‘Foundational legislation’ supports minority, women-owned businesses

Despite potential legal ramifications, the St. Petersburg City Council approved an ordinance establishing a program that mitigates municipal contract disparities among minority and women-owned businesses.

Council members voted 7-1 to create a new Minority and Women Business Enterprise (MWBE) program at their Oct. 5 meeting. The recently created Office of Supplier Diversity (OSD) will oversee the initiative.

City attorneys and administrators created the program according to state and Supreme Court precedent. However, Councilmember Ed Montanari remained steadfast in his opposition.

“We’ve been talking about this for quite a while, and all along the way, I’ve been concerned about the constitutionality of an ordinance like this,” Montanari said. “I believe this is a lawsuit waiting to happen here in the City of St. Petersburg.”

Kourey Hendryx-Bell, OSD manager, led a presentation on the program and an ordinance she called “foundational legislation.” A minority or woman must own and control at least 51% of the company to participate.

Business owners must execute a distinct city contract element and possess the qualifications needed to perform the work. The MWBE program creates participation percentage requirements for city contracts.

“We (the OSD) will review all projects with an estimated value of $10,000 or more to determine the method of goal setting for goods and services,” Hendryx-Bell said. “Another newer process that we’ll start doing is forecasting.”

She explained that administrators would focus on increasing supplier diversity when projecting future city department spending plans. Hendryx-Bell added that registered business owners could view that information and formulate bids accordingly.

She said dedicated software would review available MWBEs specializing in relevant work for each project to help determine an appropriate target. Hendryx-Bell said the platform would “provide evidence for the goals we’re setting.”

City officials will measure program success according to the number of MWBEs bidding on and receiving city contracts. Montanari noted that the Supreme Court struck down a similar program in Richmond, Virginia, due to its 30% minority business quota.

He said codifying St. Petersburg’s MWBE goals creates an unallowable mandate. Jeannine Williams, chief assistant city attorney, said Richmond’s initiative lacked “good faith efforts.”

“Let’s say the percentage is 30%,” Williams explained. “If a (lead) contractor is able to show that they are unable to find MWBEs to satisfy whatever percentage … is set, then there are a number of ways to show that good faith effort. If they satisfy that to the person officially designated, then the percentage will not have to be reached.”

In addition, she said the lack of a set target provides more flexibility than the Richmond initiative. Williams said city officials learned from that 1989 benchmark case.

Montanari also noted that Collette Holt, an outside attorney and national consultant, warned council members of an ordinance’s potential pitfalls during a December 2022 meeting. “The federal courts are extraordinarily hostile to race and gender-based public contracting programs,” Holt said.

However, she also said there is a path forward – one Williams reiterated during Thursday’s meeting – through the city’s Disparity Study.

“First, you have to set that compelling state interest, and you do so by showing an actual disparity that indicates discrimination,” Williams said. “And once you have that compelling state interest to defend your ordinance, you’ll need to make sure you have a strong basis in evidence.

“Once you’ve satisfied that … an MWBE program has to be narrowly tailored based on the disparity that is shown.”

The city’s legal department believes the program’s flexibility – and 2028 sunset date – makes it sufficiently narrowly tailored. While the goal is to mitigate discrimination shown in the Disparity Study, officials can extend the initiative according to need.

Williams said a court upheld legal challenges to Hillsborough County’s MWBE program 10 to 15 years ago. However, she stressed that St. Petersburg’s fate remains “up in the air.”

Williams mentioned the current political climate and said, “We have precedent, but precedent can be overturned.”

Councilmember John Muhammad said the program’s benefits outweigh potential legal challenges. He called it a tool for transparency, fairness and accountability.

“It will be difficult; we may be challenged,” Muhammad said. “But the status quo is never changed by those who are comfortable with it. We want the smoke, so let’s do it.”

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