Only in New York: 1
Wicks law drives up
costs of school construction
By JAY GALLAGHER
(Original publication: June 13, 2004)
Things got off to a bad start when not long after the project started unionized construction workers, angry that a contractor had hired nonunion laborers to do excavating work, erected a huge inflatable rat in front of the school. There were fights big (getting union and nonunion workers to work together) and small (determining who is responsible for filling in the soil around a fuel tank).
"There is absolutely no question in my mind that this law is clearly more expensive and causes serious delays," said Saul Yanofsky, who was district superintendent when the project started. "There is no justification for keeping it."
State, school and municipal officials have been saying for years that the 92-year-old statute, known as the Wicks law, adds hundreds of millions of dollars to the expense of building public structures in New York.
It is one of several laws unique to New York that business and government leaders say drive up taxes in the Empire State, whose residents are the most heavily taxed in the nation. Other statutes that deserve the "only in New York" tag help to increase the cost of liability insurance for contractors, disability payments, salaries for police and firefighters and liability claims against local governments.
"Part of the problem with Wicks is there is no leader on the job," said Jeffrey Zogg, managing director of the General Building Contractors of New York State. "Single financial responsibility gives the owner the best project someone who is willing to guarantee a price."
Every year for the last two decades, abolishing the Wicks law is near the top of the wish lists for school and local government officials when they come to the Capitol to lobby. And although its reach has been whittled down some, the law has remained in effect for most local governments and school districts outside New York City.
Little has changed because subcontractors and labor unions, which have considerable clout at the Capitol because they make big campaign donations and provide workers for political campaigns, have successfully argued that their interests would be harmed if Wicks is abolished. That's because, they claim, general contractors would use their broader powers to squeeze costs.
The most significant reduction in scope in the law occurred in 1989, when lawmakers set up a public authority to oversee school construction in New York City. Unions had to agree to that deal to guarantee a flow of state money to help pay for the new buildings, which provided thousands of new jobs.
School projects in Buffalo and Niagara Falls have also gotten Wicks exemptions, with unions accepting the same tradeoff.
But Wicks remains in effect in most of the rest of the state, even as pressure is mounting from school districts, which have dramatically increased building projects in the past few years. Gov. George Pataki this year proposed abolishing the law, as he has in the past, and Senate Majority Leader Joseph Bruno supports abolition as well.
On the other hand, Assembly Speaker Sheldon Silver, D-Manhattan the third member of Albany's ruling troika has in the past opposed change. A spokesman wouldn't say whether he'll block it again, but mentioned that he's looking at it as one of several budget issues.
Giving the reform plans a boost are the state's current fiscal woes. Although experts admit it's hard to put a number on how much money would be saved, a study done more than a decade ago by the state Budget Division estimated the savings at $400 million.
There's also the issue of letting local schools and governments make up their own minds on the best way to run their construction jobs, one influential Democrat said.
"There's no doubt we ought to allow school districts and others to do construction in ways they believe to be most efficient and cost-effective," said Assembly Education Committee Chairman Steven Sanders, D-Manhattan, sponsor of a bill to eliminate the law.
But politics and the Legislature's traditional inertia on controversial issues weigh against action this year, he added.
"The trouble is you've got different unions on different sides of this issue," Sanders said. "If you resolve it, you are going to cause a lot of people to be unhappy. Usually when that happens the Legislature tends to gravitate towards the status quo. By maintaining the status quo, you probably make the least amount of people angrier than they are now."
Nobody in charge
Cause of the anger is a law originally passed in 1912 designed to curb the power of general contractors and corruption on public jobs.
There was a flurry of action by other states to adopt similar statutes in the early part of the last century, but they were generally repealed as problems with coordinating jobs became apparent.
Now most construction projects around the country private and public are awarded to a single bidder, typically a general contractor. That firm then hires subcontractors such as electrical, plumbing and other specialty firms to do much of the work.
