As the D.C. Council works to finalize the Bowser administration’s $515 million commitment to Capital One Arena’s redevelopment, a debate continues to rage on about the degree to which D.C.-based contractors and certified business enterprises (CBEs) will be involved in the project.
Marcus Jackson and others who testified before the D.C. Council’s Committee of the Whole expressed skepticism that a Project Labor Agreement (PLA), like what Monumental Sports & Entertainment (MSE) and Clark Construction are currently negotiating, will ensure that the project meets the District’s minimum requirements for first-source hiring and CBE contracting.
“PLAs let unions pick who gets work and who doesn’t. It’s a self-defeating economic policy,” said Jackson, director of government affairs at Associated Builders and Contractors of Metro Washington, during the Nov. 14 public hearing for the bill titled the Downtown Arena Revitalization Act of 2024.
If passed, the Downtown Arena Revitalization Act will mandate a minimum of 40% CBE participation on the project with the goal of reaching 50%.
The arena revitalization bill also includes a stipulation that 51% of contractors are first-source District hires. MSE recently signed a memorandum of understanding with the Baltimore DC Building and Construction Trades Council to facilitate CBE and District resident inclusion.
D.C. Council Chairman Phil Mendelson (D) mentioned that the measure would most likely go before the council between late November and early December. As MSE higher ups later explained, construction would begin immediately thereafter in a manner least disruptive to the fan experience.
Most of the three-year redevelopment project will take place during the basketball and hockey off-season between 2025 and 2027.
By law, CBEs receive Department of Small and Local Business Development certification and access to preferred procurement opportunities after proving that they lease or own office space that senior leadership occupies year-round, and that more than half of their employees, owners and assets reside in D.C.
There still remains concern about whether the impending PLA will allow for top-notch, non-unionized CBEs and D.C. residents to participate in what’s anticipated to be Gallery Place-Chinatown’s largest development project in years.
Jackson and other public witnesses alluded to the Frederick Douglass Memorial Bridge construction project, which, according to a report conducted by D.C. Department of Transportation, produced one job for Ward 8 residents.
“CBEs that sign PLAs are setting themselves up for financial disaster, even bankruptcy for the owners,” Jackson told the council’s Committee of the Whole as he pivoted to high-construction costs as another concern. “I urge you to take a look at the Rand Center for Housing and Homelessness’s updated PLA study [that] found affordable housing costs more than average when built with a PLA. No additional benefit to workers.”
D.C. Council Revisits a Controversial Labor Issue
PLAs are pre-hire collective bargaining agreements that establish the terms and conditions for a specific construction project, including a no-strike, no-lockout clause. The goal, as expressed by the U.S. Department of Labor, is to facilitate the efficient and timely completion of construction projects, while fostering cooperation between construction companies and trade unions.
On Nov. 14, MSE representatives who spoke before the council’s Committee of the Whole assured Mendelson that they could meet the hiring goals to be outlined in the Project Labor Agreement that’s currently in the works.
“We spent a great deal of time to make sure we can move from 35% to 40%,” said Monica Dixon, MSE’s president of external affairs and chief administrative officer. “It was a big step, but with Clark [Construction], we can make that 40% and we will try to get to 50%.”
During the latter part of last year, the Biden-Harris administration implemented an executive order expanding the use of PLAs on large federal construction projects.
In May, D.C. Council followed suit with unanimous approval of legislation lowering the minimum million-dollar amount on local projects requiring a PLA. They did so despite concerns among some council members and CBEs about increased construction costs and timelines, exclusion of non-union CBEs, and the perpetuation of D.C.’s labor gap.
At large D.C. Councilmembers Kenyan McDuffie (I) and Anita Bonds (D) spent much of their time on dais focused on this topic during the hearing, with McDuffie holding up CBEs as the greatest priority in the Capital One Arena redevelopment project.
“When contracts go to D.C. business, they are more likely to hire District residents. That’s why I’m a fierce advocate for CBEs,” McDuffie said.
Though not directly involved with the negotiations, McDuffie recounted making this point during his meetings with MSE and Clark Construction, both of whom he said are cooperative.
“I appreciate their agreement to do more,” McDuffie explained. “This agreement guarantees an additional $40 million and as much as $120 million .. and additional contracts flowing to small businesses … means $450 million …. to be spent with D.C.-based businesses.”
Nina Albert, D.C.’s deputy mayor of planning and economic development, later spoke to reporters about how she and her colleagues attempted to address McDuffie’s concerns and that of others. Resolving conflicts between CBEs and unions, she told reporters, meant assessing and setting aside certain types of jobs on the construction site for each of those groups.
“This is a policy issue [where] we need to make a place for everyone so that beneficiaries are D.C. residents and businesses,” Albert said. “The D.C. Council voted to lower the threshold for PLAs and we haven’t reconciled how it comes together. We tried to thread that [by] looking at trades in the project [to set aside]. They have committed to the 51% [first-source hiring] and will make sure there are job hiring opportunities.”
Union Organizers and CBE Advocates Hash It Out
Renovation and expansion plans for Capital One Arena include: the addition and enhancement of building entrances, improving the connection between the interior and exterior of the building, and the creation of a shared viewing platform in the upper bowl end zone.
Jim Simpson, a union employer with Ironworkers Local 5, applauded MSE and Baltimore DC Building and Construction Trades Council for their work in crafting a PLA that exceeds the minimum requirements for CBE participation.
“The compressed schedule across several years make this project tailor made for a PLA,” said Simpson, CEO of Continental Construction Inc., in his testimony before the Committee of the Whole on Nov. 14. “PLAs and achieving minority participation are not mutually exclusive. Many small local minority businesses would have no issues with PLA projects.”
Simpson, whose 35-year portfolio includes Nationals Park, the Walter E. Washington Convention Center, and Mandarin Hotel, weighed in on the Frederick Douglass Memorial Bridge controversy, saying that the parties involved, to some degree, fulfilled the tenets of the PLA.
“My understanding is that 45 minority and women-owned businesses representing 91 million contracting opportunities were part of the construction of the Frederick Douglass Memorial Bridge,” he told council members.
But Eric J. Jones, a lobbyist of 20 years, says that history is the greatest teacher when it comes to assessing the impact of PLAs. In making his point, he brought up the Marriott Marquis Washington DC, a hotel built near the Walter Washington Convention Center without that agreement.
“[This is] the best example [of] bringing a team in place,” Jones told council members on Nov. 14. “They had the same requirements without the union piece. It was a Convention Center bid that brought in people qualified to work.”
Jones, vice president of government affairs at the Apartment and Building Association of Metropolitan D.C., later told The Informer that he still supported the arena renovation deal, which he said stands to revitalize Downtown and generate revenue in other parts of the District.
His qualm, however, stood with what he called the intrusion of out-of-towner tradespeople via the unions. He said that union jobs aren’t attractive to the majority of D.C.’s construction workforce, due to internal workings that stand to keep capable people away from employment opportunities.
“People who have seniority can jump over [those] who haven’t been in that union,” Jones said. “These big projects are being done by people who are not from here. I’m not anti-union, but too many great companies and employees won’t be able to work. If you’re qualified and capable, you should have the opportunity.”