SBA Rule Incorporates Statutory Changes Easing HUBZone Eligibility Requirements at BRAC Sites

The Small Business Administration (SBA) last week issued a final rule implementing changes to the HUBZone program enacted in the fiscal 2016 defense authorization bill designed to provide a boost to base redevelopment projects attempting to attract tenants interested in qualifying for the program.

The legislation included two key provisions intended to make it easier for companies to meet the eligibility requirements of the HUBZone program — an initiative offering preferential access to federal procurements to businesses in distressed areas.

One change expands the boundaries of BRAC-related HUBZones beyond the actual base, allowing businesses to hire employees from surrounding areas to meet the program’s requirement for 35 percent of a participant’s workers to live within a HUBZone. The change also means companies can locate beyond a closed installation’s boundaries and still fall within the associated HUBZone.

SBA’s new rules expand HUBZone eligibility to census tracts and nonmetropolitan counties that (1) contain BRAC sites, (2) intersect with BRAC sites, (3) are contiguous to BRAC sites or (4) are contiguous to any census tract or nonmetropolitan county covered in (1) through (3), according to the Aug. 4 Federal Register notice.

Currently companies hoping to take advantage of BRAC-related HUBZones need to find employees living on the former base — or another HUBZone — to meet the 35 percent staffing threshold.

The new definition of base closure area includes former installation property closed through a BRAC action, as well as property the military disposes of “for purposes relating to base closures [or] redevelopment, while retaining the authority to enter into a leaseback of all or a portion of the property for military use.”

The legislation also extends the period for which a BRAC-impacted community is designated a HUBZone. Under the new rules, a closed base would be treated as a HUBZone for at least eight years, beginning on the date the installation undergoes final closure and ending on the latter of:

  • the date SBA determines “whether or not to implement the applicable designations in accordance with the results of the decennial census conducted after the area was initially designated as a base closure area”; or
  • the date eight years after the base closure area was initially designated as a HUBZone.

If a base closure area was treated as a HUBZone at any time after 2010, it would be treated as a HUBZone until SBA determines whether or not to implement the applicable designations in accordance with the results of the 2020 decennial census, according to the final rule.

SBA issued the amendments to its regulations as a direct final rule scheduled to take effect Oct. 3, unless it receives significant adverse public comment.

The changes included in last year’s defense authorization bill marked a major victory for ADC, which worked closely with the House and Senate Defense Communities caucuses to achieve the relaxed eligibility requirements for BRAC-related HUBZone sites.

Dan Cohen
Dan Cohen
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