A heavy bar to raise on construction safety

Spurred on by the rising number of construction site injuries and deaths over the last few years —  30 construction workers were killed in New York in 2015 and 2016, according to the Occupational Safety and Health Administration — the City Council is working to curb future tragedies with a comprehensive legislative package called the Construction Safety Act. While most bills in the package passed without much controversy, one has become a flashpoint between union and nonunion shops. “Intro 1447-A” calls for 59 hours of safety training for all workers, up from the 10 currently required. And as union shops already meet this requirement as part of their collective bargaining agreements, critics say its impact would create a high barrier of entry for nonunion shops. But supporters counter that workers at nonunion shops, where a disproportionate percentage of recent deaths has occurred, aren’t being adequately protected by existing training requirements. Though the council called for the creation of a task force to address implementation in July, and is pressing for a vote in the near future, Kenneth Thomas, head of the New York City Construction Alliance, a group of open-shop contractors, said that the bill was “logistically … a nightmare,” especially if the Department of Buildings isn’t allocated more resources to enforce the mandate. To get a better idea of what’s at stake, The Real Deal spoke to experts from both sides of the table as well as developers, to see how extra mandatory training will impact their bottom line.

Jumaane Williams
Member for the 45th district, New York City Council

Jumaane Williams

Why create a task force to handle the implementation of Intro 1447-A? The council has oversight over many issues, but we are not experts on all issues. We wanted to put together a framework based on what we heard everyone saying and allow experts to fine-tune within that framework.

What exactly will the task force be advising on? What the final number of training hours should be and who should be responsible for safety [training]. I think we’ll decide that everyone — union, nonunion, documented, undocumented — needs to have access to the same training, without the workers themselves having to pay for it.

Is requiring 59 hours of training wishful thinking? No. We need to make sure workers are safe. We listened to what everyone had to say, and that’s what we came up with. We’re continuing to listen to people’s ideas. If people have additional modules or syllabuses that make sense and cover what we want to cover, [we want them to] send that to us.

Are there any guidelines or requirements for who will be on the task force? My intention is that there will be viewpoints across the spectrum.

When do you hope to see some legislative movement on this? I would love to see something voted on before the summer is over. We want to get this out expeditiously, but we also need to make sure we get it right.

There are concerns this will economically damage the construction industry. Do you think that’s a possibility? Is there a way to do this without crippling the industry? Yes. Are there going to be additional costs? Probably. That’s just a fact of life. We’ve already waited too long to respond to the amount of deaths that have occurred. The fact that there is an additional cost cannot be a deterrent to making sure that everyone has a minimum amount of safety training when they’re going on construction sites. No one can argue against that. Our job is to make sure that it isn’t crippling and doesn’t unfairly burden smaller businesses, particularly [minority and women-owned business enterprises].

Josh Schuster
Founder and managing principal, Silverback Development

Josh Schuster

What is your biggest concern with Intro 1447-A? In this environment, the rising cost of construction makes it much more difficult to get projects off the ground. A program like this is just going to add further upward pressure on our costs. A lot of those site safety costs drizzle down and become the onus of the ownership. The biggest concern I have with the bill is that it is going to apply to low-rise as well as high-rise structures: They’re talking about 40 feet, so that’s basically every building. And you’re talking about a site safety professional [who costs] between $250,000 to $300,000 a year. That’s a lot of cost to digest on a smaller project.

If you were on the task force, what recommendations would you make from the perspective of a developer? You want to use honey and vinegar with every approach, right? But if you run a safe job, maybe there should be some sort of a credit system or inducement to owners. Obviously having a safe environment usually expedites work onsite, but the bill introduces a lot of different fines and fees if you aren’t participating. If you run a safe job, maybe there should be some sort of a credit system that entices us or helps offset the cost associated with this — maybe expedited review at the [Department of Buildings].

Is there more competition between union labor and nonunion labor post-recession? Due to the rising cost of construction, more owners and developers are turning to open shops because it’s cheaper labor. Though it’s creating competition within that labor force, because there are only so many good nonunion plumbers or HVAC contractors out there.

What is your split in terms of using open shop and union labor? It really depends on the size and scale of the project. If it’s a large project with a complicated foundation system, typically we could do a hybrid arrangement. We mainly go nonunion, but if it’s a high-rise structure or requires deep foundations, we’ll typically have a union shop provide those services.

