Some contractors feel left out of deal for Bills stadium construction | Business Local

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Building a new Buffalo Bills stadium is expected to create thousands of local jobs for construction workers but some contractors are feeling left out.

Erie County Executive Mark Poloncarz said at least 10,000 building trades workers will be employed on the project expected to be completed by the 2026 NFL season.

Bills stadium aerial (copy)

Some critics of the stadium deal say they won’t get an opportunity to be part of the project.

But because the stadium agreement includes plans for a project labor agreement that requires contractors to pay prevailing wages – which are higher than those paid by many nonunion contractors – some construction firms contend they will be shut out of working on the new stadium.

Critics of the plan say that means more than two-thirds of private construction companies – and their nonunion workforces – won’t get the opportunity to be part of the project. They say that will limit the labor supply and potential bidders for work, driving up the cost of what is projected to be a $1.4 billion construction project. Some estimate that the agreement will increase construction costs by as much as 20%, costing taxpayers an estimated $200 million more than they would have paid if construction was based solely on market rates.

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Supporters of the project’s agreement hammered out between Bills owners Kim and Terry Pegula, Gov. Kathy Hochul and Poloncarz say it was important to make union labor the focal point of the new Bills stadium. And they note that nonunion workers won’t be excluded from bidding.

Project labor agreements are intended to minimize labor issues, establish cost standards and help projects stay on schedule, as well as often establishing requirements for inclusion of diversity and safety standards.

Prevailing wage is meant to provide protections for workers under a public work contract. According to state Labor Law, contractors and subcontractors must pay the prevailing wage in the locality where the work is being done, as well as fringe benefits to all workers.

Some in the industry believe project labor agreements and prevailing wage do not accomplish what they’re intended to bring to a project.

Peter Warren, the director of research for the fiscally conservative think tank Empire Center for Public Policy, said prevailing wage inflated the cost of construction projects in Buffalo by an average of about 20%. For the stadium project, that could mean an extra $234 million in costs, compared with a project based entirely on market rates, he estimated. 

The state will put $600 million toward the stadium’s upfront construction costs, while the county will contribute $250 million. The Bills and the NFL have agreed to pay the remaining construction costs, including any construction costs that exceed the $1.4 billion price tag.

“Due to the extraordinary scope of the project and its controversial nature as a publicly funded stadium, it should have been exempted from prevailing wage. But that conversation never even took place,” Warren said. “Why discriminate against private construction companies and limit the potential labor supply for this project?”

Paul Brown, president of the Buffalo and Niagara Counties Building and Construction Trade Councils, disputed that the stadium will be an all-union project.

Project labor agreements do not prevent nonunion contractors from working on a project, according to Brown. He also contends that work rules in the project labor agreement will help save money on construction.

“It’s a great opportunity,” Brown said. “Having a new stadium for the Bills is a big shot in the arm. I don’t understand what people are complaining about. It is a great thing for the area.”

Poloncarz said the agreement will ensure that more of the construction work goes to local workers.

“What would have happened – and what does happen in some of these large projects elsewhere – is there are national contractors primarily non union who bid on these contracts. And they bid low, and then they bring the workforce in from other areas,” Poloncarz told reporters at The News earlier this month.

“Does it make sense for Erie County to be investing 250 million, New York State to be investing 600 million, and then find out that the the major contractor on the project is from Texas, bringing in employees from Florida and Texas who work basically above minimum wage?” Poloncarz said.

Brian Sampson, president of Associated Builders and Contractors of Empire State, said nonunion contractors won’t bid for project labor agreement work because they’re forced to pay toward union-sponsored benefits on behalf of the employees on the project.

The prevailing wage for a carpenter in Erie County is roughly $32 an hour, with benefit costs equal to another $12 to $15 an hour, according to state Labor Department data. Separate Labor Department data pegs the market rate for carpenters locally at a median of almost $24 an hour.

An Empire Center study in 2017 concluded that prevailing wage rates, including benefits, in the Buffalo Niagara region were 84% higher than the local market rates.

Buffalo Bills Stadium (copy) (copy)

A view of Highmark Stadium home to the Buffalo Bills from a parking lot at Erie Community College South.

Putting people to work or excluding them

The Buffalo and Niagara Counties Building and Construction Trade Councils recruit apprentices year-round and that effort will be especially important as they prepare for the start of the stadium construction slated for the spring.

Eighteen locals in the building trades will be training apprentices in-house so they know what to do when they get on these types of jobs, Brown said. Apprentices will be needed to fill integral roles during the stadium construction.

Brown said this is also an ideal time for minorities and women, both underrepresented in the industry, to take advantage of this opportunity.

“It will be great for training people,” Brown said. “It is one of those opportunities where there are no excuses not to go to work. There should be full employment here for a long time.”

Sampson believes there will be fewer workers on this project than there could have been because of the project labor agreement.

According to a study by Paul Carr, a Cornell University engineering professor, project labor agreements depress the number of contractors who will bid on a job. His study, which examined more than 300 PLA projects across the state, noted that when there are fewer bidders for a project, the price goes up.

Carr’s research found that to get the most optimal cost estimate for a project, there needs to be seven bids. With project labor agreements, Sampson said some Bills stadium projects may only be looking at two or three bidders.

“If I know it is a PLA and I know certain people aren’t going to bid, the reality is that I inflate the cost of my project,” Sampson said. “It’s just simple nature that when competition goes away, I don’t have to be as tight with that number.”

Are 10,000 jobs realistic?

Poloncarz has said the project will likely create more than 10,000 jobs. He’s using data from past construction projects and estimating the scope of this one to determine that number.

He expects that it won’t just put Buffalo-area building trades employees to work, but also some from Rochester, Central New York and Northwest Pennsylvania, as well as New York City, which may be able to supply needed iron workers. As part of the job, the work crew will also be responsible for demolishing the current stadium, Poloncarz said.

Sampson said 10,000 is a fair estimate of what will be required for the job, counting the office people needed to support workers in the field. He estimated that about 60% of the 10,000 workers would be in the field.

However, he questioned whether these will actually be “new jobs” or simply people being moved from a current project to do the one at the stadium.

Brown said he is unsure whether the project will result in 10,000 jobs, but is just happy to see trades workers busy again after the pandemic hit the industry hard.

“I don’t know about 10,000 workers. That’s a lot,” he said.

How much work will come out of the project in the future could depend on potential development around the stadium, according to Brown.

Poloncarz said the county had a project labor agreement when it completed renovations of the stadium in 2013 and 2014.

“You didn’t hear a whole lot of problems, and the project got done on budget and it got done on time,” Poloncarz said. “Well, it got done on budget and on time by having a highly trained skilled workforce that was local and cared about the project.”

But Sampson said his organization is looking at its legal options and could take action against the state and the Erie County Stadium Corp., a state agency that will hold the lease with the Bills for the new stadium.

He said he doesn’t want to see a repeat of the bid-rigging scandal at the $750 million SolarCity project at Riverbend that was part of the Buffalo Billion.

“We’re not going to stop the stadium from being built,” Sampson said. “The money has been allocated and we agree on the concept of the stadium. We’ll at least force them to follow their own state laws so that we don’t have a repeat boondoggle that we had with the Buffalo Billion and Riverbend.”

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