Bill Thompson came today against a bill that would increase transparency among builders contracted by the government to construct affordable housing, but that critics say will harm small business, and especially minority and women owned businesses.
Intro 730 requires developers to obtain quarterly wage and withholding information from every employee of every contractor, subcontractor, and vendor on affordable housing projects in order to increase the accuracy of contracts and to to prevent the underpayment of workers.
“Intro 730 falls far short of meeting its goals, levees extensive burdens on small businesses and MWBEs, and disrupts competition within the affordable housing industry at a time when New York City’s focus should be on creating ways to level the playing field for new businesses,” Mr. Thompson wrote in a letter to Council Speaker Christine Quinn. “I implore you to reexamine this bill to ensure it meets the intent of ensuring transparency, rather than damaging the affordable housing sector and those small businesses and MWBE firms that rely on the industry for their livelihood.”
The success of the bill depends on Ms. Quinn, since it already has enough sponsors to pass the Council.
Critics say that the bill is being pushed by the building trades unions in an effort to punish smaller contractors who do not use union labor.
“Small businesses deal with enough barriers to entry in the affordable housing market,” said Mr. Thompson. “Intro 730 will place yet another hurdle in front of small contractors and vendors and that will threaten any progress we’ve made with MWBEs.”
Mr. Thompson and Ms. Quinn are two of the top contenders in the mayor’s race, and MWBE policy has risen to the forefront of the race. Last month, all of the candidates met in the first debate of the campaign season, a debate solely devoted to MWBE.
It appears as if some of Mr. Thompson’s concerns have already been addressed by the legislation. Looking at the bill, it exempts small contractors whose revenue is less than $2.5 million. I have reached out to the Thompson camp to find out if, in fact, their contention is that this amount of revenue doesn’t carve out enough small business, and will update when a response arrives.
In the meantime, here is the relevant section of the bill:
“Covered contractor” means a contractor or subcontractor whose annual gross revenue for the immediately preceding tax year is not less than two million five hundred thousand dollars, calculated in accordance with section 779.266 of title 29 of the code of federal regulations; provided, however that where an entity is a principal owner of, serves as principal officer of, conducts or participates directly or indirectly in the conduct of the affairs of such contractor or subcontractor and any other contractor or subcontractor, the annual gross revenue for the immediately preceding tax year for each such contractor or subcontractor shall be aggregated and, if such aggregated value is not less than two million five hundred thousand dollars, each such contractor or subcontractor shall be a covered contractor.
A spokesman for Mr. Thompson stood by the letter, saying that the $2.5 million carveout is too low of a threshold to cover most small businesses that participate in the program.
Full letter is below:
July 23, 2012
City Council Speaker Christine Quinn
250 Broadway, Suite 1856
New York, New York 10007
Dear City Council Speaker Quinn:
As a longtime advocate of minority and women owned businesses and a vocal proponent of fair business practice, I adamantly support fair wages and efforts to end fraudulent accounting practices in the affordable housing industry. As Comptroller, I aggressively enforced prevailing wage laws working to level the playing field and fought for working men and women. I invested millions in affordable housing so that New Yorkers would not be squeezed out of their homes and neighborhoods.
A bill currently under consideration by the City Council, Intro 730, poses a hazard to the success of small business that far outweighs its proposed benefits. The bill threatens to undermine minority, women-owned, and other locally-based enterprises (MWBEs) by placing an unnecessary administrative burden on their operations, limiting their ability to compete in the affordable housing industry.
Intro 730 requires developers to obtain quarterly wage and withholding information from every employee of every contractor, subcontractor, and vendor on an affordable housing project. Most employees work only part-time on affordable housing development, working the remainder on market rate or commercial projects. The wage rate reporting mandated by Intro 730 will therefore indicate nothing about wage rates in affordable housing. Rather, it will only overwhelm small businesses with a requirement to collect thousands of wage reports quarterly.
Furthermore, contractors and subcontractors who are late on one quarterly report are placed on a disqualified list for participating on affordable housing projects. Intro 730 will knock out businesses that do not have the administrative staff to comply with a reporting mandate that ultimately serves no purpose. Recent amendments to the bill now exclude the largest market rate developers, those receiving 421-Atax abatements, from these excessive reporting requirements, cementing the greatest burden on smaller businesses, including MWBE firms.
A coalition of MWBE developers, contractors, and vendors as well as affordable housing industry advocates, have proposed amendments to Intro 730 that will shift its focus back on preventing bad actors from participating in the industry. These include increasing enforcement through the New York State Department of Labor (DOL) and the New York City Department of Investigation (DOI); implementing random wage surveys through the DOL to identify wage rates for a representative sample of affordable housing projects; and developing a plan to prevent bad actors from participating in affordable housing projects while streamlining the process for honest employers.
Intro 730 falls far short of meeting its goals, levees extensive burdens on small businesses and MWBEs, and disrupts competition within the affordable housing industry at a time when New York City’s focus should be on creating ways to level the playing field for new businesses. I implore you to reexamine this bill to ensure it meets the intent of ensuring transparency, rather than damaging the affordable housing sector and those small businesses and MWBE firms that rely on the industry for their livelihood.
Thank you for your consideration.