Councillors, Developer Clash over Union Labor

July 10, 2013
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Waterfront Square developer Joe DiGangi told City Councillors at a tense meeting Monday night that he could not get financing to build the 194-unit first leg of the development using all union labor, and therefore had to sell the property to a St. Louis company that is not committed to using union labor.

After reports in the Journal several weeks ago about Covington Realty taking control of the lot at the far end of Ocean Avenue from DiGangi, several councillors expressed concern – as did several trade union officials.

The company, based out of St. Louis, is planning to fast track a 194-unit residential development that will be housed in two buildings nearest the Revere Street end of Waterfront Square.

“I don’t know where the transparency is in the administration, but it’s frustrating and embarrassing to have to read about major developments in the major media and in the Revere Journal,” said Bob Haas, chair of the Economic Development Committee. “We represent 55,000 people also and we would rather not find out about things after the fact.”

Those comments were sort of a tongue lashing for Mayor Dan Rizzo and Economic Development Director John Festa – comments that represented the thoughts of a good handful of councillors who have been miffed at the lack of communication coming from the corner offices of City Hall. However, that was not the immediate reason why Haas called the meeting Monday night. Rather, he called the meeting to get some answers about why DiGangi’s EuroVest company was not building the first leg of the project’s private development.

DiGangi, a Revere resident, said he tried to develop the buildings last year with 100 percent labor – a promise to the unions that he made when securing development rights many years ago. However, he said he couldn’t make it work – that he couldn’t get financing from traditional banks or from union-friendly credit unions.

“It was our intent to build it, no question about it,” he said. “We went 100 percent with three different contractors. We did value engineering on it. We cut things and did fine tuning…We took the model we had with union labor to traditional financing entities that I have relationships with and they all rejected it. We went one step further with going to a credit union recommended by the unions and they said no. What am I going to do? Sit there and do nothing? No. The only alternative left was to sell the land…I am ready to build with union labor if the union comes down to a number that is palatable.”

DiGangi explained that his development agreement does allow him to sell the land, but when he sells, he cannot control whether or not the new owners will use union labor.

With Covington, he said they are open to union labor if the numbers work.

“They are a vertically-integrated company, so basically, that means they perform their own construction in-house within their company,” he said. “Covington is not averse to using union. They’re not shutting the door and saying we can’t go union. They’re saying if the numbers are right, they will go union.”

A ‘maybe’ wasn’t enough, though, for a lot of councillors – who said they supported DiGangi years ago over other developers because he promised to use 100 percent union labor.

“I don’t want to see a 364 Ocean Ave., which is like a cell block to me – a big slab of concrete, non-union labor, with a bunch of Section 8s living in there,” said Councillor John Correggio, who had initiated the meeting along with Haas after hearing complaints from union reps. “We’re stuck with that building and we don’t want another.”

Councillor John Powers said he supported DiGangi because he believed the entire project – whether sold or retained by EuroVest – would be union.

“We’re in a blue-collar city and a lot of people are out of work,” he said. “Many are carpenters, ironworkers and laborers. We took you at your word and on future projects – hotels or commercial projects – I would hope you take from this meeting a clear understanding of what the City Council is looking for and the citizens want. We’re a blue-collar community and people are out of work…The main theme here is jobs for people in the city…You don’t want a bunch of people from New Hampshire coming down and hanging iron. You want Local 7 there.”

Added Councillor Richard Penta, “I consider you building this even though you flipped it. I wasn’t on the Council when this was approved, but everyone on this Council that voted for it – if you ask them now – I bet they would say they thought the whole project, no matter what, would be 100 percent union.”

Councillor Arthur Guinasso said he and other councillors would like to be better informed.

“Covington wants to build 194 units in our city; who cares about their schedule?” he said. “They should be here tomorrow. They should be on our schedule. This thing shouldn’t be a mystery and they are an unknown now. The unknown is the worst thing you can be dealing with. Good things are happening here, but we have to be better informed.”

Meanwhile, union officials said they are keeping an open mind, yet staying vigilant.

Rich Pedi, of the Carpenter’s Union Local 218, said St. Louis is a city with a high usage of union labor on residential projects, so they are optimistic that Covington will have an open mind.

“It’s not over yet,” he said.

Joe Lake – this time representing Local 33 in Boston – said he believes that there is hope, but he noted some troubling trends in the city – especially at the new Market Basket.

“We are also your partners in this,” he said. “Union labor is your partner Joe (DiGangi). We want a seat at the table.”

Summing it up, Festa addressed Haas’s opening comments. He said they’re not trying to hide anything from the Council, but they have to be certain of things before announcing anything publicly.

“We want to make sure the proposals we bring to you are real and very accurate,” he said. “We don’t want a developer to come in and say 100 units and then a week later it changes…There’s so much happening and changing and we want to be accurate…We are transparent. We’re not trying to hide any information.”

DiGangi said he plans to schedule a meeting with the Council and Covington on July 22nd.

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