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After $500K election boost, carpenters union presses Hochul on bill on contractor disclosures

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Hochul announcement (copy)

Gov. Kathy Hochul announces a series of economic development grants to several East Buffalo businesses during an event at the Lt. Col. Matt Urban Human Services Center on WNY on Nov. 14, 2022.

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After spending more than $500,000 helping Gov. Kathy Hochul win a narrow election, a union representing New York carpenters is lobbying her to sign a bill that’s sparked significant opposition, including within her own administration.

If signed into law, the bill would make information about legal violations committed by state construction contractors more publicly accessible.

But according to opponents' interpretation of the language, it would also reshape and undermine the normal process by which state contracts are bid and potentially make it more difficult for some companies to compete for state business.

After heavy lobbying by opponents, who have pressed those points to Hochul's administration, officials from major state agencies and public authorities, including the Office of General Services and Metropolitan Transportation Authority, have shared opposition or concerns about the proposal with the governor's office. Organizations representing union and nonunion contractors, local governments and business groups have also urged a Hochul veto of the bill by a Dec. 31 deadline. But according to opponents, Hochul's office has not signaled whether she will sign or veto the measure.

One construction industry opponent, Brian Sampson, attributed Hochul’s undecided posture to the heavy union election spending benefiting her.

“To a state agency, we’ve heard ‘Yes, we share your concerns,’ ” said Sampson, president of the Associated Builders and Contractors Empire State Chapter, a group consisting of contractors that frequently uses nonunion workers and is often at loggerheads with organized labor. “You empower those people because of their experience, and then to suddenly do the reverse would be highly unusual. But I think the carpenters union has probably given the governor at least half a million reasons to sign the bill.”

The situation shifted on Monday when Democratic Sen. Sean Ryan of Buffalo – the bill’s lead sponsor in that chamber – told The Buffalo News that the opponents’ main argument is premised on a misinterpretation of his bill’s language.

And Gary LaBarbera, president of the New York State Building and Construction Trades Council, also said opponents had misinterpreted the bill’s intent and impact, “perhaps intentionally.”

“To the extent this needs to be clarified, we have expressed to the necessary stakeholders we are fine making the appropriate tweaks,” said LaBarbera, who answered questions posed by The News to the state carpenters union.

Hochul could now take the option of signing the bill, but include an amendment stating that the Legislature has agreed to make changes to clarify its language.

Ryan said his bill is meant to ensure contractors doing taxpayer-funded work abide by New York labor laws, including prevailing wage requirements. It would create a database of such information easily accessible to the public, administered by the state Department of Labor. Before bidding on a state contract, bidders would have to disclose information about their histories that would then be publicly posted.

“Making a contractor who is a non-responsible bidder publicly known during the bidding process is a big change in New York State, and there are certain people who have benefited from the current system,” Ryan said. “They don't want a registration system where everyone can see that there have been violations. They want to make it a difficult process.”

The North Atlantic States Regional Council of Carpenters, which represents all union carpenters in the state outside New York City, funded two television ads urging voters to elect Hochul, spending at least $508,000 promoting her. On Nov. 8, Hochul won a narrow victory over the Republican nominee, U.S. Rep. Lee Zeldin, a victory in which organized labor has been credited with a key role. 

LaBarbera dismissed any connection between the carpenters’ support of Hochul and her continued interest in signing the labor-backed bill, as alleged by Sampson.

“There is tremendous support for this bill,” LaBarbera said. “Gov. Hochul has long been a proponent of fair contracting policies and government transparency. This legislation fits right into those categories. I would also remind Mr. Sampson that the bill passed both the Senate and Assembly with a combined 196 yay votes compared to only 11 nays.”

Hochul’s office declined to comment.

The carpenters union has recently been running an online newsletter ad urging the bill’s signing, and the lobbying firm of Jack O’Donnell, an influential Buffalo Democratic operative, has pressed Hochul’s office this fall about the matter, records show. Hochul's campaign, which raised $60 million, also received substantial donations from contracting firms that are among the bill's opponents.

