July 31 2013 12:00 AM

Building trades group challenges Lansing’s prevailing wage ordinance and wins in Circuit Court; city preparing for appeal

The 2nd floor rotunda at the Hall of Justice. Courtesy photo

Wednesday, July 31 — The city of Lansing’s prevailing wage ordinance, which requires area-standard wages be paid on city-funded construction projects, has been on hold since November after a building trades group challenged its constitutionality under state law and won.

A month later, Mayor Virg Bernero ordered the city to appeal Circuit Judge Clinton Canady III’s ruling to the state Court of Appeals, where the case now sits. Oral arguments are likely to be made before the appellate court within the next six months, said Kraig Schutter, an attorney representing the Associated Builders and Contractors Greater Michigan Chapter, the group challenging the ordinance.

The victory in Circuit Court significantly limits what authority the administration or the City Council has in mandating such labor agreements on publicly funded projects.

The Builders and Contractors contend that, under the Home Rule Cities Act, “cities do not have the authorization to regulate the wages and benefits of third parties,” Schutter said in an email this week.

The trade association is an advocate for non-union workers’ rights and free market competition. Its over 300 member companies include contractors, subcontractors and suppliers.

“Apparently, the State does not want cities creating a hodgepodge of wage and benefit schemes around the state and would prefer to utilize the Michigan Minimum Wage law as a uniform basis for regulating wages of employers in Michigan,” he said.

The city’s ordinance, adopted in 1992, follows the same spirit as state and federal laws that mandate prevailing wage standards when state or federal dollars, respectively, are used on construction projections. Republican legislators in Michigan have been active this year in trying to repeal the state’s prevailing wage law. The Builders and Contractors are leading the opposition.

Schutter said there are about 20 similar ordinances throughout the state. Lansing’s is the third to be challenged by the Builders and Contractors after Detroit’s similar living wage ordinance and Bay City’s prevailing wage ordinance. Schutter added that Detroit’s was invalidated in an earlier court decision and Bay City repealed its ordinance soon after the group filed suit.

“ABC next set its sights on Lansing knowing that the losing side would likely take the matter up to the Court of Appeals thereby setting an even clearer precedent for other cities to follow,” Schutter said.

Todd Tennis, a lobbyist for the International Brotherhood of Electrical Workers in Lansing, said the Builders and Contractors are using a 90-year-old law as precedent “to try and do an end run around the Democratic process. Unfortunately, they’ve been at least somewhat successful” with Canady’s ruling. “It’s sad an archaic law is being used.”

Tennis said prevailing wage was started to protect local contractors from contractors “who would recruit low-paid labor from other states who undercut bids of local contractors.”

“It’s also seen as a public benefit,” Tennis added. “If you’re using public tax dollars to build a building, hopefully you’ll be creating good jobs, more than poverty wages that non-local folks aren’t paying.”

Prevailing wage also ensures that contractors are awarded jobs based on how efficient and well done the work is — not who can pay the lowest wage, Tennis said. “When you go down that road, if you’re wondering where all these middle class jobs went, it’s because we’ve gotten rid of support for good wages.”

In 2010, the Builders and Contractors were an outspoken critic of four Lansing City Council members who voted to block tax incentives for developer Pat Gillespie because his Market Place and Marshall Street Armory projects didn’t have a project labor agreement attached to them.

If a PLA had ultimately been attached to Gillespie’s armory project, “These local (non-union) workers would be blackballed based on union status,” Associated Builders and Contractors of Michigan President and CEO Chris Fisher said at the time. “This goes beyond the armory, frankly. This could affect all future development if PLAs are in force and discriminate against non-union workers.”