Is it harder to get construction loans right now, and is that contributing to tighter margins? The capital markets are constrained right now — I can probably count on my hand the number of construction lenders in the city. If we can reduce the lender basis by bringing costs down, then it certainly makes it more appealing for lenders to bid on the debt. A lot of developers are raising their own funds right now to fill the mezzanine equity position because they recognize there is a gap, and if lenders are dropping their loan-to-cost ratios, it makes seeking out other structured finance vehicles more interesting.

Are you raising your own money right now? We’re trying to raise a structured credit fund ourselves. It’s a late-cycle strategy.

What effect do you see a bill like this having on activity in the city? What I’m seeing right now is a bell curve in construction costs in the city. A lot of contractors are coming off a plethora of work, and they want to fill their books and keep their staff busy through 2019. Various disciplines are becoming more competitive. You’re seeing it in the cost of concrete, which is down about 10 percent relative to a year or two ago. If there is a downward bell curve you might see more development activity, and that’s why it’s important that the city doesn’t go out of its way to implement too many measures which would offset those savings.

Lou Coletti
President and CEO, Building Trades Employers’ Association

Lou Coletti

What do you think of the latest iteration of the bill? My general response is that there should be a lot more contractor representation in the bill because it affects contractors more than any other constituency.

What would your recommendations be if you were put on the task force? To me, the critical piece is enforcement — and part of that has to be the allocation of financial resources. Without significant additional resources, I don’t think the DOB has the ability to adequately enforce this, no matter what the bill ends up looking like. I think everybody is supportive of trying to make construction sites safer, but if it’s not adequately enforced, I don’t know what we are accomplishing.

What percentage of contractors in your group already have similar training? One hundred percent of them. The commitment from BTEA contractors starts in the office of the CEO,
because that’s where the commitment has to be. Then it follows down to their executives, to their projects management staff, to their subcontractors, to their trade workforce.

So you don’t see this having much of an effect on the costs of projects? No. We’re already paying for it, and the developers [that hire us] are already paying for it. I come out of the private sector — I worked for Lehrer McGovern Bovis [now Lendlease] for six years — and I can tell you that for owners who hire BTEA contractors, safety is a major consideration.

Kenneth Thomas
Executive director, New York Construction Alliance

Kenneth Thomas

What are your thoughts on the latest iteration of the bill? I think the latest iteration is more cumbersome to implement and an increased burden. They came down on the 59 hours, but you also have the site safety task force. Our organization’s concern is how the Department of Buildings would realistically implement and enforce the various mandates within the latest iteration. Logistically, this is a nightmare. It boggles the mind — how do you scale the enforcement of the mandate through the DOB? I imagine that they would have to scale their operations as well to compensate for the increased oversight.

What would be your suggestions if you were put on the task force? I would push for more training relevant to the specific trades.

What concerns are you hearing from members of NYCA? [Internal discussions] are about how we can scale the application of the bill so that we’re all in compliance with this new site safety certification that every laborer would need to have. We’re trying to figure out how to address this given the 100,000 construction workers in New York City. Another concern is that this will have a considerable impact on sourcing labor in the communities we work in and could drastically constrain these pipelines.

You said that going to 59 hours from 10 hours is too much. In your opinion, how many hours of safety training should be required? In terms of safety training, it’s already embedded within the [Occupational Safety and Health Administration 10-hour and 30-hour construction safety and health courses]. This is almost an attempt to duplicate efforts. Safety is a core component of the training for those certifications.

So you are satisfied with the OSHA requirements as they stand? We think the OSHA 10 and OSHA 30 are really important. The larger issue is that a worker can have [both], but if they’re working on a site that isn’t fully embracing a culture of safety and doesn’t have strict oversight when it comes to instituting a safer workplace, it’s inherently problematic. I think if all workers have at least the OSHA 10 and OSHA 30, in conjunction with general contractors mandating a culture of safety, you can realize significant gains.

