State board doubles down on secrecy

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Union protestors look on at the former Wood & Brooks piano factory in Tonawanda. Photo by Garrett Looker.

For more than a year, a state board created to determine whether highly subsidized development projects must pay prevailing wages has operated in secrecy.

Since May, Investigative Post has pressed the Public Subsidy Board for records detailing its decisions, including on two Western New York projects. In response, the board has dug in its heels.

A hearing officer for the state Department of Labor, under whose umbrella the subsidy board operates, issued a ruling last month upholding the agency’s denial of records sought by Investigative Post. The request was originally made in May under the Freedom of Information Law.

“Since there is no clear guidance in the state statute on how broadly the discretionary confidentiality provisions granted to the Public Subsidy Board should or will be applied, the FOIL officer’s decision should be sustained until the courts provide further interpretation on that issue,” Chief Administrative Law Judge Marshall Day wrote in response to Investigative Post’s appeal of the denial.

The Labor Department’s denial of Investigative Post’s appeal for agency records.

The subsidy board has decided that workers on just five out of 29 projects should be paid prevailing wages. That’s a wage rate set by the Labor department and influenced by union pay.

The secrecy and lack of decisions requiring prevailing wages has lawmakers, union officials, transparency advocates and even some developers troubled.

“It’s shocking to think that a board making such important decisions can do so in complete darkness without any public reporting or observation,” said Paul Wolf, an attorney and president of the New York Coalition for Open Government.

Created as part of the 2020 state budget, the subsidy board is tasked with assessing large construction projects and the subsidies they receive and deciding whether or not the developer should pay workers prevailing wage.

By law, a developer is required to pay prevailing wages if a project costs more than $5 million and subsidies account for at least 30 percent of the expense.

At issue is a provision in the law that states “any proceedings of the board which relate to a particular individual or project shall be confidential.”

State Sen. Sean Ryan, chairman of the Senate’s economic development committee, said the lack of transparency is troubling.

“I’m disappointed to hear that you weren’t given the information that showed their math to say why they shouldn’t have to pay the prevailing rate,” he said.

Joe Guza, a lawyer and organizer with International Union of Painters and Allied Trades District Council 4, said the board not explaining its decisions makes him question what exactly it’s considering when ruling on projects. His union protested in February when the Board ruled that a Town of Tonawanda project was deemed “not covered” by the prevailing wage law.

“There’s a reason why they’re saying a project is not covered or not, and they’re not giving the reason,” he said. “Maybe they’ve done everything by the book. Maybe it makes sense. But without providing that to the public, there’s no way of knowing.”

The Labor Department, in a statement, said both it and the subsidy board are operating according to the law.

Robert Mujica, the state budget director in 2020 who helped craft the law that created the subsidy board, said he couldn’t recall why the confidentiality provision was included.

“I don’t remember the rationale for that specific section of the law,” he said. “That being said … if the law is clearly saying that, then they’re following the law.”

To date, the Public Subsidy Board has ruled on three projects in Western New York and a fourth in Rochester.

In three of the cases, the board determined that prevailing wage did not have to be paid to workers constructing the warehouse, apartments and homes. In a fourth, the board ruled that the developer of a community center project did have to pay higher wages.

One of those cases was the $550 million Amazon warehouse project underway in Niagara County. Labor advocates argued that the subsidies awarded to that project — totaling $137 million — should require payment of prevailing wages. In March, the subsidy board ruled otherwise.

At issue in that case was which cost standard the board used to determine if the subsidies amounted to 30 percent of costs. Developers favor using “total project cost,” a figure that includes materials, labor, design and legal costs. Labor advocates favor using only construction costs — just materials and labor.

The law, meanwhile, states the board should use “total construction project costs.” Mujica said the Cuomo administration purposely left the language vague.

“There wasn’t a total agreement at the time of the legislation right as to what would be a clear, objective standard,” he said. “The design of the law was, let’s create a board right that can work these issues out.”

In May, the board debated which cost standard it should base its decisions on but did not come to a conclusion. A Labor Department spokesperson said no decision has been made.

Another Western New York project the board considered was the rehabilitation of the Wood & Brooks piano factory in the Town of Tonawanda. The board’s determination that developer Michael Wopperer didn’t have to pay prevailing wage was much more cut-and-dry: The law says projects receiving historic preservation tax credits are exempt from prevailing wage rules.

Union workers in February protested the decision, calling it a loophole in the law.

Explanations for why the board ruled how it did on the Amazon and Wood & Brooks projects were among the records Investigative Post sought.

In a third case, the board ruled that developer Luis Rodriguez was required to pay prevailing wages for the Hispanic Heritage Cultural Institute under construction on Buffalo’s West Side.

Rodriguez said the board’s decision came as a surprise. He said he didn’t know who put the project before the board, what numbers the board used to make its determination or why it ruled the way it did.

“We had a lot of state funding and county and city funding, so it just made sense to make it all prevailing wage,” he said. “I’d never heard of this process and we’ve never been through it.”

The board ruled that a fourth project, to renovate a Rochester nursing home, didn’t have to pay prevailing wages because the owner and developer of the home is a nonprofit, exempting it from the law.

In a statement, a Labor Department spokesperson said that one reason the board has ruled in favor of developers on so many projects is because developers are putting projects before the board knowing they don’t qualify for prevailing wage standards.

“This is likely the reason that there have been more determinations deeming projects not covered during this period,” according to a statement from the Department of Labor.

Ryan suggested further changes in the law should be considered

“Anytime you do anything in the economic development world, you just have to realize that … whatever you do, it’s not permanent,” Ryan, D-Buffalo, said. “People are going to try to get around the changes, and that’s why you’ve got to keep coming back.”

Wolf, of the New York Coalition for Open Government, suggested that the Board ruling behind closed doors violates the state’s Open Meetings Law.

“If you’re getting public subsidies, that discussion should occur in public,” he said. “If you want to operate privately, well, then don’t stick your hand out for public subsidies.”

J. Dale Shoemaker