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Home / Commercial Construction / Northwestern tower consultant, contractor candidate share compliance struggle history

Northwestern tower consultant, contractor candidate share compliance struggle history

Materials are removed by a crane from the Northwestern Mutual Life Insurance Co.’s 16-story office building Tuesday in Milwaukee. The company has committed to 25 percent small business participation and to using Milwaukee residents for 40 percent of the construction site hours worked to build the $450 million tower to replace the existing building. (Staff photos by Kevin Harnack)

Materials are removed by a crane from the Northwestern Mutual Life Insurance Co.’s 16-story office building Tuesday in Milwaukee. The company has committed to 25 percent small business participation and to using Milwaukee residents for 40 percent of the construction site hours worked to build the $450 million tower to replace the existing building. (Staff photos by Kevin Harnack)

The consulting company hired to track compliance with federal low-income hiring requirements on Milwaukee’s Westlawn Gardens housing project is overseeing similar, though not federal, efforts on Northwestern Mutual Life Insurance Co.’s downtown office tower.

Prism Technical Management & Marketing Services LLC, Milwaukee, was hired to monitor the Westlawn project’s adherence to the federal rules. But the Housing Authority of the City of Milwaukee still failed to meet those hiring requirements.

Brookfield-based Hunzinger Construction Co. was the Westlawn Gardens construction manager. Hunzinger also is one of the candidates for general contractor on the Northwestern tower project.

Northwestern Mutual hired Prism to ensure the insurance company’s $450 million office tower project meets hiring goals set by the city of Milwaukee. Those goals, which are included in the $54 million tax incremental financing assistance agreement with the city, include hiring Milwaukee residents to work 40 percent of the construction site hours during the project and to use small businesses or those owned by women or minorities for 25 percent of the design and construction costs.

On the Westlawn project, the U.S. Department of Housing and Urban Development found that the housing authority, though acting in good faith, did not meet goals that 30 percent of the project’s workforce fall under an income cap and that 3 percent of nonconstruction contracts go to qualifying companies. HUD awarded the housing authority $9.73 million for the Westlawn project.

A HUD review determined the housing authority’s efforts to meet the requirements were unsatisfactory. The housing authority lacked an adequate understanding of the requirements and inappropriately exempted contracts, among other problems, according to a HUD letter summarizing the review.

“Partially as a result” of those deficiencies, Lafayette Crump, Prism’s chief operating officer and employee in charge of Westlawn compliance, was unaware that contracts were being exempted incorrectly and that “Westlawn residents were to be afforded the highest hiring priority,” according to the letter.

However, HUD also found “that Prism was not effectively used” on the project to reach out to potential workers and companies that could have helped the housing authority meet its requirement.

“Instead, Prism was primarily tasked,” according to the letter, “with verifying whether the contractors or subcontractors, already under contract for work on the Westlawn Project, would qualify as Section 3 businesses.”

Crump refused to comment on whether Prism has adapted its approach to projects in the wake of the Westlawn review. But, he said, he believes Northwestern Mutual is committed to the hiring goals on its proposed $450 million tower.

“We feel very supported on the project,” he said.

According to an email attributed to a Northwestern Mutual spokesman, the company refuses to comment on how it will work with Prism to ensure the goals are met.

Crump refused to comment on causes of the failure on the Westlawn project but said Prism would be comfortable working with any of the general contractor candidates, including Hunzinger.

The candidates are Bethesda, Md.-based Clark Construction Group LLC, in collaboration with Hunzinger; Providence, R.I.-based Gilbane Building Co., in collaboration with Milwaukee-based C.G. Schmidt Inc.; New York-based Lend Lease Construction Inc.; and Minneapolis-based Mortenson Construction. Northwestern Mutual plans to award a contract by mid-April.

NML2Requests for comment from Hunzinger, Clark and Lend Lease were not immediately returned Tuesday afternoon. A Gilbane representative refused to comment.

Aaron Bowman, construction manager for Houston-based construction manager Hines Interests LP, the development manager for the tower project, said he was not aware of the Westlawn project.

However, he said, Prism’s effort on the Northwestern Mutual project has been spectacular.

The design team includes multiple small businesses, he said, so overall participation could exceed 25 percent. After Northwestern Mutual hires a general contractor, Bowman said, Hines will have a better grasp on what will need to be done to meet the residential preference goal.

Alicia Dupies, director of project development for Mortenson, said the contractor has noticed the pool of woman- and minority-owned businesses, as well as small businesses, that could be hired to meet inclusivity goals is shallower in Milwaukee than in other markets.

Milwaukee, she said, is the slowest to rebound from the economic downturn of Mortenson’s six major markets, but the possibility of multiple downtown projects, including Irgens Partners LLC’s 833 and developer Rick Barrett’s The Couture, could prompt more of those small and disadvantaged businesses to expand.

“Sometimes, part of the struggle,” she said, “is you can’t grow because you don’t have enough work to grow.”

Dupies refused to comment specifically on the Northwestern project.

Mortenson’s trial run of a training program for small and disadvantaged construction businesses ended Tuesday, Dupies said, and 75 companies participated. The program was designed to help those businesses develop skills for working with general contractors, she said, and the high attendance is a promising sign for the availability of businesses to meet hiring goals on future Milwaukee projects.

Crump said he agrees the potential for a labor shortage exists if the three downtown projects all break ground, but that activity could draw people back to the industry.

“I believe that there’s a strong attempt,” he said, “to make sure that challenge is met head-on.”

About Beth Kevit

Beth Kevit is the Milwaukee city beat reporter and also covers real estate. She can be reached at beth.kevit@dailyreporter.com or 414-225-1820.

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