AIA Bulletin

Thursday, November 11, 2010  05:40 AM 

BY BILL BUSH

The Columbus Dispatch

Construction bids at the state schools for the deaf and blind came in 22 percent below bids that were rejected this summer, and one group says it’s because workers are no longer required to be union.

The lower bids for dormitories come after design changes and a less-competitive construction environment, which drove up the state’s cost estimate 10 percent, an official said.

The Ohio School Facilities Commission solicited bids in July to build new dormitories at the Ohio State School for the Deaf and the Ohio State School for the Blind, but contractors’ proposals came in 46 percent over projections.

Nonunion construction companies said a “project labor agreement” that mandated union labor caused the overruns. The agreement had been ordered by commission Executive Director Richard Murray, a former union official who was the focus of a critical inspector general’s report this summer for his dealings promoting unions.

“I think it was a good demonstration that the PLA was a cost inflator,” said Bryan Williams, a lobbyist with the nonunion Associated Builders and Contractors of Ohio.

Pasquale “Pat” Manzi, executive secretary-treasurer of the Columbus/Central Ohio Building and Construction Trades Council, said it’s difficult to say why the bids, which were opened recently, are lower. He noted that some subcontract bids were cheaper when the labor agreement was in place.

“This is just the voodoo of construction,” Manzi said. “Construction is kind of a strange world.”

The overall $28.2 million project would revamp the campuses, which sit side by side on a large, wooded lot in Beechwold. The original bids came back totaling $39.6million, or 40 percent over budget.

That package included the residential buildings at an expected cost of $6.1 million, but the bids came back as high as $8.9 million, 46 percent over the estimate, said Robert Grinch, the commission’s senior project administrator in charge of the schools’ reconstruction.

Because of design changes to comply with building codes and an increase in average construction costs since early summer, the new estimate for the residential construction rose to $6.7million. With the PLA off and nonunion companies bidding, the bids came in at just under $7 million. The project can move forward because it is within 10 percent of the estimate, Grinch said.

Contractors were given an extra 65 days to complete the project, Grinch said. Manzi had said that a tight deadline might have caused companies to increase their bids in the summer.

Commission spokesman Rick Savors couldn’t immediately say when the bids for the rest of the project, which includes academic, office and food-service buildings, would be let nor whether they would retain a labor agreement. The agreement would force nonunion companies that win bids to either unionize their work forces or hire union workers instead of their own employees.

“Before, companies that were not signatory to a union, if they bid on it, they wouldn’t be able to use their own employees,” said Mary Tebeau, president of the central Ohio chapter of the Associated Builders and Contractors.

Only two companies bid this summer for the residential project’s general trades contract, the “bricks and mortar” work that accounts for about 60 percent of the total cost. The lowest bid of those two was 44 percent over the estimated cost.

Without the PLA, 12 companies bid for the general trades work, and the apparent winner is about 20 percent under the estimate.

Of the other contracts for windows, the fire-protection system, plumbing, heating and air conditioning, and electrical systems, only the window work received fewer bids the second time around, according to commission bid records. There was one bid for that work instead of two.

The electrical contract had nine bidders the second time instead of three, but the costs came in 10 percent higher than under the labor agreement.

“This is all voodoo,” Manzi said. “Tell me, what’s going on here? I can’t decipher this.”

bbush@dispatch.com

Among the appeals recently rejected by the Ohio Supreme Court, a split majority led by Chief Justice Eric Brown has scuttled an attempt by the anti-unionist Associated Builders and Contractors of Ohio (ABC) to upend an Ohio School Facilities Commission contract including a project labor agreement (PLA), a form of wage guarantee that the open-shop advocate calls “illegal.”

ABC joined Enertech Electrical, Inc. in filing the lawsuit against the Ohio School Facilities Commission (OSFC) and the Ashtabula Area School District Board of Education, whose prevailing wage resolution plaintiffs say violates the intent of the Legislature for school construction under R.C. 4115.04(B)(3).  Former state Rep. Bryan Williams, director of government affairs for ABC, has assumed a prominent role in the dispute with OSFC and its director, Richard Murray.

A divided Court refused to hear the case last week, putting Justices Evelyn Lundberg Stratton, Maureen O’Connor and Terrence O’Donnell on the losing side of the decision.

