PUBLIC FORUM/TOWN HALL CONSTRUCTION REGULATORY REFORM - TO LEARN FROM BUSINESSES AND INDUSTRY EXPERTS WHICH REGULATIONS ARE THE LEAST USEFUL, LEAST COST-EFFECTIVE, AND, THEREFORE, SHOULD BE ELIMINATED

Master Electrician 9 Independent Contractor, Local 25 10 11 ---oOo--- 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 SENATOR GALLIVAN: Well, good afternoon, 2 everybody. 3 I'm Senator Pat Gallivan. 4 Senator Dave Valesky (indicating). 5 I'm from out Western New York way, and I'm 6 Deputy Conference Leader for Economic Development. 7 And, Dave is -- Senator Valesky is from the 8 Central New York area, and chairs the 9 Senate Commerce, Economic Development, and 10 Small Business Committee. 11 And we are co-chairing, along with 12 Senator Kathy Marchione from the Albany area, and 13 Senator Dave Carlucci from Lower Hudson Valley, a 14 series of regulatory-reform hearings, 15 industry-specific, across New York State. 16 A recent U.S. Chamber of Commerce report 17 ranked New York 50th out of 50 states for doing 18 business; least-friendly business environment. 19 So we see, time and time again, New York 20 being ranked 47th, 49th, highest taxed, most 21 regulated, and so on. 22 People can split hairs where we are, but, 23 clearly, we've got issues to deal with as it relates 24 to the things that stand in the way of our economy 25 growing. 1 Now, we see the New York City economy ends up 2 somewhat different than the rest of the state, as 3 I'm sure many of you from the Island are aware of. 4 And, of course, that remains true upstate. 5 So we've undertaken a series of initiatives, 6 some of -- we are -- we will be joined today for 7 portions of this by some local senators who are also 8 involved in similar efforts across the state. 9 Senator Carl Marcellino actually is 10 co-chairing a series of hearings on tax reform. 11 So, we look at the things that stand in the 12 way of business growth in New York, economic growth 13 in New York, growth of private-sector jobs, an 14 environment that can help create opportunities. 15 And time and time again, we hear from people, 16 and we see it: it's taxes and regulations. 17 So, we are trying to address both of them, 18 but in particular, Senator Valesky and I are taking 19 on the regulatory-reform aspect of it, and we're 20 trying to do this in an industry-specific manner. 21 Today we're focusing on the construction 22 industry, in general. 23 We are doing banking/financial services, 24 agriculture, health/medical, manufacturing, and 25 several other industries, but the idea is, to focus 1 on the regulations that don't get talked about all 2 the time. 3 We often hear of the larger regulations that 4 are out there: worker's comp issues, 5 unemployment-insurance issues, and things of that 6 nature. 7 New York has over 140,000 pages of 8 regulations, and our goal is to shrink that, 9 somehow, over 83 volumes. 10 So, we're on a mission, and looking for help, 11 to identify duplicative regulations, ridiculous 12 regulations that no longer make any sense, those 13 that are outdated, those where the costs greatly 14 exceeds any benefit that may be there. 15 And we can't understand what goes on in your 16 world, or we can't understand what goes on in the 17 medical world, agriculture world, because we're not 18 in it on a daily basis. 19 So our purpose in being here today is looking 20 for your help to identify the things that just don't 21 seem to make sense, and then we can try to do 22 something about it. 23 Our goal is to publish a report mid to late 24 November, to identify a minimum of 1,000 regulations 25 to just eliminate, and, look to put that together, 1 as we move into the next legislative session, to be 2 part of a legislative agenda, going forward, along 3 with the tax reform, and then, of course, the other 4 larger issues that you read about in the papers and 5 see on the news all the time. 6 So, I appreciate you being here, and ask 7 Senator Valesky if he'd like to say a few words. 8 SENATOR VALESKY: Great, thank you very much, 9 Senator Gallivan. 10 It's good to be with you again today. 11 This is the fourth of this series of 12 regulatory-reform hearings, and you've certainly 13 covered all the bases very well. 14 I would just mention that a number of your 15 local senators from Long Island are on the way. 16 Apparently, there's some traffic issues as a 17 result of a public-safety situation that's 18 happening. 19 So, we will move right into the hearing. 20 We have each speaker slotted in 15-minute 21 intervals, so we'd ask, as you come forward to the 22 front table, to offer your testimony. 23 And then to the degree that Senator Gallivan 24 or I, or other senators, when they get here, have 25 some questions for you, we'll move right into that 1 phase. 2 So we'll start with Mitch Pally, who's the 3 CEO of the Long Island Builders Institute. 4 Mitch. 5 SENATOR GALLIVAN: By the way, you don't have 6 to use all 15 minutes if you don't want. 7 SENATOR VALESKY: Right, right. 8 [Laughter.] 9 SENATOR GALLIVAN: And because we had the 10 assistance of members of the Long Island Senate 11 Delegation, and, in trying to coordinate, we may not 12 have gotten everybody on the list to speak, but 13 we'll make sure that we work our way through that. 14 Mitch, thanks for being here. 15 MITCH PALLY: Welcome to Long Island, both of 16 you. 17 SENATOR VALESKY: Good to be back. 18 MITCH PALLY: We were on the -- 19 SENATOR GALLIVAN: Temporary Commission on 20 Low Cost Power; yes, we were. 21 MITCH PALLY: They still were good 22 recommendations. 23 SENATOR VALESKY: Yes. 24 MITCH PALLY: Nobody else agreed. 25 We thought they were good. 1 SENATOR VALESKY: That's right. 2 MITCH PALLY: Good afternoon, and thank you 3 for letting us testify today. 4 I have a couple things I want to talk about, 5 some regulatory, some legislative, that we think 6 will be helpful. 7 First and foremost, obviously, within the 8 building industry, especially the residential 9 real-estate industry, which I represent, is our 10 concern over Sections 240 and 241 of the Labor Law, 11 the Scaffold Law, which significantly increases the 12 cost of doing business in this state. 13 And, in fact, New York is the only state in 14 the country still with this law on the books. 15 On your list of speakers is Artie Cipoletti, 16 the current vice president of LIBI, and the 17 president of DaVinci Construction, who will testify 18 regarding the specific cost issues which must be 19 taken into account by construction companies. 20 And I will leave the dramatics to him. 21 He's a forceful advocate for repeal. 22 Second, in many cases, development projects 23 receive the necessary state and local permits from 24 the appropriate agencies, and are ready to start to 25 build and create hundreds of jobs, only to be 1 stopped by lawsuits under Article 78 of the CPLR. 2 In these cases, which often take from 3 1 year to 18 months to solve, it is almost 4 impossible to get financing for the project because 5 of the possible uncertainty of the outcome of the 6 lawsuit. 7 Even if the municipality wins and the 8 development project moves forward, there are no 9 penalties imposed upon the losing side, 10 notwithstanding the fact that the developer has been 11 delayed, in many cases, over 18 months, and may have 12 missed the market for his product, and the fact that 13 the construction industry has lost 18 months of jobs 14 and New York State has lost 18 months of tax 15 revenues. 16 Legislation sponsored by 17 State Senator Jack Martens would require a bond to 18 be posted before an appeal could take place on these 19 activities. 20 And such legislation passed the State Senate 21 in June, and we are hopeful that the entire 22 State Legislature and the Governor will see the need 23 to protect permanent development projects from 24 unnecessary delays and expenses by passing this 25 legislation next year. 1 Third, there are two specific requirements 2 within the State Building Code, which many of my 3 members refer to me as imposing additional costs, 4 especially here on Long Island, which is all I can 5 talk about: 6 First, the requirement that all buildings in 7 the state, and here on Long Island, regardless of 8 location, conduct seismic evaluations and 9 construction levels, can add up to 20 to 25 percent 10 of the cost of the building; 11 Second, the requirement that air 12 modifications be continually evaluated and 13 exchanged, even in buildings in which few people 14 work, such as warehousing facilities, add 15 substantially to the cost of the development of 16 these of types of buildings which have become much 17 more prevalent on Long Island. 18 We would urge a review of both these 19 requirements. 20 Fourth, the protection of stormwater runoff 21 has become an major issue in many places, with 22 significant requirements being imposed even in 23 places where such runoff does not take place. 24 While DEC has clearly become more flexible in 25 this regard, and, in fact, changed two of their 1 regulations as a result of the efforts of LIBI, we 2 continue to try and fashion a system which will 3 allow for the control of runoff in ways which do not 4 significantly increase the cost of development. 5 Fifth, we remain concerned with the 6 subjective nature of many of the new questions being 7 required as part of the new Environmental Quality 8 Review Act forms which will take effect next month. 9 While we fully support the need to update the 10 forms, it continues to be our belief that many of 11 the new questions are more subjective rather than 12 objective, requiring assumptions and estimates on 13 many answers, which could lead to more aggressive 14 litigation on these issues because of the nature of 15 the answers being provided. 16 Sixth, there are many instances where a 17 developer must negotiate with DEC on specific uses 18 of parts of their property, which will have a 19 dramatic impact on the ability of the property to 20 fulfill the economic-development needs of the state. 21 In these cases, such as the reuse of property 22 at Calverton, which is 3,000 acres, we believe it is 23 essential that the Empire State Development 24 Corporation be included within these discussions and 25 the decision-making process so that a balance can be 1 achieved between both the environmental and economic 2 needs of our community. 3 Seventh, the need for affordable housing for 4 our young people is an ever-increasing need for our 5 economic-development goals. 6 And, unfortunately, most of the 7 municipalities on Long Island do not want such 8 housing in their communities. 9 The need for rental housing on Long Island 10 is, far and away, one of the most important aspects 11 of keeping our young people here. 12 And the inability to build such housing in 13 all parts of Long Island continues to damper the 14 opportunities to grow our companies. 15 Over 40 years ago, in a similar situation 16 with regard to housing for our citizens with 17 disabilities, the New York State Legislature enacted 18 the Padavan Law, which allowed the State to impose a 19 specific process with regard to the development of 20 housing for our citizens, because the municipalities 21 at that time refused to allow such development in 22 the amount necessary for the needs of 23 New York State. 24 We would urge you to once again look at this 25 process and include affordable housing within the 1 law to ensure that such rental housing, which is in 2 dire need here, can be developed. 3 The Long Island Builders Institute thanks 4 this Committee for reviewing these regulatory and 5 legislative issues which are of great importance to 6 the ability of our builders to continue to provide 7 the American dream for our citizens. 8 Yesterday, LIBI and its charitable arm, 9 Long Island Home Builders Care Development Corp., 10 announced the names of six U.S. service veterans who 11 will be the occupants of the first subdivision in 12 the country built especially for returning veterans. 13 The six houses are being sold to these 14 American heroes for less than 50 percent of the cost 15 of the house, through the donations and work of my 16 LIBI members. 17 We would very much like to be able to do the 18 same for all of our citizens who need housing in our 19 communities, and we are hopeful that your work will 20 allow us to expedite the building of such housing 21 now. 22 Thank you very much for this opportunity. 23 We appreciate it. 24 25 1 SENATOR VALESKY: Thank you, Mitch, 2 particularly for being so specific in giving us a 3 number of items. 4 MITCH PALLY: As Senator Boyle knows, I'm not 5 bashful in being specific. 6 SENATOR VALESKY: That's good, that's good. 7 Thank you also for your efforts on behalf of 8 our military men and women. 9 That's outstanding. 10 MITCH PALLY: Our pleasure. 11 SENATOR VALESKY: I think your final issue, 12 need for affordable housing, underscores why it's so 13 important that we're doing statewide hearings. 14 From Senator Gallivan and my part of the 15 state, that's not typically an issue that would be 16 on a top 7 or 8 list, so we appreciate, very much, 17 that. 18 And all of us have been working together in a 19 legislative capacity in the Senate, particularly 20 with the Majority Coalition that we're all members 21 of, and, we'll be certainly anxious, as we put our 22 report together following these -- this series of 23 hearings. 24 MITCH PALLY: The interesting thing that is 25 happening on Long Island, housing development at the 1 moment, is that it is almost impossible, unless you 2 finance it yourself, to get financing for for-sale 3 projects, which is what the communities, of course, 4 want. 5 It is absolutely possible in any way -- I can 6 talk tomorrow about 10 projects that could be funded 7 for rental housing, because the financing community 8 knows the dramatic need for such housing on 9 Long Island, and it gets filled up right away. 10 And that's the exact type of housing the 11 communities do not want. 12 And so we face a dilemma with the marketplace 13 calling for rental housing, especially for our young 14 people. 15 Long Island has the smallest percentage of 16 rental housing of any metropolitan area in the 17 country: 17 percent. 18 Westchester has 38 percent. 19 That dramatically impacts the ability of 20 young people to live on Long Island. 21 The changing demographics, as Senator Boyle 22 knows in his district, are unbelievable on the 23 Island. 24 People do not get married until their 30s. 25 They do not want the single-family home 1 until -- and they want housing options. 2 That's why the city of New York is booming, 3 because it has housing options, which we don't have 4 here. 5 And our ability to provide that is going to 6 be able to house these young people, who, sooner or 7 later, are going to get tired of living in mom and 8 dad's basement, or mom dad are going to get tired of 9 them living in their basement, and decide, You know 10 what? I'm going to go live someplace else. 11 Now, the funny thing is, where they go to 12 live, is in the city, because that has the housing 13 options we don't have here. 14 It has the lifestyle they want, that we don't 15 have here. 16 And we're not talking about changing the 17 lifestyle that 90 percent of Long Islanders know and 18 love, including myself, in a single-family home. 19 What we're talking about is integrating 20 within that, in places where it can happen, 21 especially our downtowns, additional rental housing 22 for our young people, because that's where they want 23 to live. 24 And, so, these opportunities, these issues, 25 will allow us to hopefully do so. 1 SENATOR VALESKY: Thank you. 2 SENATOR GALLIVAN: Just one question. 