I wonder if the contractors bid the jobs figuring prevailing wage into their bids? That's a pretty hefty profit if they did.
http://www.stltoday.com/stltoday/ne...176C4B61AA76937486257123001CEF24?OpenDocument
http://www.stltoday.com/stltoday/ne...176C4B61AA76937486257123001CEF24?OpenDocument
Arrests here shine light on illegal workers at building sites
By Nancy Cambria
ST. LOUIS POST-DISPATCH
02/27/2006
O'FALLON
People had been telling federal, state and local officials since April that something was not right at an O'Fallon construction site.
White vans with black, spray-painted windows arrived with workers before dawn and left after dusk. Workers labored seven days a week, including over Thanksgiving and Christmas.
Already incensed by the use of out-of-state workers on a publicly subsidized project, local unions cried foul to anyone who would listen. They alleged that the workers were illegal immigrants bused in from Texas by subcontractors. There was talk that workers were paid in cash and that the money flowed out of the country via wire transfers to Mexico.
"We tried to get a whole lot of people to look at that job, and nobody wanted to bite on it," said Tom Heinsz, an area Carpenters union official.
All that changed Feb. 10, when a van on its way to the site was stopped for speeding. Five illegal immigrants were arrested. About a week later, eight more were taken into custody by immigration officials: seven who were found during a traffic stop and one arrested for a fight on the construction site.
The case shouldn't be that surprising, even in a state with a relatively small number of illegal immigrants, said Jeff Passell, a demographer with the Pew Hispanic Center, which studies immigration. Behind farming and cleaning, construction ranks third in the concentration of illegal immigrant workers in the nation, he said.
Areas such as Arizona and Texas traditionally have had a high number of illegal immigrants building homes, but, Passell said, illegal workers are now following construction jobs into new areas of the country. In the past 15 years, Missouri's estimated population of illegal immigrants has increased from around 10,000 to more than 55,000, Passell said.
While that is about half of 1 percent of the nation's estimated 10 million illegal immigrants, "it's not an insignificant increase," Passell said.
Rethinking policies
In the aftermath of the O'Fallon arrests, state and local officials who issued millions in bonds and approved tax credits for the project are struggling to find ways to ensure that legal labor practices are followed on publicly subsidized projects.
In the future, both the state housing corporation and the county authority are considering requiring payrolls that certify the legal status of workers, creating penalties for contractors and lenders, and asking employers to waive employee privacy rights so they can gain access to construction sites for spot checks.
The Missouri Housing Development Commission granted the affordable housing apartment complex $1.4 million in state and federal tax credits. The county's Industrial Development Authority, an offshoot of the county's Economic Development Center, approved the project for $14.6 million in tax-exempt bonds.
"To say we were disappointed with the apparent actions of the contractor and subcontractor is an understatement," said Greg Prestemon, the head of the Economic Development Center, which operates the Industrial Development Authority. "We're extremely angry."
In October, O'Fallon City Administrator Robert Lowery said officials had been personally reassured by Gundaker Commercial Group, the local developer affiliated with the $25 million project, that no improper labor practices were taking place. They received similar assurances from the Economic Development Center.
"As far as they were concerned, this was a city of O'Fallon problem," Lowery said.
Lowery said the police reports proved what the union and city officials had suspected all along. Through broken English, one of the illegal immigrants told police he owed a man he called his uncle $1,100 for his help to enter the country, and he worked as a laborer on the site to repay him. He was paid $8 an hour - well below the prevailing union wage of about $26- and worked nine hours a day, seven days a week and sent most of his money to his family in Jalisco, Mexico.
Others told police they were paid in cash every Friday by a site supervisor. All of them said they worked for a subcontractor out of Texas. The federal Immigration and Customs Enforcement Agency found one of the workers was a juvenile. He was arrested with his father.
New accountability
Prestemon said the Industrial Development Authority had little reason to suspect such labor abuses "in large part due to the strong reputation and name of Gundaker." The deal had been introduced to the authority by Mike Hejna, president and CEO of Gundaker, a local company that reported $68 million in revenue in 2004. The construction company later hired for the project, NRP Contractors of Cleveland, is one of the top producers of affordable housing in the nation. And its primary financier, Related Capital of New York, reports $8 billion in development and refers to itself as the national leader in financing government sponsored housing projects.
Rick Bailey, a principal with NRP, insisted that the company knew nothing about illegal labor on the site and deferred liability to its subcontractors. Andy Weil, managing director of Related Capital in New York, said his company was as shocked as everyone else about the workers and had never encountered illegal labor problems on other projects.
In April, amid growing rumors that the contractors on the site were breaking federal law by using illegal workers, Missouri Treasurer Sarah Steelman and former state Rep. Bill Luetkenhaus, both of the Missouri Housing Development Commission, asked Hejna to respond to the commission. Both said Hejna had assured them that the workers would be local and the labor legal. Luetkenhaus said that the response had appeased staff and board members but that they should have been looking harder.
Prestemon said once the bonds are sold, the authority has no ability to stop or impose sanctions on the project.
Hejna said Gundaker would never again structure a deal in which it was not the contractor. Despite protests from NRP, Hejna said workers from Gundaker now conduct morning identification checks at the site and turn away workers who fail to have the proper paperwork.
NRP contractors continue to work on the site, and the project's main financial backer, Related Capital, continues to employ NRP. Lowery said he believes Hejna's efforts have helped to reduce illegal workers at the site, but he thinks justice has not been served.
"Somebody has to be accountable here," he said. "We seem to punish the workers, and we let the contractors and subcontractors get away with this."
