Protecting federal taxpayer interest; training a local workforce—L.A. Crenshaw light rail line

By Mary Ebeling
Long-standing FTA and USDOT policy prohibits geographic preferences in hiring for construction projects. Historically, the dominance of federal funds on projects led to the idea that jobs paid for by national taxes should not be restricted geographically, and a policy was born. Now that the funding responsibility has shifted, and states and municipalities sometimes contribute more than half the funding for transportation projects, it makes sense to revisit the federal ban on geographic preference requirements for construction projects. State and local governments are asking for greater flexibility and room for policy changes that will improve options for local hiring.
Concurrent with the shift in how projects get funded, many states and cities have developed training programs or local hiring policies as part of workforce development initiatives. While several states run apprenticeship programs to train workers for jobs in the transportation construction industry, those programs target skills rather than local hiring, so they have not encountered the same challenges as local government programs. To meet their workforce goals, municipalities often require a defined percentage of construction jobs be filled through local hiring. For example, in 2011, San Francisco passed a local hiring ordinance requiring 50 percent of jobs to be local hires by the seventh year of the program. Denver’s WIN program is open to those eligible to work in the United States but focuses its outreach on those who live in the zip codes where developments—such as FastTraks projects—are taking place. What many of these successful local programs have in common are robust local funding, and an ability to structure the phasing and financing of a project to keep federal and non-federal dollars separate, allowing the local hiring program to apply to the non-federal portion of the project.
The tension between local hiring ordinances and federal geographic preference policy is currently playing out on the Crenshaw line in Los Angeles, which is expected to begin construction in 2014. The local government participation in financing this project supports 53 percent of the estimated $2.05 billion construction costs. The financing package for this project is complicated; but in summary, county taxpayers will ultimately pay nearly 80 percent of the cost. The line runs through some of the most impoverished areas in the state, and the city and county would like to use local hiring as a means of workforce and economic development.
Compelling arguments are being made that a local or state agency with a local hiring ordinance should be able to require local hiring in equal proportion to the local financial stake in the project.  A compromise solution may be in the works. Representative Karen Bass (D-Los Angeles) has introduced the Local Hire Act, which would change federal transportation law to give state and local agencies the ability to include geographical hiring targets in their bid specifications for highway and public transportation projects, regardless of federal funding awarded to the project. There is precedent for this type of flexibility in other federal agencies: The Department of Housing and Urban Development requires grant recipients to attempt to hire locally first, before expanding the hiring search to surrounding areas.
Mary Ebeling is a Transportation Policy Analyst at SSTI.