3 MITCH PALLY: Yes. 4 SENATOR GALLIVAN: When were you talking 5 about the Environmental Quality Review Forms -- 6 MITCH PALLY: Yes. 7 SENATOR GALLIVAN: -- and their subjective 8 nature, the new ones, could you provide them to us? 9 MITCH PALLY: Oh, sure. 10 They actually go into effect October 7th. 11 In fact, I just got another e-mail from DEC, 12 which I sent out to my members, but, the form went, 13 from 11 pages, to 30 pages. 14 Now, that by itself has issues, but, 15 I'll take away the issue of the length. 16 Many of the questions are now much more 17 subjective in nature. 18 And a developer trying to answer those 19 questions is answering them, of course, before the 20 project has happened. 21 They're trying to get permission to do the 22 project, not afterward. 23 So the ability to know exactly how many cars 24 are going to be there, or how many schoolchildren, 25 or all of these issues, are estimates, because you 1 don't know. 2 And our concern is, the subjective nature of 3 those questions could lead to additional litigation, 4 which Senator Martins and I have had many 5 conversations about, about Article 78. 6 And the goal there is not to end up in 7 litigation. 8 The goal there is to end up with a project 9 that meets the needs of the community and can meet 10 the environmental needs of the community; not to 11 say, okay, yes or no, on something. 12 So that is of great concern to us. 13 I'll be more than happy to share the forms 14 with you so you can see those directly. 15 SENATOR GALLIVAN: Yes, please. 16 And Zach right behind you can provide you our 17 e-mail address. 18 MITCH PALLY: Will do. 19 SENATOR GALLIVAN: It will probably be 20 easiest. 21 Any questions? 22 SENATOR BOYLE: No, I'd just like to thank, 23 Mitch, for your leadership, both the Long Island 24 Builders Institute, but in the other capacities 25 you've had over the years, to lessen the amount of 1 regulation. 2 And I'd like to thank the Chairmen for coming 3 to Long Island, and holding this hearing here. 4 We appreciate it. 5 SENATOR GALLIVAN: Thanks. 6 All right, Mitch, thank you. 7 MITCH PALLY: Thank you. 8 Thank you very much. 9 SENATOR GALLIVAN: Of course, we've been 10 joined by Senator Phil Boyle and 11 Senator Jack Martins, both who helped put this 12 together, and we appreciate your help. 13 And is there anything else that you wanted to 14 add to your comments, and then Jack, you, too? 15 SENATOR BOYLE: Just to thank the Chairmen 16 for holding these hearings around the state. 17 Whether it's agriculture, health care, 18 regulations have been making it more difficult to 19 start up businesses and to maintain businesses here 20 in the state of New York. 21 Long Island, we've had particular problem in 22 the construction industry. 23 I've talked to developers and real-estate 24 people, and citizens who are looking for housing 25 options, business options. 1 And, our overregulation; there's a certain 2 amount of regulation that's needed to protect the 3 workers and environment, and other things, but we 4 are overregulated, and it's stifling our 5 development. 6 And I thank you. 7 I hope we have some legislation coming out of 8 these hearings that will lessen that. 9 SENATOR GALLIVAN: Thanks, Phil. 10 Jack? 11 SENATOR MARTINS: Thank you. 12 You know, people say that the regulations are 13 the hidden tax. 14 It's a tax increase on our businesses and 15 impacts our businesses, because it requires you to 16 do certain things that you otherwise may not need to 17 do; or to do things over and over and over again, 18 and supply the same forms and the same information 19 over and over and over again; where, you shouldn't 20 have to do that. 21 I want to applaud Senator Gallivan for his 22 initiative in taking on this task, not only with 23 respect to the topic we have here today, which is 24 the construction industry. 25 And, obviously, it's something close to me, 1 but, throughout the state, whether it's agriculture, 2 whether it's business, whether it's insurance, or 3 construction, very important issue. 4 And to the extent that we can begin getting 5 into this issue a little more carefully, hearing 6 from those of you who are in the industry, giving us 7 your firsthand impressions, maybe we can actually do 8 something about it. 9 If we can roll back some of these 10 regulations, if we can take some of the pressure 11 that you have on you that is put on there by a State 12 and a bureaucracy that oftentimes is overbearing, 13 then we've partially done our job. 14 I'm looking forward to the testimony here 15 today. 16 Thank you. 17 SENATOR GALLIVAN: Thanks, Jack. 18 Matt Cohen from the Long Island Association. 19 Hi, Matt. 20 MATT COHEN: Good afternoon, Senators, and 21 thank you for the opportunity to be with you today. 22 My name is Matthew Cohen. 23 I am vice president of legislative affairs 24 for the Long Island Association, which is the 25 leading business organization in the region. 1 Our membership is comprised of small and 2 large businesses: technology and manufacturing 3 companies, universities, financial-services firms, 4 banks and credit unions; hospitals, real-estate 5 companies, and sole proprietors, which, together, 6 employ more than one-half of the region's workforce. 7 Our mission is to lead the region's economic 8 development and bring together disparate factions 9 within the community to forge regional solutions for 10 Long Island. 11 We are very pleased the Senate Majority 12 Coalition is holding a series of public forums on 13 regulatory reform, and that you have chosen 14 Long Island to discuss the construction industry in 15 particular; an industry that has always been 16 important to us and, now more than ever, as we 17 continue to rebuild from the devastation of 18 "Superstorm Sandy." 19 While Long Island and New York State are 20 still struggling with the slow and bumpy economic 21 recovery, Albany has properly repurposed its focus 22 on creating jobs and supporting the business 23 community. 24 We have witnessed important efforts to 25 provide meaningful relief to our municipalities and 1 employers through some pension and Medicaid reforms, 2 and the implementation of some modest tax cuts and 3 the 2 percent property-tax cap, and we applaud all 4 of your efforts to see that become a reality. 5 But there's more work to do and difficult 6 battles to wage to create more jobs, spur private 7 investment, reduce the property-tax burden, and 8 further improve the overall business climate. 9 That is why the input you receive at your 10 hearings and the work you do through your Committees 11 is so important to our economic future. 12 So in addition to more tax relief for small 13 businesses, I'd like to start off talking about 14 commonsense reforms that we need to antiquated 15 regulations, like The Scaffold Law; and, thus, we've 16 supported Senator Gallivan's legislation, 17 Senate Bill 111. 18 As you know very well, I'm sure, the current 19 law imposes a standard of absolute liability upon 20 contractors and property owners for all 21 gravity-related industries. 22 The approach advocated by the legislation 23 would replace the absolute-liability standard with a 24 fair comparative negligence standard only in 25 situations where a worker's injury is founded and 1 caused by that worker's failure to follow safety 2 training or use available safety devices, 3 intox- --I'm sorry, intoxification -- intoxication 4 or commission of a crime; meanwhile, negligent 5 employers will still be held fully liable and the 6 injured worker may still collect worker's 7 compensation benefits. 8 New York is the only state which retains this 9 antiquated law which was originally enacted in 1885; 10 thus, insurance costs for construction projects in 11 New York are higher than anywhere else in the 12 country, and many small companies simply cannot 13 afford the policies. 14 Reducing these jobs [sic] would allow 15 businesses to grow and spur more investment. 16 In addition to construction companies, 17 high insurance costs also impact businesses and 18 consumers that pay hundreds of thousands of dollars, 19 if not millions more to build commercial and 20 residential projects, and our local governments and 21 taxpayers are forced to pay more for public 22 infrastructure projects, such as roads, bridges, and 23 the "Superstorm Sandy" recovery; or even worse, they 24 do not build at all. 25 And, municipalities also bear the costs of 1 the judgments and settlements when they are sued 2 under the Scaffold Law. 3 A recent article that you may have read in 4 the Associated Press cited a few startling examples 5 of the impact of the larger insurance costs in 6 New York. 7 It noted that building groups estimate that 8 the current law will add an extra 200 to 9 400 million dollars to the State's replacement of 10 the Tappan Zee Bridge; 11 That New York City's school system says the 12 insurance costs it incurs from the law is enough to 13 build two new schools every year; 14 And that, in Western New York, the 15 general-liability insurance premium was $380,000 to 16 cover rehabilitation on just 23 miles of the 17 State Thruway. 18 As a result, the cost of business is higher 19 than it needs to be, there's a disincentive to 20 invest in our infrastructure, and fewer jobs are 21 created. 22 This is one area of regulatory reform that 23 can be addressed while not impinging upon the 24 workplace safeguards that have been established 25 since the original passage of the Scaffold Law. 1 Secondly, the State Legislature should also 2 consider reforming the Wicks Law, which requires 3 state and local government construction projects to 4 issue multiple contracts for plumbing, HVAC, and 5 electrical work, with the balance of the job going 6 to a general contractor for all public-works 7 projects. 8 While perhaps well-intended to promote fair 9 competition and protect workers' rights, it has also 10 led to expensive inefficiencies and delays, higher 11 construction costs for municipalities and school 12 districts, and tax pressures on the business 13 community. 14 According to a report of the New York State 15 Commission on Local Government Efficiency and 16 Competitiveness completed in April of 2008, several 17 studies have estimated higher costs resulting from 18 the Wicks Law provisions, and New York City had 19 estimated, at that time, that it would save 20 $3.7 billion over the 10-year capital plan with a 21 full repeal of Wicks. 22 Other studies have indicated that the 23 Wicks Law could add anywhere from 8 percent to 24 30 percent to the project's price tag. 25 In 2008, the Wicks Law was amended to set an 1 exemption threshold of $1.5 million for Nassau, 2 Suffolk, and Westchester counties, $3 million in 3 New York City, and $500,000 for upstate. 4 While we enjoy good working relationship with 5 our brothers and sisters from labor, and we are not 6 suggesting anything to hurt labor, we need to strike 7 the right balance. 8 The Wicks Law should either be eliminated, 9 but, in the absence of that, see its thresholds 10 dramatically increased in order to generate 11 significant savings, and, thus, improve the business 12 climate. 13 A third area in which regulatory reform could 14 promote economic development and assist the business 15 community relates to the time frame of municipal 16 decisions for land use, and building on what Mitch 17 had testified to. 18 Under current Article 78 law, any delay in 19 moving a development project forward results in 20 additional costs to the developer because it's not 21 feasible to secure financing and start a project 22 while such an appeal is moving forward. 23 This has had a negative effect on important 24 development projects throughout Long Island, 25 including Avalon Huntington Station, the Meadows at 1 Yaphank, and New Village in Patchogue. 2 In total, Article 78 has jeopardized projects 3 that represent a total statewide economic impact in 4 excess of $1.5 billion, and has either delayed or 5 curtailed thousands of employment opportunities. 6 That is why we have supported 7 Senator Martins' bill, Senate Bill 985, that would 8 require a bond be submitted by the party appealing a 9 decision, so as to protect the developer from 10 associated costs relating to delays caused by 11 frivolous appeals of decisions made by 12 municipalities, in favor of these development 13 projects. 14 The proposed legislation, sponsored by 15 Senator Martins, would lower business costs and 16 generate critical economic activity. 17 Expediting and streamlining the 18 State Environmental Quality Review Act process would 19 also be helpful. 20 There is an unfortunate practice of 21 municipalities here on Long Island to keep secret 22 hearings open even though the totality of impacts 23 have been vetted and mitigated. 24 Municipalities sometimes only do this to 25 delay votes and approvals. 1 While there are timelines and deadlines that 2 are set forth within the regulations implementing 3 SECRA, these need to be made mandatory and 4 enforceable. 5 The imposition of default provisions for 6 noncompliance with timelines and deadlines would 7 provide leverage to the private sector to expedite 8 the approval process. 9 We could also support longer timelines and 10 deadlines with the condition that default approvals 11 will be a consequence of noncompliance. 12 It is important that local government have 13 the ability to positively encourage improved 14 economic conditions by expediting projects 15 consistent with the comprehensive plan of each 16 municipality and municipal home rule. 17 For example, an application in conformity 18 with, and a principle permitted use under, local 19 zoning should be the benefit of accelerated approval 20 process. 21 Similar to the reenacted Article 10 Law, the 22 State should establish a fast-track process for 23 applications that also meet certain environmental 24 criteria that address economic-development needs. 25 While some sensible reforms to SECRA could 1 foster economic development, we do not wish to do so 2 at the expense of protecting the environment, 3 something we all agree we must do. 4 We are not in any way suggesting anything 5 anti-environment; however, the harsh reality is, 6 that, many times, the SECRA process delays or 7 prohibits good projects that do not truly have a 8 negative impact on the environment. 9 California has also recently sought to amend 10 its version of SECRA, the Environmental Quality Act, 11 because, while it too has helped keep the air and 12 water clean, the law has also stalled projects that 13 would spur economic growth. 14 Finally, we should explore 15 self-certifications for certain construction 16 projects like some other states permit. 17 I believe North Carolina is one of them. 18 Here, an engineer or architect, licensed by 19 New York State, would certify that all plans and 20 drawings meet or exceed all building-permit 21 requirements, and once filed with the local 22 municipality, construction can start. 