5.6. SR 02-13-2006 - Laserfiche WebLink

Home Browse Search

contractors, depending on where they are from. Generally, contractors from the St. Cloud area tend to be non-union; contractors from the metropolitan area tend to be UIllon. 5. Two recent examples of the potential costs due to a prevailing wage law were the Northstar Business Park project and the 2004 Street Overlay project. With the Northstar Business Park project, prevailing wage was added to the contract by change order after the bid was originally awarded. This was done due to a grant the Economic Development Department received to help pay for the improvements which required the use of prevailing wages. The negotiation with Northdale Construction, the general contractor, resulted in an additional cost of $22,290.90 to add prevailing wage to the original bid of $645,415.33. Keep in mind that Northdale Construction is a union contractor; therefore, adding prevailing wage did not require them to pay their employees more. The change order was basically for the increase salary for non-union contractors and for the required documentation for prevailing wage. The second example is the 2004 Street Overlay improvement, which is essentially just street paving. The low bidder on that project was Universal Enterprises, a non-union contractor, in the amount $447,907.50. The second place bidder was North Valley, Inc., a union contractor. Their bid was approximately $37,000 (8.2 percent) more than the low bidder. 6. With regard to the claim that prevailing wage law provides for higher quality construction while reducing delays and overruns, I believe that claim is not borne out in the area of utility and street construction issues. Generally speaking, we would receive bids from the same group of contractors for these types of improvements, whether or not prevailing wages are required on the project. The only contractors that may not participate would be relatively small subcontractors who may choose not to deal with the regulations for reporting and the increased pay for prevailing wage law. On the flip side, I do not believe that adding prevailing wage requirements to all street and utility contracts in the City of Elk River would reduce competition. I do believe that the competition level would remain constant. The quality would be similar to that which we have experienced in the past. The cost could increase, depending upon the type of project. 7. Things for the City Council to consider if they are to adopt a prevailing wage ordinance are some of the hidden overhead costs which would come with it. Prevailing wage law typically requires the contractor to have a display board posted at all job sites. There is also typically a requirement for the general contractor to provide payroll documentation to ensure that prevailing wage law is met. Finally, there is a requirement for the City to verify that prevailing wage law is met by reviewing the submitted documentation and verifying it through on-site employee interviews. 8. The other area that would need consideration would be with regard to how to deal with violations of the prevailing law ordinance. Currently, with Federally or State funded projects, issues of violation are dealt with by MnDOT and/or the Minnesota Department of Labor and Industry. If the City adopts a prevailing wage ordinance for all other projects other than Federally or State funded, I believe the City will need to be S:\Engineer\2006 Letters\0130 061tr LJ Prevailing wage. doc