Following county commissioner’s Feb. 12 meeting, the dispute between Cincinnati and Hamilton County over contracting rules for Metropolitan Sewer District (MSD) projects appears to be heading to court.
The court battle comes after the county dismissed multiple concessions from the city and put MSD’s revamp of the local sewer system on hold in protest of the city’s rules. With a federal mandate looming, both sides agree a resolution is needed soon to avoid costly fines from the federal government.
For many across the city and county, the conflict is understandably confusing. The debate has often been mired down by biased media reports and political talking points that obfuscate the issue. Jargon referencing “responsible bidder,” “local hire,” “local preference,” unions, apprenticeship programs, a pre-apprenticeship fund and contractors make it even more difficult to grasp what is going on.
Cutting through the politics, here is what the responsible bidder rules actually do and why the city and county seem incapable of compromise.
What is responsible bidder?
It’s a city ordinance that essentially forces MSD contractors to adopt job training measures known as apprenticeship programs and pay for a pre-apprenticeship fund. By requiring the training options, the city hopes workers will be able to improve their skills and successfully transition to other jobs once their MSD work is finished.
Apprenticeship programs take workers through extensive on-the-job and classroom-based training in which they can hone their skills in a specific craft, such as electrical or plumbing work. Because workers get paid for their work while participating in an apprenticeship, the programs are typically characterized as an “earn-while-you-learn” model.
The pre-apprenticeship fund will put money toward programs that will teach newcomers basic skills, such as math and reading, so they can eventually move up to an apprenticeship program.
The rules don’t apply to every MSD contractor. Contracts worth less than $400,000, which make up roughly half of MSD’s sewer revamp, are exempted.
What about local hire and local preference?
Those are ordinances separate from responsible bidder that give preference to Cincinnati-based businesses. They try to keep MSD contracts within local companies.
What’s the conflict about?
The conflict is between Cincinnati and Hamilton County, which jointly run MSD. The Democrat-controlled city supports the rules, while the Republican-controlled county opposes them.
The city and county also dispute which governing body can set policy for MSD. Under a 1968 agreement, the county owns and funds MSD, and the city operates and maintains it. City Council argues the agreement allows the city to set policy for MSD, but the county disagrees. Both sides acknowledge the set-up is far from ideal.
So, did the city’s rules halt MSD projects?
No. Nothing in the city’s ordinances forces MSD projects to stop. County commissioners singlehandedly halted MSD projects in protest of the city’s rules. If it were up to the city, work would continue today.
Why are these projects so important?
By federal decree, the city needs to revamp the sewer system to bring it up to environmentally safe standards. The project will cost $3.2 billion over 15-20 years, making it one of the most expensive in the city’s history.
If the city and county don’t carry on with the revamp soon, the federal government will begin issuing fines. By some guesses, the fines could begin rolling in by the end of the year.
Why does a majority of City Council support responsible bidder?
Councilman Chris Seelbach, the Democrat who championed the rules, says they will boost local employment and create more job training options for the city’s struggling workforce.
Other Democrats on council agree, although some, like Councilman P.G. Sittenfeld, believe the ordinance is “imperfect.”
Does responsible bidder benefit workers?
Some research suggests it would.
The left-leaning Center for American Progress (CAP) in a December report argued apprenticeship programs provide an opportunity to revitalize the U.S. workforce.
“By 2020, America is projected to experience a shortage of 3 million workers with associate’s degrees or higher and 5 million workers with technical certificates and credentials,” the report claimed. “Compounding our inadequate workforce development system, research shows that employers are now spending less on training than they have in the past. At the same time, industry surveys show that a lack of qualified workers is a top concern for many employers.”
Citing a 2012 study from Mathematica Policy Research, CAP estimated apprenticeship programs alone can boost a worker’s lifetime earnings and benefits by more than $300,000. Over 36 years of employment, that’s an average gain of nearly $8,400 a year.
Why do county commissioners oppose the rules?
In terms of policy, county commissioners say the responsible bidder rules favor unions and burden businesses.
On a legal basis, the county argues the city’s responsible bidder rules conflict with state law and the local hire and preference rules enforce unconstitutional geographic preferences.
Does responsible bidder actually favor unions?
Since unions tend to offer better and more apprenticeship programs, yes.