23 The municipality can always review and/or 24 audit the submissions, and if there were any 25 evidence of misrepresentation, then the license of 1 the engineer or architect could be revoked by the 2 State. 3 This would significantly accelerate 4 construction of single-family homes, additions, and 5 certain commercial projects. 6 The LIA applauds the New York State Senate 7 for passing 14 regulatory reform bills in the last 8 session as part of your initiative, that includes 9 these statewide public hearings, to identify and 10 eliminate costly and unnecessary government 11 regulations that inhibit job growth and drive up 12 property taxes. 13 Thank you for allowing me the opportunity to 14 testify today, and I respectfully urge you to 15 consider our recommendations during your 16 deliberations. 17 Thank you. 18 SENATOR GALLIVAN: Any questions? 19 SENATOR MARTINS: Thank you. 20 Matt, good to see you. 21 MATT COHEN: Good to see you, Senator. 22 SENATOR MARTINS: Thank you. 23 Let's take these one at a time. 24 The Scaffold Law reform: 25 With Senator Gallivan's proposed, sort of 1 levels the playing field, I think. 2 Under the current scenario, who wins, in your 3 opinion? 4 MATT COHEN: Well, I can tell you who loses: 5 it's taxpayers and businesses that are paying extra 6 costs for insurance. 7 SENATOR MARTINS: No, I get it. 8 I understand that. 9 But, you know, if our goal is safety; and our 10 goal is safety on job sites, and make sure that our 11 workforce is in a safe environment, is there any 12 benefit to continuing with an absolute-liability 13 statute, as opposed to a statute that takes into 14 consideration personal responsibility? 15 MATT COHEN: Well, I've read stories, and 16 know, anecdotally, that there are folks that have 17 been injured on the job, that would say that the 18 absolute-liability standard is important, and help 19 them pay for their medical bills. 20 And I completely understand and appreciate 21 that, but I think we've come a long way since 1885, 22 and I think there are a lot -- there is a lot that 23 we're doing to protect our workers. 24 And, of course, there's got to be a balance. 25 And no one wants to see workers get penalized 1 or punished for an accident that's not their fault. 2 SENATOR MARTINS: Yeah, I don't disagree with 3 you. 4 I'm actually going to your point. 5 MATT COHEN: Okay. 6 SENATOR MARTINS: You know, I'm concerned 7 that we are the only state that has this standard, 8 and this absolute standard, and it's being enforced 9 in this way. 10 I have, over the years, actually seen various 11 examples of this particular statute having been 12 taken advantage of, and inappropriately taken 13 advantage of. 14 And, obviously, if that's replicated 15 throughout New York State, we can see the impacts of 16 that on the cost of construction, and you pointed 17 that out. 18 Wicks Law, you mentioned there was an issue 19 for labor. 20 Isn't it Wicks Law specific to a certain area 21 of labor, certain trades? 22 MATT COHEN: Electric, HVAC, and plumbing. 23 SENATOR MARTINS: All right, so everyone 24 else, whether it's laborers themselves, carpenters, 25 operating engineers, and the like, they're not 1 impacted by Wicks Law one way or the other? 2 MATT COHEN: Directly, not to my knowledge, 3 no. 4 SENATOR MARTINS: And, of course, the SECRA 5 reviews, you talked about timelines. 6 There are different types of projects out 7 there. 8 You mentioned some very significant projects 9 that were impacted by SECRA and Article 78 10 proceedings. 11 How do we provide a timeline that covers, not 12 only the mega projects and the large projects, but 13 the smaller projects as well? 14 How do we strike that balance? 15 Because I know the imposition of a timeline 16 may work for, you know, an average project. 17 When we do have larger projects, those 18 timelines then become arbitrary. 19 You know, have you given any thought to how 20 we can perhaps evaluate the type of project, the 21 complexity of the project, and put timelines in that 22 are commensurate with the size project, for example? 23 MATT COHEN: Yeah, that's a great question. 24 And, we have not gone to that level of 25 specificity, but I would be happy to talk to our 1 members, and to Kevin, and offer you some 2 recommendations, you know, in preparation for your 3 report that you're going to complete, that has some 4 more specifics and suggestions. 5 SENATOR MARTINS: Because, again, there is a 6 valid purpose, obviously, to SECRA. 7 There's a valid purpose to having it, in 8 measuring environmental impacts, protecting 9 neighborhoods, protecting communities. 10 On the other hand, not every project 11 requires, or even should require, the same level of 12 review. 13 MATT COHEN: Sure. 14 SENATOR MARTINS: And, so, there should be a 15 baseline. 16 And then there are, certainly, for those more 17 complex projects, certainly have the ability to have 18 a greater analysis. 19 MATT COHEN: Yeah, good point, and I'd like 20 to be back in touch with your office, if that's 21 okay? 22 SENATOR MARTINS: Self-certification: 23 With the construct that we have out here, 24 with all of our villages and towns, and their 25 individual building departments, are you suggesting 1 that, perhaps, we replicate the process that they 2 have in New York City, with architects and engineers 3 being able to self-certify their projects? 4 MATT COHEN: Yeah, and we think the 5 self-certification process, you know, we know that 6 it's done in other states. 7 We know it's been worked -- it's worked well 8 in other states. 9 And, again, you want to guard against fraud 10 or abuse or someone taking advantage of the systems, 11 but, I think, you know, with the proper audits and 12 safeguards in check, it's something worth looking at 13 and studying further. 14 You know, I'm certainly not an expert on it 15 but I think it's something that we should look at 16 further because, again, it just goes to that larger 17 point, which is sort of symptomatic of a lot of our 18 issues on Long Island, as I think you'll probably 19 agree on on some level, that there's just too many 20 delays, too many inefficiencies. 21 And big things that we want to get done, you 22 know, whether it's at Belmont, or the Hub, or 23 anywhere, it's just -- there's too many of these 24 types of examples of process-type issues of 25 bureaucracy-type issues that sort of slow everything 1 down. 2 So that may be a little bit more of an 3 in-the-weeds suggestion, but it's just something 4 I think we should-- me and Kevin thought we should 5 take a look at. 6 SENATOR MARTINS: Yeah, we have too many 7 examples of no -- 8 MATT COHEN: Right. 9 SENATOR MARTINS: -- when we deal with these 10 projects on the Island, and elsewhere in 11 New York State, and too little effort in working 12 together to try to get to yes. 13 And, I appreciate your suggestions in that 14 context. 15 Thank you. 16 MATT COHEN: Thanks, Senator. 17 SENATOR GALLIVAN: You're good? 18 SENATOR BOYLE: I'm good. 19 SENATOR GALLIVAN: You're good? 20 Thanks, Matt. 21 MATT COHEN: Okay, thank you very much. 22 SENATOR GALLIVAN: Charles Gardner, from the 23 Long Island Chapter of the National Electrical 24 Contractors Association. 25 CHARLES GARDNER: I got moved up. 1 Good afternoon, Members. 2 And again, as has been reiterated, I thank 3 you for the opportunity, and very glad that you have 4 come to our section of the state. 5 My name is Charles Gardner. 6 I'm the -- currently director of government 7 affairs for the National Electrical Contractors 8 Association, the Long Island Chapter. 9 I have been on both sides of the regulatory 10 divide, in that, I'm the immediate past president of 11 the -- for 12 years, of the King's Park Chamber of 12 Commerce; 13 I am past president of the King's Park School 14 Board, for nine years; 15 And I also was Commissioner of Consumer 16 Affairs for the Suffolk County, for more than 17 ten years. 18 So I have been on both sides of regulatory 19 issues. 20 And, there are two points I'd like to bring 21 up today, and, really, not necessarily a repeal. 22 The first is -- refers to a bill that has 23 been introduced by Senator Zeldin and 24 Assemblyman Thiele, and it would empower 25 Suffolk County to assume more licensing duties for 1 our electricians within the county of Suffolk. 2 The -- our chapter, the members of our 3 chapter, we have more than 100 signatory members. 4 We're in partnership with our electrical 5 workers from Local 25 of IBEW. 6 And, for more than six years our chapter has 7 really been a leading voice in the electrical 8 construction industry on Long Island, and as such, 9 we work throughout Nassau and Suffolk county. 10 We are concerned with the number of smaller 11 municipalities that have gone to requiring licenses, 12 or, in some cases, they'll call them 13 "registrations," for people to work as master 14 electricians. 15 In our view, it is strictly a 16 revenue-producing requirement. 17 It has nothing to do with competence, 18 protection of consumers, leveling of the marketplace 19 for contractors. 20 For instance, the requirements of the Village 21 of Mastic Beach, within several months after 22 incorporation in Mastic Beach, they decided that 23 they were going to require electricians to have 24 their license in order to work anywhere within the 25 confines of the village. 1 The Town of South Hampton forces electricians 2 already licensed by Suffolk County to be registered 3 or licensed separately. 4 These are two perfect examples of unnecessary 5 governmental duplication for the sole purpose of 6 raising revenue. 7 Instead of using the Suffolk County law as a 8 complement to their code and enforcement policies, 9 at no cost to the town or village, they have chosen 10 to add a redundant layer of compliance on the backs 11 of all contractors. 12 We have no dispute with the town or village 13 building codes or enforcement of those codes. 14 Our concerns are the extra fees for the 15 registration of contractors, the burden of extra 16 administrative costs for a contractor, and the 17 burden of having to appear in person to pick up 18 registration stickers, or for renewals, for example. 19 It is about the illusion of more protection 20 for consumers, and the illusion that, somehow, these 21 jurisdictions are better able to keep untrustworthy, 22 incompetent contractors from working within their 23 boundaries. 24 With or without the extra license, the 25 enforcement policy to the town or the village, and 1 the available sanctions against incompetent 2 contractors, are exactly the same. 3 Licenses or registrations are only issued to 4 contractors who already possess a Suffolk County 5 license. 6 Why require these redundant licenses, 7 especially when there is the implication that there 8 will be more consumer protection, or, somehow, 9 better licensed contractors, when, in fact, there 10 will be neither? 11 We are most concerned about the snowballing 12 effect in Suffolk County, and we need to prevent the 13 nightmare of regulations that currently exist in 14 Nassau County, where, if you want to work as a 15 master electrician anywhere within the boundaries of 16 Nassau County -- 3 townships, 2 cities, 17 64 incorporated villages -- you would need, 18 approximately, 26 separate licenses. 19 You have to administer them. 20 You have you to manage them. 21 Terms of these license vary, from one year, 22 to two years. 23 Terms vary, from a calendar year, to a date 24 of inception of the license. 25 Fees range from $50 to $400 per year, 1 sometimes for two years. 2 You have to appear -- you have to have your 3 same stack of worker's comp insurance, your work 4 experience within the industry, et cetera. 5 You have to carry these around, over and over 6 and over again, the same packet of papers to all 7 these jurisdictions. 8 To our mind, the requirement of so many 9 licenses is truly an unfair burden, overregulation, 10 and redundancy. 11 One of our major contractors, for instance, 12 he does hold all of the required licenses for 13 Nassau County. 14 He has one employee whose sole job is to keep 15 track of these licenses: when they are expiring, 16 when they are coming due. 17 Any regulations that may change. 18 That is her full-time job: keeping track of 19 the licenses required in Nassau County. 20 Now in Suffolk County, where you have three. 21 So, the law that has been introduced by 22 Senator Zeldin and Assemblyman Thiele does require a 23 home-rule message from Suffolk County. 24 That has already been filed in the 25 Consumer Affairs Committee in the county by 1 Legislator Thomas Cilmi. 2 It has been tabled, awaiting for the next 3 session, whenever that might be called. 4 We would certainly ask for your support in 5 allowing this bill to go forward. 6 It would preempt the existing regulations, 7 and prevent any further small municipalities within 8 the county of Suffolk from going ahead and requiring 9 additional licenses for a master electrician. 10 Some of the -- some of the little things, 11 besides the management of it and keeping up with it, 12 people don't realize that, if you're in a 13 jurisdiction that requires a license, and you don't 14 have one, you can't even give an estimate, legally. 15 So, if somebody calls you, maybe you're 16 working across the street or down the block from -- 17 let's, for instance, use the village of 18 Mastic Beach -- and, you know, people see you, and 19 their neighbor's getting work done, and see 20 ABC Contractor, or whatever, and they say, Hey, you 21 know, we have a job. Could you come over and give 22 an estimate? 23 They say, No, I can't, because, you know, 24 you're in Mastic Beach, and I don't have that 25 license, so I can't -- legally, I can't even give 1 you an estimate. 2 So there are contractors who won't even go to 3 the smaller municipality to apply for that license, 4 wait the month, sometimes several months, to get a 5 license, then go give the estimate, and then wind up 6 not getting the job anyway. 7 So, it is certainly a burden in the 8 day-to-day activities for the contractor. 9 It increases the cost of the contractor. 10 And as we know, when the contractor's costs 11 increase, where do they get passed on to? 12 The consumer. 13 And, there is really no additional protection 14 or benefits to either the contractors or consumers 15 by these smaller municipalities requiring additional 16 licenses. 17 So we would hope we could get some support 18 for that in the coming session. 19 The second item I would like to speak about, 20 and it's been mentioned already today, is the 21 Wicks Law. 22 And I was a little bit of a pariah when I was 23 president of the school board, because I never could 24 really understand the insistence on doing away with 25 the Wicks Law. 1 I'd like to read a statement from the 2 chapter. 3 "The Long Island Chapter of the 4 National Electrical Contractors Association strongly 5 protests any proposal that might repeal the 6 Wicks Law for public-works projects, allowing 7 municipalities and school districts to bid projects 8 using a single prime contractor instead of the 9 current multiple-prime system. 10 "There is a perception that contracts for 11 large projects will always save taxpayer dollars if 12 let to by a single prime bidder. 