A law meant to ensure more city contracts are ferried toward Detroit-based and headquartered businesses is undergoing changes that could give union construction companies an advantage.
Detroit City Council President Mary Sheffield is spearheading an effort to create new incentives for construction contractors that provide health insurance and retirement benefits or participate in registered apprenticeship programs. The ordinance would offer new “equalization credits” that give qualifying companies a better chance of winning bids for city contracts. Some Detroit small business owners are worried the changes will shift preference toward suburban contractors that work with unions.
Sheffield emphasized non-union companies can apply for the same credits, so long as they provide benefits and participate in apprenticeship programs.
“This ordinance is not a push to get contractors to become unionized,” the council president told BridgeDetroit in a Thursday interview. “I’m a huge supporter of union contractors and union work, but that’s not what this is about. It’s strictly about the employee and how they are treated.”
Charity Dean, president of the Metro Detroit Black Business Alliance, said the changes will negatively impact small Black-owned construction firms. Dean said most small businesses can’t afford to provide pensions, 410(k) plans or apprenticeship programs. She urged the council not to create incentives that will give non-Detroit contractors a leg up over local businesses.
“We love the fact that City Council was looking at incentives to get people to do the right thing,” Dean said at a Wednesday public hearing. “We think that’s the way to go. The question is: Who wins? When you have to make a choice between a Detroit business and a non-Detroit business, It always has to be the Detroiter.”
The new credits would only apply to “high-impact construction contracts” valued at $250,000 or more. Other existing credits can be received by Detroit businesses for contracts valued between $25,000 and $2.7 million, depending on the type. The ordinance also proposes requirements for safety training, licensing and certification, and disclosures of past compliance issues.
Sheffield said the proposed “responsible contracting” incentives are meant to improve working conditions on construction sites. For example, she said, workers on large construction projects have been found to handle hazardous materials without proper safety precautions.
“The reality is this: we know there are several irresponsible contractors,” Sheffield said. “We’ve had issues with dirt, with work that was not done to a good standard (and we had) to go back and get the work done again, people not being properly trained and handling asbestos without proper training, all kinds of things.”
Dean sent Detroit Corporation Counsel Conrad Mallet and council members a letter this week arguing the city failed to follow public outreach requirements. A 2020 ordinance mandates public meetings to be held in neighborhoods affected by initiatives related to construction projects. Dean said the council should hold further discussion on the ordinance until meetings are held in each council district.
Dean is also building a coalition to increase engagement with business owners. But she said those efforts met resistance from groups that stand to benefit from the ordinance changes. Dean said one union leader called a member of the MDBBA and threatened to send union members to job sites. Dean said it feels like an intimidation tactic.
“Never have we experienced this before,” Dean said. “It’s frightening. We’ve created a culture in city politics where this is OK.”
Sheffield touts a strong relationship with Detroit unions and has publicly supported collective bargaining efforts amid a wave of labor strikes this year. The Michigan Regional Council of Carpenters, which represents striking casino workers, is the top donor to a campaign committee Sheffield formed in preparation for a potential 2025 mayoral run.
The Laborer’s International Union of North America and Local 1191 was heavily involved in the ordinance’s creation. Members were on hand for an October press conference where Sheffield recommitted to passing the “responsible contracting” upgrades.
“We see workers in every industry are standing up right now for better working conditions, for living wages, for safety – and they ask us every day: Will you stand with us, not just with your words, but with your actions?,” Sheffield said during a Nov. 1 public hearing. “I look at responsible contracting as one way that we as an elected body can ensure that when business comes to the city, when contractors are asking for public dollars, that we are protecting the workers that are out there doing the work day in and day out.”
While Sheffield invoked labor movements in her introduction of the changes, she also emphasized there’s no specific preference for union contractors in the ordinance language.
“This is not about union or non-union,” Sheffield said on Nov 1. “It’s about workers.”
The city doesn’t currently collect information about which businesses offer retirement plans or have registered apprenticeship programs, so city officials were unable to say Wednesday how many businesses would qualify for the new credits.
Sheffield said the ordinance has been in the works for five years, and was kickstarted by former Council President Brenda Jones. Sheffield intended to bring the ordinance for a vote before the end of 2023, but it’s not clear whether there’s enough time to call a vote before a winter break at the end of November.
The council’s Budget Finance and Audit Committee heard arguments in two public hearings this month, with a third scheduled for Nov. 15. The council’s final meeting is scheduled for Nov. 21.
MDBBA representatives and council members want more time to weigh in on the proposal. Several council members proposed their own changes to the value of incentives and what contracts the ordinance applies to. Various other amendments are being worked out, including a request from Council Member Scott Benson for the credits to only be available for construction contracts worth $2 million or more.
Several construction contractors have spoken out against the changes. Kalaya Long, owner of Blue Horizon Construction, said her company will be unable to qualify for the proposed credits.
“This proposed ordinance would render us unable to compete for Detroit projects,” she said.
Charles Bailey, owner of Detroit-based Lake Star Construction Services, LLC, said it’s already difficult to compete for contracts and the changes will put his firm at a further disadvantage.
“It will be very difficult for a business like mine,” Bailey said.
Jolika Dumas, president of Detroit’s chapter of the National Association of Black Women in Construction, said there’s “no doubt” the ordinance will hurt Black-owned businesses.
Dean said she’s had frustrations with the council introducing proposals without consulting her organization, which represents 1,200 Black-owned businesses. She said the proposed ordinance is a chance to look at other reforms to procurement policies in Detroit, and small businesses should have a greater say in potential changes. Dean previously served as the director of Civil Rights, Inclusion, and Opportunity for the city.
“This is not about unions versus businesses,” Dean said. “City Council is opening the procurement ordinance, invite us to participate.”
Detroit currently uses a range of credits to give local businesses a leg up in the competition for contracts. The credits knock percentages off the bid price, giving a preference to qualifying companies when a competing firm’s bid is equal or lower.
A 5 percent credit is available for businesses when half of the workforce is made up of Detroiters. Another 5 percent credit is available for businesses headquartered in the city. A 2 percent credit is available for “micro-businesses” and Detroit-based businesses, while a 1 percent credit is offered to small businesses.
Sheffield’s proposal creates two new credits each worth 6 percent. The first is for “construction workforce development businesses,” which applies to contractors that participate in a registered apprenticeship program. The other is for “construction workforce investment businesses” that provide health insurance and retirement benefits.
The credits can stack up to 12 percent.
“As long as somebody can get those points and beat out a Detroit business, we’re never going to support it,” Dean said. “Detroit businesses should always win when it comes to Detroit taxpayers dollars.”
Sheffield said she’s open to reducing the 6 percent credit or increasing the 5 percent credit for Detroit-headquartered businesses so they’re on the same level. Conversations between her office and MDBBA are ongoing.
“I agree there could be better communication,” Sheffield said. “We want something that works for everyone.”