The Truth About Project Labor Agreements

Last week four union construction workers were seriously injured in an accident at the $40 million Potrero Launch apartment project in San Francisco’s Dogpatch neighborhood (“Four hospitalized after SF construction accident,” 8/31/11):

The roof support structure gave way and collapsed onto three workers below, who were in a stairwell on the sixth floor, he said. The impact caused them to fall three stories.

The project received $584,917 in federal stimulus funds as part of $800 million in federal support for affordable housing projects in California.

The AFL-CIO Housing Investment Trust (HIT) also invested $2.6 million in the project. Despite the fact that the project received federal tax dollars and should be open to all qualified taxpayers in the construction industry, one of the stipulations of projects receiving HIT financing is for the construction tradespeople to be all union. 

Nibbi Brothers, the general contractor for the apartment construction segment of the $80.6 million mixed-use development, employed the injured workers through union hiring halls. 

Developments subject to project labor agreements (PLAs) and union-only requirements such as this project are not uncommon when the AFL-CIO HIT and other union pension plans finance construction. 

Unfortunately, this is not the first safety or construction quality incident to plague a union-only project funded by union pension funds. 

In April 2010, a 25-story apartment complex in Seattle owned by a Seattle-based venture formed by pension funds and the local carpenters union evicted hundreds of residents and business owners because of major structural flaws found in the building.

The $32 million project was built all-union in 2001, according to the Seattle Times (“9-year-old Belltown high-rise too flawed to fix,” 4/11/10) :

Carpenter’s Tower — owned by Carpenters Union, Local 131 and the Multi-Employer Property Trust — said the problems can be traced to construction. In its news release, the company said load-bearing cable ends have corroded because they weren’t painted properly, and that builders also used the wrong type of grout, which allowed water to seep in. 

Carpenter’s Tower sued the contractor, Bellevue’s McCarthy Building Companies, and the Seattle-based Hewitt Architects, in 2007, alleging negligence and failure to adhere to industry standards. McCarthy, a subsidiary of a Missouri company, in turn sued dozens of subcontractors. The court file contains thousands of pages of documents, and is scheduled for trial in September in King County Superior Court. 

The building was demolished in May 2011 because it was cheaper to raze than to repair the extensive construction defects. 

In 2001, the National Federation of Plumbers, Pipefitters and Journeymen’s pension fund sunk $800 million – an amount that was nearly 20 percent of the pension fund’s total assets at the time – into the construction of the Westin Diplomat Hotel and Resort in Hollywood, Fla. The hotel opened in February 2001, almost 18 months late and at a cost almost $400 million above projections after two years of construction.  Pension plan trustees were sued by the U.S. Department of Labor under auspices of the Employee Retirement Income Security Act (ERISA), a conflict of interest statute designed to prevent the trustees of a multiemployer national pension fund from engaging in self-serving actions and to ensure fund investments are prudent. 

While many union-only construction projects benefitting from union pension fund financing have been completed without incident, and we applaud efforts to spur development and create more jobs for the industry, these examples do fly in the face of misleading statements by PLA and union-only construction proponents insinuating that union-only construction is the only way to deliver safe, on-time and on-budget projects.