by Gigi Wood

UNIVERSITY OF IOWA – Grading work is under way at the Iowa River Landing District, with the first major project within the development ready to begin.

What will be built in the district near the Coralville Marriott remains largely unknown, but officials have said it will be a mix of residential, commercial and attractions. One definite project is the University of Iowa Hospitals and Clinics’ $73 million outpatient facility, to be built near the northeast corner of First Avenue and East Ninth Street.

The new facility will be a major construction project, expected to be completed by the end of 2012. At the request of Gov. Chet Culver, it’s the first time the Board of Regents has used a project labor agreement (PLA) in the construction of a new facility. Mr. Culver issued an executive order in February, encouraging state agencies to designate any project worth $25 million or more as a PLA.

A PLA is a collective bargaining agreement, in this case negotiated between the hospital, regents and local unions, to define terms and conditions of employment. By agreeing to use mostly labor unions, the project is in return expected to be completed on time without dispute or strikes and is intended to save money by achieving those goals. PLAs are also being used in construction projects in Cedar Rapids and for Fort Madison’s new state prison.

UIHC progress

The use of PLAs is a highly controversial topic nationally, with some local governments banning the use of such contracts in construction projects. Some say PLAs save taxpayers money. Others say it shuts out quality non-union workers from jobs. Regardless, the regents voted 5-4 Aug. 5 to approve the use of a PLA for the hospital project and bidding for work is ongoing.

“(The PLA) was something that was in place before we went out for bids, so we had to sit down at the bargaining table with representatives from the Board of Regents and from the University of Iowa Hospitals and the unions to go through terms and conditions,” said Bill Mielnik, interim director in UIHC’s office of capital management.

The groups used a combination of terms from other state PLA projects as a starting point.

“We sat at the table and went back and forth as far as what was important to us and important to them and hit a happy medium there that we’re both confident will serve the intent behind the agreement,” he said.

The terms of that agreement, including pay ranges and dispute arbitration protocols, were inserted into the bid specifications for the work.

“It doesn’t overwrite anything, necessarily, that we’ve already got in our general conditions for our projects; it’s just an addition and kind of spells out a little more detail (about) how the labor is handled and managed on that particular project,” he said.

UIHC officials are bidding for the project in phases. The first bid, for the foundation, was bid out two weeks ago. The second bid package, for the elevators and building structure, will be next.

“As we get (building elements) designed, we’ll put them out for bid,” Mr. Mielnik said. “We know what we need for a completion date in order to show the return on our investment that we need to make this a successful venture for the hospital.”

Contractors do not necessarily need to be part of a union to be part of the project, he said.

“There are some stipulations in the project labor agreement as to how many of what they call their ‘core employees’ they can bring on the site,” he said. “Let’s say a merit shop (non-union) contractor got one of the portions of work there, drywall. He would be allowed to have the first five employees on the job site, he could bring from his own organization and after that there is kind of a ratio, the sixth person would be hired out of the union hall and it would go on back-and-forth like that.”

It’s too early to tell how well the PLA will work, he said.

“If a project comes in a little higher than the estimate, well, did we blow the estimate or was it the project labor agreement? If it comes in under, was it because of the project labor agreement or was it because of the economy? There’s no way to be able to determine that,” Mr. Mielnik said.
UIHC and Coralville are closing on the property purchase, then work will begin on the medical facility.

“We have anticipated closing on our parcel the first of November,” he said. “We can’t really set foot on the site until it becomes university property and that’s when you’ll begin to see a lot more activity, putting in the footings and foundations for the building.”

Non-union response

The Iowa chapter of the Associated Builders and Contractors, Inc. (ABC), a nonprofit construction trade association, released a statement in August saying the group was disappointed by the use of a PLA in the UIHC project.

That sentiment has not changed and the group never received a response from the regents, said Greg Spenner, president and CEO of Waukee-based ABC of Iowa.

He doesn’t buy the UIHC’s argument that non-union contractors can bid on the Coralville project.

“The rules put in place in those project labor agreements make it impossible for merit contractors to be successful on the project,” he said. “You have to operate like a union; you can only use a small group of your core employees, the rest have to be from the hiring halls. You have to use the union work processes and jurisdiction over disputes instead of your own internal workings that have helped make you successful. Contractors are not going to put themselves at risk in those situations.”

According to his figures, 85 percent of construction workers in Iowa, a right-to-work state, choose not to join a union. He also argues that the regents never pointed out any past construction project problems that the PLA would resolve.

“A lot of that work will be going out-of-state instead of staying in state,” Mr. Spenner said.

PLAs drive up the cost of projects because of a lack of competition for bids, he said.

“If you have more contractors competing for the work you’re going to get a more competitive cost, so by eliminating a vast majority of the competition, you’re going to get bid prices that are higher than what they would be on a fair and level bidding process,” Mr. Spenner said.

Mr. Culver is trying to cater to the union vote by requesting the use of PLA’s, Mr. Spenner said. If Republican candidate Terry Branstad is elected in November, Mr. Spenner said he hopes the use of PLAs is abandoned.

“We have no legal recourse with (Mr.) Culver’s PLA, so we’ll await the verdict of Iowans,” he said.

Mr. Branstad said in campaign appearances in the Corridor last week that he would repeal the PLA legislation on his first day in office if elected.

Regents’ rationale

Regent Bob Downer said the board voted to approve the use of the PLA for this project after much debate and research.

“The rationale for a PLA is that it essentially gets all of the various trades, subcontractors, general contractors, etc., working in harmony on a project,” he said. “There is a guarantee in effect that there would be no strike that would cause the project to go off schedule or get into other unpleasantness during the course of the project. The persons who are employed on the project are required to meet minimum training requirements, as far as apprenticeship programs are concerned.”

Mr. Downer, who has served as a regent for more than seven years, said he is personally against the use of PLAs but respects the regent board’s decision.

“In my opinion, these (strikes, on-time completion, worker training) have been non-problems on regent projects,” he said. “I do not recall a situation since I’ve been on the board, where a contact has had to be terminated or we had to sanction someone for sub-standard work.”
Whether regents will approve future construction projects as PLAs remains to be seen.

“There is no project other than Iowa River Landing to which the project labor agreement applies at this time,” he said. “I think if we’re going to do it on future projects it would require future action by the board unless there are circumstances that present themselves that have not been present thus far.”

When the regents review future PLAs, he will be wary of potential cost increases.

“I think they do increase the cost. I’m very conscious of trying to get the very best bargain that we can, not only for the taxpayers of Iowa, but where we have federal funds, where we have students fees, various others sources that impact people in Iowa,” he said.