But the rules don’t exclude non-union businesses from participating. For example, Ohio Valley Associated Builders and Contractors maintains some non-union apprenticeship programs that would qualify under the law.
Still, most of the union favoritism debate centered around a regulation the city actually offered to give up. Specifically, under current rules employers are only eligible to contract with MSD if they have apprenticeship programs that have graduated at least one person a year for the past five years. In October, Seelbach offered to strip the mandate and replace it with an incentive program. The county seemed unmoved by the proposal.
What about businesses? Does responsible bidder burden them?
By requiring businesses to adopt apprenticeship programs and put 10 cents for each hour of labor into a pre-apprenticeship fund, the law certainly places more regulations on businesses. Whether the requirements are a burden is subjective.
John Morris, president of the Ohio Valley Associated Builders and Contractors and an opponent of the law, told CityBeat the pre-apprenticeship fund’s requirement will increase business costs by $2-3 million over 15-20 years.
Citing MSD estimates for the cost of labor, Rob Richardson, regional manager of the Laborers’ International Union of North America, said the fund will cost businesses $1.5 million.
Even if someone accepts Morris’ estimate, the requirement adds up to at most 0.1 percent of the $3.2 billion project.
More broadly, some supporters of the city’s rules question whether placing a burden on businesses is innately a bad thing. The basic point of government regulations is to make the economy and businesses work better for the public. In that sense, regulations are always going to burden businesses to some extent.
For example, financial regulations burden big banks and financial institutions. But many Americans agree the regulations are necessary to avoid another financial crisis like the one that plunged the country into the Great Recession.
Still, critics argue the extra regulations would increase the cost of business, and the impact could ultimately be felt by MSD ratepayers.
Why don’t the city and county just compromise?
They kind of tried, but it seems the philosophical split between Hamilton County Republicans and Cincinnati Democrats is too strong to reach a substantial agreement.
The city, for example, has offered multiple concessions to the county. In May, City Council modified the law to ease some requirements and add an exemption for contracts worth less than $400,000, which covers half of the contracts involved in MSD’s sewer revamp. In October, Seelbach offered to replace a strict mandate with a looser incentive program. Seelbach also told CityBeat on Feb. 6 that he would consider raising the contract exemption from $400,000 to $750,000.
In return, the county rejected the concessions and instead offered to establish aspirational inclusion goals and some funding for local job training programs — as long as the city repealed its rules altogether.
Which side would win the court battle?
It’s hard to say. Both sides — and their lawyers — seem pretty confident about their legal standing.
So what’s next?
At the current rate, it looks like the city and county are heading to court. Whether the process involves a full-on legal battle or mediation between the city and county’s lawyers remains uncertain, but it’s clear something will eventually have to give.
This blog post will be regularly updated as the situation develops.
Last week, CityBeat's April 4 cover story, "Losing Fight," discussed Cincinnati's legislation that's outlawed ownership of pit bulls within city limits since 2003. Seelbach reveals to CityBeat that he made a pledge to work to repeal the city's ban on pit bulls when he was first elected to office in December 2011, and has met in with stakeholders in the past to discuss reform strategies. "I've always believed that entire breeds should not be punished — we need to punish bad owners," he says.
Just one month before voters pick nine council members at the ballot box on Nov. 5, 18 of 21 City Council candidates on Oct. 5 participated at a candidate forum that covered issues ranging from better supporting low-income Cincinnatians to expanding downtown's growth to all 52 neighborhoods.
During the event, the candidates agreed Cincinnati is moving forward, but they generally agreed that the city needs to carry its current economic growth from downtown and Over-the-Rhine to all 52 neighborhoods. Participating candidates particularly emphasized public safety and government transparency, while a majority also focused on education partnerships and human services for the poor and homeless, which have been funded below council's goals since 2004.
The three City Council candidates not in attendance were Republican Councilman Charlie Winburn, Independent Councilman Chris Smitherman and Independent challenger Tim Dornbusch. The absences prompted forum moderator Kathy Wilson, who's also a columnist at CityBeat, to remind the audience that "a vote is a precious thing" and candidates should work to earn support by engaging the public.
Councilman Chris Seelbach and challenger David Mann, both Democrats, had surrogates stand in for them. Seelbach was attending a wedding, and Mann was celebrating his 50th wedding anniversary with his family.