13 "The fact is, that using multiple prime 14 contractors will always result in increasing 15 competition and eliminating third-party or middleman 16 payments" -- 17 Competition is truly the lifeblood of a free 18 marketplace. 19 -- "both of which are strong factors in 20 reducing costs associated with any project. 21 "In single prime, the subcontractors, those 22 who are actually doing the day-to-day work, are 23 chosen by the GC (the general contractor). 24 "In most cases, their criteria for being 25 chosen by the GC are not known by the customer. 1 "One might assume that the subs are being 2 picked based on the quality of work, financial 3 stability, and credibility within the industry, but, 4 too often, the main factor for being chosen is 5 lowball price from the GC. 6 "'You get what you pay for' is a cliche that 7 is understood by all of us when applied to 8 purchasing any goods or services. 9 "A repeal of the Wicks Law would not help 10 taxpayers, in our opinion; would benefit a 11 relatively small number of general contractors with 12 the resources to bid on multimillion dollar 13 projects"; -- 14 The larger the projects, the more that our 15 local contractors are, effectively, shut out, 16 because they just do not have the resources to be 17 able to bid on, you know, a single prime. 18 -- "would adversely affect hundreds of both 19 union and non-union, small and medium-sized 20 businesses, and their thousands of employees and 21 family members. 22 "We ask that you act to protect the interests 23 of taxpayers, our working families, and the small 24 businesses of New York by ensuring that the state's 25 Wicks Law remains in effect. 1 "Thank you for your attention to this serious 2 matter, and stand ready to meet with you at any 3 time." 4 And, again, we do appreciate the ability to 5 get our remarks on the record. 6 Thank you. 7 SENATOR MARTINS: Mr. Gardner, thank you. 8 Let me take your first point, first. 9 In Suffolk County, do they have -- any of the 10 municipalities, the towns, have tests for 11 electricians, that you actually have to go through 12 in order to be certified and be licensed in that 13 town? 14 CHARLES GARDNER: In South Hampton, the main 15 requirement is, you show up and you show them that 16 your Suffolk County license. 17 SENATOR MARTINS: Right, no, any of the other 18 towns, that you're aware of, you know, any of the 19 towns in Suffolk County, any of the municipalities 20 in Suffolk County, are any of them -- do any of them 21 have a licensing requirement? 22 CHARLES GARDNER: No. 23 Many of the ones in Nassau do. 24 SENATOR MARTINS: Right. 25 CHARLES GARDNER: Yes, they do. 1 SENATOR MARTINS: Right, and that's why -- 2 CHARLES GARDNER: Correct. 3 SENATOR MARTINS: -- I started with Suffolk, 4 come back to Nassau. 5 But, you know, there -- and I hope you would 6 agree that there is a benefit to localites, because 7 there are certain requirements that some 8 municipalities may want to see in the construction 9 in their municipality. 10 They make those decisions for themselves. 11 There are different standards that can be 12 applied with regard to electrical work, or plumbing 13 work. 14 And that if a municipality chooses to 15 exercise its own prerogative to have different types 16 of construction within its municipality, shouldn't 17 it have the ability to do that? 18 CHARLES GARDNER: If that were the case, 19 I might agree, but, it really isn't, because the 20 building codes are -- you know, the New York State 21 building code, the national fire codes, they are -- 22 they're standard. 23 That's what the building inspectors enforce. 24 And, Senator, I think if you checked most of 25 the testing requirements, even within Nassau County, 1 you would find that the tests are pretty -- very, 2 very, very much similar, as well as the prior-work 3 requirements. 4 And, by the way, one of the main reasons 5 we're not even addressing Nassau County -- because 6 it is what it is -- is because there is no -- 7 SENATOR MARTINS: I appreciate the way you 8 put that, by the way. 9 [Laughter.] 10 CHARLES GARDNER: Well, what I mean is, that 11 there is no -- let's just say that I was able to go 12 to the village associations, you know, the -- the 13 independent villages -- 14 SENATOR MARTINS: Oh, sure, right. 15 The Nassau County Village Officials 16 Association? 17 CHARLES GARDNER: Right. 18 -- and they said, Fine, next Monday, we'll 19 give up licensing. 20 Who's going to do it? 21 See, right now, there's no setup. 22 Nassau County Consumer Affairs only licenses 23 the home-improvement people. 24 SENATOR MARTINS: Right. 25 CHARLES GARDNER: So there is no overarching 1 agency that would be able to pick up and start 2 saying, Okay, we'll license everybody. 3 Suffolk County has that. 4 It's been in effect in Suffolk County since 5 1972. 6 So, that's why it's -- that's a horse of a 7 different color, in Nassau. 8 So, it is -- it's not going to change. 9 It's not going to change in the very near 10 future. 11 We're very concerned that it does not 12 snowball in Suffolk County. 13 We can maintain -- we've been doing that -- 14 doing it since 1972, requiring that one master 15 electrician's license. 16 We feel it's the best way to go, and it's 17 less burdensome on our contractors for Suffolk. 18 SENATOR MARTINS: All right. 19 I do appreciate that. 20 And I do appreciate the distinction as well. 21 CHARLES GARDNER: Yes. 22 A big one. 23 SENATOR MARTINS: Going to Wicks for a 24 second: 25 You know, you mentioned it may not allow 1 smaller contractors to bid on these larger projects. 2 But wouldn't a smaller contractor, or any 3 contractor, be bidding on exactly the same work? 4 If you have an electrical contractor that 5 currently can bid on electrical work as a prime 6 directly to the owner, let's say, to a local school 7 district that wishes to either build a school or put 8 an addition onto a school, there is a GC that's 9 going to do general work. 10 They're going to have subcontractors to 11 them -- 12 CHARLES GARDNER: That's correct. 13 SENATOR MARTINS: -- for everything other 14 than the mechanical trades. 15 Then you have your mechanical trades that are 16 going to bid directly to the owner. 17 If the GC was to, and if Wicks was to be 18 amended, or if it was below the thresholds we 19 discussed earlier, wouldn't the GC have the ability 20 to go to those same exact contractors and ask them 21 to bid on that same work that they otherwise would 22 be bidding to the owner? 23 CHARLES GARDNER: Of course. 24 SENATOR MARTINS: And it's not as if these 25 contractors are going to be bidding on the entire 1 project. 2 They're still going to be bidding on that 3 portion of the contract that corresponds -- 4 CHARLES GARDNER: Electrical, plumbing, and 5 HVAC. 6 SENATOR MARTINS: Right. 7 CHARLES GARDNER: Right. 8 But from the customer's point of view, when 9 I say that competition is the lifeblood of the free 10 marketplace, if you're the electrical contractor, 11 let's just say, for instance, it's $100,000 for the 12 electrical job, and I'm the GC. 13 Well, if you're going to bid 100,000, the 14 school district is not going to pay a hundred, 15 because if I'm the GC, and it's 100,000 of work, I'm 16 going to the school district with maybe a hundred 17 and twenty, maybe a hundred and fifteen. 18 SENATOR MARTINS: If the GC doesn't want to 19 get the job, because the GC is also competing 20 against other GCs for the work. 21 CHARLES GARDNER: They shop it. 22 SENATOR MARTINS: And, that electrical 23 contractor is also bidding that work to every one of 24 those GCs and giving the lowest possible price. 25 So, again, competition being the lifeblood of 1 what we do, and of our economy, not only will the 2 owner have the benefit of the lowest possible price, 3 generally, from the general contractor, but that GC, 4 in giving them the lowest possible price, is also 5 going to request that the subs provide that GC with 6 the lowest possible price so that they can package 7 it together. 8 My concern, when we discuss Wicks, is more 9 along the lines of coordination of jobs, and 10 different trades on the jobs, and sequencing of 11 trades, and the difficulties that arise when you 12 have multiple primes on a job site, and the lack of 13 coordination between those primes that sometimes 14 leads to delays when one trade refuses to get out of 15 the way for another one, and there is no 16 coordination that would normally fall to a general 17 contractor. 18 It becomes unwieldy. 19 And, so, to the extent that there is a model 20 out there that works in the private sector, to the 21 extent that there are savings associated with that, 22 and I think there are studies out there that bear 23 out that there are savings to the taxpayer of 24 coordinating the various trades, and, frankly, to 25 the extent that, if we go back to when the Wicks Law 1 was originally enacted, nearly 100 years ago-- 2 CHARLES GARDNER: 112. 3 SENATOR MARTINS: Right. 4 -- that, you know, it was predicated on 5 preventing fraud. 6 CHARLES GARDNER: Corruption was one of the 7 prime movers in that, yeah. 8 SENATOR MARTINS: And, today, our bidding 9 process, especially on our public-works projects, 10 requires an extraordinary level of oversight. 11 You know, you have sealed bids. 12 And the opportunity for there to be 13 collusion, or the kind of fraud that led to the 14 Wicks Law being enacted to begin with, just simply 15 doesn't exist. 16 Certainly not here in New York State with all 17 of the requirements for the bidding process. 18 So, although I certainly understand the 19 reluctance of the industry, and in the electrical 20 industry and the various mechanical trades, to see 21 this go away, I would also, in fairness, say that 22 there are alternative points of view that would lead 23 to the kinds of savings that you were talking about 24 when you were advocating consolidating our efforts 25 in Suffolk County. 1 And I would hope that we would keep that in 2 mind as well. 3 Thank you, sir. 4 CHARLES GARDNER: Thank you, Senator. 5 Senator Boyle? 6 SENATOR BOYLE: Thank you again for your 7 testimony. 8 And just to get back to Senator Martins' 9 point about the licensing from the different 10 municipalities, as a layman I'm really not sure of 11 the difference. 12 So, can you tell me just a couple of the 13 differences that, say, a normal license for an 14 electrician in Suffolk County, versus the one that 15 the town of South Hampton or village of Mastic would 16 require? 17 What would the village require on top of or 18 instead of, for licensing? 19 CHARLES GARDNER: That's one of the 20 grievances, is that there really isn't anything 21 extra. 22 SENATOR BOYLE: Just the money. 23 CHARLES GARDNER: Yeah, it's just the money, 24 that's correct. 25 SENATOR BOYLE: So how do they prove that? 1 Do they just come in -- would they just go 2 in -- in practice, how does that work? 3 Do they come go in and show their regular 4 license and say, Oh, here, fill out this form? 5 CHARLES GARDNER: One of the benchmarks, 6 Senator, before you can go any further is, you have 7 to have a Suffolk County license. 8 SENATOR BOYLE: Right. 9 CHARLES GARDNER: So if you don't have the 10 Suffolk County license, then you can't get the other 11 one. 12 SENATOR BOYLE: Okay. 13 CHARLES GARDNER: Which we're saying, well -- 14 I mean, I can -- so, for instance, when the village 15 started two years ago, I mean, we've had master 16 electricians been in business 40 years, working. 17 And now, all of a sudden, in this little 18 area, they can't work anymore. 19 And, you know, I can bring up a little 20 anecdote about, again, what Senator Martins was 21 talking about, with Nassau County. 22 It's very typical for contractors -- many our 23 contractors don't have all of the licenses. 24 They might have 10 or 12 or 14 in Nassau 25 County. 1 I can remember when Nassau County first 2 instituted their red-light cameras. 3 The first three they put in, if you remember, 4 two of them had to be removed. 5 You know why? 6 Because the County installed them -- I think 7 Senator Martins knows -- on other than county 8 property. 9 They were installed in -- within the confines 10 of the jurisdiction of a village. 11 SENATOR MARTINS: An incorporated village, 12 sure. 13 CHARLES GARDNER: Or what we say is, 14 These are our guys. 15 These are just guys out working every day. 16 Now they have to know, well, where does 17 Mineola stop, where does Williston Parks begin. 18 I'm across the street. 19 It's the same thing now, you know, in 20 Mastic Beach. 21 The town of South Hampton requires it; the 22 village of South Hampton does not. 23 So, I mean, our guys have to keep up with 24 the -- they have to be geography experts as well as 25 jurisdictional experts. 1 So, it is definitely a burden. 2 And that's why we're really enthused about 3 Senator Zeldin's and Assemblyman -- and 4 Assemblyman Thiele, you know, he's an east-end guy, 5 so, we're really hoping that it gets through. 6 SENATOR GALLIVAN: Senator John Flanagan has 7 also joined us. 8 SENATOR FLANAGAN: Yes. 9 Nice to be here. 10 CHARLES GARDNER: I saw him. 11 SENATOR FLANAGAN: Just want to say hello to 12 one of my constituents. 13 Charlie, it's nice to see you. 14 How are you doing? 15 CHARLES GARDNER: Good, good. 16 Thank you. 17 SENATOR GALLIVAN: Thank you very much. 18 Artie Cipoletti, president of 19 DaVinci Construction. 20 ARTIE CIPOLETTI: Senators, thank you for 21 having me. 22 Yes, Artie Cipoletti, president of 23 DaVinci Construction; vice president of Long Island 24 Builders Institute; and, Scaffold Law expert by 25 default. 1 [Laughter.] 2 ARTIE CIPOLETTI: Matt Cohen did a good job 3 explaining some of the history behind the 4 Scaffold Law, going back to the 1800s. 5 And, you know, there was a time and a place 6 for that, as there is a time and a place for 7 everything. 8 I'm the guy in the fields. 9 I'm the guy that it makes a big difference 10 to. 11 And whether or not a law that was put into 12 effect to protect people that were working on 13 skyscrapers equates to people that are in 14 residential construction of two to four stories is 15 an equivalent, I would argue the fact that it isn't. 16 The main factor is, the fact that the law is 17 there, but it's abused. 18 And because it's absolute, it's easy to 19 abuse. 20 There's an example in the paperwork in front 21 of you, and I'm not prepared to sit here and read 22 testimony like my constituents are. 23 You know, I'm the guy in the field. I make 24 things happen. 25 I'm the guy it affects, that costs me money. 1 At any given day, I have 200 employees out 2 there. 3 I work in four states: 4 New York, New Jersey, Connecticut, and 5 Massachusetts. 6 I live in New York on Long Island. 7 My main office is on Long Island. 8 I have a suboffice in Massachusetts, and I'm 9 much more competitive in Massachusetts because of 10 the fact of the Scaffold Law not being in place over 11 there. 12 There's an example on the cover page over 13 here, of a -- of what a general-liability policy, 14 with a payroll of $450,000, would be in the state of 15 New York. 16 That premium, now, this is just the GL. 17 You know, when you're doing major projects, 18 there's all kinds of additional insurance. 