This picture may be one of the last of the "big three" (Strickland, Husted, and Harris) holding hands over Clean Ohio. Governor Ted Strickland’s administration is proposing to mandate prevailing wage for all construction that occurs on land for which the State has funded environmental remediation. A key political debate is shaping up as to how this change will affect projects funded using brownfield grant funds through the Clean Ohio Program.
To provide answers a few points must be addressed:
- Which type of Clean Ohio grant funded the project?
- Which costs are at issue? Remediation costs or construction costs post-clean up?
Clean Ohio recently created a new "redevelopment-ready" grant track. This is in addition to the "known end-user track." Apparently, under the proposed policy how much work at a brownfield is covered by prevailing wage will depend upon which grant track your project was funded.
Under the proposed prevailing wage policy, if your project receives Clean Ohio funding under the "known-end user track" the use of grant funds will "presumptively subject all construction on the entire project to prevailing wage." However, if the state were to fund the cleanup at the brownfield under the "redevelopment ready track" (i.e. there is no identified end-user of the property), then only the remediation work is subject to prevailing wage.
According to the Columbus Dispatch, Speaker Jon Husted expressed concern that application of prevailing wage to brownfield development could drive people to using green space or farmland for development. What type of cost increases would decrease the attractiveness of public-subsidized redevelopment of brownfield sites?
A Legislative Service Center (LSC) study of the exemption of school projects from prevailing wage concluded it reduced costs by around 10% and saved $487 million. The conclusions of the LSC study were challenged, so it is difficult to really know whether similar cost increases could occur at brownfield sites.
Here is my take:
- Environmental remediation is an expensive business, application of prevailing wage may not impact the costs associated with this type of clean up work. However, it may be different when dealing with the redevelopment of the site post-clean up (i.e. pure construction work). It is possible that construction costs at a brownfield could increase by a comparable amount (10%) as was found in the LSC study.
- A 10% increase in costs is probably unlikely to make most projects that are premised upon receiving public subsidies no longer attractive. However, why diminish the cost effectiveness of a grant program designed to spur redevelopment in neglected areas.