Developers don't want subsidies linked to wages
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Telling stores and hotels what to pay their workers would be tantamount to telling them not to come to Pittsburgh, developers say in response to a push in City Council this week to tie construction subsidies to new business wages.
That was the concerted -- if not orchestrated -- response to calls Monday by labor unions and community activists, plus some council members, for new rules attached to city development aid. Some advocates want businesses lured to large, taxpayer-backed projects to have to pay "prevailing wages" or "living wages," and possibly agree to environmental standards and community benefits.
New rules "would potentially make it more challenging for us to land that tenant that would make our development successful, by putting strings on peoples' business operations," said Lucas Piatt, executive vice president of Millcraft Industries, which is bringing stores and restaurants to Market Square. "It may cause tenants to go to the suburbs."
Labor union leaders and council allies, though, said they believe legislation can promote fair pay at city-backed hotels, office complexes and stores, without stifling growth.
"If people getting big-scale money from the public don't want to commit to providing good-paying jobs, then don't take the money," said Gabe Morgan, director of Service Employees International Union Local 32 BJ. "It is absolutely government's place to say to large companies asking for large handouts, 'Here's what it's appropriate to do with our money.'"
The push for new development rules has emerged out of community groups' stalled drive for a benefits agreement related to Continental Development's North Shore projects. At a council public hearing on Monday, that push broadened into a call for citywide development aid rules.
That prompted an e-mail late Tuesday by city Urban Redevelopment Authority Executive Director Rob Stephany to developers, asking them to contact council and the media.
"While I think we all support the concept of living wages, we worry about putting the city at a competitive disadvantage as well as potential unintended detrimental impacts to city residents and neighborhoods" if wage requirements are placed on subsidy beneficiaries, he wrote.
"It'll kill development," said Mabon Lichtenfels, vice president of construction and design for the Soffer Organization, which is building the 34-acre SouthSide Works. "I think what would occur is [potential retail tenants would] come in and ask for a reduction in rent from the landlord to make up for the higher wage. We'd have to say we can't do that. And that would kill development."
National companies "are super-proprietary about anything that has anything to do with their hiring," said Mark Minnerly, director of real estate development at The Mosites Co., which is trying to bring a Target store to its Eastside complex on the border of East Liberty and Shadyside. The URA board has agreed to $2 million in tax-increment financing to improve the road system for Target.
While a tax credit or other incentive to pay good wages would help attract companies, any personnel-related demand "can be a deal killer," he said.
"How do I control what my tenants pay employees?" asked Mr. Piatt. "Do I have to kick them out if they don't play by the rules?"
Council President Doug Shields said council would only make rules for development that gets city taxpayer help, and wouldn't touch construction done entirely with private funds.
"If you want me as an equity partner in your business deal, then I, like any other equity partner, am going to have certain requirements," he said.
He said that developers like Continental often get three subsidies: land prepared by the city and sold at a bargain price; government grants or loans; and then the help the state and federal government must provide to low-wage employees like janitors. Workers in their developments, he said, should be paid enough so they don't have to live in public housing and rely on state health insurance.
Mr. Morgan said wages at subsidized developments shouldn't undercut those of workers at established businesses. Just as construction workers at government-backed projects get prevailing wages, workers at new, taxpayer-aided hotels and janitors at publicly backed office buildings should get salaries like those paid by competing businesses.
Prevailing wages usually are determined by the average of wages paid at all similar businesses, such as hotels, restaurants or construction sites.
Developers countered that they may be creating some entry-level jobs, but many of the positions they bring to the city pay much better. SouthSide Works, for instance, brought in the American Eagle Outfitters headquarters.
Councilman William Peduto said wages are just a part of an emerging raft of legislation that also would tie development subsidies to the environmental and community impact of a project. That reflects a deepening alliance between labor unions, community groups, environmentalists and some clergy, he said.
"It's a gathering of the tribes, and it's a politically powerful force to reckon with," he said.
A similar coalition narrowly failed to win city and Allegheny County living wage legislation in 2001. It would have set a minimum wage of $10.62 an hour, or $9.12 with benefits, for employees of those governments, their vendors, and businesses that get economic assistance. Business groups opposed it.
Mr. Peduto and Mr. Shields said they might introduce legislation in September.
First Published July 30, 2009 12:00 am
