June 29, 2012 The Honorable Christine Quinn Speaker, NYC Council 250 Broadway New York, NY 10007 Dear Speaker Quinn: As business owners in the affordable housing industry and MWBEs, we adamantly oppose the underpayment of workers in all instances, and fervently support every effort by government to weed out dishonest actors. However, Intro 730, a bill that’s been touted as the solution to enforce fairness and accountability in the affordable housing arena, will not ensure fair wages or guarantee greater transparency. Rather, this bill will impose a tremendous and overwhelming administrative burden on us – local, small, and medium-sized businesses – threatening our survival and ability to compete in the market. We depend on the affordable housing industry for our livelihood and that means we have the utmost interest in ensuring the integrity of our business. The wage reporting mandates in Intro 730 will not prevent bad actors from participating in the industry – after all, the onus is on the employer to report the underpayment of its workers. What 730 will do is decimate our ability to compete with the largest affordable housing developers who will be able to absorb the vast costs imposed by this bill. For a typical affordable housing project, the reporting expenses would add an additional $200,000 in administrative costs: one administrative staff person for the general contractor at $50,000 including benefits, and $15,000 for a part-time accounting staff person for every 3 of 30 subcontractors on a project. The amount is beyond what most well-established general contractors can afford, let alone a small business. Intro 730 will effectively prevent local, small, and medium-sized businesses from competing for affordable housing contracts. New York City builds 200 affordable housing projects every year, meaning the implementation of this bill would cost $40 million annually when estimating 200 projects at $200,000 each. That accounts for nearly 10% of the Department of Housing Preservation and Development’s (HPD) capital budget at a time when the need for affordable housing is greater than ever. ! With the survival of our businesses hanging in the balance, we urge you to reexamine the impact of Intro 730’s current wage reporting requirements and to work with us to develop legislation that achieves a collective objective of ensuring the highest level of integrity in the affordable housing industry. Eliminating the ability of medium and small sized firms to compete for projects will not achieve this end. We have assembled a list of actions that we believe will have a greater impact on keeping actors in our industry honest and accountable. Our recommendations are as follows: • Increase enforcement through the New York State Department of Labor (DOL) and the New York City Department of Investigation (DOI). The DOL is obligated to investigate all accusations of worker underpayment. The DOI has authority to bar a contractor under credible investigation from beginning a new project until the accusations are resolved. • Implement random wage surveys through the New York State Department of Labor to identify wage rates for a representative sample of affordable housing projects. We know from previous studies of the industry, that affordable housing developers pay a living wage or far better; additional surveys of the industry will allow for a more complete picture of wage rates on affordable housing projects. ! • Develop a plan to identify and prevent bad actors, whether they are developers, contractors or subcontractors, from participating in affordable housing projects. The overwhelming majority of businesses in affordable housing are honest employers. Working with HPD, a more effective system can be established for weeding out any bad actors to streamline the work of honest employers. We believe that these recommendations present effective opportunities for safeguarding the affordable housing industry, without the destructive consequences the current Intro 730 bill will have on the ability of small and medium businesses to survive in the field. We hope that you, as Speaker, will consider these amendments to the wage reporting requirements in Intro 730, given the profound impact this bill will have on the future of our businesses, families, and communities. Thank you for your consideration. Sincerely, Donovan Anderson Shaun Covington Anderson Flooring Covington Realty Services, Inc. Ralph Barone Maikel Cuesta Barone Steel Fabricators, Inc. Dynamic Electric Aubrey Arscota Bob Cummins Ajosta Services Inc. Guardsman Elevator Co Thomas Campbell Guy Delia Thorobird Companies Casa Building Materials Isaac Chazbani Lavington Edwards Katz and Son Metal Fabricators ENT-ERR Construction Inc. Richard Chen Sandra Erickson Kiska Solutions Inc. Sandra Erickson Real Estate, Inc. David Fung Manuel Martinez Metal & Glass Solutions Alliance for Progress Peter Gioello Emerald Merchant Amber Lite Electric Corp. G & F Drywall Bruce Gunther Gilvandro Nascimento More Air Mechanical GMN Painting Pro. Karim Hutson Gene O'Reily The Genesis Companies/GP Construction MC&O Masonry Kendrick Jobe Simone Peel Jobe Development Corp. New World Contracting Enterprises Peter Kaplow Andrea Phillips Rockaway Contracting Annandale Contracting Corp. Andrea Kretchmer David Rodriguez Kretchmer Companies JB Security Inc Nancy Lepre Shamas Sarwar Avante Contracting Corp. Shamas Contracting Co., Inc Alan Levitt Dan Shuster Big Apple Fire Sprinkler Co DV Group LLC Chris Mallouras Beatrice Sibblies Alpha Construction BOS Development Tony Marinello Michael Simmons Electrical Design Management Malmek Glass Contracting Inc Mike Mourounas George Stanislaus FirstLine Contracting Inc. Stanislaus Construction ! Meredith Marshall Wing Kan Wong BRP Development Brooklyn West Supply !
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