SBE, SBEC, and EBE certification; eligibility of applicant business enterprises.
Denver Revised Municipal Code § 28-205
in effectSec. 28-205. - SBE, SBEC, and EBE certification; eligibility of applicant business enterprises.
(a) Procedures and methods. The director shall, by rule and regulation or informal guidelines relating solely to internal management and procedure, establish reasonable procedures and methods for the certification of applicant business enterprises as SBEs, SBECs, and EBEs in order to effectuate the purposes of this article VII. The director may seek input and advice from appropriate industry sources as to appropriate aspects of work performance, equipment and staffing in these industry areas in which certification is being sought.
(b) Only applicant business enterprises that meet the criteria for certification as an SBE, SBEC, and EBE may participate in the program established under this article VII. The SBEs, SBECs, and EBEs applicant business enterprise has the burden of persuasion by a preponderance of the evidence. SBEs, SBECs, and EBEs shall be certified only for the certification area(s) for which they apply and in which they have had sustained business activity for a minimum of six (6) months. Certification areas shall correspond to the codes set forth in North American Industrial Classification Standard (NAICS) Codes, or successor classification system, Code of Federal Regulations § 121.201, as amended, or successor regulation.
(c) To determine whether the requirements set forth below are met, the division must consider all of the facts in the record, viewed as a whole.
(1) Ownership. In order for the owner(s) to be found to own the applicant business enterprise for purposes of certification, as applicable, the applicant business enterprise or owner(s) must meet the requirements set forth below.
a. Own in his or her own name the legal and equitable interest in the applicant business enterprise;
b. Have acquired the interest in a verifiable and substantial arms-length transaction utilizing verifiable, substantial, and continuing consideration, going beyond pro forma ownership of the applicant business enterprise as reflected in ownership documents;
c. Enjoy customary incidents of ownership and share in the risks and profits commensurate with his or her ownership interest in practice, not merely in the form of arrangements; and
d. Have acquired the interest with a contribution of his or her own capital resources, by having put his or her own financial resources at risk in the operation of the applicant business enterprise, or subject to requirements below, with a contribution of expertise. All contributions by the owner(s) to acquire the ownership interest in the applicant business enterprise must be verifiable, substantial, and continuing, which in part, means that it be commensurate with the ownership interest acquired.
(A) If expertise is relied upon as part of an owner's contribution to acquire ownership, the expertise must be of the requisite quality generally recognized in a specialized field, in areas critical to the operations of the applicant business enterprise, indispensable to the applicant business enterprise's potential success, specific to the type of work the applicant business enterprise performs and documented in the applicant business enterprise's records. These records must clearly show the contribution of expertise, including its equivalent monetary value. The individual(s) whose expertise is relied upon must have a commensurate capital investment in the applicant business enterprise.
(2) Management and control. The owner(s) shall manage and control the daily business operations of the applicant business enterprise. The owner(s) management and control must be verifiable, substantial, and continuing and go beyond the pro forma ownership of the applicant business enterprise as reflected in its ownership documents. Ownership alone is not sufficient to establish management and control. To determine whether the owner(s) satisfy these requirements, the DSBO shall consider the criteria below.
(3) Management and control. The owner(s) shall manage and control the daily business operations of the applicant business enterprise. The owner's(s') management and control must be real, substantial, and continuing and go beyond the pro forma ownership of the applicant business enterprise as reflected in its ownership documents. Ownership alone is not sufficient to establish management and control. To determine whether the owner(s) satisfy these requirements, the DSBO shall consider the criteria below.
a. If federal or state law or city ordinance requires the owner(s) to have a particular license or other credential to own or control a certain type of business enterprise, then the owner(s) must possess the required license or other credential. If federal or state law or city ordinance does not require that the owner possess the license or other credential to own or control the business enterprise, including control, direction, or supervision of the work performed under the license, to determine whether the owner(s) manage and control the business enterprise, the DSBO may consider whether the owner(s) holds the license or other credential as a factor. If there is not a legal requirement for the owner to hold the license or other credential to own or control a certain type of business enterprise, failure of the owner to hold the license or other credential does not by itself indicate lack of management and control of a business enterprise without other factors indicating to the contrary.
b. An owner(s) shall have substantial experience in the trade or industry that would be necessary to make routine and major decisions for the applicant business enterprise.
c. An owner(s) shall regularly make decisions, hold himself or herself out to the public, and sign important documents and financial instruments in a manner that is indicative of primary management and control of daily business operations and responsibility for routine and major decisions.
d. There may not be any restriction through corporate charter provisions, by law provisions, contracts or any other formal or informal devices that prevent the owner(s), without the cooperation or vote of any other individual, from making any business decision of the applicant business enterprise, including the making of obligations or the dispersing of funds.
e. The owner(s) must possess the power to direct or cause the direction of the management and policies of the applicant business enterprise and to make day-to-day as well as long-term decisions on management, policy, and operations.
f. The owner(s) may delegate various areas of the management, policymaking, or daily operations of the applicant business enterprise to another participant or other participant(s) who are not owner(s). Such delegations of authority must be revocable, and the owner(s) must retain the power to hire and fire any such person. The owner(s) must actually exercise control over the applicant business enterprise's operations, management, and policies.
g. The owner(s) must have an overall understanding of, and managerial and technical competence, experience and expertise, directly related to the type of business in which the applicant business enterprise is engaged and its operations. The owner(s) is not required to have experience or expertise in every critical area of the applicant business enterprise's operations or have greater experience or expertise in a given field than managers or key employees. The owner(s) must have the ability to intelligently and critically evaluate information presented by other participants in the applicant business enterprise's activities and to make independent decisions concerning the applicant business enterprise's daily operations, management, and policymaking. Generally, expertise or responsibilities primarily in office management, administration, bookkeeping, or other functions unrelated to the principal business activities of the applicant business enterprise are insufficient to demonstrate management and control.
h. An owner(s) may not engage in outside employment or other business interests that conflict with the management of the applicant business enterprise or prevent the owner(s) from devoting sufficient time and attention to the affairs of the applicant business enterprise to manage and control its day to day activities. For example, absentee ownership of a business and part-time work in a full-time applicant business enterprise are not viewed as constituting management and control. An individual, however, could be viewed as controlling a part-time business that operates only evenings or weekends or both, provided the individual manages and controls it throughout all hours of operation.
