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Bill would force contractors to hire city residents

SalesBusinessLaws and LegislationUnemployment and LayoffsGeorge Nilson

The City Council is poised to vote Monday on a bill that would require businesses receiving large city contracts or major financial support to hire 51 percent of new workers from Baltimore — or face sanctions.

"We have the highest unemployment rate in the state," said City Council President Bernard C. "Jack" Young, the bill's lead sponsor. "If a business wants to take our money, at least hire us. As they begin to enrich themselves, enrich the citizens as well."

But the city's law department is challenging the legislation — calling it unconstitutional — and some businesses are objecting to what they believe is a burdensome requirement.

"To be limited to only city residents shrinks the pool of qualified applicants to choose from, which increases the possibility of a bad hire," Peter G. Ligon of general contractor Ligon & Ligon Inc. wrote in a letter opposing the bill. "This bill would increase our liability exposure and costs, and place our current mixture of resident and nonresident employees at risk of unemployment."

Young's bill would apply to a business receiving any city contract worth at least $300,000 or any project that gets at least $5 million in city assistance. It would require 51 percent of new jobs to go to residents of Baltimore. Under the proposal, businesses that do not comply could be barred from receiving city contracts for one year and face a $500 fine.

The proposed legislation comes as city officials struggle to overcome the effects of the nationwide economic downtown. City unemployment remains persistently high. It was 9.6 percent in March — the latest figures available — compared with 5.2 percent in March of 2008.

Young says he expects the measure to pass, noting that a majority of the council has cosponsored the bill.

Fewer than 20 city-supported projects top the bill's $5 million mark, according to the Baltimore Development Corp., the city's quasi-public economic development arm. Some examples include the Clipper Mill development, Harborview Pier Homes, the Baltimore Hilton and Mondawmin Mall, which all benefit from millions in tax-increment financing.

Under such deals, the city issues bonds to pay for some project-related expenses such as property acquisition or infrastructure improvements, then uses the increased property taxes to pay off the debt.

Many more businesses get city contracts in excess of $300,000. Just last week, for instance, the city's Board of Estimates approved the qualifications of nine businesses to receive contracts greater than that amount.

Young said he didn't understand why some organizations were objecting to hiring Baltimore residents.

"Any business that does not want to support that, I would not want to support anything they did," Young said. "This is not anti-business. I've been pro-business, pro-development my whole career. It's the right thing to do."

Waivers could be issued, on a case-by-case basis, under certain conditions, Young said. For instance, if a company could demonstrate it made a "good faith" effort to hire city residents but couldn't find enough with the necessary skills, it could avoid a penalty, the measure states.

Businesses that are located — and perform their work — outside the area also would be eligible for waivers, according to the proposed legislation. For instance, American Eurocopter Corp., which has supplied the police department's helicopters, wouldn't fall under the proposed law because its headquarters and production facility are outside Maryland.

Young said similar local hiring programs in Boston and San Francisco are models for Baltimore. He also noted that the bill would not take effect until six months after it became law.

"We have to get Baltimore to work," Young said. "People are going to be working. You're going to see crime reduced. You're going to have parents buying kids the things they need to go to school. All that stuff triggers a better economy for people who live in the city."

The city's law department has a different view of the bill.

Assistant City Solicitor Ashlea H. Brown wrote in a letter to council members that enacting hiring preferences based on residence would put the city in a "legally indefensible" position and violate the U.S. Constitution's Privileges and Immunities Clause, which bars one state from discriminating against the residents of another. City Solicitor George Nilson said if the council passes the bill and it becomes law, he expects the city will lose any lawsuits filed against it.

"This bill cannot be amended to make it legal," Nilson wrote to Young.

Several organizations, including the Job Opportunities Task Force, Associated Black Charities and the Baltimore Jewish Council, submitted testimony in favor of the bill, citing the benefits of bolstering hiring for city residents.

Joshua Arce, director of the Brightline Defense Project in San Francisco, which advocated for that city's local hiring law, said the nonprofit found "legally sound and viable ways" to counter arguments that such ordinances violate the constitution.

Since Young's bill exempts out-of-state companies and residents, Arce said he believes it does not run afoul of the Privileges and Immunities Clause.

"The push for reform seems to come at a time of stubbornly high unemployment in Baltimore," he wrote in a letter supporting the legislation.

Asked about the bill last week, Mayor Stephanie Rawlings-Blake noted the concerns of the city's lawyers and local businesses, while emphasizing her administration's support of local hiring. She's signed an executive order — called "Employ Baltimore" — to assist companies in applications for city work if they have hired city residents.

She did not say whether she would veto the bill if it is approved by the City Council.

"The law department has raised concerns. The business community has raised concerns," Rawlings-Blake said. "I'm also respectful of the will of the council and I look forward to working with the council president and the council members.

"At the end of the day, we all support local hiring. ... All of us have the same goal. It's just a matter of how we're going to get there."

luke.broadwater@baltsun.com

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Copyright © 2014, The Baltimore Sun
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SalesBusinessLaws and LegislationUnemployment and LayoffsGeorge Nilson
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