19 Besides auto, there's umbrellas, and whatnot, 20 that you have to cover, all of which relate in a 21 higher-percentage premium. 22 So the premium in New York for a typical job 23 of this size, would be $43,000-and change. 24 Typical job in Connecticut is 25 $37,000-and-change. 1 And a typical job, all the same, in 2 Massachusetts, is $24,000. 3 Now, there's a little caveat that goes along 4 with Connecticut. 5 Over the past ten years, prices have 6 increased insurance in Connecticut. 7 It's still 14 percent lower than New York. 8 But the reason that the prices have 9 increased, is you got to keep in mind that you're 10 dealing with insurance companies. 11 They're very smart people. 12 You don't get a lot past them for too long. 13 The marketplace out there in New York is very 14 shallow. 15 There's two or three companies that can place 16 these liability policies. 17 The reason is, because the law is absolute, 18 they lose money on it; and if they're losing money 19 on it, they don't want to sell you the policy. 20 And if they are going to sell you the policy, 21 it's going to be more cost-effective for them. 22 So that would even blow this premium up even 23 further. 24 Now, the reason I bring Connecticut into the 25 fold here, is that, in Connecticut, they figure that 1 the proximity to New York is such, that you're 2 likely to have a Connecticut contractor get 3 insurance and work in New York; and, so, now they've 4 been raising the premiums there. 5 I'm not guilty of that. 6 I have separate corporations that work in all 7 of these states. 8 So, you know -- but the fact is, that I work 9 for the same rates here in Long Island as I do in 10 Connecticut and Massachusetts and New Jersey. 11 And the apartments are exactly the same, the 12 work that goes into them is exactly the same; but, 13 yet, we're more competitive in other states. 14 So where would I rather have most of my 15 employees working? 16 Living here in New York, I would rather have 17 them here, but, for business purposes, they're 18 working up in Massachusetts. 19 The more work there for me, the better. 20 I look at the example that Matt brought up 21 about the Tappan Zee Bridge. 22 I mean, you know, look at these percentages 23 right here. 24 43 percent lower to build the same bridge in 25 Massachusetts, for insurance premiums. 1 "43 percent." 2 What's that mean to our taxpayers? 3 That's a lot less money that they got to go 4 and take a bond out for. 5 And there's the cost of money, everybody 6 knows that. 7 And there's the cost of doing business, so 8 doing business in New York is counterproductive to 9 the economy. 10 We want to be as competitive. 11 We have a law in effect that's here in 12 New York, and it exists no place else because, were 13 they smarter than us? 14 I don't know. 15 Well, do they have better lawyers that are 16 able to make a good living off of this law? -- which 17 they do. 18 And, they're not just protecting, you know, 19 contractors, or, let's say, employees of contractors 20 that are injured. 21 They're protecting their law firms from -- 22 you know, for the future. 23 I'm not here for that. 24 I'm here for the people that I have working 25 out in the field; 1 I'm here to continue doing business in 2 New York; 3 And I'm here to help, you know, push this 4 bill along, because we need some reform. 5 If somebody is standing -- there's an example 6 in here of a case that's ongoing right now, where an 7 employee, who had placed lumber the day before on -- 8 horizontally on the ground, with another co-worker. 9 The following morning, they were going to 10 work in that area. 11 The one co-worker walked around the lumber. 12 The other co-worker walked over the lumber, 13 and because it was the morning, there was a mist on 14 it. 15 A morning dew, so to speak. 16 He slipped on it; he fell, he broke his leg. 17 This lawsuit's been going on for nine years 18 now, the litigation, and the numbers are being 19 thrown out of around $650,000. 20 He broke his leg; he could have returned to 21 work in 12 weeks. 22 But because there's, what their term out in 23 the field, as a "come line," he's on the come line 24 and he's waiting for his payday to come in. 25 That's abuse of this law. 1 And that's the kind of abuse that has to be 2 avoided. 3 And that's why I'm here today. 4 SENATOR GALLIVAN: Well, appreciate your 5 being here. 6 I have two questions. 7 The first, you gave us the example, and then 8 you talked about your higher liability insurance, 9 and compared to the other states. 10 And I think you mentioned something to the 11 effect, is that you're less competitive with these 12 out-of-state companies -- or, New York is less 13 competitive because of this Scaffold Law. 14 My question is: 15 Are there any other factors that make New 16 York less competitive, that affect you and your 17 business, outside of labor law -- 18 ARTIE CIPOLETTI: You know, I'm here 19 specifically for that purpose. 20 I didn't really do any research to say that 21 there is other things. 22 SENATOR GALLIVAN: Fair enough. 23 ARTIE CIPOLETTI: You know, we work union, 24 non-union. 25 We do prevailing-wage work. 1 We do public works. 2 We're on an equal playing field when there's 3 equal rules. 4 So, over here, you know, with equal rules on 5 prevailing wage, we're as competitive as the next 6 guy that has to be under those same rules. 7 But, state to state, we're not as 8 competitive, because the cost of somebody doing 9 business in these other states is much less. 10 So, you know, businesses go to where they can 11 make the most profit. 12 I want to make money. 13 Everybody wants to make money. 14 We want our employees to make money. 15 And we can't do it here. 16 We've got to ship them up to Massachusetts. 17 SENATOR GALLIVAN: Now, along those same 18 lines, and this is -- I had several conversations 19 earlier with some individuals, and the same thing 20 kind of came up. 21 You mentioned out-of-state companies coming 22 into New York without a state liability insurance. 23 Does that mean that they're not coming -- 24 they're not following our rules, as they exist? 25 ARTIE CIPOLETTI: I might not have 1 pronounciated [sic] that correctly. 2 SENATOR GALLIVAN: I may have misunderstood 3 it. 4 ARTIE CIPOLETTI: I'm not talking about 5 out-of-state contractors coming into Long Island to 6 do work here. 7 Although, I was very -- I participated in the 8 "Sandy" rebuild from day one. 9 I was one of the authors of the STEP program. 10 I wrote the Nassau program, and then I got it 11 implemented into Suffolk County. 12 And it's been successful; so successful, that 13 the government is going to use this statewide, you 14 know, to help people. 15 One of the big concerns that we had was, yes, 16 out-of-state contractors coming in and taking work 17 from people that we had on the bench that we wanted 18 to put back to work. 19 We did get people back to work, and we 20 weren't able to stop other contractors coming in, 21 because there was such a big need, and there was -- 22 you know, we didn't really have the staffing -- 23 although we thought we did -- we didn't have the 24 staffing to keep everybody happy. 25 And that's what you need to do. 1 You know, when there's a time of crisis, you 2 have to have rules that qualify people, but also get 3 people working, because they got to get back in 4 their houses. 5 Now, the out-of-state contractors did have an 6 advantage because, when it came down to, after 7 things were approved, and, say, the temporary work 8 was in place, and they were going to rebuild their 9 houses, the out-of-state contractors weren't bound 10 by the same rules as us, and the cost of their 11 insurance was a lot less. 12 So, they were able to underbid us and come in 13 and do the work. 14 You know, it was a good idea by 15 Consumer Affairs, and then by Sammy Chu out in 16 Suffolk County, to relax the rules, to an extent; 17 that, you know, there wasn't an inspector going 18 around, knocking on doors, to find out if the guy 19 was licensed in Suffolk or licensed in New York, or 20 Long Island, or any of the village municipalities. 21 It would have only slowed the recovery down 22 further. 23 It would have made everybody look bad. 24 That wasn't what it was all about. 25 But keep that in mind, when you see, you 1 know, a truck, or trucks, you go down the block and 2 you see 20 trucks from out of state, and they won 3 the job over me, because, they're not bound by the 4 same rules, you know. 5 And I was okay with bending it, too, but you 6 do have to have something that equalizes the playing 7 field, such as like they do in prevailing wages. 8 But I'm not here for that. 9 Knock the Scaffold Law out. 10 SENATOR GALLIVAN: Thank you. 11 Jack? 12 Question? 13 All right, thank you, sir. 14 ARTIE CIPOLETTI: You must have heard my 15 point. 16 Thank you. 17 [Laughter.] 18 SENATOR GALLIVAN: Wilbur Breslin from 19 Breslin Realty Development Corp. 20 When you're ready, sir. 21 WILBUR BRESLIN: I was asked here to come 22 this afternoon to discuss my involvements in 23 development and construction, and what type of 24 impacts we're feeling now as a result of the state's 25 new regulations. 1 I'm referring to the regulations that I think 2 went into effect somewheres around 2010. 3 I started a project approximately six years 4 ago. 5 That project consists of 18 acres of land, 6 which was to be redeveloped. 7 On the existing site was an old motel that 8 was in disrepair and breaking for approximately 9 ten years; a gas station, and some other ancillary 10 buildings. 11 When we looked at that parcel, we defined it 12 as an improved property, only to find that the 13 interpretation of the ORV regulation by DOT was that 14 it was unimproved; and, therefore, we were subject 15 to the new regulations, which was a difference of 16 about $2 1/2 million to our project, none of which 17 we believe that $2 1/2 million materially affected 18 the health, welfare, and hazardous conditions and 19 environmental conditions in there. 20 So our engineers, feeling that the 21 interpretation was wrong, tried to set up a meeting 22 with the DOT. 23 That took approximately five months to 24 accomplish. 25 And at that meeting, they were disillusioned 1 by the statement that, what we thought would be the 2 proper way to develop the site, and to take the 3 appropriate steps to do so, and save $2 1/2 million 4 in the interim, they thought it was a good idea, 5 but, disillusioned us to the fact that it would take 6 three years to get it approved. 7 And, obviously, I'm now in my sixth year on 8 this project. 9 I have $6 1/2 million already spent on soft 10 costs. 11 I don't own anything with the $6 1/2 million, 12 because we haven't taken title as yet. 13 So, recently, I sought help, and, very 14 frankly, I got it as well; and I got it, a meeting 15 set up with people that were anxious to move forward 16 and produce revenue, and things of that nature, 17 because the property is already pre-leased by a 18 national tenant, and so forth. 19 So the moral of that story is, that the 20 obligations that I already agreed to, which is, 21 I'm putting up $3 million to improve the road 22 situations, if I now have to spend another 23 $2 1/2 million to $3 million on ORV, okay, I can't 24 afford, on this budget, to give the DOT $3 million 25 for improvements. 1 So that's kind of foolish. 2 It shouldn't take, five, six years to find 3 this out, number one. 4 And that's my tale. 5 Will we finally resolve the issue? Yes, we 6 will, because we always do. 7 But it shouldn't take, five, six years to do 8 so, and millions of dollars spent needlessly. 9 That doesn't do anybody any good, except the 10 engineers, and the lawyers, etc. 11 So if anybody has any questions, I'll be glad 12 to try to answer them. 13 SENATOR BOYLE: Mr. Breslin, thank you very 14 much for your testimony. 15 Where was this project you were referring to 16 located? 17 WILBUR BRESLIN: In Yorktown, Westchester 18 County. 19 SENATOR BOYLE: Okay. 20 And, so -- but how did the municipality feel 21 about it? 22 Did the local folks want it? 23 Was it the State that was causing the 24 problem? 25 WILBUR BRESLIN: Yes. 1 When I introduced myself to the community in 2 there, I went to the supervisor and the board. 3 I got their support. 4 The town board supports this project, the 5 residents support this project, because it really is 6 a win-win situation for everyone. 7 Residents are supporting us, primarily 8 because they're getting a great deal out of it. 9 They're getting their traffic condition, 10 which is deplorable, improved. 11 They're getting their sewage improved. 12 We have a situation where all our 13 environmental studies, and so forth say, we're doing 14 the right thing. 15 And economically speaking, we can't afford 16 another $2 1/2 million for something that really 17 isn't going to improve the conditions. 18 And just because there's a regulation, there 19 should be a board there that can define it, and 20 clarify what is reasonable and what is not. 21 And you don't have that today. 22 You have people that are looking at the words 23 in the regulations and saying, "That's what you have 24 to adhere to," and making their interpretation as to 25 what the law really calls for. 1 A prime example is what I said before, not to 2 be redundant, but, you have an old motel, you have a 3 gas station, you have ancillary buildings on there, 4 and they say it's not an improved property. 5 SENATOR BOYLE: Yeah, thank you, Mr. Breslin. 6 I would just point out to my colleagues that 7 Mr. Breslin, obviously, for those on Long Island 8 know, he's an iconic developer here on Long Island 9 for many years. 10 And if he could not get this done with his 11 resources, can you imagine what a smaller developer 12 without those resources? 13 I think it says, not only that the 14 regulations need to be pulled back, but, also, it's 15 a shame that he could not get a meeting for 16 five months, when we're trying to bring development 17 and jobs to New York State. 18 Thank you, sir, for your testimony. 19 Appreciate it. 20 SENATOR GALLIVAN: John? 21 SENATOR FLANAGAN: I have a couple of 22 questions. 23 Mr. Breslin, I appreciate your testimony as 24 well. 25 I have two basic things that I think should 1 be applicable. 2 For anyone who works in the public sector, as 3 part of your resume and your job experience, I think 4 before you're allowed to issue any permits, you 5 should have the obligation to learn how to get one 6 first "before" you're in that position. 7 But, a couple of times, the builders have 8 come up on issues, and one of the things, it kind of 9 ties into two components: 10 One is, vesting of property rights, so that 11 even if there are regulatory changes, that you are 12 sort of grandfathered in. 13 We grapple with that, and sometimes when we 14 advance ideas like that, people say, Oh, no, no, you 15 can't do that. 16 It seems to me that we should be able to 17 craft a law that says, that at the time of your 18 application, that whatever the status of the 19 regulatory framework is, that that should be what 20 you operate under for the time that you have your 21 application pending. 