Since then, the 1851 Center for Constitutional Law has joined the founder of the Mansfield North Central Ohio Tea Party and several Richland County taxpayers in suing the governor, Murray, OSFC, the Laborers’ International Union of North America (LIUNA), and others. They claim that union influence over publicly funded school construction constitutes a violation of the state’s racketeer influenced corrupt organization (RICO) laws. 

A public interest law firm has filed a lawsuit in Richland County common pleas court accusing the Strickland administration of “an unlawfully cozy relationship” with labor unions that continues to put millions of dollars for school construction at risk of being wasted.

The 1851 Center for Constitutional Law filed a 31-page complaint on behalf of taxpayers in the Madison Local and Shelby City school districts.

Named as defendants were Gov. Ted Strickland, Executive Director Richard Murray of the Ohio School Facilities Commission, the Laborers’ International Union of North America, and others.

The 1851 Center said in a news release that the lawsuit charges the unions and Mr. Murray of using “bribery, intimidation, and obstruction of justice to further union financial interests, through projects funded by the OSFC, while the Strickland administration aided and abetted the conduct for its own political gain.”

Maurice Thompson, executive director of the 1851 Center, said it “appears as though union influence over the Strickland administration caused the firing” of previous OSFC Director Michael Shoemaker, “with either the instructions or the implicit understanding that Murray would run rough-shod over taxpayers and school districts to benefit union allies.”

The lawsuit is an attempt to prohibit future distribution of state funds through the OSFC to finance project labor agreements and projects that pay prevailing union wages.

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Contracts to build schools at heart of corruption claim

FRIDAY, OCTOBER 15, 2010  02:55 AM

BY DARREL ROWLAND

THE COLUMBUS DISPATCH

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Today’s political news

• Poll: Kasich holds 8-point lead over Strickland
• Preparing an appeal, feds want ‘don’t ask’ to continue
• House to vote on $250 Social Security bonus
• Health-overhaul challenge allowed to move forward
• Former ‘car czar’ settles with SEC
• Advocate: Working families set up to fail
• Panel hears complaints on slew of election ads
• Fisher behind Portman in recent fundraising
• Conservatives’ suit alleges Strickland favored unions
• Licking County child-support office lays off 8; all departments on notice
• Absentee voting off to strong start in Ohio

conservative group sued Gov. Ted Strickland, his chief of staff, the Ohio School Facilities Commission and others yesterday, alleging that they engaged in a pattern of corrupt activity by favoring unions in school-construction contracts.

A lawyer for the Columbus-based 1851 Center for Constitutional Law filed the action on behalf of six

Richland County residents – including the founder of the local tea party – in that county’s Common Pleas Court.

The lawsuit parallels many of the August findings of Inspector General Thomas P. Charles about the commission’s pro-union slant after Richard Murray was hired to replace Michael Shoemaker as its head. The suit also names Murray and the Laborers International Union.

“It certainly appears as though union influence over the Strickland administration caused the firing of the prior OSFC director, and the hiring of Murray, with either the instructions or the implicit understanding that Murray would run roughshod over taxpayers and school districts to benefit union allies,” said center Executive Director Maurice Thompson in a news release.

“School districts are making construction decisions within this troublesome framework. This suit aims to clean up the process before additional tax dollars are wasted.”

Strickland spokeswoman Amanda Wurst called the lawsuit “a really sad political stunt” by supporters of GOP opponent John Kasich.

“It’s an embarrassing sign of desperation just weeks before an election. We know that Congressman Kasich and his allies don’t share Ohio values, but to equate the governor’s support for policies that make sure working Ohioans get fair pay for a hard day’s work to corruption is just pathetic.”

The suit alleges that John Haseley, Strickland’s chief of staff, pressured Shoemaker to favor unions, noting that they are major Democratic contributors. Shoemaker was fired in July 2009 after unions threatened to withhold $400,000 in campaign contributions to Strickland, the suit contends.

The lawsuit accuses the Strickland administration of steering work – and state money – to the Laborers union “in exchange for (the union’s) contributions to the re-election campaign fund of Strickland.” The administration took part in bribery, intimidation, obstructing justice and money laundering, the suit alleges.

The complaint alleges instances of corrupt activity by the defendants in the Madison and Shelby school districts in Richland County, the Clay, New Boston and Washington-Nile school districts in Scioto County, and the Fremont school district in Sandusky County.

drowland@dispatch.com

The idea that post World War II architecture in Ohio is inferior has contributed to a threat on the historic designs and have Ohio Historical Society officials calling for increased preservation efforts, officials said.

