Legislative Matter

Miami-Dade Legislative Item
File Number: 121243

Printable PDF Format

Clerk's Official Copy

File Number: 121243

File Type: Ordinance

Status: Adopted

Version: 0

Reference: 12-43

Control: Board of County Commissioners

File Name: RESPONSIBLE WAGES IN COUNTY CONSTRUCTION CONTRACTS

Introduced: 6/15/2012

Requester: NONE

Cost:

Final Action: 7/3/2012

Agenda Date: 7/3/2012

Agenda Item Number: 5A

Notes:

Title:

ORDINANCE PROVIDING FOR RESPONSIBLE WAGES IN COUNTY CONSTRUCTION CONTRACTS; MODIFYING THE EXEMPTION FOR CERTAIN PRIVATELY FUNDED CONSTRUCTION PROJECTS; PROVIDING THAT CERTAIN PRIVATELY FUNDED PROJECTS WITH AN ESTIMATED COST LESS THAN FIVE MILLION DOLLARS SHALL BE EXEMPT; DELETING THE EXEMPTION FOR PROJECTS WHOSE ESTIMATED COST EXCEEDS ONE MILLION DOLLARS; AMENDING SECTION 2-11.16 OF THE CODE; PROVIDING SEVERABILITY, INCLUSION IN THE CODE, AND AN EFFECTIVE DATE

Indexes:	CONSTRUCTION
	ORDINANCE AMENDING
	WAGES

Sponsors:	Sally A. Heyman, Prime Sponsor
	Audrey M. Edmonson, Co-Sponsor
	Barbara J. Jordan, Co-Sponsor
	Jean Monestime, Co-Sponsor
	Dennis C. Moss, Co-Sponsor

Sunset Provision: No

Effective Date:

Expiration Date:

Registered Lobbyist:

None Listed

Legislative History
Acting Body	Date	Agenda Item	Action	Sent To	Due Date	Returned	Pass/Fail

