Prevailing Winds

The NY Times has an interesting story this morning about the new wind blowing through the state on the issue of prevailing wage-particularly when it comes to tax breaks gained through IDA: "In a bid to shore up his relations with labor unions, Gov. David A. Paterson is readying legislation that would require developers to pay prevailing wages on many construction projects that receive public financing, meaning that construction workers would have to be paid significantly more than minimum wage."

So the idea that projects that get significant public support should be required to pay workers at a higher than what has been normal rate is gaining traction-we call it a prevailing wind, and its implications should be clear for the city council in its deliberations on the fate of the Kingsbridge Armory. As the Times points out: "The issues at stake in the legislation are already being played out in the Bronx, where a $310 million development project would bring a new shopping mall to the Kingsbridge Armory. A coalition of community leaders has pushed for requirements that jobs at the mall pay a wage of $11.50 an hour, or $10 with benefits, as opposed to the $7.25 minimum wage. The governor is proposing a far higher wage rate. The developer of the Bronx project, the Related Companies, has said that it would give up the project if it faced such requirements."

And, just as he is in the city debate, it is the RWDSU's Stuart Appelbaum who is front and center in the state fight as well: "Why — in the middle of the worst crisis since the Great Depression — would the governor want to kill an economic development program that has created over 200,000 new jobs?” said Kenneth Adams, the president of the Business Council of New York State. “It’s a proposal that destroys hope for economic recovery in New York.” But Stuart Appelbaum, president of the national Retail, Wholesale and Department Store Union, said, “If public resources are being used to finance development of any kind, there should be a notion that the community gets something back in return, and that notion is that we are creating good jobs.”

The handwriting on the wall is quite legible if you are Related. If you take the money, be prepared to pony up for the workers-and as Daily Politics points out, this issue is really taking hold with New York's elected officials: "The bill would require prevailing wages on construction projects that receive public financing through IDAs throughout the state. Needless to say, members of the business community - particularly those in the construction business - are not big fans of this idea. IDA reform has been the cause célèbre of several big players in the labor community: 32 BJ, RWDSU and the building trades. Of that trio, 32BJ has been lobbying the hardest, even going so far as to launch a print and radio ad campaign."

So, as far as Related and the Armory is concerned, the open question is whether or not the price of entry here is too steep. If it is, the developer just might pull the plug on the entire effort-but that point certainly hasn't been reached quite yet. The progress of negotiations will determine if Related will employ the time honored strategy of quitting in order to be able to fight another day.