The Truth About Project Labor Agreements

A www.TheTruthAboutPLAs.com reader sent me a Las Vegas Sun follow-up story about the Laborers Local Union #872’s plans to gamble with nearly $80 million of union pension money to fund the construction of a new Las Vegas city hall (to be built with a union-only PLA, of course). We questioned this unwise use of union pension funds and wrote about a previous disastrous union investment of pension funds in another union-only project that went bust here.

Well now it looks like all bets are off. A Laborers pit boss official had to muzzle the local’s top political dog and put him on ice in the dog house as a result of some misinformation (“Not so fast, union says on loan for city hall,” 7/22).

Laborers chief Tommy White wants to make one thing perfectly clear: His union would like to build Las Vegas a new city hall — but not with nearly $80 million from the local’s pension fund, as one of his deputies told the Sun last week.

That deputy, Tom Morley, has been suspended for “speaking out of turn,” White said.

Morley, who makes $104,000 a year as political director and spokesman for Laborers Local 872, told the newspaper the union had voted unanimously to use its pension fund to finance up to half the cost of a proposed city hall. City officials estimate the project’s price tag at $157 million, meaning the union would have put up nearly a quarter of its pension fund.

On Tuesday, White, who serves as the local’s business manager and secretary-treasurer and chairman of the pension fund’s board of trustees, said no such vote had taken place and that Morley grossly misrepresented the extent of the union’s financial interest.

“Tom don’t understand,” White said. “He’s good at what he does as political director. But the local and the pension fund are two separate entities, and he doesn’t understand the way the whole process works.”

Morley almost had it right. The local pension board does pressure developers to produce union-only jobs, but they use a Real Estate Investment Trust (REIT) to do their dirty work – and maybe generate a little profit for investors in the process. 

Correcting the record, White said the local’s pension plan joins those of unions across the country in paying into a national real-estate investment fund known as “J for Jobs,” run by the Union Labor Life Insurance Co. The fund’s aim is threefold: spur development, create union jobs and generate returns for investors.

According to the company’s Web site, the fund provided $100 million as part of a $1 billion construction loan to build Wynn Las Vegas. White said the fund also invested in the Allure luxury condo tower.

As commercial projects stalled this winter and the city encountered trouble selling bonds, White said, he contacted investment managers to float the idea of investing in downtown redevelopment, including the proposed city hall, which the Culinary Union had tried to derail with a pair of ballot initiatives.

(According to White, Morley also misstated the amount the laborers spent fighting the initiatives. The union spent about $100,000, not $200,000, White said.)

“Since we had used a lot of that money on the Strip in the past, I was looking at how we could bring some of it downtown,” White said of the real estate investment fund. “I said, ‘You guys might want to look at this. See whether it’s feasible, provided there’s a positive return.’ ”

He said he informed Las Vegas Mayor Oscar Goodman of his idea.

As the market worsened, White said, he and other trades officials met with Goodman to discuss the idea. “I said to the mayor, ‘Remember the people we were talking about several months ago? Let’s see if they can do something with city hall,’ ” White said. “The mayor said, ‘Let’s look into it.’ That’s as far as that conversation went.”

Goodman made the idea public when he mentioned it, without prompting, during a City Council meeting July 1.

The pension plan’s board of trustees governs investments, but a decision to invest in the city hall project, if it ever comes, seems far off. The city has yet to finalize underwriting for the new city hall.

As White said, “There’s no numbers yet. And investment managers don’t look into projects that are somebody’s dream.”

To be sure, Morley, the suspended union official, was right on one count: The laborers union needs work. According to White, nearly 20 percent of the local’s 5,200 members are unemployed, on the “out of work” list.

“The prospects for jobs aren’t good right now,” White said. “Anything we can do to build this economy — building, renovating, demolishing — would be worth it for us … But we are not allowed to do anything like Tom suggested.”