Bucks Beat Hiring Goals on Arena

The Milwaukee Bucks have scored a big victory when it comes to making sure city residents and businesses are involved in building their new arena and associated development.

Through the end of 2017, the team has met or exceeded all local hiring and contracting requirements on the $524 million Wisconsin Entertainment and Sports Center. The public-private partnership at a minimum has created construction jobs for 807 city residents that were previously unemployed or underemployed through the city’s Resident Preference Program.

Because the project, which relies on over $250 million in public funds, received $47 million from city tax-incremental financing districts, the team and its general contractor are required to employ RPP-certified city residents for 40 percent of the project’s construction hours and pay a prevailing wage. In addition, the team is required to hire city-certified small business enterprises or disadvantaged business enterprises for 25 percent of the project’s construction costs and 18 percent of the project’s professional services costs.

As part of the requirement, the team must submit quarterly reports to the city. Project representatives were before the Common Council’s Zoning, Neighborhoods & Development Committee Tuesday morning to report the good news.

According to the team’s 63-page report, 807 previously unemployed or underemployed participants in the city’s Resident Preference Program have spent 530,292 collective hours on the project doing everything from pouring concrete and installing HVAC equipment to fabricating steel and performing electrical work. This includes work on the arena, plaza and parking structure. Across the three projects, RPP participants have performed 41.2 percent of the project’s construction hours, exceeding the 40 percent requirement.

“We’re very proud of all the work we’ve done to be held to a high standard on RPP and SBE, and to meet and exceed those goals,” team vice president Alex Lasry told the committee.

On the SBE/DBE front, the team also scored big. The team has paid qualified construction firms $54,704,241. That $54 million represents 32.8 percent of construction costs through the end of 2017, far exceeding the 25 percent goal. For professional services, qualified contractors have been paid $4,423,836 or 18.8 percent, exceeding the 18 percent target.

The workers have come from across the city. At least 14 workers have come from each of the city’s 15 aldermanic districts. An Urban Milwaukee analysis of the data from the report indicates that the likely racial makeup of the RPP participants reflects the city at large, with 44.6 percent of the city’s voting age population being white, 36 percent black, 14.6  percent Hispanic and 3.4 percent Asian. The program is race neutral, although the council allocated money to study the issue in the 2018 city budget.

Alderman Nik Kovac praised the Bucks. “You have been so successful that other developers that can’t meet the goals are blaming you for stealing the workers,” said the alderman, while adding that he didn’t necessarily believe the claims of other developers. Kovac pushed project representatives, which included Lafayette Crump of Prism Technical Management and Carla Cross of Cross Management Services, to identify success stories so the council can better understand the efficacy of the program.

Ald. Milele A. Coggs added “I am happy to hear the numbers… It is my sincere hope that with all of the other arena development the goals continue to be met and exceeded.”

The team announced last week that the arena is 95 percent complete. Lynn Littlejohn of Mortenson Construction told the committee that given how close the project is to completion, the development team is confident they will maintain the hiring and contracting numbers.

The good news from the Bucks comes on the heels of Northwestern Mutual wrapping up construction on its new tower. The insurance giant announced in January that it had created 795 jobs for RPP-certified city residents, achieving a 43.5 percent rate on the 1.8 million hour project.

The High Cost of Inclusion Monitoring

To achieve its success, the Bucks have needed to spend considerable amounts on monitoring and job promotion. Ironically, they’re able to count costs spent tracking RPP and SBE participation as SBE participation.

Of the $5.6 million spent with SBE and DBE firms on professional services, nearly $1.3 million has gone to firms involved in monitoring performance or attracting workers. The biggest beneficiaries are Prism (which was paid $776,000) and Cross ($420,000).

One of the companies they’ve monitored has wound up in legal trouble. Sonag Ready Mix, led by Muskego resident Brian Ganos, has worked on a number of area projects, but may have done so illegitimately. According to a 22-count indictment: “The essence of the conspiracy and scheme was to operate companies with straw owners who qualified as a socially and economically disadvantaged individual or as a service-disabled veteran, but who did not actually control the companies.” The company’s northwest side headquarters has been raided twice by the FBI with over $2 million in assets seized.

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