Here are the highlights from the 18 participating candidates, in order of their appearance:
Wendell Young (Democrat, incumbent): Young said Cincinnati should put basic services and public safety first, but he added that the city should also help address "quality of life issues" such as providing "world-class parks." He also said Cincinnati needs to structurally balance its budget, which has relied on one-time funding sources since at least 2001, and make further adjustments to the underfunded pension system. Young also explained that the city needs to strengthen its partnerships with local organizations to help combat homelessness, affordable housing, child poverty and infant mortality.
Laure Quinlivan (Democrat, incumbent): Quinlivan proudly pointed out she's the "only elected mom" on City Council. She said her goal is to make Cincinnati "cleaner, greener and smarter" by focusing on population and job growth and thriving neighborhoods. To spur such growth, Quinlivan claimed the city needs the streetcar project and more bike and hike trails, both of which she argued will attract more young adults to Cincinnati. Unlike other candidates, Quinlivan publicly supported potentially "rightsizing" — or cutting — Cincinnati's police and fire departments to structurally balance the budget. She also said the city should provide more options for health insurance to city employees so they don't all get a so-called "Cadillac plan" that's expensive for the city.
P.G. Sittenfeld (Democrat, incumbent): Sittenfeld touted downtown and Over-the-Rhine's turnaround as a model for economic growth that Cincinnati should expand to all neighborhoods. He argued the model is what attracts companies like Pure Romance to Cincinnati, as the company mentioned the city's recent urban growth as one reason it decided to stay here. (Of course, the nearly $699,000 in tax incentives over 10 years probably help as well.) When asked about his opposition to the current streetcar project, Sittenfeld said the current project is fiscally irresponsible because of its previous budget problems, which City Council fixed in June, and reduction in funding from the state government, which forced the city to pick up more of the funding share. Sittenfeld said his past two years on council were a success, but he added, "I'm not done yet."
Amy Murray (Republican and Charterite, challenger): Murray said her campaign is focused on creating a fiscally sound city by structurally balancing the budget and fixing the underfunded pension system. But she said she would do both without increasing taxes, which could force the city to cut services and retirement benefits. When asked about her opposition in 2011 to extending city employee benefits to LGBT spouses, Murray said she never had a problem with extending the benefits to LGBT individuals — which City Council did in 2012 — but was simply acknowledging that providing the extra benefits requires making cuts elsewhere to balance the budget. (Opponents previously said the issue should be about equality and fairness, not costs.)
Vanessa White (Charterite, challenger): White said her main goals are reducing poverty in Cincinnati, providing more education opportunities to residents and expanding citizen access to city officials. When specifying her goals for education, White said Cincinnati needs to do a better job incentivizing internships for youth at local businesses and touted the Cincinnati Preschool Promise, which seeks to expand preschool education opportunities in Cincinnati. To increase transparency and outreach, White said she would assign City Hall staffers to answer citizens' questions after council meetings.
Michelle Dillingham (Democrat, challenger): Dillingham said the role of local government is to spur growth in abandoned areas that have been failed by the private sector. But to successfully do this, she said the city needs to engage and reach out to its citizens more often. As an example, she cited the development of an affordable housing complex in Avondale, which has been snared by sudden public outcry from a neighborhood group. Dillingham said supporting affordable housing is also more than just providing expanded services; she explained that she supports creating more jobs that would provide a living wage, which would then let more locals own or rent a home without exceeding 30 percent of their gross income on housing costs. At the end, Dillingham touted her 10-point plan to give more Cincinnatians "a seat at the table" and make the city government more inclusive.
Mike Moroski (Independent, challenger): Moroski said he intends to focus on growing Cincinnati's population, reducing re-entry into the criminal justice system and lowering child poverty. He also touted support for development projects and infrastructure, including the streetcar project. At the same time, Moroski argued some development in Over-the-Rhine and downtown is pricing low-income people out of the city's booming areas — an issue he would like to address. Moroski also said he backs efforts to increase Cincinnati's human services funding to 1 percent of the operating budget over the next few years. When asked about his lack of government experience, Moroski said he sees it as a "gift" and "blessing" that's given him a fresh, outside perspective. "I will be the voice for the voiceless," he said.