But under New York's Wicks law, four separate contracts are awarded for general contracting, plumbing, electrical work and heating/ventilation/air conditioning.
The problem with this arrangement, its critics claim, is that nobody is in charge.
"Often I've wanted to get a striped shirt and whistle to use on the job site," said Russell Davidson, the architect of the White Plains High School addition whose job included helping to coordinate the project. He described himself as a referee among the four contractors.
"I've had to stand in the middle of a concrete slab on a job site for an hour and a half while four contractors argue over who has to clean up the garbage," he said. "They'll say 'Those aren't my wires, pipes, drywall, etc. They belong to somebody else.' It's unproductive work and it causes delays."
Delays started early on the White Plains High School project, which added a new science wing, media center and cafeterias to the 40-year-old building.
Summer is a crucial time for school renovations, not only because the weather is favorable, but because the building is empty.
But shortly after the work started in the summer of 2000, it was halted by a labor dispute.
The general contractor, Trataros Construction Co. of Brooklyn, had both union and nonunion workers. The other three contractors were all-union shops.
When Trataros hired nonunion laborers for excavation work, the union workers put up the rat and a picket line. Work ground to a halt for about three months the prime of the construction season.
"Trataros didn't want to use union labor, and the other three wouldn't cross picket lines,'' Davidson said.
"We go to the general contactor and say he's not maintaining labor peace," as required by his contract, Davidson continued. "'But mine are all peaceful,' he responds. 'It's the others who aren't working. They're demonstrating.' ... Divide up the contracting, it becomes impossible to hold anyone accountable for labor peace."
Eventually Trataros hired union excavators and the job continued. Trataros officials couldn't be reached for comment. Their telephone in Brooklyn had been disconnected.
There also was a dispute over who had to fill in the hole dug for a fuel tank.
Davidson explained that fuel tanks used for most projects now are made out of two layers of Fiberglas and are so light they have to be strapped down to concrete slabs. When buried, special fill has to be used around them because they're delicate. The preferred material is a small washed stone known as pea gravel.
It was the general contractor's job to dig the hole for the tank, and the HVAC contractor's job to install the tank. But responsibility for the pea gravel was a "transitional area," Davidson said.
The argument went on for a month before Trataros agreed to do it.
"If there was a single prime contractor, there would be no dispute," Davidson said. "He would just order someone to do it."
But with a Wicks job, he said the four contractors tend to look to shed work since that increases their profit.
And sometimes it is just cumbersome.
Michael Lynch, director of buildings for the White Plains schools, pointed to a light switch in one of the school's new corridors while leading a reporter on a tour. But instead of just a switch flush against the wall, the entire electrical box for the switch was exposed, as was a small metal conduit that carried the wire up to the ceiling, giving the hall an industrial, or unfinished, feel.
"At first, we thought we didn't want any light switches in the corridors. We'd just leave them on all the time for security," he said. "But then we changed our minds. We told the architect. He made drawings. But by the time we negotiated a price and signed a contract with the electrical guy, the general (contractor) had already put up the wall. So here are the switches on the outside. There were a billion things like that."
Another example, according to Davidson: When the general contractor pulled heating units out of a terrazzo-tile floor, the floor needed to be patched. But the general contractor said that was the heating contractor's job. The heating contractor disagreed and it still hasn't been done, Davidson said.
The project was declared substantially completed last June. But in the end, the project ended up where many Wicks projects do in court.
The school district is trying to get $2 million from Travelers Insurance Co., which took over the liabilities of Trataros when the district decided Trataros wasn't performing adequately. The other contractors, meanwhile, are trying to collect a total of about $6 million from the school district because of delays in the project.
Charles Goldberger, the district's lawyer, said the case will probably decided some time early next year.
'They don't have the leverage'
Things were at least as bad in the nearby Bronxville school district, where a construction project that was supposed to be finished almost two years ago is still in progress. The latest tentative completion date is August almost three years late. And the cost, originally pegged at $22.3 million when voters approved it in 1999, is now slated to be almost $31 million.