The OHS Historic Preservation Office this week presented findings from a year-long project, which indicate architecture from 1940 to 1970 is increasingly threatened.

“Mid-20th-century properties are more often endangered by neglect and demolition than older properties,” OHS Executive Director and CEO Burt Logan said in a release. “Buildings and homes built after World War II suffer from a perception problem about their relative historic value and architectural significance, which contributes to their endangerment.

“Many view that design of mid-20th-century architecture as inferior creating a sense of disposability. This is what needs to be changed in order to preserve Ohio’s recent past and its legacy.”

Ohio Modern: Preserving Our Recent Past documented historic themes and properties of the greater Dayton area that hark back to that era. The purpose of the project was to raise awareness of preserving recent-past architecture by serving as a model for other Ohio communities, said Barbara Powers, who directed the endeavor.

She said the Historic Preservation Office discovered that historic properties of the recent past were considerably under-represented in survey information, Ohio historic inventory and property listed in the National Register of Historic Places.

“We set out to undertake this project in order to gain more information about this time period in Ohio and also to begin to identify additional properties that reflect the broad trends and important expressions of architecture from this time period,” Ms. Powers said in an interview.

Of the total $136,500 cost of the study, $87,656 came from the Preserve America Program of the National Park Services. When it comes to commercial construction services in California it’s essential to have a reliable team of bank construction specialists on your side. Dayton is a Preserve America community, which is why that area of the state was the research focus, Ms. Powers said.

The additional funding sources came from the matched the Preserve America grant, including the Department of Transportation, Department of Development, the Ohio Humanities Council, City of Dayton, University of Dayton, and Ohio Historic Preservation Office.

Among the at-risk properties discovered are all schools in Dayton and Huber Heights in addition to movie theaters, motels, drive-in restaurants and roadside signs, according to OHS.

Many prominent examples of 1940-1970 architecture have already been demolished in recent years, including all four examples of unique raised school gymnasiums, Dayton’s Polynesian-themed Kon-Tiki Theatre, and the Flint’s Hamburgers sign with revolving starburst, OHS reported.

Because they are under-appreciated and often misunderstood, these recent-past sites are often not taken into consideration in decisions about reuse or future opportunities for economic development, Ms. Powers said.

Not all is lost, however. The study also reports a “wealth of resources” remain in the metropolitan region that illustrate the area’s post-WWII prosperity, thus imbedding a legacy on each community’s streetscape.

The Ohio Modern Project recommends communities undertake historic inventory surveys of recent-past architecture then nominate the properties to the National Register of Historic places.

Additionally, organizations and property owners should seek local resources, such as from historical societies, government offices and home building and other trade associations, in their efforts to preserve the sites, according to OHS.

“Ohio communities need to take action now if they want to preserve the built environment that was influenced by this unprecedented period of growth and prosperity in America,” Ms. Powers said in a release. “Currently, less than 1% is recorded in the Ohio Historic Inventory and these historic properties are being lost at a phenomenal rate.”

Gov. Strickland signed an executive order Wednesday that would implement the elimination of Ohio’s tangible personal property tax and real property tax for advanced and renewable energy facilities.  The order implements Sen. Chris Widener, FAIA’s SB 232 which passed just prior to the legislature’s summer recess.

“As Ohio residents and businesses are fighting hard to recover from the crippling Wall Street recession, we must give promising companies every reason to develop and invest in Ohio as quickly as possible,” Mr. Strickland said in a release. “I signed this order to implement these rules and help spur business investment immediately.

“This tax reform is part of our economic development strategy to strengthen Ohio’s business climate and help create jobs for Ohioans in our growing industries like advanced energy.”

The governor proposed the tax treatment during his State of the State address earlier this year in an effort to make Ohio more competitive in the industry.

The elimination will affect projects that begin construction before Jan. 1, 2012, produce energy by 2013 and create Ohio jobs. The law exempts qualified energy facilities from TPP and real property taxes, and instead levies lower service payments based on the project’s energy production levels and a commitment to jobs creation.

Companies may submit applications for projects now, according to the governor’s office.

The law requires county commissioner approval for projects that exceed 5 megawatts of power.

A divided Ohio Supreme Court on Wednesday declined to decide if the Ohio School Facilities Commission abused its discretion in promoting imposition of prevailing wages on building projects.

Instead, justices voted 4-3 to review a more limited issue of whether taxpayers paying a special levy to construct schools have legal standing to challenge the commission or a local school board over application of prevailing wage.

