Construction unions pressure developers of Terminal Warehouse

Organized labor using pension fund as leverage against nonunion contractor

(Gensler/TMRW, iStlock)
(Gensler/TMRW, iStlock)

In some ways, Terminal Warehouse was already a risk for developers Columbia Property Trust and L&L Holding. Now they have angry construction unions to deal with.

Their $1.8 billion project will transform the landmark warehouse in West Chelsea into office and retail space at a time of uncertainty for both sectors. Office vacancy rates remain high and street retail continues to struggle with the pandemic and online competition.

But construction unions are zeroing in on what they see as a different threat: The contractor hired for demolition work on the site.

Laborers’ Local 79, the New York City District of Council of Carpenters and others are calling out the developers for hiring Manhattan-based Alba, a nonunion company embroiled in disputes with Local 79.

In their campaign against Alba, the unions are taking a somewhat unusual route by targeting PIMCO, the parent company of Columbia Property Trust. The unions are a customer of the financial firm.

PIMCO manages pension funds for the laborers, carpenters, iron workers and other trades, who hope to leverage the relationship to squeeze Alba. So far, it has not worked.

The Laborers’ International Union of North America, the parent organization for the laborers, tried to warn PIMCO about Alba before the investment firm acquired Columbia for $2.2 billion late last year. One union source told The Real Deal that PIMCO had not offered to take any action as of their conversation last week.

PIMCO declined to comment, but the laborers union issued a statement.

“When Pimco bought Columbia Properties, they bought all of the problems at the Terminal Warehouse project,” said Chaz Rynkiewicz, assistant business manager at Local 79 and a trustee of the union’s funds. “The risks posed by the hiring of irresponsible contractors and an uninsured workforce during a pandemic are serious. When we raised these issues with Pimco, we were told that there was nothing that they could do.”

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The unions allege that Alba doesn’t offer workers health care and offers a $5,000 reward for information leading to the arrest and conviction of employees who have made a “fraudulent claim” — a policy the unions see as a threat to workers who file for workers’ compensation. One worker told The Real Deal that employees fear losing their jobs if they speak out against management.

Alba and Local 79 have clashed on other projects. In January, an administrative law judge with the National Labor Relations Board ruled that Alba had wrongfully told a union representative not to speak to its workers on a site at 40 West 29th Street, and had interrogated employees about their union activity.

The unions and a group of immigrant demolition workers, who call themselves los demolicionistas, planned to hold a rally at Terminal Warehouse yesterday to speak out against Alba. The company could not be reached for comment.

It is fairly common for construction unions to target developers and contractors who hire nonunion companies, but efforts to pressure project investors tend to happen behind the scenes. In this case, the unions have also appealed to California State Teachers’ Retirement System, a minority investor in Terminal Warehouse.

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In a September memo to CalSTRS, Local 79 urged the removal of “irresponsible contractors” from the project, or at the very least, for the pension fund to avoid working with those who hire them in the future. The memo also flagged that awarding such a large demolition contract to a nonunion firm threatened to undermine “decades of work to establish fair wage, pensions and health care for laborers in the demolition market.”

CalSTRS has a responsible contractor policy, though it only applies when the fund has greater than a 50 percent stake in a project. A spokesperson for CalSTRS noted that in cases where it is a minority investor, the fund continues “to encourage partners to comply with the spirit and practice of responsible contracting.”

A representative for Columbia and L&L noted that a majority of private-sector construction projects are open-shop, meaning they use union and nonunion labor, which helps ensure “every qualified and responsible union, nonunion and MWBE contractor and subcontractor is given an equal opportunity to compete for and secure contracts.”

“We are dedicated to ensuring high standards in all aspects of this project, especially with regard to the fair treatment and ongoing health and safety of our construction workforce,” the developers said in a statement. “If presented with evidence of potential wrongdoing, our policy is to immediately investigate and take corrective action.”