Nearly 40% of the fees New York’s Metropolitan Transportation Authority pays for bond sales go to women-owned, minority-owned and service-disabled veteran-owned investment banks, according to internal data.
Of the $11.2 billion of par amount the MTA issued from April 2016 through March, $14.2 million of the $37 million, or 38.4%, of the fees it paid went to 15 firms under that umbrella.
“We take pride in the number of contracts we are awarding,” said Michael Garner, the MTA’s chief diversity officer.
The state-run MTA, one of the largest municipal issuers with $49 billion of debt outstanding including special credits, operates New York City’s subways and buses, two commuter rail lines and several interborough bridges and tunnels. It has scheduled a $1.3 billion sale of Series 2021 bonds, its inaugural issuance under a payroll mobility tax credit.
Authority Chairman Patrick Foye said Garner’s department “continues to do tremendous work under Michael’s leadership, helping deliver on the MTA’s commitment to support and serve a diversity of suppliers across the region.”
The commitment has extended through the COVID-19 pandemic, Garner said. “Just because there’s an emergency declaration doesn’t mean we change the way we do business.”
In 2014, Gov. Andrew Cuomo set a goal of using MWBEs for 30% of state contracting, raising the goal from 20% he had set three years earlier.
Fee breakdown for the five-year period is $6.9 million for MBE and $5.1 for WBE, the two combining for $12 million MWBE. Service-disabled, veteran-owned businesses accounted for $2.2 billion.
The MTA’s investor pool includes minority business enterprises Blaylock Van LLC, Cabrera Capital Markets Inc., Estrada Hinojosa & Co., Great Pacific Securities, Loop Capital Markets LLC, Ramirez & Co., Rice Financial Products Co., Valdes & Moreno and Williams Capital Group. Women business enterprises are Alamo Capital, Siebert Williams Shank & Co. LLC, and Stern Brothers & Co. SDVOB underwriters are Academy Securities, Drexel Hamilton LLC and Mischler Financial Group.
Before joining MTA in 2010, Garner worked for the New York City Housing Authority and the New York City School Construction Authority. Through his work at these authorities and the MTA, Garner and his teams have been responsible for more than $10 billion awarded to certified MWDBEs and businesses owned by service-disabled veterans.
“I just appreciate that the MTA has been in the game in terms of inclusion for so many years. For them, it’s not a new phenomenon,” said Suzanne Shank, president and chief executive of Siebert Williams Shank & Co. LLC. “It’s meant a lot for our firm’s growth.”
Shank recalled her firm’s first bookrunner deal with the authority, shortly after Hurricane Sandy ravaged New York in October 2012 and flooded Lower Manhattan.
“I remember that quite vividly,” she said in an interview. “We were working out of our homes. We were not in our office at 100 Wall Street. It was a critical time for the MTA.”
Since, then, her firm has been bookrunner on four MTA-related transactions totaling nearly $2 billion.
“This has been a critical role for a firm like ours that serves transportation issuers nationally,” Shank said. “Having a high-quality name like MTA helps grow our business.”
She also cited the Illinois Tollway, Chicago Transit Authority and the Pennsylvania Turnpike Commission as firms with strong track records on MWBE contracting.
The U.S. Census Bureau, in its annual business
Garner, a member of New York City Comptroller Scott Stringer’s MWBE advisory council, has also worked similarly for New York Gov. Andrew Cuomo and Mayor Bill de Blasio.
In addition, he is advising Buffalo, Chicago and the CTA on minority business development and inclusion programs.
“The person you hire to execute must report to the top,” Garner said in an interview. “You need a person who reports directly to the top person. You also need adequate funding and staff.”
The 15 firms bring different perspectives than those of traditional bulge-bracket firms, according to the MTA’s finance director, Patrick McCoy.
“We began a really concerted effort on diversity that goes back maybe 12 or 13 years,” said McCoy, who runs point on bond sales. “As a practical matter, we have a very robust program here and we’re going to continue it.
“Our contracting reflects the composition of our ridership, which consists of every type of person.”
Garner’s office promoted its efforts in January through March, which covered civil rights leader Martin Luther King’s birthday, Black History Month and Women’s History Month.
Many firms move on to bigger work with the MTA and elsewhere, McCoy said. MTA cotracting, he said, provides a strong reference point to sell to other issuers.
“Over the last, almost, 30 years, we have built a business through the MWBE programs,” said Cheryl McKissack Daniel, president and chief executive of 115-year-old McKissack & McKissack, the nation’s oldest Black-and-minority owned design and construction firm.
“The MTA has been instrumental in our growth,” she said on a video that aired during the authority’s February board meeting. “There was a surge and focus on how to get minority- and women-owned firms in prime roles.”
The firm, she said, began with an opportunity as an independent engineer for the MTA. It has held that position for 10 years.
“We put our hat in the ring at an interview,” Daniel said. “They began to understand that a firm with a leader who looks like me could actually do this work. And they took the chance.”
Shank called the MTA “idea-generation oriented."
She added: “You reap what you sow. You have to compete even when you’re in the pool and that helps make us better. We can’t afford not to do an excellent job because our firm is built on the premise of repeat business.
“Our best clients are the most informed and well-versed. We call them a frequent prolific issuer, because when they come to market everyone pays attention. They are very good to work with because they appreciate our frankness. You can have technical, high-level discussions with them when you go in.”
Garner also cited growth with a small business mentoring program, which he modeled on a similar undertaking with the School Construction Authority. Cuomo and state lawmakers expanded the program in 2019.
“We had to go to Albany,” Garner said of the program’s early days. “Fast forward, and we’ve issued $490 million in contracts over 10 years.”
McCoy, the MTA’s finance director since 2004, said he would like to see more women-owned businesses participate. “Maybe someone working for a bulge-bracket firm who would like to hang out her own shingle,” he said.