Board of County Commissioners	7/3/2012	5A	Adopted				P
REPORT:	First Assistant County Attorney Abigail Price-Williams read the foregoing proposed ordinance into the record. Chairman Martinez opened the public hearing and called for persons wishing to speak on this ordinance. Mr. Carlos Carrillo, representing Associated Builders and Contractors, appeared in opposition to the foregoing proposed ordinance. He noted while the economy appeared to be improving, the commercial construction industry was still suffering from 20 percent unemployment. Mr. Carrillo said that Public Private Partnership (PPP) projects could address the County needs by leveraging private industry; however, this proposed ordinance would increase the cost of those projects. He noted the living wage rates were some of the highest in the country and would likely increase construction costs by 15 to 30 percent; and the cost of doing business with Miami-Dade County would result in the industry being much less competitive. Mr. Carrillo said that he understood this ordinance’s intent was to benefit the County; however, he expressed concern that it would create the opposite effect. Mr. Carrillo pointed out that attracting more partners would address high unemployment and he urged the Commission to vote “no” on this ordinance. Mr. Bill Riley, 1657 NW 17 Avenue, Miami, 33125, President, South Florida Building and Construction Trades Council, appeared in support of the foregoing ordinance. He emphasized that if a private developer wanted to build on County-owned land, the project should be undertaken by workers earning a responsible wage, as there was no evidence that a project built by qualified, experienced trade workers would cost more than a project built by lower paid workers. Mr. Riley noted by voting for this ordinance, the County Commission would be guaranteeing that every project on County-owned land would be built to last by a qualified, skilled workforce. He urged the Commission to support this proposed ordinance. Mr. Alan Eichenbaum, 10059 NW 1st Court, Plantation, Florida, counsel for the South Florida Building and Construction Trades Council, appeared in support of the foregoing ordinance. He referred to a June 2011 study that was conducted by an independent economics professor for the State of Colorado Department of Transportation. Mr. Eichenbaum said the study found that productivity was higher on projects that paid the prevailing wage rates; that the prevailing wage requirement was not associated with a reduction in the number of bidders on the project; and that union contractors had no advantage and non-union contractors had no disadvantage when prevailing rates were applied. He noted labor was not the determining factor on a construction project’s overall cost, and urged the County Commission to adopt this proposed ordinance. Chairman Martinez relinquished the Chair to Vice-Chairwoman Edmonson. Ms. Nooshan Mahalia Adler, Economic and Policy Researcher, appeared before the County Commission. Ms. Adler said that she currently worked as a consultant for the Lewin Group in Falls Church, Virginia, and previously worked as an analyst for the Economic Policy Institute (EPI). She provided an overview of the EPI’s research on the impact of prevailing wages on government contracting costs and noted empirical research provided no evidence that prevailing wages were passed on in the form of increased government costs. Mr. Andy Madtes, representing the AFL-CIO, appeared in support of the foregoing proposed ordinance. He noted he did not believe that a private sector company would refuse a multi-million dollar contract if presented with the opportunity to build in Miami. Vice-Chairwoman Edmonson closed the public hearing after no one else appeared wishing to speak. Commissioner Heyman spoke in support of the foregoing proposed ordinance. She recalled state employees’ concerns of insufficient income during her tenure as a state legislator, and noted these employees were tied to government in a burdensome way unless they were allowed to have additional jobs. Commissioner Heyman pointed out that this proposed ordinance was limited to construction contracts. She noted this item was originally deferred pending a study by Florida International University (FIU); however, that study did not materialize and this issue was being revisited as a new item. Commissioner Heyman said that Section 4 of this proposed ordinance was prospective and would not apply to existing contracts. She noted she had prepared an amendment to ensure that Miami-Dade County maintained a competitive edge and to address potential excessive increases if this ordinance was adopted. However, Commissioner Heyman said that it was impossible to determine what impact wages would have on a project’s profitability, because no vendor who was awarded a County contract had ever given an exact profit amount in their bid. She spoke in support of the ordinance noting, however, should problems arise in the future, the Commission could revisit this ordinance and any conditions set when a Private Public Partnership was established. It was moved by Commissioner Heyman that the foregoing proposed ordinance be adopted. This motion was seconded by Commissioner Jordan. Commissioner Monestime spoke in support of the foregoing proposed ordinance. He expressed the opinion that projects were built based on demand and not solely on labor costs. Commissioner Monestime said that this ordinance provided greater competitive advantages for the workers and the developers; and he did not believe any developer would refuse any major project because labor costs were higher. He expressed appreciation to Commissioner Heyman for allowing him to co-sponsor this ordinance. Chairman Martinez resumed the Chair. In response to Commissioner Diaz’ inquiry as to whether the FIU study was prepared, Mr. Mario Goderich, Director, Department of Regulatory and Economic Resources, said that the study was not released. Deputy Mayor/Chief of Staff Genaro “Chip” Iglesias indicated that he would determine whether the FIU study was prepared. Commissioner Diaz suggested that a workshop be held with industry representatives. Responding to Commissioner Heyman’s comment that the County Commission had been waiting for the FIU study since November 16, 2010, Chairman Martinez said that he would call FIU to determine whether the study was conducted. Commissioner Sosa stated that she received letters from the Miami Airport Affairs Committee and from the Greater Miami Aviation Association regarding the impact of this proposed ordinance. She noted she was not prepared to support this ordinance until a study was conducted outlining the impact of this ordinance. Commissioner Sosa asked Deputy Mayor/Chief of Staff Iglesias to ensure that the Aviation Department Director and the Port of Miami Director provide the County Commission with a report outlining the impact of this proposed ordinance on the performance, cost and daily lives of the workers. Commissioner Moss spoke in support of the foregoing proposed ordinance. He noted workers seemed convinced that cost increases, if any, would be marginal. Commissioner Moss pointed out that the public paid the cost when living wages were not implemented as workers could not afford health insurance and had to be treated at Jackson Memorial Hospital. He noted if this ordinance was adopted competition for contracts would continue, the cost would be competitive, and the public would not be burdened with paying for health insurance and other types of services for these workers. In response to Commissioner Jordan’s inquiry regarding the difference between a prevailing wage and a responsible wage, Assistant County Attorney Hugo Benitez advised that a responsible wage was a construction-mandated measure. He noted the prevailing wage (living wage) was for certain covered service sectors and was governed by a separate ordinance. Assistant County Attorney Benitez advised that according to the ordinance the responsible wages were established by reference to negotiated union contracts for construction and by the Davis-Bacon Act, in the absence of a negotiated contract, while the prevailing wage (living wage) was determined by the County Commission and was indexed every year. He confirmed that the responsible and prevailing wages were interchangeable. Responding to Commissioner Jordan, Deputy Mayor/Chief of Staff Iglesias noted he was informed that the County did not have a contract with FIU for a study. Commissioner Jordan observed that she did not believe a study was necessary. She pointed out that whenever a bid was advertised it was normally based on the estimated project cost; therefore, there should be no conflict with regard to increased cost due to higher wages. Commissioner Jordan noted the only issue would be the difference in the profit margin, not in the project cost. She pointed out that she was not interested in protecting a profit margin, but rather the workers. Responding to Commissioner Bell’s inquiry regarding the impact of this ordinance on airport projects, Mr. Miguel Southwell, Deputy Director for Business, Miami-Dade Aviation Department, said that this item was first proposed approximately two years ago, and staff was awaiting the FIU study. He indicated that the airline community found out a week ago that the item was being revisited. Mr. Southwell advised that the living wage did not apply to the airlines, and they were concerned that the responsible wage would impact them significantly. He noted in an effort to understand the airlines’ concerns, he requested a construction company that would not be impacted by this ordinance, to determine the impact of applying the responsible wage versus the prevailing wage to a project. Using a project for which the estimated costs were previously determined, the company applied the responsible and the prevailing wages separately, Mr. Southwell said. He noted the company determined that the prevailing wage reduced their cost by $436,000 on a $95 million project; however, when the responsible wage was applied, the project cost increased from $95 million to $106 million, representing an 11.5 percent increase. Mr. Southwell said this indicated that sufficient evidence existed to suggest a potential negative impact on the airlines. Mr. Southwell referred to an airline that was considering whether a hangar should be built in Miami; or Santiago, Chile, noting this project would create 203 high-paying jobs. He pointed out that if the responsible wage was applied for one year, 203 jobs would be lost to Santiago. Mr. Southwell said that he believed the proposed ordinance needed additional discussion. Commissioner Bell said that she could not support this proposed ordinance until she was assured that it would not result in a negative economic impact on Miami-Dade County, its residents and the taxpayers. She expressed concern regarding anything that would stymie economic growth and said that a high cost project did not guarantee a better product. Commissioner Bell noted the County had an obligation to pay its workers a prevailing wage, but to increase it to this new level of responsible wage was cost-prohibitive. Chairman Martinez spoke in support of the foregoing proposed ordinance. He noted he strongly believed in tax incentives to companies to allow them to increase their hiring efforts; however, in spite of these tax breaks companies were still not hiring. Chairman Martinez said he was hopeful that Commissioner Heyman would not delay this ordinance pending a study. He noted his initial lack of support; however, he pointed out that while this proposal would reduce company profits, it would place more money in County residents’ pockets. It would not be more costly to residents as the County established the price of the project, noted Chairman Martinez. Commissioner Edmonson spoke in support of the foregoing proposed ordinance. She said she believed it was time for the County to support reasonable, decent and fair wages for all of its residents. Commissioner Edmonson noted she did not believe this proposal would discourage anyone from doing business with the County. She requested to be shown as a co-sponsor and indicated that she would second the motion. Commissioner Diaz indicated that he was persuaded by his colleagues’ arguments and that he would support this ordinance. He noted competition should be fair, and while he would have preferred that the study be available, it would be time consuming to wait for it and the County needed to proceed. Commissioner Heyman noted this proposed ordinance was limited to construction jobs on County-owned land. She expressed her disappointment that the Commission had requested a study which was never conducted, noting a contract was not necessary because the County had a line item in the budget every year for FIU as a research partner. Commissioner Bell noted she believed this proposed ordinance would have a chilling effect on projects. She said that she was speaking in favor of bringing jobs to the County and in favor of the economy. Prior to the vote on the foregoing ordinance, First Assistant County Attorney Abigail Price-Williams advised that Commissioner Sosa had to leave due to an emergency telephone call.