22 WILBUR BRESLIN: I wholeheartedly agree with 23 that. 24 SENATOR FLANAGAN: Okay. 25 And also, too, not to be glib in any way, it 1 strikes me that, if you are going to be in a 2 position of potentially getting a permit, that a 3 municipality should have either one of two things: 4 Either a fail-safe or a time-certain, where, 5 if they have not worked on your application in a 6 fair and efficient fashion, that it's, by default, 7 approved; 8 Or, as a parallel, that if it took you 9 27 months to get your permit, that at the time that 10 it's issued, that it should be issued for 27 months 11 at least. 12 Would you generally agree with that? 13 WILBUR BRESLIN: Absolutely. 14 On the point that you bring up, when we 15 started this job, we signed a contract for 16 engineering for $950,000. 17 Right now, our budget is over $2 1/4 million, 18 just for engineering, as a result of delays. 19 SENATOR FLANAGAN: Well, as a lawyer, I wish 20 you were paying the lawyers, but I know you have to 21 pay those engineers as well. 22 WILBUR BRESLIN: That's another subject. 23 [Laughter.] 24 SENATOR FLANAGAN: Thank you. 25 SENATOR GALLIVAN: Thank you. 1 WILBUR BRESLIN: I have -- 2 SENATOR GALLIVAN: Mr. -- oh, go ahead, sir. 3 WILBUR BRESLIN: If you like, I have some 4 handouts here that were prepared by my engineer, 5 that gives you some more details than I elaborated 6 on. 7 SENATOR GALLIVAN: Excellent. 8 WILBUR BRESLIN: And I'd like to pass them 9 around, if I may? 10 SENATOR GALLIVAN: Okay. 11 I was actually going to ask you for details. 12 Do you see the gentleman in the striped tie? 13 WILBUR BRESLIN: Yeah. 14 SENATOR GALLIVAN: He'll grab them from you, 15 and he'll get those to us. 16 But if I may, thank you very much for being 17 here. 18 What seems consistent, and I can understand 19 the frustration that we have heard, no matter the 20 industry, so far is the timeliness, timeliness, 21 timeliness; the duplication; and the accountability, 22 or lack of, accountability on behalf of the state 23 agencies. 24 WILBUR BRESLIN: Once again, I agree 25 wholeheartedly. 1 SENATOR GALLIVAN: We appreciate your 2 testimony today. 3 And the gentleman in the back will grab that 4 stuff from you. 5 Thank you. 6 SENATOR VALESKY: Thank you. 7 WILBUR BRESLIN: Thank you. 8 SENATOR GALLIVAN: Walter, you're here; 9 right? 10 WALTER PACHOLCZAK: Good afternoon, Senators. 11 Thank you for having me here today. 12 I'm Walter Pacholczak. 13 I'm the vice president of government affairs 14 for the Associated General Contractors of 15 New York State, better known as "AGC." 16 AGC is the largest statewide trade 17 association representing the unionized and 18 non-unionized construction industry, with over 19 650 contractor and related firms, and over 80 years 20 of experience working with public agencies and 21 private developers to deliver quality projects that 22 are the lifeblood of our economy. 23 Our members perform the majority of the 24 public and private transportation, education, 25 environmental, and building-infrastructure work in 1 New York State. 2 Today's topic about regulatory reform is a 3 continuation of an ongoing and critical dialogue 4 between AGC, legislators, the Executive Chamber, and 5 state agencies and authorities. 6 So on behalf of the membership of AGC, we 7 appreciate this opportunity to participate in 8 today's Senate public forum. 9 We regularly host executive-level partnering 10 meetings with state agencies and authorities, 11 including the Department of Transportation, 12 Thruway Authority, DEC, State University of New York 13 Construction Fund, New York City School Construction 14 Authority, and others. 15 The purpose of these meetings is for the 16 construction industry and government to discuss the 17 multitude of laws, rules, and regulations that 18 impact business, and work on solutions to help 19 rebuild New York's deteriorating infrastructure. 20 It will take a strong partnership between the 21 construction industry, Legislature, Executive, and 22 state government to truly enact the significant 23 reforms supported by the construction industry. 24 And, obviously, I'm going to start with the 25 Scaffold Law, and I'm not going to reiterate what 1 was said here in the past. 2 I think what I'd like to do here today, is to 3 discuss with the Committee some data that the AGC 4 was able to put together with the help of some state 5 authorities, the insurance industry, and the 6 Bureau of Labor Statistics. 7 And, you know, obviously, we're the only 8 state with an absolute-liability standard, like the 9 Scaffold Law. 10 And, in fact, the Scaffold Law is, really, 11 the only area of civil liability in New York State 12 in which comparative negligence does not apply. 13 Other than Illinois, no other state has such 14 an absolute-liability standard since at least the 15 1940s when worker's compensation became the norm. 16 What I did with today's testimony, is to 17 provide the Senators with a copy of some PowerPoint 18 slides we've been presenting to both the 19 Executive Chamber, legislators, and anybody willing 20 to listen, about the call for Scaffold Law reform. 21 And I think the front cover of this 22 PowerPoint says it all. 23 I see a picture, the iconic picture, of the 24 ironworkers sitting on the beam of what I believe is 25 the Empire State Building, and, a more modern 1 scaffold which you see, which previously adorned the 2 State Capitol. 3 A lot has changed in the past 100 years, and 4 we think this law, it's long overdue. 5 I think if you go to the third page, I want 6 to talk a little bit about the most recent reform 7 experience of a Scaffold Law-type statute. 8 It was in 1995 when Illinois repealed their 9 statute known as the "Structural Work Act." 10 What happened there is, in addition to 11 significant reductions in insurance loss costs, 12 Illinois experienced a significant increase in 13 construction employment, and significant reductions 14 in construction workplace fatalities and injuries. 15 Post-reform Illinois, construction jobs rose 16 by 25 percent, workplace fatalities decreased by 17 30 percent, over a six-year span, and overall worker 18 injury rates decreased by 53 percent, giving 19 Illinois the 10th lowest injury rate in the country. 20 The next chart shows the loss costs and how 21 they declined dramatically post reform. 22 The source of this information is the ISO, 23 which has confirmed, went from 32.90 in 1995, down 24 to $2.90 in the year 2000. 25 Moving on to the next slide, Illinois 1 construction employment increased, while fatalities 2 post reform decreased. 3 There's clear, clear correlation here with 4 reforming the Scaffold Law. 5 You know, there are attempts at repealing the 6 Illinois Structural Work Act, and, uhm -- by the 7 personal-injury trial lawyers, and, they failed, and 8 they failed over and over, because the law works. 9 In fact, they tried to get Dennis Gannon, the 10 president of the Chicago Federation of Labor 11 involved in their appeal efforts, and he rejected 12 it. 13 And he said, quote, "It's a legislative issue 14 for the trial lawyers, but not necessarily for 15 organized labor at this time. If the construction 16 industry does well, our members do well, and this is 17 going to erode that relationship." 18 That's a very, very strong comment by 19 Mr. Gannon at the time when this was going to try to 20 be repealed by the plaintiffs' bar. 21 When you look at the cost of insurance, in 22 the next chart, for bridge and elevated-highway 23 construction and structural metal construction, this 24 is clearly a telling graph here of the costs of 25 New York compared to, not only the northeast states, 1 but to other major states, such as California, 2 Texas, Florida, and Illinois. 3 It's all right here. 4 I mean, I don't need to go through this 5 anymore. 6 And these are just two examples of that. 7 We move on to the next slide, and we talk 8 about non-fatal injuries, and how costs are not 9 proportional to injury. 10 And, finally, on the VLS data, fatal 11 construction-industry accidents, New York is on par 12 with the rest of the country, which shows you that 13 the Scaffold Law simply does not increase safety at 14 work sites. 15 So what does all this mean to us? 16 Well, on a private sector, obviously, the 17 cost of insurance increases the cost of doing 18 business. 19 But on a public sector, one of the things 20 that we always sought for years and years, and we 21 finally have some partners willing to provide us 22 with some detailed information, is the actual fiscal 23 impact of this law on projects, such as the 24 Tappan Zee Bridge, the New York City School 25 Construction Authority, and the Port Authority of 1 New York and New Jersey. 2 I heard Thruway Authority -- I'm sorry, 3 Tappan Zee Bridge, 100 to 200 million dollars, 4 conservatively. 5 That's absolutely true. 6 We know some of the folks that have gone in 7 and talked to the Thruway Authority about this, made 8 presentations regarding the insurance package to 9 cover this $3.9 billion project. 10 That number is confirmed. 11 It's undeniable, it costs hundreds of 12 millions of dollars of more money -- or, taxpayer 13 dollars, to build the Tappan Zee Bridge replacement 14 program. 15 Moving along, I want to talk a little bit 16 about the New York City School Construction 17 Authority. 18 For 25 years or more -- a little bit more, 19 the School Construction Authority has operated under 20 what is known as a "wrap-up insurance program." 21 The School Construction Authority puts the 22 bid -- puts out the bids -- solicits bids from 23 insurers to provide their wrap-up insurance program. 24 And, the wrap-up insurance program covers the 25 whole construction program of the 1 School Construction Authority. 2 So, we asked them to provide a comparative 3 about, What would it cost to build in New York City 4 compared to New Jersey? 5 I'm talking about right across the river in 6 New Jersey. 7 I'm not talking South Jersey; right across 8 the river. 9 So, in 2012, it cost the School Construction 10 Authority $100 million for the insurance. 11 By 2013, $125 million, compared to New Jersey 12 at $25 million. 13 What compounds this problem for the 14 School Construction Authority, is that their 15 upcoming capital program in 2014 is, right now, 16 without insurance. 17 They're unable to find an insurer that is 18 willing to come into New York State and provide a 19 policy for over $1 billion of School Construction 20 Authority work. 21 It's amazing that no insurer wants to come 22 into this state and write insurance policy for a 23 billion dollars of work. 24 That tells it all. 25 We're in contact with the School Construction 1 Authority this week to confirm that no complete bids 2 have come in. 3 This is highly problematic for the 4 contractors and subcontractors that do these 5 projects, many of which have never had gone out to 6 procure insurance in the past. They worked under 7 the wrap-up program. 8 Now, without a wrap-up program, they will be 9 forced into the insurance market. 10 We had a few members go and try to get 11 insurance. 12 These are mid-sized contractors with over 13 20 years of experience. 14 Weren't able to get it. 15 This law will have a disproportionate impact 16 now on the MWBE subcontractors that do work for the 17 SCA. 18 The SCA has probably -- them and the 19 Port Authority have the best mentor-protege program 20 for the MWBE development. 21 When you're looking at what this will do to 22 the MWBE contractors, this will just be another 23 incredible hurdle for them to get by, and to try to 24 continue to grow. 25 Our friend is the chairman of the 1 School Construction Authority's Diversity Program, 2 Reverend DeGraff, and he's been instrumental in 3 raising this issue for us. 4 We appreciate the Reverend's efforts, and he 5 is a partner with us, to try to move this forward. 6 Moving away from the School Construction 7 Authority, when you look at the Port Authority of 8 New York and New Jersey, and this is a telling 9 slide: 10 Average incurred claims costs on the -- on 11 the -- this would be the Goethals Bridge project: 12 New York side, $22.7 million; Jersey, $10.3. 13 Is there anything different when you cross 14 the border of New York and New Jersey? 15 I don't think so. 16 It's the same contractor, same group of 17 people, working on this project. 18 It's the insurance costs. 19 I apologize for my coughing. 20 So what would reform do in New York? 21 What would it do? 22 Well, first, it would reduce the cost of 23 construction in New York by reducing the cost of 24 insurance. 25 It would allow New York to build more, both 1 publicly and privately. 2 It would protect the MWBE firms. 3 It would reduce New York's 4 second-highest-in-the-nation cost of doing business 5 and increase our economic competitiveness. 6 It would clearly create jobs. 7 That's the most important thing here, is 8 creating jobs. 9 More money, through insurance costs, should 10 be reinvested on the public side into public 11 infrastructure. 12 It would provide relief for taxpayers at all 13 levels, and strike a blow for fairness, justice, and 14 common sense in the state. 15 So, I think when you look, when you talk 16 about Scaffold Law, I don't know what else there is 17 to say. 18 It's bad, it's getting worse, and we're 19 looking at a cliff here, particularly for the 20 School Construction Authority of New York. 21 Some of the other presenters talked about the 22 Wicks Law. 23 Again, I think that that -- they said -- made 24 eloquent comments on that. 25 Obviously, all village, towns, and cities, 1 it's not just state, all under Wicks Law. 2 I think one of the interesting things about 3 the Wicks Law is not even application of the Wicks 4 Law. 5 So, for example, some public authorities, but 6 not all, are covered by reference or a version of 7 Wicks. 8 School Construction Authority being one of 9 them, which the School Construction comes back to 10 the legislature for passage of a bill. 11 You look at the State University Construction 12 Fund, DASNY, it's an uneven application of the 13 Wicks Law; and, therefore, we think it should be 14 repealed. 15 The federal government doesn't require it. 16 Other states don't require it. 17 I mean, if there's a cost savings to it, why 18 is it mandated? 19 Doesn't make any sense. 20 If there's cost savings, it doesn't need to 21 be mandated. 22 My final two or three items, I just want to 23 touch briefly upon, are the Diesel Emissions 24 Retrofit Act, better known as "DERA." It was passed 25 in 2006. 1 It was enacted to address the public-health 2 threat posed by diesel-fuel emissions. 3 Obviously, we appreciate the work in the 4 Senate and the Assembly, and the Governor, in 5 pushing back on the implementation of DERA. 6 Most recently, it was passed in this year's 7 state budget. 8 It delays the implementation of DERA through 9 2014. 10 And let's face it, DERA was a great idea at 11 the time. 12 Clearly, technology has outpaced the 13 legislation. 14 2007 and later trucks are already 15 retrofitted. 16 We use ultra-low-sulfer diesel fuel. 17 Those two items right there, according to the 18 EPA, really cut emissions by almost 90 percent. 19 And that's the most important thing. 