Melissa Wegman (Republican, challenger): Wegman opened by showing off her business credentials and neighborhood advocacy. When asked what she means when she says she'll bring a "business perspective" to council, she said she would like to see the city put more support toward small businesses. In particular, Wegman said underserved neighborhoods need more city help and funding. She also told panelists that she opposes Issue 4, which will appear on the Nov. 5 ballot and would semi-privatize Cincinnati's pension system.
Kevin Flynn (Charterite, challenger): Flynn said Cincinnati's budget problems are by far the most important issues facing the city, but he also trumpeted the local government's lack of transparency and engagement as major issues. He explained he's particularly opposed to the mayor's pocket veto, which allows the mayor to entirely dictate what legislation is voted on by council and potentially block any legislation he or she disagrees with. Flynn said he would like to see more citizen engagement on budget issues and more open debate between council members during public meetings.
Greg Landsman (Democrat and Charterite, challenger): Landsman stated his focus is on population, job and revenue growth, which could help him achieve his goal of a structurally balanced budget. He said the city needs to do more to attract and retain young people. Although Landsman acknowledges the city's progress, he said Cincinnati is undergoing a "tale of two cities" in which some neighborhoods prosper and others flounder. Landsman also suggested increasing human services to 1 percent of the operating budget over the next few years and improving city management in other areas, including the budget, pension system and roads.
Kevin Johnson (Independent, challenger): Johnson said the role of government should be to balance out the private sector and provide a safety net for those who fall through the system. He said the city needs to do more to tackle income inequality by "investing in people." Johnson said he supports recent efforts to create a land bank system for struggling neighborhoods, which aim to increase homeownership by making it more affordable and accessible. Johnson also claimed that people are tired of party politics and would like to see more transparency in government.
David Mann (Democrat and Charterite, challenger), represented by campaign manager John Juech: Speaking for Mann, Juech said his candidate got into the campaign to address Cincinnati's budget problems. Juech explained Mann will leave "all options on the table," whether it's revenue increases or service cuts, to structurally balance the budget. When asked whether Mann, who previously served 18 years on council, really deserves more time in the local government, Juech explained that Mann's experience makes him a "walking Cincinnati historian." He also argued that Mann has great relationships with county officials, particularly Hamilton County Auditor Dusty Rhodes, that could make it easier to jointly manage some city services in a way that would drive down costs.
Yvette Simpson (Democrat and Charterite, incumbent): Simpson said she measures progress in Cincinnati by "how well the least of us do," which drove her to start the Cincinnati Youth Commission and other partnerships that help connect the city's youth to jobs. Although Simpson said she supports boosting funding to human services and building better relationships with human services agencies, she said providing more funding is hindered by a "simple math problem" and the city needs to balance its budget before it can provide more and better services. Simpson also said the city could and should do a better job engaging the public with big ideas.
Chris Seelbach (Democrat, incumbent), represented by legislative director Jon Harmon: Reading a statement from Seelbach, Harmon said Cincinnati is on the rise but still needs to improve in various areas. In particular, he said the city needs to do a better job funding all 52 neighborhoods, providing more opportunities for low-income Cincinnatians and eventually increasing human services funding to 1 percent of the operating budget. Harmon also touted City Council's progress with infrastructure issues, including increased road paving and bridge funding. By addressing these issues and occasionally making "tough choices," Harmon said Seelbach hopes to continue growing the city.
Pam Thomas (Democrat, incumbent): Thomas claimed she wants local government to be open, honest and transparent. She said the city's progress should be gauged through education metrics, particularly local graduation rates and, starting next year, the city's success in meeting state-mandated third-grade reading proficiency standards. Thomas replaced her husband on council after she was appointed by him and other council members earlier in 2013, but Thomas said that, unlike him, she opposes the current streetcar project and parking plan, which would lease the city's parking meters, lots and garages to the Greater Cincinnati Port Authority to fund development projects and help balance the budget.
Shawn Butler (Democrat, challenger): To Butler, progress means reducing income inequality, creating jobs and growing the city's population. Although Butler, who is Mayor Mark Mallory's director of community affairs, said he's generally supportive of the mayor's policies, he said the city could do a better job selling itself and reaching out to the business community. Butler also touted his experience, particularly how he's gone through eight budget cycles during his time with the mayor. To structurally balance the budget, Butler said he wouldn't increase the earnings tax and would instead pursue other options, such as tapping into money from the parking plan and cutting services.
