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JCIDA to investigate policy requiring developers to hire local labor

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Housing projects in Jefferson County supported by tax breaks have created hundreds of temporary construction jobs this past summer, but sources say most of the local construction workers are sitting on the sidelines.

That’s why some labor leaders say the Jefferson County Industrial Development Agency should require developers who get tax breaks to hire local workers. Such an arrangement, known as a clawback agreement, would mean the agency could scrap tax breaks and get back its funding if developers don’t hire contractors from the region.

That was the request made Thursday to the agency’s board of directors by Dennis C. Affinati, business manager for the International Brotherhood of Electrical Engineers. Roughly half of the union’s 400 active electrical workers who work in the north country’s six-county region are employed by contractors in Jefferson County.

“There seems to be a bull’s-eye for construction workers in our area, but a lot of (union) people are unemployed,” Mr. Affinati said. He said 95 union members are seeking employment. “I know the board has been encouraging developers to hire local workers, but it hasn’t been enough.”

Three developers broke ground on major projects over the summer but failed to hire local contractors, choosing companies located downstate and even out of state to complete the work. The multiyear projects that received payment-in-lieu-of-taxes agreements from the JCIDA include COR Development Co. of Fayetteville’s 296-unit Beaver Meadows complex, to be built south of Target in COR’s Towne Center, Route 3; Morgan Management of Pittsford’s 394-unit complex off County Route 202 in the town of Watertown, and Albany energy provider ReEnergy LLC’s project to retrofit a former coal plant at Fort Drum to produce biomass energy.

Morgan hired general contractor DGA Builders, Rochester, while general contractor Cianbro Corp. of Pittsfield, Maine, was hired by ReEnergy. COR Development is serving as the lead contractor for its project and hiring subcontractors from the Syracuse region.

“I believe our work force and contracting firms in the area can be every bit as competitive, efficient, and have the skills and expertise these developers would like,” Mr. Affinati said. “Looking at the mission of the IDA being the well-being of Jefferson County and to serve taxpayers, it seems we’re missing something here.”

Some IDAs have local-labor policies that compel developers to hire only local workers to set up shop. The Monroe County Industrial Development Agency, Rochester, for instance, has since 2007 required developers to hire laborers from its nine-county area. To make sure they do, a monitoring group visits work sites to verify that workers reside in the area. If a violation isn’t corrected, the MCIDA executive director has the authority to revoke project benefits.

“The contractor can be out of the area, but the laborers on the project have to be local residents,” said agency director Judy A. Seil.

The policy also includes exceptions in which developers are allowed to hire labor from out of the area for the following reasons: warranty issues that require approved installers; specialized work for which local contractors aren’t available; if hiring local labor increases the cost of a project by 25 percent or more, or if no local labor is available.

“It hasn’t been a challenge for developers” to meet the requirement, Ms. Seil said. “We have a large population here with enough labor.”

JCIDA Chief Executive Officer Donald C. Alexander said he will investigate the merits of implementing such an approach here and report back to the board next month.

But Mr. Alexander has reservations about starting such a policy. He said the north country’s rural area might not be able to adequately supply the skilled work force that major housing developers are looking for. And requiring developers who are used to working with contractors with whom they are familiar to hire local workers could be scared away by the restriction.

Starting “a mandate on companies to hire local labor could make them reluctant to do business here,” Mr. Alexander said. “You can restrict these guys so much that it drives their labor costs higher and they pass it on to the project. And when you do that, it puts the project at risk.”

While hiring more union workers sounds good, he said, doing so can be more costly due to relatively high prevailing wage rates.

“In some cases, you can drive up costs by more than 30 percent,” he said.

Statistics show that Jefferson County’s construction sector is suffering the most compared with other industries, even though it makes up only 4 percent of the economy. Of the 4,800 people here on unemployment, 2,600 come from the construction industry, according to statistics from The Workplace employment agency in Watertown.

“That’s what’s keeping our unemployment numbers so high,” said Director Cheryl A. Mayforth. “These workers contribute greatly to the economy, and (it’s frustrating) when there are big projects and they see this.”

Jefferson County’s unemployment rate is now 8.9 percent.

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