New builder in town prompts wage push
Union leaders press council for guarantee on PDC projects
By JIM REDDEN Issue date: Fri, Jun 9, 2006
The Tribune A Canadian construction company is prompting Oregon labor leaders to press the City Council over a long-simmering dispute — whether to compel the Portland Development Commission to require that state prevailing-wage rates be paid on all its projects.
ITC of Vancouver, British Columbia, has opened a Portland office and is planning to work on many future construction projects in the metropolitan area. Its first project is the Benson Tower, a privately financed 26-story condominium being built at Southwest 11th Avenue and Clay Street. ITC also is consulting on the next phase of construction in the South Waterfront urban renewal district, a nine-acre parcel owned by Prometheus Real Estate Group Inc.
“We didn’t come to Portland to do just one project,” said ITC’s senior vice president and chief operating officer, Lloyd Tosoff. “We expect to become a major player in the Pacific Northwest.”
Most of the large construction companies that work on PDC projects, including both the Hoffman and Walsh construction companies, employ only union subcontractors. But ITC is an open shop, meaning it employs both union and nonunion subcontractors.
“We respect unions and nonunions alike,” Tosoff said.
That worries union leaders like Bob Shiprack, executive secretary of the Oregon State Building Trades Council. He believes that ITC’s presence in the market will drive down the wages on all major construction projects, including those that employ union workers.
“We’re very concerned about ITC coming into Portland,” Shiprack said. “We think it would be bad for working people.”
Although unions could not stop ITC from working on the Benson Tower, they are trying to prevent the company from employing nonunion subcontractors in the South Waterfront urban renewal district, which is managed by the PDC. The unions’ main tactic at this point is to persuade the PDC to require that all developers on its largest projects pay state prevailing wages. The rates — which are set by the state labor commissioner — mirror union wages in the Portland area.
PDC Executive Director Bruce Warner said the agency is committed to paying fair wages on its projects. He noted that prevailing wages are now paid about 60 percent of the time, including on all street and sewer improvement projects. But Warner said the state’s prevailing-wage law does not cover many of the developers that work with the agency on the public-private partnerships that have built much of the Pearl District and are at work in the South Waterfront urban renewal district.
“The law does not say we have to require developers that do not receive any direct funding from us to pay prevailing wages,” Warner said.
The unions made their case before the council Wednesday at a hearing arranged by Commissioner Sam Adams. Although the announced subject was employment practices that should be avoided in Portland, several speakers took the opportunity to disparage ITC, including Cliff Puckett, organizer for the Pacific Northwest Regional Council of Carpenters, who said, “We don’t need irresponsible, out-of-country contractors driving down our wage.”
Tosoff said the unions are merely trying to protect their turf.
“We’re the new kid in town, and we expect to be treated different. It’s called self-interest,” he said.
The council, however, seems ready to back the unions. After Wednesday’s testimony, Mayor Tom Potter and all four commissioners expressed concern about the need for more family-wage jobs in Portland. And a majority of the council — Adams, Randy Leonard and Erik Sten — appeared to be ready to direct the PDC to require that prevailing wages be paid on more of its projects.
Leonard said: “It’s what I care about. It’s what I am.”
Many changes since 1959
The 1959 Oregon Legislature passed the state prevailing-wage-rate laws to require that minimum wages paid on public works projects do not undercut the standard wages paid in the areas where the work is occurring.
The law authorizes the labor commissioner to set and enforce the wages paid on such projects. The commissioner oversees the Bureau of Labor and Industries, which contracts with the Oregon Employment Department for annual surveys to determine the prevailing wages paid in 14 regions in the state.
Much has changed since the law was passed in 1959. Urban renewal agencies such as the PDC now partner with private companies on urban renewal projects. The PDC pays for infrastructure improvements like roads and sewers, while private developers construct the office, retail, apartment and condominium buildings. These are called public-private partnerships.
State Labor Commissioner Dan Gardner thinks the law should apply to at least some of these projects — the ones with the greatest amount of PDC involvement. The PDC so far has disagreed, saying the Legislature has not included public-private partnerships in the law. Only one case has ever gone to trial; the PDC won it last month, to the chagrin of Gardner and union officials.
A case in point
The history of the building that now houses the Henry V event-planning firm shows how deeply the PDC can be involved in a project without its being considered public under the law.
The PDC purchased a 1.8-acre parcel in the renewal area for $1,725,600 in May 2000. The land, at 6360 N.E. Martin Luther King Jr. Blvd., had been unused for many years. At the direction of the PDC’s board of commissioners, the agency marketed the land through a real estate firm. A local marketing and communications firm, National Meeting Corp. Inc., began looking at the property in summer 2002. In January 2004, firm owner Douglas Daggett and Vice President Patrick Eckford formed a company, Tin Roof LLC, to develop the property.
To make the deal work, the PDC entered into an agreement with Tin Roof in June 2004. As part of the agreement, the PDC said it would loan $1.16 million to Tin Roof for the purchase of the property and to credit Tin Roof another $15,000 toward the purchase price because of a latent defect in the existing building.
The agreement also gave the PDC the power to review and approve the design of the building to make sure it “enhances N.E. Martin Luther King Jr. Boulevard, serves as an anchor development to the northern end of the (urban renewal area), and complements a burgeoning neighborhood node where a mix of uses is being encouraged.”
The PDC did not provide any of the approximately $1.74 million construction contract funds. Work began in January 2005 and was completed about six months later. The project came to the attention of the Bureau of Labor and Industries when a union — Operating Engineers Local 701 — complained that prevailing wages were not paid on it. The labor agency investigated, concluded that prevailing wages should have been paid, and entered a judgment against the PDC and several contractors on the project.
The PDC appealed the judgment to the Multnomah County Circuit Court, claiming the project was not covered by state prevailing wage-rate laws.
Judge Henry Kantor sided with the PDC and dismissed the labor judgment in May. But he did not issue a written ruling explaining his decision. Gardner has appealed the ruling to the Oregon Court of Appeals.
Prometheus may be exempt
Even if the PDC requires major developers to pay prevailing wages, the upcoming Prometheus projects may be exempt. Unlike other South Waterfront developers, Prometheus has not entered into a binding development agreement with the PDC.
“We’re not asking anything from the city,” said Prometheus project manager Ellen Brown.
The PDC’s Warner agreed.
“Prometheus is not a development partner at this point,” he said.
Puckett of the Pacific Northwest Regional Council of Carpenters believes all major developers working in city-approved urban renewal districts should comply with the law, even if they are receiving no PDC loans or grants.
“If they’re working in an area where the city is building the infrastructure, they should be a responsible company,” Puckett said.
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