PDC to Examine Wages

The Portland Development Commission, which has been criticized by some City Council members recently for failing to pay prevailing wages on many of its projects, will examine whether it should adopt a prevailing wage policy. A decision is expected in November.
PDC commissioners decided Wednesday to study the prevailing wage issue, which was the focus of a recent Multnomah County Circuit Court ruling and is before the Oregon State Court of Appeals.
Proposed by the PDC staff, the study will examine the differences in wage standards established by the federal government and the average market wages locally for specific construction trades.
It also will explore how minority- and women-owned construction companies would be affected if they are required to include prevailing wage rates in their bids for PDC projects.
"Minority contracting issues are very high on our list of priorities," said Rochelle Lessner, policy and public affairs director for the PDC. "What we want to hear is how it (establishing a prevailing wages rate policy) would affect minority contractors. The issue has been raised as a concern."
State law requires hourly prevailing wage rates be paid by contractors and subcontractors on public works projects valued at more than $25,000, including roads, highways, public buildings and renovation of public facilities. The prevailing wage law currently applies to about 40 percent of PDC projects, according to the PDC staff. Such projects include streets, light rail, parks, the aerial tram for the Oregon Health & Science University's Macadam project and the Eastbank Esplanade, as well as demolition and site preparation. Last year, the prevailing wage law represented about $70 million in PDC projects.
In other projects, such as affordable housing developments of five stories or less, loans and grants for home improvements and private businesses and Enterprise Zone projects, the prevailing wage law doesn't apply, according to the PDC. These projects amount to 30 to 40 percent of the PDC budget.
But what is up for discussion is the remaining 20 to 30 percent of the budget that pays for large-scale industrial, commercial or residential projects or mixed-use projects. According to the PDC proposal for the study, prevailing wages may not be required, but determining how these projects benefit the public and what the impact of paying prevailing wages may be would be the study's focus.
Several work sessions will be scheduled to collect testimony from minority contractors, affordable housing advocates, commercial developers, representatives from the state Bureau of Labor and Industries and elected officials.
The prevailing wage issue was the focus of a decision by a Multnomah County Circuit Court judge in May who determined that the PDC did not have to pay prevailing wages because the private contractor, who had the construction contract, controlled the construction, not the PDC. However, the decision is being appealed in the state Court of Appeals by state Labor Commissioner Dan Gardner.
In the case, the Bureau of Labor and Industries contends that the law covers any binding agreement a public agency enters into that requires construction, uses public funds and is done in the public interest.
The crux of the issue is whether an agency that lends money for construction should require the contractor doing the work to pay prevailing wages, said Annette Talbott, deputy labor commissioner.
"Ideally any public entity could say, 'Here is what we want' and provide the funding. As long as it didn't have the contract, it would not have to pay prevailing wages."
But, she added, the work is being done because the agency requested it: "The agency is telling the contractor what to build, how many stories, what it's to be built of, the color, etc." In that case, she said, the prevailing wage law should apply.
The PDC argues that the law applies only if a public agency contracts directly with a construction contractor or if the public agency actually owns the project.
"For projects that are public works — roads, public transportation, sidewalks — these are publicly owned, and we have never disputed that the prevailing wage law applies," Lessner said. "The disputes have arisen over projects that are privately owned and are financed by the PDC."
If a state weatherization loan is given to a contractor to improve a privately owned building, for instance, would the prevailing wage law apply to that project? It's a question that's up for debate, Lessner said.
The state Bureau of Labor and Industries began examining the PDC's practice after receiving a complaint about the so-called "Tin Roof" project. The project called for construction of the Henry V Events building at 6360 N.E. Northeast Martin Luther King Jr. Boulevard and street improvements; about 40 percent of the $3.4 million project came from the PDC. Henry V is an advertising, marketing and trade show company employing about 30 people.
After examining the wages paid to construction workers on the project, the labor bureau determined that, in addition to the $225,862 in wages due to workers, another $120,418 was due for fringe benefits of health insurance and retirement pensions.
The state's prevailing wage rates are established by an annual, independent survey conducted by the Oregon Employment Department. The survey asks more than 5,000 union and nonunion contractors in 14 different regions statewide what they are paying their workers.
The prevailing wage law was established in 1959; when asked to repeal the law in 1994, voters refused.
Before many public agencies begin projects, they ask the labor bureau to "predetermine" what the prevailing wages would be. The labor bureau said the PDC did not ask for a "predetermination" on the Tin Roof project and hasn't requested predeterminations for several years, "despite the Bureau of Labor and Industries' encouragement to do so," according to a memo written to Portland Mayor Tom Potter and the City Council by Labor Commissioner Gardner.