20 And we look for-- we request that the 21 Legislature repeal DERA, and let the federal 22 government regulate this. 23 Two other items, just quickly, we're running 24 short on time: 25 Timely notice of prevailing-wage violations: 1 Under 223 of the Labor Law, prime contractors 2 are responsible for the subcontractor's failure to 3 pay prevailing wages to employees; however, the 4 statute doesn't contain a requirement to notify the 5 GC of such underpayment in a timely manner. 6 So what happens there? 7 Often, the prime contractor is notified about 8 underpayment years later, long after the offending 9 sub has been paid, left the job, is no longer in 10 business, and we are -- we're responsible for that. 11 And, finally, in terms of government 12 efficiency, back in 2009, under Governor Paterson, 13 he established -- or, his budget office established 14 Budget Bulletin B1184. 15 What this does, is it establishes revised 16 guidelines for the implementation of agency 17 contracts. 18 But what this does to the construction 19 industry, is that it eliminates overtime for 20 employees that work, say, at the DOT or the 21 Thruway Authority. 22 The construction industry is a very fluid and 23 dynamic business that requires all sorts of 24 manhours. 25 Now what we're -- we have found is becoming 1 problematic, since the tight time frames, are these 2 contracts are now taking place, that DOT employees 3 cannot work overtime. 4 That delays projects, obviously. 5 You know, the DOT needs the flexibility to 6 bring these people on, as needed, to complete these 7 projects. 8 So, in conclusion, I want to thank the 9 members of this Committee for the opportunity to 10 discuss these costly mandates, and to hopefully 11 provide the Committee with some solutions here to 12 improve New York's business climate to create new 13 jobs. 14 The members and the staff of AGC look forward 15 to continuing this dialogue, and implementing the 16 recommendations presented here today. 17 Thank you. 18 SENATOR GALLIVAN: Thanks for your testimony, 19 Walter. 20 We're good, thank you. 21 WALTER PACHOLCZAK: Thank you. 22 SENATOR GALLIVAN: Jeff Greenfield and 23 Gene Sandy, Professional Insurance Agents of 24 New York. 25 JEFF GREENFIELD: Good afternoon, Senators. 1 Thank you for this opportunity afforded us to 2 appear before you. 3 Jeff Greenfield, past president of the 4 Professional Insurance Agents of New York. 5 I'm joined with my colleague Gene Sandy, 6 who's a vice president, and, hopefully, a future 7 president, of our organization. 8 We appear here with no slides, no preprinted 9 testimony; just real-life stories of insurance 10 problems that our members, your constituents, our 11 customers, have with respect to insurance in the 12 construction arena. 13 I'm going to cover small artisans; small 14 contractors. 15 But, first, I want to say we're delighted to 16 be here, because we've been part of the Scaffold Law 17 Reform Coalition for years. 18 We see the need every day, when we meet with 19 our clients in the construction arena, of changes, 20 the 240 and 241 of the Labor Law, changes that make 21 us unique, in that, we're the only state with this 22 law. 23 We see the job-crippling effect this law has 24 in New York. 25 We see firsthand when we deliver. 1 We hear from our clients about premiums, and 2 the difference in premiums. 3 I do business in multiple states, and you 4 heard testimony earlier. 5 And, the premiums in New York reflect the 6 company's experience, and the fact of the adverse 7 experience encouraged by this law, and the effect 8 the law has on it. 9 There's real questions today in New York and 10 the insurance arena with respect to affordability 11 and availability, and these are two very, very real 12 issues. 13 The artisan small-contractor community has 14 been dramatized in the post-"Sandy" arena. 15 I have a Lynbrook independent insurance 16 agency. 17 We have a lot of contractors that have a lot 18 of business, fortunately, or unfortunately, because 19 of "Sandy." And, they have a lot of insurance 20 problems and challenges. 21 The State Insurance Fund is a quasi state 22 agency, which I can tell you is out of control, with 23 respect to the way in which they conduct business, 24 especially when it comes to small business. 25 First and foremost, I don't know why or how 1 over the years you have them in the insurance 2 business and they don't answer to the New York State 3 Department of Financial Services. They never 4 answered to the New York State Insurance Department. 5 They have rules and regulations that are 6 unique, different, and challenging to clients 7 because the manner in which they do business. 8 They are an agency in need of further 9 oversight. 10 Everybody has oversight. 11 Everybody answers to somebody. 12 You answer to your constituents, the voters. 13 We answer to our clients, the bill payers. 14 They answer to nobody, and that's wrong, 15 wrong, wrong. 16 I know it's the favored piggy bank of prior 17 governors, with respect to the ability to tap them 18 for money to balance the budget. 19 The number one issue in their manner in which 20 doing business which needs change, is the 21 requirement of 30-days' advanced notice to cancel a 22 policy. 23 Where in America do you have to tell somebody 24 30 days in advance you want to make a change in 25 insurance, car? 1 You don't tell the car dealer before your 2 lease is up, 30 days in advance, I'm not going to 3 take that lease. 4 And if you don't tell them 30 days in 5 advance, you're required to lease another car? 6 It doesn't happen that way. 7 With the New York State Insurance Fund, if 8 you don't put them on notice 30 days in advance that 9 you're not taking the policy, you can't leave them, 10 and they make it very difficult and very onerous. 11 30 days in advance is ridiculous. 12 It's anti-American. 13 It deprives the contractors, especially the 14 small contractors, of the freedom of choice. 15 When a contractor is starting out, the 16 State Insurance Fund is the insurer of last resort. 17 No other standard insurance carrier will take them 18 because they're new in business. 19 They get a few years of good experience under 20 their belt, they want to shop their insurance, and 21 they want to go someplace else, and we want to help 22 them do that. 23 We provide, as independent insurance agents, 24 a service to our clients. 25 We don't just renew policies. 1 We review them, we shop them. 2 We look for better opportunities. 3 When it comes to the State Insurance fund, 4 it's very difficult. 5 You have to send them a Reservation of Rights 6 letter 30 days in advance. 7 And over the years, they've treated those 8 Reservation of Rights letters in different manners. 9 At one time, they stopped accepting 10 Reservation of Rights letters and they treated them 11 like a cancellation request, like you were going to 12 cancel the policy. 13 Recently, I sent the State Insurance Fund 14 Reservation of Rights letters for clients. 15 They wrote back to the clients, and copied 16 me, fortunately, saying, that if they didn't make up 17 their mind 10 days in advance of the effective date, 18 they were going to treat it like a cancellation and 19 report them to the Worker's Compensation Board. 20 Where is that written? 21 It isn't in the Old Testament or the 22 New Testament. 23 They make up their own rules. 24 Every other insurance company reports after 25 the cancellation date, within 30 days of 1 cancellation. 2 They made a decision, 10 days in advance 3 you're going to make a decision. 4 Sometimes we don't have a quote. 5 Why should the contractor be put under the 6 gun that he has to notify them like that? 7 No other business operates like that. 8 It's time for change at the State Insurance 9 Fund. 10 Even the Pope announced he was making 11 changes, so -- 12 [Laughter.] 13 JEFF GREENFIELD: -- so I hope there's hope 14 out there that the State Insurance Fund can be 15 brought under some changes here. 16 Now my -- I'll come back for some other 17 remarks. 18 GENE SANDY: Thank you. 19 JEFF GREENFIELD: Gene. 20 GENE SANDY: I'm the director of marketing 21 for an agency in Syosset. 22 We do around $27 million in commercial 23 premium. A majority of that is contractors and 24 real estate. 25 We write general contractors and we write 1 trade contractors. 2 I'm here to talk about the Scaffold Law. 3 It is hurting the contractors. 4 It is making the availability -- the 5 insured -- insurance contracts not affordable. 6 We are seeing increases of premium of -- on 7 the general-liability policies and on the umbrella 8 policies, of anywhere from 25 percent to 200 percent 9 increases in premiums, because of this law. 10 And if you're a new venture, like Walter was 11 saying before, the cost for them to get insurance, 12 some of the carriers start -- and I'm talking where 13 there's coverage carriers -- where, it starts at 14 $15,000, and up. 15 It's just not affordable for small businesses 16 and mid-sized businesses. 17 You heard about all the big contractors, but 18 the small contractors are getting hurt. 19 The people who are flipping houses, 20 commercially, for a living. Not residential, but 21 they're selling them, and setting those things up. 22 Also we're seeing a lack of availability of 23 quality insurance. 24 A lot of the, what you would call, the 25 "mainstream admitted carriers" are not writing 1 contractor's insurance in New York because of this 2 law. 3 We are being -- going to what we call the 4 "excess and surplus lines" carriers. 5 These are insurance carriers who are 6 non-admitted, but approved to do business in the 7 state of New York. 8 But the problem with that is, there is 9 nobody -- they don't come under the insurance laws. 10 They can charge what they want. 11 And, also, they can put on restrictive 12 endorsements. 13 And that's what's happening to us. 14 We're seeing a lot of restrictive 15 endorsements going on, where, based on the type of 16 work they're doing. 17 If you're doing residential or condos or 18 co-ops, no coverage. 19 It's based on where you're working. 20 If you're working in the five boroughs, no 21 coverage. 22 If there's a height -- if there is height 23 involved in a job, if it goes over a certain 24 stories, no coverage. 25 Contractual liabilities: These are the 1 contracts that these contractors are signing, where 2 there's a hold-harmless indemnification agreement. 3 They're carving out these agreements, saying, 4 Well, we're not going to cover indemnification 5 strict liability. 6 Also, we're seeing for the contractors, if 7 they hire a subcontractor, now they have to be 8 worried, because in their contract it will say, 9 If your subcontractor doesn't have the proper 10 insurance, that we respond to a Labor Law claim, 11 then your policy may not respond; or, if it does 12 respond, it could be a sublimit of $50,000; or, 13 there could be a sizeable deductible of 25,000 to 14 50,000 dollars. 15 And these are being built into the policies. 16 Lastly, the building owners: 17 The tenants go out and hire a contractor. 18 Building owner doesn't know what's going on. 19 But, because this is a strict 20 absolute-liability law for the building owners, too, 21 they're getting dragged in, and they had nothing to 22 do with setting up the job, reviewing the contracts, 23 seeing who's coming, and they're at risk for these 24 Labor Law claims. 25 JEFF GREENFIELD: On the Labor Law claims and 1 the Scaffold Law, I have a lot of real-estate 2 clients, and they're calling me up constantly, 3 frustrated and upset, that they're getting hit with 4 these summonses and claims, and they don't even -- 5 they get certificates of insurance to try to protect 6 themselves from the contractors doing work and the 7 subs, and don't realize that they can be brought in 8 and they're liable, also. 9 It's driving their premiums up to insure 10 their real estate. 11 It is making it problematic for market 12 conditions. 13 You heard Gene mention the non-admitted 14 carriers, and with all the conditions they have on 15 their policies. 16 The small contractors, especially, have no 17 place to go to secure coverage, so they turn to that 18 marketplace. 19 They don't read their policies properly. 20 They bid a job, or get a job. 21 They don't realize all the exclusions. 22 We tell them; we write cover letters, we 23 explain it to them. 24 And then it happens, you get the summons and 25 the claim, and then the denial letter in, and then 1 they get upset with us, and we get involved. 2 And our members get involved in 3 errors-and-omissions insurance claims, also, making 4 wild accusations. 5 When this was the only company, they're 6 desperate to present a Certificate of Insurance. 7 They're desperate to get the job and to get 8 the work. 9 And, they go ahead and do that, and don't 10 understand that they put themselves in harm's way. 11 We have insurance companies requiring us to 12 review all certificates of insurance for all 13 subcontractors who work. 14 We're constantly writing cover letters and 15 telling our real-estate clients not to let anybody 16 in any building at any time for any kind of work 17 without a Certificate of Insurance, and that still 18 isn't enough. 19 We have to reengage the New York insurance 20 market to be more competitive, and we need relief -- 21 mandated relief and changes to 240 and 241. 22 You heard about the big-premium items with 23 the Tappan Zee bridge, that's a given. 24 It affects every small contractor struggling 25 and trying to do business in the state of New York. 1 And, we need your help. 2 We're counting on the Senate to try to make 3 some changes, and try to influence your peers in the 4 Assembly to go along with some changes that are 5 needed. 6 Reasonable changes. 7 We're not looking to hurt anybody. 8 And we're always there for our clients. 9 And because we're always there for the 10 clients, we're on top of what changes that are 11 happening out there. 12 So thank you again. 13 And if you have any questions, or -- we have 14 a professional staff in Albany. 15 You've seen our building by Exit 23 of the 16 Thruway. 17 They'll be happy to supply you or your staff, 18 any additional information for your report. 19 SENATOR GALLIVAN: Thanks for your testimony. 20 SENATOR MARTINS: I do have a question. 21 Jeff, can you -- can you tell us about 22 experience mods? 23 JEFF GREENFIELD: Experience modifications 24 are -- on the worker's compensation are-- 25 GENE SANDY: Well, experience mods are on 1 both. 2 It is on workmen's [sic] compensation, but it 3 is also on all casualty lines -- certain casualty 4 lines. 5 Like, automobile; if you have a certain 6 amount of automobiles. 7 And on general liability, if your base 8 premium is over a certain amount. 9 And that goes into effect to rating. 10 But what I'm talking about with the 11 excess-and-surplus-lines companies, they don't have 12 to worry about experience ratings, because they 13 don't follow the rules and regulations of ISO. 14 They don't have to because they're not 15 admitted; so, therefore, they can charge whatever 16 they want. 17 So, what they feel is the proper rate for 18 that exposure, that's what they're going to charge. 19 JEFF GREENFIELD: Experience mods were put in 20 to reward those with good experience, with a credit 21 mod; 22 And those with bad experience, a debit mod, 23 to be punished, and encouraged, to do better. 