Under current law, contractors and subcontractors on state projects must fill out questionnaires disclosing past legal troubles, including histories of labor law and wage violations. Those answers are then accessible by submitting Freedom of Information Law requests to the state comptroller’s office. But Ryan argues that local governments making contracting decisions should have much easier access to such information.

As an example of the problem he’s trying to solve, Ryan cited Erie County’s past awarding of a major road reconstruction contract to Alden-based Zoladz Construction.

Although the company was the low bidder, the company’s winning bid was ultimately spiked because the firm had numerous undisclosed federal labor violations. Those violations were brought to the attention of Erie County by the New York Foundation for Fair Contracting – a Hamburg-based nonprofit that receives funding from a Buffalo-area building trades union. The nonprofit also flagged that Zoladz was accused of fraudulently gaining federal work in 2017 in a case the company settled with the U.S. Department of Justice for $3 million.

With the new contractor database, local governments could much more easily flag bidders with histories of labor violations, Ryan said.

“The bill is needed in order to provide more transparency and accountability on projects receiving taxpayer subsidies,” LaBarbera said. “The construction industry is one where unscrupulous actors are able to cheat workers in a number of different ways. For those projects receiving significant taxpayer-revenue, this will allow New York to ensure that contractors receiving those public funds are able to meet very basic requirements to demonstrate they are an upstanding business.”

But opponents believe the language of the bill has broader implications.

At issue is whether is whether the language would institute a sweeping change: a requirement that general contractors, at the time of a bid’s submission to an agency, disclose every subcontractor necessary for the duration of the construction project. Opponents also believe that at the time of bid submission, the bill would all require disclosure filings from all subcontractors.

Opponents argue that particularly on complex building projects, it’s impossible for general contractors to line up all subcontractors in the tight time frame of a state agency bidding process.

In an early August letter to Hochul, the leaders of more than 40 groups opposing the bill wrote that the legislation “is divorced from the realities of the bidding process, where bids from subcontractors are often provided minutes before bid opening.”

If Hochul signed the bill, they wrote, it would effectively kill an increasingly popular construction method called “design-build” in which a state agency streamlines complex work by having the general contractor handle design, as well as building.

A number of signatories represent contractors that often use union labor, such as the Construction Exchange of Buffalo & Western New York. Signers include the leaders of the state Association of Towns and the School Boards association, and two groups representing women- and minority-owned contracting firms, the Association of Minority Enterprises of New York and the Minority & Women Contractors & Developers Association.

Michael Elmendorf, president of the Associated General Contractors of New York State, said he believes the carpenters union has pushed the bill because it would provide a tool for the union-funded nonprofit – the New York Foundation for Fair Contracting – to pressure state agencies not to select bidders using nonunion subcontractors.

Yet the opponents’ central argument – that the subcontractor disclosure requirement would stifle public works – is based on a misinterpretation, Ryan said.  

"This bill doesn't require contractors to disclose all of their subcontractors in their bids,” Ryan said. “It just stipulates that any contractors that are (already) legally required to be included in a bid have to be registered at the time of submission. Additional subcontractors not included in the bid only need to be registered before they start work on the project."

Elmendorf leads an umbrella group representing both union and nonunion contractors, which has taken a lead role in lobbying against the bill over the past year. His group's lobbying included telling Ryan about concerns over the subcontractor disclosure, Elmendorf said.

Despite those many discussions, Elmendorf said, he had never heard Ryan or anyone else offer the narrower interpretation of the bill until it was presented by proponents to The News this week.

Elmendorf said the construction industry, business community – and a number of state agencies charged with construction projects – had for months agreed that the bill’s language created the broader subcontractor disclosure requirement.

“Until now, no one we have talked to about this legislation has disputed our reading of the bill,” he said on Tuesday. “This is not a new or recently developed argument on our part. This is a new, recently developed argument on the part of the proponents.

“If somehow the bill was written poorly enough that everyone reached an erroneous conclusion, that is a problem in and of itself,” he said. “If their intention was not to do that, then we’d be happy to have that discussion with whomever.”

But even if the bill became more palatable, Elmendorf said, his group would still ultimately urge a veto, under the belief that the added contractor disclosure requirements are unnecessary.

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