business Enterprise (DBE) and Airport Concession Disadvantaged Business Enterprise (ACDBE) Programs.
In its comments, ACRA expressed support for proposed changes that would:
- Increase the personal net worth (PNW) cap for DBE owners from $1.3 million to $1.6 million.
- Create a process to increase the cap every 5 years – without the need for new rulemaking – to keep up with inflation in national household net worth.
- Improve procedures for ensuring state-by-state reciprocity for DBE certifications by “proposing procedures that would facilitate information sharing amongst [Unified Certification Programs] and would establish efficient processes to remove ineligible firms from the program.”
However, ACRA expressed concern about proposed changes that could make it more difficult for DBE firms to attract new, younger owners and engage in succession planning.
The proposal would require that a Socially and Economically Disadvantaged Owner (SEDO) who has financed their investment through a loan must have paid at least 15% of the total value of the investment by the time the firm applies for certification. In addition, the company cannot be a party to the loan, and its property cannot serve as collateral.
In other words, a new owner who has financed their ownership through a loan would have to have paid at least 15% of the value of the investment in order to qualify as an owner, and must put up their own collateral.
ACRA noted that “this change may be onerous for younger owners, for whom it may take years to pay off 15% of the initial investment, and are less likely to have collateral, like property, to access. For CRM and other DBE firms that are well into succession planning, this proposed change could force them to choose between delaying succession or losing DBE status until the new owners meet the criteria. . . . This would run counter to the intent of the DBE program, which is to reduce barriers for socially and economically disadvantaged people to become business owners and build capital.”
It is not known when DOT will issue its new rules. ACRA will keep monitoring their efforts.