Angela Beamon (Independent, challenger): Beamon said she would ensure city services are spread out to all citizens and neighborhoods. She suggested struggling neighborhoods are underserved — not "underperforming," a term she doesn't adhere to — and the city should do more to reach out to them. Beamon also stood firm on her opposition to the streetcar project. Instead of funding the streetcar, she said city resources should go toward promoting business ownership and services that help the underprivileged.
Sam Malone (Republican, challenger): Malone said his goal is to make all of Cincinnati's neighborhoods thrive with more businesses. He said since he lost his re-election to City Council in 2005, he's managed a small business and learned how it feels to be on the other side of the government-business relationship. Malone said his campaign slogan ("I love everybody, I come in peace") best exemplifies how he's led his life. When asked about a 2005 incident in which he disciplined his son with a belt, Malone claimed he's "running on issues" and his parenting tactics were deemed lawful by a court.
Some members of city council agreed that the city needs to take a hard look at the way it inspects projects done with taxpayer money, but they took no action during a special joint committee meeting Thursday to discuss allegations that workers were being underpaid at the University Square development in Clifton.
Council members Laure Quinlivan, Cecil Thomas and Wendell Young presented a video investigation they conducted, which included interviews with workers on the project who claim they were being taken advantage of by the University Square developers.
Under Ohio and Cincinnati law, workers on projects funded by taxpayers must be paid a so-called “prevailing wage” (the same as a unionized worker) and be given benefits.
In Cincinnati, that wage is $23.17 an hour for the carpentry work done by the workers interviewed for the video.
The workers in the video claimed they were paid $500 for working a 60-hour week.
“Five-hundred dollars a week to me when you don’t have a job, that’s a lot,” said Garrick Foxx, a construction worker on the project.
“But actually when you average it out, it’s not. Like to the hour-wise it’s probably like 9-something, so like I could actually make that working at McDonalds.”
The University Square developer — a collaboration between Towne Properties and Al. Neyer, Inc. — is building a complex with a parking garage, residential units and retail space.
The City of Cincinnati has $21 million invested in the parking garage. The State of Ohio recently ruled that the prevailing wage provisions apply only workers constructing the garage that the city has money invested in.
Arn Bortz with Towne Properties said the controversy was ginned up by unions and it hasn’t been proven that workers are being underpaid.
“All of this was started by the unions themselves because they became very unhappy when the State of Ohio said a sizeable portion of our project was not subject to prevailing wage,” Bortz said. “They tried then to discredit and intimidate anyone who is on the other side of the table.”
Bortz said he agreed to pay a prevailing wage even to workers who worked on parts of the project not subject to the law. He said he cuts a check to the subcontractors based on that agreement.
“Whether any of those subcontractors might have been unfair to the workers, we do not know,” Bortz said. “If they were, they should be made to be fair.”
Deputy City Solicitor Aaron Herzig said if the contract required a particular wage be paid and it wasn’t, the city can bring a breach of contract action against the developers. But to start an investigation, a complaint must first be made.
The council members asked that their investigation be considered a formal complaint.
It's finally over and done with.
After years of criticism by his opponents and at least one similar attempt two years ago, the Cincinnati Democratic Committee voted this morning to un-endorse City Councilman Jeff Berding. CityBeat first mentioned the current effort in early July.
It took awhile due to some miscommunication about police terminology, but CityBeat managed to get a copy of the incident report that Cincinnati City Councilman Jeff Berding filed late last month against a one-time political ally.
Berding filed a report with Cincinnati Police Officer Jay D. Barnes on Jan. 27, the same day that Berding announced his impending resignation from City Council.
Supporters of the $133 million streetcar project on Thursday night packed Mercantile Library and Fountain Square to start a two-week campaign that seeks to prevent the incoming mayor and City Council from canceling the ongoing project.
Turnout was particularly strong as supporters reached the 200-person capacity at Mercantile Library before the event started. Another 200 watched the event from the Jumbotron screen at Fountain Square, according to the event's organizers.
In attendance were several Over-the-Rhine business owners and residents; council members P.G. Sittenfeld, Chris Seelbach and Wendell Young; and several supporters of the project from around the city.