What effect do you believe this will have on the pace of development in the city? I’m not trying to be hyperbolic, but I think it could put a stranglehold on development in the city. It will make it much more difficult for people to become workers. It will increase the barrier of entry for the man or woman looking to establish a career in the construction industry, because now you are mandating whatever the final number of hours of training will be. The training will be cumbersome and won’t necessarily be relevant or applicable. I firmly believe that will discourage many from seeking careers.

Gary LaBarbera
President, Building and Construction Trades Council of Greater New York

Gary LaBarbera

What do you think of the latest version of the training bill? The bill is still very much in discussion. What I will tell you is that our advocacy for this bill is for one reason and one reason only: We want to see nonunion workers protected on job sites. I don’t want to beat it to death, but we know what the last two years in the industry have been — 30 fatalities, and 90 percent of them on nonunion job sites. Obviously, there is a need to have a required amount of training and then additional training beyond that for specific tasks, which I believe the task force will be very helpful in figuring out. Quite frankly, I’m very surprised that there are still people in the industry, namely the [Associated Builders and Contractors] and the [New York State Association for Affordable Housing], that are opposing the bill. I hate to say this, but I think it’s about profits over people. If they don’t want to invest in their workers, it’s because they don’t care about their workers.

What would your recommendations be if you were on the task force? We would look at the curriculum for specific tasks, like concrete operations or rigging. There is standard [Department of Labor] curriculum approved by the New York State and U.S. Department of Labor. For rigging, that is a 30-hour course, so that’s what we would suggest. Use those modules and train those workers. It’s very simple.

Some are concerned that the DOB won’t have enough resources to enforce the bill. Are you worried about that too? Well, they just added another 100 inspectors. And we would advocate for more resources for the DOB, absolutely.

What, in your opinion, is the absolute minimum number of hours of safety training that workers should receive? Fifty-nine hours. And if they’re doing specific tasks, it should be the same as our programs, which go as high as 250 hours of training, done over a period of time. One of the arguments [against this] is that opponents say, “We need five years [to implement this].” You don’t need five years. Fifty-nine hours of training can certainly be done in a year. You could take two eight-hour courses a month on a Saturday. That’s 16 hours a month, and in four months you’re done with your training.

Where does the number 59 come from? That’s a compilation of discussions with the Department of Buildings and what we felt was appropriate from the training programs we have. That would be the core, the base amount of hours to get what they call a Site Safety Training card.

Is there any concern that this will discourage people from entering the industry because they would have to get this training? Not at all. In fact, a lot of the nonunion workers we talk to tell us they want the training but their employers don’t train them.

Kirk Goodrich
Director of real estate development, Monadnock Development

Kirk Goodrich

What is your biggest concern with Intro 1447-A? We’re supportive of making construction worksites safer. The problem is that the current version of the bill, which requires 59 hours of training, presents a significant barrier to local hiring and minority business enterprises. My perspective is probably shaped by the fact that my family came here form Belize in the early 1960s, and [many of them] are construction types. None of the individuals in my family, or their colleagues, were part of any formal apprenticeship program. My concern is really for the small-business guy and the laborers who don’t really have the resources to pay for that extent of training and the time required to get it.

What would be your recommendations if you were on the task force? I would want to hear from the DOB or the people who would know about the nature of accidents, such as insurance companies. There’s all this focus on training and very little focus on equipment. Are people wearing goggles? Go find out how many people have had accidents related to their eyes. What about drug testing? I don’t understand why those are not priorities. I’m not a construction guy, so I’m going to ask innocently: Are there things other than training that we could be doing?

What are Monadnock’s subcontractors saying about the bill? I don’t really speak to subcontractors directly about it, but I did advise our construction folks to talk to them about the bill because they would be impacted by it, particularly the nonunion subcontractors. They would be faced with paying for training.

How do you see this impacting development in the city? It’s going to hurt small subcontractors and emerging minority and women contractors and developers. It’s going to hurt our ability to hire locally. Based on our interactions with local elected officials and local community boards, they really have a desire for us to make an effort to hire locally. I don’t see how we’ll fulfill that mandate. There are people coming [into construction work from] off the street — it’s possible that they have OSHA training, and if they don’t, it’s possible to get them the $150 or so to get them the 10 hours of training [that are currently required]. But are we going to start writing checks for $2,000 so that someone can get trained, and then after two months decide construction isn’t the job for them?