Local Hiring at Essex Crossing: Are Developers Keeping Their Promises? So Far, the Answer is “Yes”

The Lower East Side is teeming with construction workers, in large part due to the big Essex Crossing project. You might have wondered how many of those workers are local residents. It’s a topic we have been exploring in the past few days following pointed comments from a high-profile member of the community at a recent public meeting.

Construction is underway on the first four of nine sites that make up the 1.9 million square foot mixed-use project in the former Seward Park Urban Renewal Area. The development consortium, Delancey Street Associates, signed an agreement with the city establishing certain benchmarks for the hiring of New York City workers. At a meeting of Community Board 3 last Tuesday evening, Alan van Capelle, president and CEO of the Educational Alliance, was sharply critical of the employment program. Van Capelle is a member of Community Board 3 and a local resident. He tells us his comments were made solely as a member of CB3’s economic development committee.

What van Capelle said publicly did not sit well with the developers and others in the community.

The remarks came during a report to the board by Gigi Li, chairperson of a community task force that meets quarterly with the development team. “I just don’t feel that great about the work that the developers have done in terms of local hiring,” said van Capelle. He referred to a presentation before CB3’s economic development committee last October, in which he said Delancey Street Associates reported hiring 34 locals for the construction project out of 200 jobs it pledged to create.

He added that workers are not being paid prevailing wages (which are set in accordance with union pay scales). In a reference to the $15 minimum wage law kicking in at the end of 2018, van Capelle said, “Some of the jobs they’re advertising for are paying $11 and $12 an hour, where next year (those same workers could) be at McDonald’s on the corner of Essex and Delancey, and they’ll be paid $15 an hour.” He called on developers to set up an office on the Lower East Side for job applicants. 

Part of the problem, van Capelle asserted, is that subcontractors doing the hiring are not held accountable. He urged the community board to prepare a “lessons learned” document that could be shared with other communities. “So the next time (the city) decides to make an agreement with a developer,” said van Capelle, “we say, ‘By the way, don’t buy the 200 jobs business, because we aren’t going to see those 200 jobs,’ and negotiate something that is attainable at the end of the day.”  Van Capelle concluded, “this community board got screwed on the deal.”

The development team has provided The Lo-Down with an extensive written response. We will get into that in a moment, but first a quick recap of our previous reporting of the labor issue at Essex Crossing.

Delancey Street Associates was chosen to develop the former city-owned parcels through a competitive bidding process. Community board guidelines were included in the Request for Proposals (RFP). Those guidelines called for the developer to work with a local partner to hire low-income residents and stated, “All construction jobs created in the development should be at prevailing wage rates.”

The contract with the city, however, did not require the developer to pay prevailing wages. A separate labor agreement guaranteed all workers “fair and competitive wages.”

At last week’s CB3 meeting, at least one board member expressed shock that the Essex Crossing developers are not required to use union labor. In reality, however, CB3’s final guidelines did not call for the use of trade unions to build the project. Like most New York City developments that include affordable housing (half of the units are below market rate), Essex Crossing is an “open shop site.” This means both union and non-union workers can be hired. Developers and city officials say using union labor for affordable projects is prohibitively expensive (unions obviously disagree with that assessment).

In the deal with the city’s Economic Development Corp., the developers agreed to “make good faith efforts” to hire NYC laborers in the first phase of construction for 1.000 hours of work. So how are they doing? Information from Delancey Street Associates shows that van Capelle’s assertions regarding their hiring record contain, at the very least, outdated information, and in the opinion of many community members, blatant inaccuracies.

–98 workers have been hired so far for nearly 400 hours of work. It was estimated that 147 people would be hired in the first phase of construction.

–51 of those workers have been hired locally or through local employment programs.

–In keeping with the agreement, every construction worker is paid a base wage of $18.50/hour plus benefits. Some workers are paid more, depending on their experience and craft.

–Flagmen, who direct traffic at each site, earn $18.50/hour, while security guards make $14.80/hour, or $13.30 with benefits.

Another part of the agreement with the city requires Delancey Street Associates to partner with the Lower East Side Employment Network. Seven local not-for-profit groups with job training and referral programs are members of the network. The developers and the LES Employment Network have co-sponsored job fairs and informational sessions. The development team also collaborates with the city’s Department of Small Business Services to find qualified workers.