Board of County Commissioners	6/19/2012	14A4	PH and 2nd Reading Rescheduled to 7/3/2012. Rule for 4 and 6 wks Municipal Notice Suspended		7/3/2012		P
REPORT:	The foregoing proposed ordinance was adopted on first reading and set for public hearing and second reading before the Board of County Commissioners on Tuesday, July 3, 2012 at 9:30 a.m.

County Attorney	6/18/2012		Referred	Infrastructure and Land Use Committee	7/11/2012

County Attorney	6/15/2012		Assigned	Hugo Benitez

County Attorney	6/15/2012		Referred	Infrastructure and Land Use Committee

Office of the Chairperson	6/15/2012		Additions		6/19/2012

Legislative Text

TITLE
ORDINANCE PROVIDING FOR RESPONSIBLE WAGES IN COUNTY CONSTRUCTION CONTRACTS; MODIFYING THE EXEMPTION FOR CERTAIN PRIVATELY FUNDED CONSTRUCTION PROJECTS; PROVIDING THAT CERTAIN PRIVATELY FUNDED PROJECTS WITH AN ESTIMATED COST LESS THAN FIVE MILLION DOLLARS SHALL BE EXEMPT; DELETING THE EXEMPTION FOR PROJECTS WHOSE ESTIMATED COST EXCEEDS ONE MILLION DOLLARS; AMENDING SECTION 2-11.16 OF THE CODE; PROVIDING SEVERABILITY, INCLUSION IN THE CODE, AND AN EFFECTIVE DATE

BODY

BE IT ORDAINED BY THE BOARD OF COUNTY COMMISSIONERS OF MIAMIDADE COUNTY, FLORIDA:
Section 1. Section 2-11.16 of the Code of Miami-Dade County, Florida, is hereby amended to read as follows:1
Sec. 2-11.16. County construction contracts.

