Though Davis and O’Donnell are usually at odds, this week they agreed that big developments in Bayonne should be required to use 20 percent local union labor. This, after Davis proposed an ordinance to require development projects of more than $15 million to have Project Labor Agreements. (PLAs). Bayonne would become one of only a few cities in the state to have passed such an ordinance, modeled after Jersey City’s PLA ordinance, which was passed in 2007 and revised in 2017.
The city council passed a PLA in June of 2015 for public projects of more than $5 million. The new ordinance applies to private developments that have PILOT agreements with Bayonne.
Bayonne is historically a blue-collar city and still has the highest rate of union membership in the county. A PLA requirement would be popular; many residents have clamored for it at city council meetings where PILOTs (Payment In Lieu of Taxes) are discussed. By introducing a PLA ordinance, Davis may have beaten O’Donnell to the punch, thus draining some potent political capital.
Support for PLAs has been one of O’Donnell’s core proposals from the onset of his campaign. Since announcing, he’s picked up endorsements from the International Union of Operating Engineers Local 825 and the United Steel Workers Union Local 4-406.
In October, when O’Donnell announced his candidacy, he told the Bayonne Community News, “When we award wealthy developers 25- and 30-year tax breaks without benefits of project labor agreements [with local unions], that will rob future generations of education funding. I don’t think that’s the wisest move.”
Soon after the PLA ordinance was announced, O’Donnell called Davis “disingenuous” for choosing not to propose such an ordinance during his first three years in office.
“How many union jobs have been [mandated]for these projects? Zero,” O’Donnell said. “Now, after 35 PILOT agreements, you’re going to do a PLA? You have to see through it.”
According to Davis, a PLA policy in Bayonne has long been contemplated. “Bayonne was once stagnant, and now that the economy and construction is heating up, timing is right to do something like this,” he said. “It’s just the next natural step.”
Former Mayor Mark Smith may add a valuable perspective to the development debate. Smith was elected when the global economy crashed. Bayonne was where it is now – on the cusp of major development. But the financial crisis drained capital reserves, putting a halt to development projects in Bayonne, and around the world.
Smith was not available for comment.
The Davis Administration is credited with digging the city out of the pile of lawsuits left over from the financial crisis and deciding on a new development policy.
O’Donnell has been highly critical of the development strategy embraced by the Davis Administration, which encourages large and medium-scale real estate development by foregoing property taxes in exchange for payments made directly to the city, while not requiring those developers to use union labor.
Developers embrace this arrangement because it makes it easier to secure risk-averse investors. Return on investment is more easily calculated when considering fixed payments over the course of 20-30 years than predicting fluctuations in property tax rates. PILOTs are attractive to local governments because developer payments are direct cash infusion into the city’s coffers, and the city is not required to share nearly as much of that revenue with the school district as it does property tax revenue.
But educators and taxpayers do not like these agreements because they artificially depress the ratable property tax base in the short term, putting added pressure on the public-school district that depends on local property taxes and state aid for funding.To help alleviate the problem, the city council in June passed an ordinance requiring that five percent of PILOT payments go to the Bayonne school district after Jersey City passed its own version in the spring of 2017.
To those who work in construction, PILOTs are a story of union versus nonunion labor. Union members want PLAs, while nonunion construction workers do not because they are excluded from them. In Jersey City, this conflict resulted in nonunion industry groups filing a lawsuit that resulted in July’s revised PLA ordinance, on which Bayonne modeled its PLA ordinance.
The Davis Administration’s approval of 35 PILOTs are mostly for projects on land on Bayonne’s long-dormant industrial waterfront. City officials have described the long-term strategy as jump starting development, with expectations that future developers will be less likely to ask for PILOTs. Obviously, those explanations have not quelled criticism.
Rory Pasquariello can be reached at email@example.com.