Dive Brief:
- San Francisco's Office of Community Investment and Infrastructure reported that small businesses make up 18% of the companies to work on construction of the Golden State Warriors' $1 billion arena, despite a hiring goal of 50%, according to NBC Bay Area. So far, 85% of the contracts have been handed out; besides the low number of contracts to small business, less than 2% have gone to minority-owned firms.
- San Francisco requires developers and contractors to make a good-faith effort to award 50% of the work on projects in the city to small local businesses.
- NBC Bay Area reported that it obtained an email — sent from Mortenson/Clark, the joint-venture general contractor for the Warriors arena, to some of the project's large contractors — that indicated cost was a factor in not hiring small businesses. Warriors officials, however, maintain that the team's and the general contractor's hiring practices have exceeded San Francisco's good-faith-effort requirements.
Dive Insight:
In Detroit, contractors that constructed the $1 billion Little Caesars hockey arena were held to a much stricter hiring standard than those firms working on the Warriors project. Detroit required that 51% of workers be city residents, and at the beginning of the project that wasn't a problem. As work progressed, however, contractors could not find enough qualified residents, so the city levied fines against companies that fell short of the 51% requirement.
As of October 2016, Detroit had issued hiring-related fines totaling $500,000 to Little Caesars arena contractors. By March 2017, the total had skyrocketed to nearly $3 million for 53 contractors. City officials said they believed the contractors had made best efforts to find local workers, but that there weren't enough residents with the requisite skills. They added the fines would go toward job training.
There has been pushback against local hiring requirements for publicly funded projects on the basis that the rules violate local anti-discrimination licensing laws, and some have called them unconstitutional. Susan Lent, a partner at Washington, D.C.-based Akin Gump Strauss Hauer & Feld law firm, told Construction Dive in November that local hiring requirements on federally funded projects are prohibited, and that agencies and departments are required to seek the best value regardless of the location of contractors or workers.