The court accepted for review one part of an appeal from the Northern Ohio Chapter of Associated Builders & Contractors, Inc. (ABC) in a lawsuit it filed against Barberton City Schools and the OSFC.

Contractors, in a case that they said was the first of its kind, wanted to determine whether the district or commission had authority in the Ohio Revised Code to require compliance with Ohio’s Prevailing Wage Law on school construction projects.

Barberton voters passed a 5.2 mill bond levy in 2008 to finance $72 million worth of school construction. The board subsequently adopted a resolution requiring payment of prevailing wages to construction workers.

The contractors group, a non-profit trade association, filed suit. It contended the school board and commission exceeded their authority in mandating compliance with prevailing wage requirements.

Summit County common pleas court dismissed the complaint in July 2009. It held that the contractors group, a construction company that bid on the project, and two Barberton taxpayers all lacked legal standing to bring the suit.

Last April, the 9^th District Court of Appeals upheld the trial judge. The panel said that the contractors, company, and taxpayers could not challenge allegedly unlawful bid specifications on a school construction project.

ABC asked the Supreme Court to review whether:

• Taxpayers in such a school district have a common law standing to bring such lawsuits.
• Contractors and trade associations representing them could challenge bid specifications.
• A board of education abuses its discretion in mandating payment of prevailing wages.
• OSFC exceeded its statutory authority in adopting a resolution that promotes imposition of prevailing wage on school projects because the General Assembly expressly stated that it does not apply to them.

“The issue presented to this court is of great general interest and public importance as it involves the manner in which billions of taxpayer dollars will be expended on school construction projects in the state of Ohio,” attorney Alan Ross of Cleveland told the court on behalf of ABC.

Assistant Attorney General Jon Walden said contractors were presenting the court with nothing more than a policy disagreement that raised no significant legal issues warranting a review.

He said the 9^th District correctly held that the taxpayers in the lawsuit lacked standing because they were unable to articulate an injury that was different from other similarly situated Barberton taxpayers.

“Here, (contractors) ask the court to step beyond these long-settled standing issues to serve as a super board of education to make decisions about the proper construction specifications for a local school project,” Mr. Walden said.

“But just as this court should not be the first court to weigh in on the substantive propositions, this court should also not – and cannot properly – determine how a local board of education defines its specifications for a construction project,” he said.

Justices said Wednesday they would take up only ABC’s first proposition of law dealing with a common law taxpayer standing to sue.

Making up the majority to accept the case on that point were Justices Evelyn Stratton, Maureen O’Connor, Terrence O’Donnell, and Judith Lanzinger.

Justices Stratton and O’Donnell said they also would have accepted the appeal on the other three points ABC raised.

Dissenting from the decision to accept the case on the single proposition were Chief Justice Eric Brown and Justices Paul Pfeifer and Robert Cupp.

Facing bids that were more than 40 percent of the estimated cost for the new schools for the blind and deaf, the Ohio School Facilities Commission (OSFC) will rebid a portion of the projects with a controversial piece removed.

The OSFC voted to reject bids for the schools at the last meeting after the bids came in too high. At the meeting, Republican lawmakers on the panel had argued that the union-friendly project labor agreements (PLA) were responsible for the increases. During the discussion, OSFC Executive Director Richard Murray said all options are in the table.

In his report during Thursday’s meeting, Murray said that they have had discussions with the schools and the architect on the project. Because the schools stressed the importance of new dormitories, Murray said those portions of the project will be sent out for new bids in early October with the PLAs removed.

“This demonstrates that all options are on the table,” he told the commission.

After the meeting, Murray said that while the dormitories are being rebid, the commission will be looking at “value added engineering” on the other portions of the school construction to see if there are cost savings in the design of the project. He said they hope to see what the market is like through the rebid on the dormitories and then rebid the rest of the project at a later date.

While he did not have a timetable, Murray said he hopes to have the rebid on the rest of the projects go out later this year or early next year.

During the meeting, State Superintendent Deborah Delisle’s designee, Francis Pompey, asked if the rebid will give an idea as to how much the PLA may be costing the project. Murray said that it should give an idea of the labor and material costs, but construction on the dormitories is slightly different than the rest of the construction on the academic facilities. He compared the dormitory construction to building single family homes. Still, he said it will give some data on the costs.