The goal of the event was to organize supporters and begin a lobbying campaign to convince the three perceived swing votes in the incoming council — Sittenfeld, David Mann and Kevin Flynn — to support continuing the project. All three have spoken against the streetcar in the past, but they told CityBeat they want to fully account for the project's cancellation costs, completion costs and potential return on investment before making a final decision.
Speakers urged supporters to contact the nine newly elected council members and raise awareness about the streetcar's benefits before Mayor-elect John Cranley, who opposes the streetcar project, and the new City Council take office in December.
Ryan Messer, a lead organizer of the effort to save the streetcar, spoke about the advantages of the streetcar project for much of the event. "This is a good economic tool that helps all of Cincinnati," he repeatedly stated.
Supporters have some empirical evidence to base their claims on. A 2007 study from consulting firm HDR found the streetcar project would generate a 2.7-to-1 return on investment over 35 years. The HDR study was later evaluated and supported by the University of Cincinnati.
Project executive John Deatrick acknowledges the 2007 study is now outdated and the city is working on updating the numbers. But he says the streetcar project is supposed to be viewed as an economic development vehicle, not just another transit option.
Supporters also warned of the potential costs of canceling the streetcar project. Hours before the gathering, Mayor Mark Mallory released a letter from the Federal Transit Administration that explicitly stated the city would lose nearly $41 million in federal grant dollars if the project were canceled, and another $4 million would be placed in the hands of Gov. John Kasich to do as he sees fit.
City spokesperson Meg Olberding previously told CityBeat that the city already spent about $2 million of the federal funds. If the project were canceled, she says the money would have to be repaid through the operating budget that funds police, firefighters and human services instead of the capital budget currently financing the streetcar project.
The operating budget has been structurally imbalanced since 2001, so adding millions in costs to it could force the city to cut services or raise taxes.
The FTA letter might already be playing an influence for at least one of the swing votes on City Council. On the elevator ride up to Mercantile Library, Sittenfeld told Seelbach and CityBeat, "I will say that today's news is a big gain in the pro-streetcar column."
Another threat for the city is potential litigation from contractors, subcontractors, taxpayers and Over-the-Rhine residents and businesses who invested in the project or along the streetcar line with the expectation that the project would be completed.
Litigation costs would also come out of the operating budget, according to Olberding.
"As a trial lawyer, this is actually appealing," said Democratic attorney Don Mooney. "For the city, not so much."
Supporters also outlined the potential damage that pulling from the project could do to the city's image, given that developers, businesses and the federal government have put their support and dollars toward the streetcar.
"Is Cincinnati that city that will dine you and wine you and leave you alone at the altar?" Young asked.
But if the lobbying effort, cancellation costs and threat of litigation aren't enough, supporters also presented one more option to save the streetcar: a ballot initiative. Mayor-elect John Cranley on Thursday told The Cincinnati Enquirer that he would be open to allowing some sort of streetcar referendum on the ballot.
The ultimate goal for supporters of the streetcar, beyond ensuring sustainable growth in the urban core, is to connect all of Cincinnati through a vast transit network, much like the streetcar lines that ran through Cincinnati before the city government dismantled the old system in the 1950s.
That provides little assurance to opponents of the streetcar project. Cranley and at least three hard-liners in the incoming City Council — Amy Murray, Charlie Winburn and Christopher Smitherman — claim the project is too expensive and the wrong priority for Cincinnati. Discussing more phases makes the project appear even costlier to opponents who are already concerned with costs.
In its comprehensive plan for 2040, the Ohio-Kentucky-Indiana Regional Council of Governments put the cost of various extensions — to the University of Cincinnati and surrounding hospitals, the Cincinnati Zoo, the Cincinnati Museum Center and the Broadway Commons area near the Horseshoe Casino — at more than $191 million, or $58 million more than the estimated cost for the current phase.
But if Cincinnati never completes the first phase of the streetcar project, supporters say it could be decades before other light rail options are considered.
Facing term limits, Cincinnati City Councilman John Cranley announced today that he would resign his seat Thursday to join the Keating Muething & Klekamp law firm and concentrate on development projects in East Price Hill.
During the past two weeks CityBeat has published its list of endorsements in the race for Cincinnati City Council,along with those on local and state issues.
Some readers have requested that the endorsements be put into a smaller format that will be simpler to print out and take along with them to their polling places on Tuesday.
So, here it is. Clip, save and enjoy.