To Boost Employment, Town Considers Joining Private Sector

In a bid to give more jobs to residents of Akron, Ohio, Mayor Don Plusquellic wants to create a private entity to help the city build $1.4 billion in sewer improvements.
by | March 25, 2015

City officials in Akron, Ohio, which is under a court order to make $1.4 billion in sewer improvements, are exploring a new way to ensure that the majority of workers hired to complete the project actually live in Akron: They want to set up a city-run company to bid on the work.

The city has already required contractors working on sewer improvements to hire at least half of their workers from Akron, but creating a private company to handle the work would allow them to hire an even greater share of residents. The city could not do the same if it handled the work itself, because Ohio lawmakers blocked cities from establishing residency requirements for city workers more than a decade ago.

Mayor Don Plusquellic came up with the idea after the city was able to employ 90 percent Akron residents on two smaller sewer-related projects, by using two minority-owned firms and performing some of the work itself. "The mayor had the idea and said if our local contractors and companies aren't going to make those hiring requirements, we'll do it ourselves," said Phil Montgomery, the city's deputy director of public service. "So we're starting our own company. Nothing is a done deal, but it is innovative, and we think we can make it work."

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It is unclear how the new company would be structured, but Montgomery pointed out that the city already has created private entities, for example, to promote economic development. The new company would inevitably compete against Mack Concrete, the only concrete supplier in the area with the capacity to bid on a large-scale project.

Not everyone is sold on the idea. The city council has peppered the mayor with questions about the arrangement in two hearings so far, especially on the wisdom of spending tax money on construction equipment. Plusquellic is asking a skeptical city council to spend $1.9 million to buy dump trucks and cement trucks for the new company.

Chris Runyan, president of the Ohio Contractors Association, criticized Akron for trying to get around state law prohibiting residency requirements for city workers. He said the city's effort to create its own private company is a matter of "semantics." "If whatever entity they're trying to create does not competitively bid, if it does not have to bond, if it does not have to utilize prevailing wage rates, if it does not have to make a profit like the private sector does, then I would be hard-pressed to call it a construction company," he said. "I would say that it is the city finding another way to make their payroll larger."

Construction workers in Akron, Ohio. (FlickrCC/Mark Turnauckas)

The Ohio Contractors Association is also trying to convince the Republican-controlled legislature to prevent cities from including requirements in construction contracts to hire local residents. Akron officials rallied to block the new restriction once this session, but both sides anticipate that it could come up again. "We think it's wrong that a governmental entity can tell a person where to live to be eligible for a job," Runyan said. Akron officials rallied to block the new restriction once this session, but it has re-emerged as a provision of a transportation funding bill. The prohibition would apply to cities that use state loans to finance infrastructure construction, including Akron's sewer project.

But Montgomery said it is unfair for the state to tell cities how to spend their money on projects like sewer upgrades, which are paid for by local residents. "It's one thing to tell [the Ohio Department of Transportation] how to spend its money, but it's another thing to tell Akron how to spend our own dollars," he said.

The city also has been working to improve the skills of local workers to make them more attractive to employers too. It offered a class to help residents get commercial driver's licenses last year. It partnered with local unions and the Urban League to offer a "pre-apprenticeship" to help residents better prepare for union jobs.

When it comes to the sewer project, Montgomery said there is no set target for what percentage of workers ought to come from Akron. "We would love to get 100 percent, but we're not unrealistic. No one in Akron can drive a tunnel-boring machine," he said. "We want to get it as high as we can get it without shutting anything down."