"Our graduating class this year went four years without a gym or a cafeteria," said Superintendent Warren Gemmill. "That's just unconscionable."
He blames the Wicks law for much of the delay and extra cost, echoing White Plains officials about the problems of trying to coordinate the work of the four prime contractors.
Like White Plains, Bronxville had a problem with a general contractor who used nonunion workers and the other contractors who did not.
Gemmill said the district hired a competent firm, the Turner Construction Co., to manage the project. But the problem is that because of the Wicks law, Turner didn't have enough authority to properly manage it.
"Rather than having that single point of accountability, they're really more in the position of advising us and convincing and cajoling contractors," Gemmill said. "They don't have the leverage they have when they have a private job."
But subcontractors and union officials say the blame is misplaced, and that jobs done under the Wicks law can and often do come in on time and on or under budget.
Michael Misenhimer, head of the state Subcontractors Association, is also a former member of the school board in a rural district in Albany County, Berne-Knox-Westerlo.
"When we built a $5 million addition under Wicks a few years ago, it came in six months early and $50,000 under budget," he said.
Most construction job problems are caused by incompetent general contractors not the Wicks law, said Martin Hopwood, vice president of Richards Conditioning of Tuckahoe, which did the heating/ventilation/air conditioning work on the White Plains project.
He said if insurance companies held those firms to higher standards before selling them policies, incompetent firms would be weeded out. No contractor can bid on a public job without liability insurance.
"Then Wicks would work better," he said. Otherwise, he likes the current arrangement.
"I like the fact I can bid a job directly, and if I have the low bid I get the job," Hopwood said. "When I work for a general contractor, I'm not sure I'll get paid. There is more incentive for the general (contractor) to cut back on what I do."
"If there was not a Wicks law, I would go out of business," said Louis Coppola, whose plumbing firm, L.J. Coppola of Thornwood, did the plumbing work at White Plains High School.
"I don't like to be shopped on every price I put in," he said. With Wicks, "I can bid what I think the job is worth and if I don't get it I move on."
More important politically than the subcontractors are the union plumbers, electricians and sheet metal workers, many of whom earn more than $60 an hour on projects like this. They also don't want the law changed.
"The main concern for union members working for subcontractors is there are places in the state where there are no union general contractors," said Denis Hughes, president of the state AFL-CIO, which opposes any change. "They purposely don't want union guys on the job. So a union contractor will never get the work without Wicks."
Full repeal unlikely
Labor and government leaders along with contractors agree that the wages paid to construction workers wouldn't change if Wicks were abolished. Virtually all public construction jobs in the state are covered by the prevailing wage law, which in practice mandates that union-scale wages be paid to workers whether they're organized or not. But it may affect the craft union members who work for the electrical, plumbing and heating contractors who now get Wicks contracts.
Despite the opposition, some lawmakers think that the law could be modified, but probably not repealed, this year.
"We keep talking about mandate relief," said state Sen. Nicholas Spano, R-Yonkers, the Senate sponsor of Sanders' bill to abolish Wicks. "This is one way of providing meaningful relief without having to provide real dollars. It would be popular to enact."
He said full repeal is unlikely, but added that the threshold for jobs covered by Wicks, which has stood at $50,000 for decades, could be raised to $1 million or more.
"There has been a lot of public attention drawn to Wicks by school districts who feel the costs have risen steadily as a result of this law," he said, and changing it could be a way to slow that rise.
A potential compromise would be to mandate that the general contractors when bidding on a job specify how much they intend to spend on subcontractors, to prevent them from being squeezed, suggested Assemblyman Joseph Morelle, D-Irondequoit in Monroe County.
"That would answer the major objections of the subcontractors and the organized opponents of reform on this issue," he said.
What strikes Lynch, head of buildings for the White Plains district, is how the law has survived this long largely intact.
"How can there be something so many people don't want and they just don't change it?" he asked, speaking of the Legislature. "I don't understand that."
© 2004, Gannett News Service