Dive Brief:
- In an Oct. 28 memo to the mayor, the director of the DC Department of Employment Services said the developer of a luxury hotel has not met the local hiring requirements necessary for the company to receive an agreed-upon tax break of $46 million, according to the Washington City Paper.
- Director Deborah Carroll said the Sydell Group, developer of The Line hotel located in the Adams Morgan neighborhood, was 129,000 DC resident work hours and 189 local employees short of meeting the goals outlined in the tax abatement legislation. The bill states that 51% of work hours be performed by a minimum of 342 local hires.
- According to the City Paper, a forfeiture of the tax break would call into question The Line's ability to turn a profit in the short-term. City officials said the chances of Sydell being able to turn things around between now and the hotel's completion in January are slim.
Dive Insight:
Local hiring requirements are common on projects partially or fully funded with public money, but some developers have said the mandates are often unrealistic amid the ongoing industry labor shortage.
In a high-profile example, contractors on the $627.5 million new Detroit Red Wings arena ran afoul of project hiring requirements when they failed to meet the 51% local-hire mandate set forth by the city. The city established the hiring regulations after it invested a significant amount of money ($35 million) into the cost of construction. However, last month, the city announced that, despite holding job fairs and training program for Detroit residents, contractors failed to reach hiring goals and fined them a total of $500,000.
Brian Turmail, of the Associated General Contractors of America, told Construction Dive last month that the organization is opposed to hiring requirements and that cities could be paying for decisions made decades ago. A cut in financial support for career and technical education programs, he said, might be one of the reasons qualified locals are hard to find. However, political pressures often trump the reality of an area's workforce capabilities.
Not to be dissuaded by cases like Detroit's, San Francisco has a 50% across-the-board local hiring requirement currently being phased in, with a mandate that half of all workers on city-funded projects be residents of San Francisco or San Francisco County by 2017.