Here’s what we were told by Delancey Street Associates about hiring at Essex Crossing:

Delancey Street Associates (DSA) is firmly committed to hiring unemployed and underemployed workers at Essex Crossing through our agreement with NYC EDC. It’s a commitment we take seriously, and have dedicated staff simply for this purpose. We go above and beyond the norm to honor that commitment, with an overarching goal of creating career path opportunities for Lower East Side residents.

To this end, are engaged with both the city’s Department of Small Business Services and the Lower East Side Employment Network (LESEN) to accomplish our hiring goals. Further, we maintain regular, constructive contact with Community Board 3’s Essex Crossing Task Force to keep the community apprised of our hiring efforts, and to facilitate an ongoing dialogue about how to make those efforts as robust as they can be.

Our hiring efforts are active and wide-ranging:

In addition to having hired 98 workers for nearly 400 hours of work toward our formal official commitment of 1000 hours of work on phase 1 of the project, we have routinely held community outreach and training events since the project’s inception. We have street-level presence throughout the Lower East Side in partnership with LESEN, as well at all four construction sites. We have full-time worker mentors on each construction site. And we provide hiring information to local NYCHA developments, along with other neighborhood groups and stakeholders.

While our subcontractors are contractually obligated to follow our hiring guidelines, we take multiple steps to ensure such compliance. And DSA staff sees each and every resume of a potential hire and handles them personally. Finally, as part of our agreement with the City, every construction worker on site is paid a required base wage of $18.50 an hour plus benefits, though many are paid more, according to experience and craft. Through these efforts, we continue to add more local hires each week, keep the community updated on those efforts, and work constantly with our subcontractors to ensure all hiring guidelines are followed.

At the same time, though, we are always working with our partners to strengthen our local hiring work. For example, we are working with LESEN to create a comprehensive skills training program. We expect to launch that initiative in June.

DSA is proud of our efforts to meet our hiring commitments and we continue to provide more opportunities for the unemployed and underemployed every week.

But it’s not simply that we believe our hiring actions constitute a genuine effort to meet our commitments. Indeed, and perhaps most meaningfully, our community partners most familiar with these efforts – from LESEN to Henry Street Settlement to CB3 – resoundingly agree.

A spokesperson for the Economic Development Corp. told The Lo-Down that the agreement with Delancey Street Associates required the hiring of 1,000 “qualified but underemployed” workers, pulled from databases of low-income New Yorkers. The spokesperson said it’s clear to city officials that the developers are engaging with local stakeholders to accomplish the project’s hiring goals and that they are making good faith efforts to fulfill their commitments.

In 2015, Delancey Street Associates signed an agreement with 32BJ SEIU, the city’s largest property workers service union, for up to 80 full-time jobs at Essex Crossing once the buildings open. The developers are partnering with the LES Employment Network to provide training for local residents to fill those jobs.

David Garza, executive director of Henry Street Settlement and co-founder of the LES Employment Network, helped negotiate the agreement. In an interview, he said Delancey Street Associates, “has been very proactive” in connecting the employment network with employers. “They have been very good,” he said, “about sharing timelines for tenants.” They’ve brokered meetings with Splitsville Lanes, a bowling alley concept, and with Trader Joe’s, which is opening a large store on Grand Street, he said. 

At last week’s CB3 meeting, David Ford, chairman of the economic development committee, said he believes there’s “a lot of confusion” whenever the LES Employment Network (LESEN) comes up. “LESEN is not actually involved in hiring. They do employment training,” said Ford, adding that the network is, “almost a front for developers and other people” who want to appear community-oriented. Van Capelle, whose organization (Educational Alliance) is a LESEN member, agreed with Ford, saying he believes the network, “has been used to some extent as a foil.”

Garza told us he agrees that there’s confusion around the employment network’s role. The organization has provided referrals for construction jobs but, he added, “it does not have the depth of experience to handle the (specialized) training of construction workers.” More to the point, Garza, said, the organization’s training contract with the development team does not cover construction jobs, only permanent jobs in the completed project.

During the meeting, Gigi Li recalled the community board’s lengthy negotiations with the city over the Seward Park development plan. The hard-fought agreement for 50% permanent affordable housing in the project, she said, was “a great win,” while other issues (such as local hiring) “fell lower on the priority list.” Li, as chair of the Essex Crossing task force, pledged to keep the local hiring issue on the table. “I think the task force and the board and the board leadership is very focused on using every bit of leverage that we have to make sure every promise that was made to us is kept,” said Li. “We will use every ounce of political leverage that we have, along with our elected officials, to make sure we get as much transparency and local hiring (as possible).”