(a) In addition to the other elements of the term "responsible bidder" in law or in the discretion of the Board of Commissioners of Miami-Dade County, as applies to competitively bid County contracts in excess of one hundred thousand dollars ($100,000.00) for the construction, alteration, and/or repair, including painting or decorating, of public buildings or public works, shall mean a bidder who provides documented
proof in its bid that the various classes of laborers and mechanics will be paid no less than the specified overall hourly rates as set forth in the contract specifications. All leases and contracts entered into after the effective date of this ordinance which provide for privately funded construction, alteration or repair of buildings or improvements located on County-owned land [[whose estimated cost is greater than or equal to one million dollars ($1,000,000.00)]] shall require laborers and mechanics performing such work be paid no less than the overall hourly rates required on competitively bid County construction contracts under this Section >>unless specifically exempted below<<. Fees for monitoring compliance with this Section shall be charged as provided in the most current County-wide Budget as follows: for County construction contracts, the Department of Business Development shall charge the using department therefor; for leases and contracts which provide for privately funded construction, alteration or repair of buildings or improvements on County owned land, the party contracting with the County shall be charged therefor.

* * *

(i) Exemption for certain privately funded construction. This Section shall not apply to leases and contracts entered into after the effective date of this ordinance which provide for privately funded construction, alteration or repair of buildings or improvements located on County-owned land whose estimated cost is [[greater]] >>equal to or less<< than [[or equal to one]] >>five<>5<<,000,000.00) which are financed:

(1) Solely through private sources, without one dollar ($1.00) or more of financing provided through any federal, state, county or local governmental entity or bond sources including Industrial Development Authority (IDA) bonds or similar type of bond funding; or

(2) by entities which meet all of three (3) of the following conditions: exemption from Federal Income Taxes under section 501(c)(3), not-for-profit and community-based.

(j) The foregoing notwithstanding, any lease or contract entered into after the effective date of this ordinance which provides for privately funded construction, alteration or repair of buildings or improvements located on County-owned land whose estimated cost is [[greater]] >>equal to or less<< than [[or equal to one]] >>five<>5<<,000,000.00), receives IDA bond financing and also receives State and/or local development incentives (including but not limited to: waiver of or reduced impact or permit fees and reduced property or other taxes) based on job creation shall not require payment of the overall hourly rates provided by this Section. Such lease or contract shall provide that in the event the job creation requirements on which the foregoing development incentives were conditioned are not fulfilled, the lessee shall be required to pay a penalty of up to twenty (20) percent of the cost of such construction, alteration or repair. Said penalty shall be in addition to any rental or other payments required in each lease or contract to which this subsection applies. Said penalty shall be paid to Miami-Dade County for deposit in the Department of Business Development Compliance Trust Fund and used to cover the costs of monitoring compliance with this Section.

Section 2. If any section, subsection, sentence, clause or provision of this ordinance is held invalid, the remainder of this ordinance shall not be affected by such invalidity.
Section 3. It is the intention of the Board of County Commissioners, and it is hereby ordained that the provisions of this ordinance, including any sunset provision, shall become and be made a part of the Code of Miami-Dade County, Florida. The sections of this ordinance may be renumbered or relettered to accomplish such intention, and the word "ordinance" may be changed to "section," "article," or other appropriate word.
Section 4. The substantive provisions of this ordinance shall not apply to any lease or contract resulting from a competitive process advertised prior to the effective date of this ordinance. In the event the lease or contract is not the subject of a competitive process, and application of this ordinance affects in a material way matters negotiated prior to the effective date of this ordinance, the Mayor may request, in writing, the waiver of its requirements.

Section 5. This ordinance shall become effective ten (10) days after the date of enactment unless vetoed by the Mayor, and if vetoed, shall become effective only upon an override by this Board.

1 Words stricken through and/or [[double bracketed]] shall be deleted. Words underscored and/or >>double arrowed<< constitute the amendment proposed. Remaining provisions are now in effect and remain unchanged.