The Portland Development Commission (PDC) Board on Jan. 10 passed a policy that sets parameters for when prevailing wage laws will apply on private construction projects that it helps finance. PDC is the quasi-independent urban renewal development arm of the City of Portland.

“Ending the uncertainty around prevailing wage and establishing a floor on wages and benefits are in the long term best interests of the community,” said PDC Board Chair Mark Rosenbaum.

To help end that uncertainty, all private construction projects receiving $1 million or more in PDC resources will be subject to the new wage policy, which will require wages, fringe benefits, overtime pay and apprentice pay to mirror that of state prevailing wage rates for commercial construction, or federal Davis-Bacon Housing of Urban Development rates for residential construction. PDC defines “resources” as donated land, grants and below-market-rate loans. New Markets Tax Credits and other federal and state tax credits will not be counted as a PDC resource.

Additionally, low-income residential housing projects will be exempt, or at least be consistent with the recent agreement between the Oregon State Building and Construction Trades Council and the affordable housing community.

Prevailing wage laws are designed to level the playing field for construction companies on public projects by setting wage standards for workers on a craft-by-craft basis. Annual wage surveys are conducted by the Oregon Employment Division, and the law is enforced by the Oregon Bureau of Labor and Industries.

“We made some significant compromises,” said Bob Shiprack, executive secretary-treasurer of the Oregon State Building and Construction Trades Council. “But something had to be done. Doing nothing was not an option.”

Shiprack said the new wage policy will make a big difference on larger projects downtown. “It will apply to roughly 80 to 85 percent of the construction dollars spent by PDC,” he said.

From July 1, 2004 to July 1, 2006, PDC has invested nearly $200 million in private and public construction development projects.

The new wage policy will not apply retroactively to projects already under construction unless developers sign a memorandum of understanding. All projects now in the pipeline or under consideration will have to abide by the new construction wage policy. Projects subject to the wage policy also will have to negotiate specific hiring goals for minorities and women. Those goals will be determined on a project-by-project basis.

At the Jan. 10 meeting, Commissioner Charles Wilhoite questioned why the construction wage policy didn’t contain language for some type of economic sanction against developers that don’t meet the established hiring goals. Wilhoite will ask the Board to amend the policy to include such language at the next PDC meeting scheduled for Jan. 24.

Also at that Jan. 24 meeting PDC staff will present a Minority Contracting Initiative to the Board for consideration. This initiative will address issues including prompt payment, insurance and bonding barriers, expanded use of the city’s Sheltered Market Program, and other ways to increase the use of minority and women-owned businesses on PDC projects.

John Jackley, manager of the PDC’s operations division, told the NW Labor Press that when the Board amends the wage policy regarding economic sanctions, it also will clarify other terms in the policy. For instance, one condition of the construction wage policy states that “the Oregon Building and Construction Trades Council will submit an annual affirmative action report from each member union. On projects where the wage policy applies, the report will include usage rates and goals for apprentice and journey workers. Participating unions shall allow direct entry into the apprenticeship pool from qualified pre-apprenticeship programs when no women or minority apprentices are otherwise available.” The policy makes no reference to open-shop contractors.

“The clear intent was to include open-shop contractors as well,” Jackley said. “It will be those types of technical changes” that the Board will make on Jan. 24.

Other terms of the construction wage policy include:

• PDC will appoint a Wage Rate Oversight Group that includes PDC, union and nonunion representatives, women in trades, the minority community, the construction industry and other stakeholders to review the affirmative action report and make recommendations.

• Environmental remediation and demolition shall be done consistent with current BOLI rules.

• Contractors that are on the BOLI list of ineligibles cannot participate in construction projects subject to the wage policy.

• Projects constructed privately that include public and private ownership may be separated for the purposes of this policy.

• When the total floor area of publicly-owned space is less than 50 percent of the total floor area of the combined public/private space, the policy will not apply to the construction of the privately-owned space unless that portion of the project receives $1 million or more in PDC resources.

• Any project that is constructed which will be owned by the public is subject to the policy.

Jackley told the NW Labor Press that PDC will act as the monitor and enforcer of the new construction wage policy.

Labor Commissioner Dan Gardner said his agency will continue enforcing state prevailing wage laws. “Regardless of their new policy, if we receive a complaint about a PDC project, we will apply the state law as it is currently written,” he said.

The threshold for applying state prevailing wage rates on a public project in Oregon is $50,000.

John Mohlis, executive secretary-treasurer of the Columbia-Pacific Building Trades Council, said the PDC’s new construction wage policy “is a good starting point. It’s not perfect, but there is a process for fine tuning it.”