Six months ago the city adopted a controversial “workforce agreement ordinance” that, beginning May 30, will require contractors on large city projects to have union contracts.

A bill designed to soften the negative impacts of the new law is moving through the Honolulu City Council and will be up for a key vote Wednesday.

Community workforce agreements are collective bargaining agreements between building and trade unions and the city.

Bill 37 (2019), which became law in October without Mayor Kirk Caldwell’s signature, mandates that contract work for city projects valued at $2 million or more must include a collective bargaining agreement between the city, the Hawaii Building and Construction Trades Council, the Hawaii Construction Alliance and their affiliated labor unions. The proposal divided the state’s construction industry, with major unions lobbying hard for it and contractor associations working just as hard to get it shot down.

The ordinance is set to take effect May 30, but city attorneys have raised legal concerns about the language of the bill, prompting the Council to consider Bill 40.

Councilman Joey Manahan, who introduced Bill 40, said the new measure clears up a concern raised by Caldwell and city attorneys that requiring workforce agreements infringes on the executive branch’s authority to procure contracts, to decide whether community workforce agreements are suitable and then negotiate those agreements.

Caldwell, who said he supported the concept of workforce agreements in certain situations, also voiced concern that the language in the bill requiring workforce agreements to give preference to use local laborers would jeopardize funding from some federal funding programs that prohibit such a clause, Manahan said.

Manahan said the new bill removes most references to “shall” with the word “may.”

“We’re trying to fix things up,” Manahan said.

Nathaniel Kinney, executive director of the Hawaii Construction Alliance, said he believes the concerns raised by city attorneys about procurement were overblown.

Kinney noted that the $2 million-plus contracts that need to have workforce agreements represent only 25% of city contracts.

The unions reluctantly are agreeing to the changes, Kinney said. “If this is what it takes … to make sure that local workers go to work, that’s fine.”

Jeffrey Durham, interim president of the Associated Builders and Contractors Hawaii chapter, said the new bill does remove workforce agreements from being required, but “our feeling is that it still has the potential of requiring any successful builder on a city project of over $2 million to become signatories to organized labor for the duration of that contract.”

That means any additional workers would need to be hired from a union, and fringe benefit packages would have to be paid to the unions instead of the companies’ own programs, Durham said.

Many of the companies that are members of his organization might not not even bother to bid on city projects as a result, effectively taking out as much as two-thirds of the state’s available contractors from being considered, he said.

Both the contractor and union agreements are using the coronavirus outbreak to bolster their arguments.

Kinney said he expects that with the global pandemic, more workers from outside the state will come to Hawaii and seek construction jobs, especially since COVID-19 cases here are significantly fewer than in other U.S. cities. “People are already looking at flying down here for vacation. You don’t think that they’re going to come down here and work?”

At a time when the state’s unemployment rate is 37%, “we need every single dollar to stay in Hawaii,” Kinney said. “And the only way to do that is through community workforce agreements. Is there any other way to make sure that at least the local guys get to go first? There is none.”

Michael Yadao, government relations director for the General Contractors Association of Hawaii, said in written testimony that it would be inappropriate for the Council to pass the bill in the midst of the pandemic.

“Given the immense health and economic crisis the city is experiencing, we believe that this is a time for the city to work with the entire construction industry to streamline processes such as entitlement and permitting, and focus on initiatives that could potentially spur construction activity, rather than impede it,” Yadao said.