In other action, the panel approved changes to the Priority Order of District Funding list for the next year. Ten districts were added to the Classroom Facilities Assistance Program (CFAP) list, while six districts were added to the lapsed project list after the districts failed to secure funding. One district was added to the Vocational Facilities Assistance Program (VFAP).  

Three veteran state budget observers agreed Wednesday that Ohio’s multiple layers of local government should be on the chopping block as lawmakers seek to close next biennium’s looming budget gap… and one suggested extending the sales tax to services such as architectural services.

Local government consolidation was a recurring theme during a Columbus Metropolitan Club discussion. Matt Yuskevich, chair of the Ohio Society of CPAs Budget Advisory Task Force, John Begala, executive director of the Center for Community Solutions, and Gene Krebs, senior director of government affairs and policy for Greater Ohio, offered suggestions on patching the upcoming $4-8 billion budget shortfall.

While the three generally agreed that a short-term solution would require both budget cuts and tax increases, reducing redundancy in local government emerged as a necessary salve for the state’s long-term budget woes.

“We’re still operating on the governmental model that evolved in the 1800s, where the county seat had to be no more than a day’s stagecoach ride away – that’s why we have 88 counties,” Mr. Yuskevich said. “Do we need 88? Do we need 530-some cities? Do we need 1,700 townships, all of them duplicating services?”

Mr. Krebs said Ohio’s complex system of overlapping local jurisdictions made the state’s cost of living and doing business relatively high.

A previous Greater Ohio report found Ohioans have the country’s ninth highest local tax burden, compared to 34^th highest for state taxes, he said. Moreover, the state spends 49% more on school district administration than the national average.

“Ohio has 3,800-plus taxing jurisdictions, which includes counties, townships, cities, school districts, service delivery areas,” he said. “Have we ever given thought to what duties are performed by which entity and whether we can make the system work better?”

Mr. Begala said the combination of municipalities’ authority to levy income taxes and state payments of about $1 billion a year through the local government fund is “pretty extraordinary. What do we get for that in terms of collaboration?”

Mr. Yuskevich said rather than mandating local government consolidation, the state could offer incentives to merge services.

For example, policymakers could withhold about half of the $1 billion local government fund to use as grants for entities that share operations and reduce spending, he said. “It doesn’t get you the whole way there, but that’s something that could be done in the next few years that could have some long-term effect in terms of starting to move that consolidation forward in a practical way.”

Mr. Krebs said policymakers should create a local government commission to recommend far-reaching changes to school districts and local entities.

Although making dramatic changes to local government organization is difficult, it’s less politically risky than raising taxes or cutting programs for the needy, he said. “Governance reform is the less painful answer.”

Mr. Yuskevich said recent polls show public support for reducing government services.

“We still need to cut some more, but there’s probably going to have to be some kind of revenue enhancement on the other side, whether you call that a tax increase, plugging a loophole or something similar to that,” he said.

Mr. Begala said policymakers should impose sunset limits on tax deductions, credits and exemptions to force a periodic review to determine whether they still served a legitimate purpose.  Another option is to expand the sales tax to services, he said. “One thing we can do, if we don’t want to raise tax rates, is broaden the base if we’re moving from a goods economy to a service economy.”

He also suggested forming a cooperative to combine the health care purchasing power of Ohio’s Medicaid recipients, state and local government employees, and pensioners.

“There are a lot of businesses – major insurance companies that will scream bloody murder about that. But if you want to approach doing government like a business, that’s the kind of thing that we need to be doing,” Mr. Begala said.

Further delaying action on the state’s budget woes will eventually eliminate any alternatives to raising taxes Mr. Yuskevich said. “It’s going to become the only solution that’s available because it has instantaneous revenue implications.”

The speakers said an equitable solution would require a departure from the usual practice of each constituency fighting to protect its own interests.

“That notion of cover your own back is exactly the theme that all three of our organizations and many others are trying to get beyond or transcend,” Mr. Begala said. “If we’ve got Statehouse politics as usual, if we’ve got pay-to-play… we don’t get through this and it’s going to be an ugly first six months of the next year.”

Two groups launched new attack advertisements against Gov. Ted Strickland this week, attacking him on a recent inspector general’s report and his push to delay the final year of a planned income tax cut.

Let Ohio Know said it is running a new radio ad in all major media markets as well as southern Ohio that highlights an inspector general’s report on the Ohio School Facilities Commission. The report alleged that Richard Murray, the executive director of the commission, improperly promoted union labor for school construction projects.