Valparaiso’s responsible bidding practices were up for debate at a recent City Council meeting, with a majority of the Democratic-led council favoring a more restrictive ordinance over a resolution and Mayor Jon Costas concerned either measure could put a crimp on development within the city.
The two Republicans on the council, Jack Pupillo, R-4th, and Peter Anderson, R-5th, presented a competing resolution during the Feb. 24 meeting, which provides greater flexibility for the interpretation of guidelines and implications of what might be factors of concern.
The resolution was defeated by a 4-3 vote. Diana Reed, D-1st, voted in favor of the resolution with Pupillo and Anderson but the rest of the council, Council President Ellen Kapitan, D-At-large; Emilie Hunt, D-At-large; Barbara Domer, D-3rd; and Robert Cotton, 2nd, voted against it.
As mayor, Costas said he doesn’t vote on matters before the council but wanted to share his position and that of his leadership team on the two proposals.
“Overall, I feel that both the resolution and the ordinance are not necessary and not worth the potential risk of increased costs and reduced investment in private sector city projects,” he said.
He preferred the resolution over the ordinance but still saw it as problematic.
“I do not favor the adoption of the resolution or ordinance because I feel that it will add unnecessary risks and costs in private sector projects that will increase the expenses of these projects and limit the important role of competition in the bidding and construction process,” Costas said, adding taxpayers could be asked to pay more in incentives to make up the difference, “or, worse yet, private firms will avoid investing in our city” because the ordinance limits the companies bidding on projects so they can’t estimate and contain costs.
Costas said “other than the issue of the carpentry bid for The Linc apartments,” he is aware of only one other private project in the last 20 years that received city economic incentives and gave rise to the concern about subcontractors coming from other locations.
“Occasionally, there are valid reasons for using out-of-area subcontractors,” Costas said.
Creating a new law that requires more oversight, like the ordinance, “is only justified to remedy a critical, recurring problem,” the mayor said. “I believe that The Linc issue is an anomaly caused by factors unique to private-sector construction and do not justify this high degree of government regulation.”
The ordinance, he said, also could hamstring smaller companies from bidding on private projects with city incentives, could limit their growth, and the potential for lower bids on a project.
Jason Creasbaum, of the International Union of Operating Engineers Local 150, preferred the ordinance over the resolution.
“A resolution is not the same as an ordinance,” he said. “The ordinance will encourage the participation of local tradesmen, tradeswomen and contractors and will encourage young people (to) seek apprenticeships.”
A counterargument was presented by Rex Richards, president and CEO of the Greater Valparaiso Chamber of Commerce, speaking on behalf of the Valparaiso Economic Development Corporation.
“I represent our group with about 45 of the key local contractors and businesses, who will be doing the construction work of Valparaiso projects,” Richards said.
The group supports the resolution, he said, “which encourages local and minority hiring without creating legal risks and ensures fair and inclusive government decision-making and promoting transparent government over bureaucratic mandates,” Richards said
“We have people looking at Valparaiso to make huge investments, and many of them are looking at what’s happening tonight.”
The resolution and the ordinance, Costas said, extend contractor requirements for public works projects, from those funded entirely by the city to private projects that receive city incentives over $150,000.
“This is a significant expansion of our current responsible bidder ordinance,” Costas said.
The main difference between the two proposals at issue, Costas said, is that the resolution gives the council the option and flexibility to require certain conditions, and the ordinance requires contractors and first-tier subcontractors to satisfy nine requirements.
Also, the ordinance states that any waivers to the requirements must be approved by the council.
“As a practical matter, the council will likely not have sufficient information to make an informed decision on a waiver request for months, if not years, after the economic incentives are initially and conditionally approved,” Costas said, adding it’s doubtful developers would be willing to operate with such a high level of uncertainty.
The resolution, he said allows the city’s director of economic development to negotiate with a developer and present project-specific options for the council to consider. “The council still has the option to reject a project.”
Costas acknowledged the town of Chesterton recently adopted a similar ordinance, and Hobart has enacted provisions similar to the resolution. He also had George Douglas, the city’s director of development, and Vicki Thrasher, the building commissioner, share their concerns about the ordinance.
The duties of both, he said, “will be significantly impacted” by the ordinance, “and their opinions are vital to assessing the actual impact of these proposed council actions.”
The Valparaiso City Council will have a second reading of the ordinance at the Monday, March 10 meeting, including a public hearing before the vote.
Philip Potempa is a freelance reporter for the Post-Tribune.