(4) Independence. Only an independent applicant business enterprise may be certified as an SBE, SBEC or an EBE. An independent applicant business enterprise is one whose viability does not depend on its relationship with another business enterprise. Recognition of an applicant business enterprise as a separate entity for tax or corporate purposes is not necessarily sufficient to demonstrate that the applicant business enterprise is independent and not an affiliate. In determining whether an applicant business enterprise is an independent business, the director shall:
a. Examine whether there is actual or potential affiliation between the applicant business enterprise and individuals or non-certified business enterprises. To determine whether affiliation exists, the division considers factors such as ownership, management, previous relationships with or ties to another individual or non-certified business entity, and contractual relationships. Affiliation may be based on common management, identity of interest, newly organized concern rule, joint venture, or any combination thereof.
b. Scrutinize relationships with non-certified business enterprises in areas of personnel, finance, facilities, equipment, and other resources. The division may consider shared employees (including administrative staff), office space, phone numbers, and equipment and whether there is any support or sharing of bonding capacity, lines of credit, and other resources.
c. Consider present or recent employer/employee relationships between the owner(s) of the applicant and non-owner individuals, non-certified business enterprises, and persons associated with non-certified business enterprises.
d. Examine the applicant business enterprise's relationships with non-certified business enterprises to determine whether there is a pattern of exclusive or primary dealings with non-certified business enterprises.
e. Consider whether relationships between the applicant business enterprise and other non-certified persons and business enterprises is consistent with normal industry practice.
(5) Other ownership criteria. The director may establish by rule and regulation other appropriate criteria of ownership, including, but not limited to, conditions of personal net worth of SBEs owners, other than those certified solely as concessionaires. Personal net worth shall be the amount of personal net worth described in subsection 28-204(31).
(6) Actively in business for six (6) months. The applicant business enterprise may not be certified until six (6) months after the satisfaction of each of the following:
a. Formation of the applicant business enterprise;
b. Commencement of sustained business activity in the trade or profession described on the certification application; and
c. Commencement of ownership, management and control of daily business operations by the identified owner(s).
(7) Lawfully present in the United States. The owner(s) must be a citizen of the United States or a lawfully admitted permanent resident of the United States, and must not have the status of an unauthorized worker or otherwise be disqualified from lawfully residing in the United States, engaging in business and seeking this certification. As a condition of certification, owner(s) must comply with all reporting, submittal and other requirements that may be imposed by the city, State of Colorado or United States governments regarding such lawful presence.
(8) Threshold size; continued eligibility and renewal of certification. No applicant business enterprise or SBE or EBE shall be eligible for initial or subsequent renewal of certification if such applicant business enterprise or SBE or EBE combined with any affiliates meets the criteria set forth in section 28-206 for graduation from this article VII. An SBE, SBEC or an EBE will be certified for a three-year period. Following initial certification, an SBE, SBEC or an EBE that desires to continue its certification shall, no later than thirty (30) days prior to each three-year anniversary of the certification, submit a certification renewal application that shall update and reaffirm all requirements for certification. No later than thirty (30) days prior to each annual anniversary of the certification, an SBE, SBEC or an EBE shall submit an affidavit certifying that there has been no change in any information affecting certification eligibility, and other required tax or other financial information and documents. A certification may be terminated by the director upon the failure of the SBE, SBEC or an EBE to satisfy any certification requirement set forth in this article VII.
(9) City officials, officers and employees ineligible. No applicant business enterprise shall be eligible to be certified as an EBE, SBE, SBEC if ownership or control of such business enterprise is held by a current official, officer or employee of the city.
(10) Interviews, investigation and onsite visits. The DSBO shall personally interview all persons upon whom eligibility for certification is based, and is empowered to interview such other persons and conduct such onsite visits and investigations as may be appropriate in its sole discretion to verify eligibility for certification. An applicant business enterprise wishing to be certified as an SBE, SBEC or an EBE shall cooperate with the DSBO in supplying additional information that may be requested in order to make a determination.
(d) An applicant business enterprise shall be certified only for specific types of work in which the owner(s) has the ability and expertise to manage and control the applicant business enterprise's operations and work.
(e) In lieu of conducting its own certifications, the DSBO may accept formal certifications by other governmental entities as meeting the requirements of this article VII provided that the director determines that the certification standards and safeguards of such entities are substantially equivalent to those of the city.
(Ord. No. 286-20, § 4, 4-13-20; Ord. No. 833-21, § 15, 8-23-21)
Source: City and County of Denver, Revised Municipal Code and Charter (Municode Library, library.municode.com)URL: https://library.municode.com/co/denver/codes/code_of_ordinances?nodeId=TITIIREMUCO_CH28HURI_ARTVIIOPSMBUENEMBUENCOCOREREPRDECOSESMBUENCOCOAGTHDESEPOCOCOAG_S28-205SBSBEBCEELAPBUENFetched: 10/27/2026