March 8 2018 10:26 AM

Labor fears Red Cedar developers won’t hire locally

Throughout construction of the SkyVue complex on Michigan Avenue, organized labor picketed over the use of non-local workers to build it.

Now the proposed $242 million development on the old Red Cedar golf course across the street is facing the same prospect.

Red Cedar developers Frank Kass from Columbus and Joel Ferguson from Lansing say they are committed to hiring local. But critics from labor and the City Council say that sounds familiar.

“How many times have we heard that from a developer,” said City Councilwoman Jody Washington, who represents the ward where the project would be built. “We are told all sorts of things, but it doesn’t come off.”

Tyler McCastle of the Michigan Regional Council of Carpenters said that “local taxpaying citizens won’t be on that work” when he appeared before the Council on Feb. 26, when the developers submitted their plan.

Glenn Freeman, past president of the Lansing Labor Council, agreed. “It’s just like the SkyVue thing,” he said in an interview Monday.

SkyVue is the $90 million, nine-story mixed-used development that is mostly student housing built by Georgia-based RISE Real Estate. Labor protesters greeted the groundbreaking ceremony in 2016 and continued to picket along Michigan Avenue until the development opened last year. Labor activists shot video showing license plates on the cars from workers from the South, where unions are less powerful and wages are lower than locally.

Red Cedar’s developers say they are committed to hiring local, or at least trying to.

Indeed, the development agreement they submitted to the city, which is on file with the City Clerk’s Office for a 30-day review period, puts that in black and white.

“Developer will use its best efforts to use available and qualified local Lansing area residents and local firms within a 50 mile radius of the project, employing Michigan workers, with an emphasis on engaging women and minority-owned firms or individuals,” it says.

And Christopher Stralkowski, senior project manager with Ferguson Development, said the company has personal reasons for seeking local workers.

“Joel is from Lansing,” Stralkowski said. “I am from Lansing. My wife is from Lansing. We want Lansing people to do this work. It’s good for us too.”

But critics point out that the promise in the development agreement to seek local labor and with it a commitment to paying higher “prevailing” wages extends only to a portion of the project.

The project has two components. One is the infrastructure, which is $77.9 million. The bulk of the project will be hotels, apartment buildings, student and senior housing and retail space, at a cost of $164.1 million.

Strings are attached to the developers’ expense for the infrastructure, which will be reimbursed to a large extent through Brownfield Tax Increment Financing, a program whereby the developers will be repaid through the property taxes collected on the development. The developers have agreed to pay $67.2 million of the infrastructure cost, with the remaining $10.7 million to be publicly financed through bonds.

To get this offset for their costs, the developers would compensate workers on the infrastructure portion at “prevailing wage,” which is union wage.

But the agreement does not guarantee the use of local labor — only the developers’ “best efforts” to employ local workers.

And the infrastructure portion, big though it is, is less than half the cost of the rest of the project, where not only are no strings are attached on prevailing wage but also the developers do not even have to pay lip service to seeking local workers. That makes it understandable why McCastle and the carpenters’ union, for example, are so concerned, since they have no role in the infrastructure portion.

Stralkowski said Monday that the developers “absolutely would be focused” on finding local workers for the so-called “vertical build.”

Washington said such “implications don’t give us any assurances.” She serves on the Council’s Development and Planning Committee, which will review the proposal before the Council votes on it.

“We will try to get things in writing,” she said. “As much as we can get cemented in an agreement, I want it.”

Brian McGrain, the director of development and planning for the new Schor administration, said he believes the developers will use local labor throughout.

“It’s pretty fantastic that all of the public infrastructure is certainly going to be at prevailing wage,” he said. “Beyond that, I’m hopeful that Kass and Ferguson, knowing they’ve got a great pool of local talents, will be able to utilize as much as they can.

“Certainly,” he added, “it’s Mayor Schor’s idea they’re going to take advantage of who we have locally and work out some things that are mutually beneficial.”

A further wrinkle is that there may not be enough local labor to handle Red Cedar and other big projects, such as the new McLaren Hospital, at the same time.

Freeman said most of the skilled trade unions are operating apprentice programs to bring more trained workers for the expected construction boom.

Said McGrain, “There’s going to be opportunity for labor beyond here to work at local projects because I think everybody’s going to be busy.”

“This,” he added, “is a good problem to have.”