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City faces local preference criticism (UPDATE)

By Sean Ryan

A Milwaukee alderman is defending the city’s preference for local bidders against criticism from Milwaukee 7, a group formed to promote regional cooperation.

“It seems any type of legislation or a policy objective that benefits the city of Milwaukee, it seems that that somehow gets deemed as anti-regional,” said Alderman Ashanti Hamilton, who wrote the city’s local preference legislation. “And that is just not the case. And any effort to characterize this as such is counter to the regional cooperation that we’re working toward.”

Milwaukee in August began applying a 5 percent bidding preference for contractors in the city. So far, the city has used the preference on only two contracts, but the law has spurred a lawsuit from two low bidders from outside the city that may lose contracts to Milwaukee-based MJ Construction Inc.

The preference is now drawing heat from Milwaukee 7, an organization of area businesses and governments in seven southeastern Wisconsin counties.

Gale Klappa, co-chairman of Milwaukee 7 and chairman and CEO of We Energies, last week wrote a letter arguing the local preference displays an “anti-regional attitude.”

The fear among regional organizers is a local preference in Milwaukee will create a cycle of retaliation during which more communities favor their contractors or put builders from the other side of the border at a disadvantage, said Steve Baas, Metropolitan Milwaukee Association of Commerce director of government affairs.

“It’s like (Benjamin) Franklin’s old adage,” he said. “You’ve got to either hang together or hang separately.”

The local preference is a roadblock to regionalism, said Richard Wanta, executive director of the Wisconsin Underground Contractors Association.

Although the political arguments probably will not undo the local preference program, they at least will inform other communities about the program, he said.

“If nothing else, we’re making them aware of what Milwaukee has done,” Wanta said, “and how it affects their constituents.”

Hamilton said the local preference should not be painted as Milwaukee trying to snub its neighbors. He said it helps the region by targeting poverty in the city and helping local businesses.

The economic need in Milwaukee is far greater than that in surrounding municipalities, Hamilton said, and crime and unemployment within the city hurt everyone.

“As a region,” he said, “for us not to focus on those is a detriment to the region.”

Without much hope of swaying city aldermen, Wanta said, contractors are lobbying the Wisconsin Department of Natural Resources to prohibit local preferences on projects receiving loans from the DNR’s Clean Water Fund.

The DNR on Friday received competing arguments from city attorneys and lawyers representing contractors that are challenging the local preference.

The city is requesting permission to award two sewer contracts to MJ Construction even though the company did not submit the low bid.

The city, in a letter to the DNR, argued state and federal laws do not prohibit the city from applying a local preference on projects that receive the loans.

Two contractors — Underground Pipeline Construction Inc., New Berlin, and American Sewer Services Inc., Rubicon — disagree. State laws for the Clean Water Fund require contracts be the “most cost-effective alternative,” and the state violates this rule when it does not accept the low bid, according to the letter from Michael Best & Friedrich LLP, Milwaukee, dated Nov. 18.

The city asked for a decision on the issue by mid-December.

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