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Legal Eagles: A fresh look at HUB reporting 

by: John Phelps, NCLM Senior Associate Counsel 

Reporting requirements are common for local governments, and it is prudent to periodically review them to assure continued compliance.  Here is a quick refresher on the reporting requirements associated with minority businesses, also sometimes referred to as historically underutilized businesses or HUBs.

For a number of years, state law has required government entities in North Carolina, including cities, to promote the participation of historically underutilized businesses in public construction projects.  The applicable statutes specify requirements in three basic areas: (1) setting verifiable percentage goals for participation by minority businesses in building construction and repair contracts, (2) establishing good faith efforts that the unit of government will take to make it feasible for minority businesses to submit successful bids, and (3) reporting the outcomes of these goals and efforts.  The application of each of these statutory requirements to particular situations depends on the type, cost and funding source of the project.  Please consult with your municipal attorney regarding the application of these requirements to individual projects.

Local governments are required to report specific information regarding building construction and repair projects that are subject to the HUB requirements to the HUB Office within the N.C. Department of Administration.  These reports must be in the format and contain the data prescribed by the Secretary of Administration.  The HUB Office and the State Construction Office developed the HUBSCO Construction Reporting System, a web-based application, to assist in complying with the reporting requirements.  Through the HUBSCO system government entities enter the information online for formal and informal construction projects.

The HUB Office website includes forms for both formal and informal project reporting that may be used to assist in the process of completing the online questions.  Formal project reporting is required for building construction or repair projects costing $300,000 or more.  These reports must be filed semi-annually.  Informal project reporting is required for building construction or repair projects costing between $30,000 and $300,000 and must be reported upon completion of the project.  There are no reporting requirements for projects under $30,000.

There is some uncertainty regarding the threshold amount for formal project reporting.  As explained in the School of Government’s Local Government Law Bulletin, the problem results from an “inconsistent overlap in the statutory requirements for HUB participation in building construction projects costing between $300,000 and $500,000.”  Consistent with the advice in that Bulletin, it is recommended that for projects costing between $300,000 and $500,000, the safest course of action is to report the project under the formal reporting structure.

You might also notice HUB purchase reporting forms and instructions on the HUB Office website.  Purchase reporting does not apply to municipalities -- it applies only to governmental entities that are required by statute to use the services of the Department of Administration in the purchase of goods and services, to local school administrative units, and to certain private, nonprofit corporations that receive appropriations of $500,000 or more during a fiscal year from the General Assembly.

The HUBSCO reporting forms and other useful information on the reporting process are available through the HUB Office website at www.doa.nc.gov/hub/Reporting.aspx.  For a complete discussion on all the aspects of HUB participation requirements, see the School of Government’s Local Government Law Bulletin No. 131/February 2013 entitled HUB Participation in Building Construction Contracting by N.C. Local Governments:  Statutory Requirements and Constitutional Limitations.