24 And then you pass some good legislation 25 requiring, on worker's compensation, for people that 1 have very high mods, to go ahead and to do some 2 workplace safety. 3 And that's good. 4 That was good legislation. It's going on out 5 there. 6 But what's happening now is, because of the 7 Scaffold Law, there are claims. 8 And the mods are based upon reserves; not 9 necessarily payouts. 10 And the clients are being very frustrated 11 because it escalates their premium. 12 And if it escalates their premium, it makes 13 them noncompetitive in trying to bid jobs. 14 So, it has a job-killing negative effect, and 15 that was something that was never considered out 16 there. 17 And that's another byproduct of the law. 18 SENATOR MARTINS: So if I have a small 19 contractor that -- or medium-sized contractor, that 20 has a claim made for a job-site injury, regardless 21 of whether the claim bears itself out, regardless of 22 whether or not there's any correlation between the 23 job-site injury and that particular worker's 24 experience on the job site, the fact that they have 25 a claim against the company immediately spikes their 1 experience mod to a point where it impacts the cost 2 of their procurement of insurance, going forward? 3 JEFF GREENFIELD: Absolutely. 4 SENATOR MARTINS: And if -- 5 JEFF GREENFIELD: And the State Fund is 6 famous for this. 7 SENATOR MARTINS: And if that -- and, so, 8 that's why I brought it up. 9 If there is a -- then, a finding down the 10 road -- three, four, five, six years down the 11 road -- once litigation has been completed, where 12 the reserve that was set aside was far exceeded what 13 the actual damages were -- 14 GENE SANDY: Well, the experience rating only 15 looks back three years after the current. 16 And the way the lawsuits are going, they 17 could take anywhere from five to ten years to be 18 settled. 19 So, you could have a large reserve up there 20 during the experience period, and then get settled 21 for a fraction of what it was, and there is no 22 look-back. 23 SENATOR MARTINS: But that contractor never 24 gets a look-back, never recoups the additional 25 premiums that they may pay. 1 JEFF GREENFIELD: No. 2 SENATOR MARTINS: And, so, I would ask 3 whether or not there was an alternative. 4 Some -- perhaps a suggestion that the 5 industry may have, with respect to that additional 6 cost that contractors bear as a result of, perhaps 7 just the fact that there is a lawsuit, just the fact 8 that that lawsuit happens to be venued in certain 9 counties as opposed to others, the reserves that are 10 set for that lawsuit, irrespective of whether or not 11 it's successful, the impact to the contractor is 12 immediate. 13 JEFF GREENFIELD: Absolutely. 14 SENATOR MARTINS: And, so, is there a 15 recommendation that perhaps we can look at, as to 16 how we can adjust that? 17 Because, there are impacts, immediate 18 impacts, to our contractors that don't necessarily 19 reflect, perhaps, their best actions on a job site 20 and any safety precautions that they may have in 21 place. 22 JEFF GREENFIELD: We'll huddle with and 23 brainstorm with our professional staff in Albany, 24 and get back to your staff. 25 I think we can come up with something. 1 I think that's a very good suggestion, 2 Senator. 3 And I think it would be very well-received by 4 the business community and the contractor community, 5 because it goes beyond just contractors. 6 It affects the real-estate community. 7 And people get upset when -- I have one 8 person now, with a very large loss runs. 9 And because of reserves, not necessarily paid 10 claims, and it affects his renewal premium, and he 11 doesn't understand that. 12 So, this, we have to address. 13 SENATOR MARTINS: And the impacts can be 14 significant. 15 I mean, the impacts to a premium for a 16 medium-sized contractor can add, literally, 17 25 percent to their premium cost, year to year, 18 depending on their experience mod. 19 I would appreciate your looking into it. 20 JEFF GREENFIELD: We absolutely will. 21 It will be -- and it makes them 22 noncompetitive, and it's job-killing. 23 And we got to do more to bring jobs back. 24 If I can make a comment, Senator, on wearing 25 another hat, on another note, is an earlier speaker, 1 my friend Mitch Pally mentioned, one of my favorite 2 subjects is, workforce housing for young people. 3 My daughter, a Hofstra law graduate, who's 4 working in Jericho, can't work in New York City 5 because she doesn't want to reverse commute. 6 And I served her with eviction papers from 7 her childhood room a year ago. 8 And, her mother and I wanted to get her out 9 of the house, and it took her over a year to find 10 housing that she could afford. 11 And, Senator, she's now in your district. 12 She left Senator Skelos's district for your 13 district, and she's living in Great Neck. 14 And, she did that because then she can afford 15 to commute to the city if she ever gets a job in the 16 city. 17 But, meanwhile, there is a definite shortage. 18 We've done a great job in Nassau County with 19 senior-citizen housing. 20 And, there is a definite shortage of 21 young-people housing, and the Senate should come up 22 with some incentives to bring in rental housing, 23 workforce housing, for young people. 24 SENATOR MARTINS: Well, I think if you check 25 with the Long Island Housing Partnership, or, 1 Long Island Housing, there is a $25 million stipend 2 that was awarded some years ago, prior to my arrival 3 in the Senate, that was to encourage the development 4 of affordable next-generation housing. 5 But there is also good news, Jeff, aside from 6 that: 7 Tell your daughter, across the street here on 8 Old Country Road in Mineola, right by the train 9 station, there will be 300 new rental units breaking 10 ground in the next year, 10 percent of which are set 11 aside for next-generation housing. 12 So -- 13 JEFF GREENFIELD: I remember, when you were 14 mayor, I moved that very quickly through the 15 planning commission. 16 Not like Wilbur's story. 17 SENATOR MARTINS: You did, and I appreciate 18 it. 19 But there are, you know, projects that are 20 taking place. 21 And, certainly, to the extent that we can 22 help, we'll be looking to do so. 23 JEFF GREENFIELD: Thank you, Senators. 24 Thank you for your time. 25 1 SENATOR GALLIVAN: Thank you. 2 Michael Posillico. 3 And before you start, I don't know if 4 anybody's driving a GMC, the license plate is 5 FPY-2323. 6 STEPHEN LEFEBVRE: That could be mine. 7 SENATOR GALLIVAN: If you are, just touch 8 base with the good-looking guy with the striped tie 9 there, please. 10 Thank you. 11 When you're ready, Michael. 12 MICHAEL POSILLICO: I'm going to make it 13 short and sweet. 14 Good afternoon, Senators, and thank you for 15 hosting this. 16 I think it's very important to get 17 information that's occurring in our industry, plus 18 in our communities, back to you, so that you can act 19 legislatively, or continue to act legislatively, to 20 make change, to make New York more competitive. 21 And I think when Senator Marcellino had 22 reached out to me, we are -- again, my name is 23 Michael Posillico. 24 Our company, Posillico, Inc., employs, 25 roughly, 500 employees in New York and New Jersey, 1 in the construction industry: heavy civil, 2 environmental, development, and material production. 3 Predominantly, we're a union shop, and we pay 4 a very hefty wage to our employees who deserve every 5 penny of it. 6 Unfortunately, a significant amount of the 7 dollars, as expense from our operations, go to 8 insurance; and, again, the Scaffold Law is one of 9 the primary causes of these exorbitant expenses. 10 And you touched on EMR as one of the methods 11 for valuating the expense, where, good contractors, 12 or people that perform work, get rewarded if they 13 have a low EMR. 14 Ours is .8, so we're below industry standard. 15 Those that above 1.0 are somewhat punished. 16 We employ 12 safety professionals and risk 17 professionals to monitor, to train. 18 We have a mobile safety unit that goes around 19 to all our job sites. 20 We have Safety Day, safety calendars, for all 21 of our employees. 22 And nothing is more important than our 23 employee safety. 24 However, despite that, I feel our company is 25 engaged in a nanny state, in terms of what we must 1 do for employees to protect them from themselves. 2 And I have cases here, a couple that we've 3 settled out. 4 Where, the Scaffold Law, again, in the 1800s, 5 with fall protection, or, you know, being 6 responsible for people, their training, so they 7 don't fall and get killed, because anything over, 8 really, a couple -- you know, 10 feet, you can kill 9 yourself. 10 And, it's important. 11 But, when you have cases now, where -- and 12 I'll give instances, where a couple of employees are 13 putting a generator on a loading dock, which is 14 probably about, this high (indicating). 15 One of the employees gets his clothing stuck 16 on the generator, a little hand generator, as we 17 have for our homes, it falls on him. 18 And during a three-year period, I think it's 19 called a, uhm -- let me find the case here -- there 20 was case law that now took this law to a new level, 21 the Runner case. 22 And, now, that case was interpreted that 23 we're 100 percent liable, because it's now 24 considered a fall under the Scaffold Law. 25 A huge award, you know, from his injury, a 1 broken leg. 2 Another case, an employee on a forklift had a 3 beam. 4 He was in charge of the operation, directing 5 it, and the beam from the forklift slid off, about 6 3 feet, hit his leg. 7 He broke his leg. 8 Again, the case, which dragged on for years, 9 was interpreted, where it qualified as a fall, 10 because the beam fell about -- it slid off and fell 11 about 3 feet, now it's considered a fall. 12 Now this case, again, went into that, where 13 the employee, again, self-directing the operation, 14 had been trained, now we're 100 percent liable. 15 We're at wit's end, almost, as to what we can 16 do in terms of employee training, employee safety. 17 There's a new level of supervisor training. 18 We're one of the first in the states to 19 employ that training. 20 We see we must do everything to avoid an 21 accident. 22 And nothing is worse than hearing about an 23 employee that we know. 24 Again, we're four generations, over 70 years 25 of experience, something happening to one of our 1 employees. 2 But unless there's change, and, again, we're 3 one company, where it costs us millions of dollars 4 over a period of time, independent of, you know, our 5 general-liability cases with accidents, and things 6 of that sort. 7 Those dollars are coming out of our -- 8 they're getting added to our expense. 9 We can get insurance. 10 We do have a good EMR, we have a great safety 11 record. 12 But as previous people mentioned, you know, 13 the smaller contractor or a medium-sized contractor 14 can't afford a safety department, a risk director, 15 and all of these burdens that, you know, just to 16 keep yourself competitive, let alone manage your 17 expenses in a direction, along with your employees, 18 that are reasonable. 19 So, again, doing work in New Jersey, we don't 20 have those expenses, we don't have those exposures. 21 When we're in New York, we do. 22 And, again, us, along with many other 23 contractors, we're at wit's end. 24 We're a member of the AGC, we're a member of 25 the Long Island Contractors Association, and their 1 testimony, again, is much the same on that law. 2 Moving on to, you know, things that the State 3 is doing well to increase its economic engine: 4 They're doing design-build for the first time 5 through the accelerated program for the 6 Governor's Initiative, which we think is excellent. 7 We think some of the Wicks Law-type projects 8 may be better considered for design-build, maybe to 9 expedite cost-savings, cooperation amongst subs and 10 the trades. 11 Our experience in Wicks, particularly, we had 12 a project in Nassau County on a sewage-treatment 13 plant, [unintelligible] took 30 percent longer; and, 14 time is money. 15 And it was, also, you know, the change 16 condition and no negotiation between the trades was 17 just, I think, one of the -- you know, one of the 18 worst experiences we've ever had. 19 So, we don't see it as good. 20 We don't want to reduce competition, but we 21 think there's ways to create partnerships with GCs, 22 value engineering, and create more value for the 23 eventual owner, which often is the taxpayer. 24 Lastly, in New Jersey, versus New York, and 25 also Massachusetts, on the environmental side, they 1 have a licensed site remedial professional system, 2 which now is, I think, in its third year, where it's 3 a self-certification for cleanup. 4 So when we go to build a site that may be 5 contaminated, and there are many contaminated sites 6 throughout New York State, that the process is a 7 self-certification, which can help to accelerate 8 projects; again, particularly in more semi-urban, 9 urban, markets where there are a lot oft of legacy 10 sites that need to get redeveloped. 11 So, we think that's a worthwhile program to 12 pursue. 13 New Jersey has a lot of success with that. 14 The time and cost to effect a cleanup, and 15 coordinate it with a reconstruction, is greatly 16 reduced, and we think that's positive. 17 That's all I have. 18 Any questions of me? 19 SENATOR MARTINS: Thank you. 20 SENATOR GALLIVAN: Thank you. 21 MICHAEL POSILLICO: Thank you. 22 SENATOR GALLIVAN: Stephen LeFebvre, 23 Associated Builders and Contractors. 24 STEPHEN LEFEBVRE: I was out moving my car. 25 SENATOR GALLIVAN: Is it all set? 1 STEPHEN LEFEBVRE: I think someone is out 2 there with it, so, it will be taken care of. 3 I guess I didn't realize there was a 4 reserving downstairs. I didn't see the sign in 5 front. 6 SENATOR GALLIVAN: I might be next. 7 STEPHEN LEFEBVRE: Sorry? 8 SENATOR GALLIVAN: I might be next. 9 STEPHEN LEFEBVRE: Well, my name is 10 Steve Lefebvre, and I'm the president of the 11 Empire State Chapter of the Associated Builders and 12 Contractors. 13 And I want to thank you and members of the 14 Panel for the opportunity to represent ABC's 15 testimony, as you seek input to identify specific 16 regulations that can be repealed or modified to make 17 New York more business-friendly towards the 18 construction industry. 19 The Empire State Chapter of the 20 Associated Builders and Contractors is a trade 21 association, representing hundreds of New York State 22 contractors and industry-related firms which employ 23 thousands of New Yorkers. 24 ABC is founded on the merit-shop philosophy 25 which encourages the traditional American values of 1 free enterprise and open competition in the 2 construction sector. 3 We believe that government regulations should 4 be crafted to protect the system of open competition 5 by ensuring a fair and level playing field that is 6 competitive, and promotes safety and quality in 7 construction work. 8 In a perfect world, government regulation 9 would work to ensure construction is performed 10 safely, ethically, and competitively, regardless of 11 labor affiliation, for the benefit of the taxpayers 12 in the communities where contractors work and live. 13 The general feeling from our membership is 14 that there are a number of regulations in place, and 15 policies implemented by our state agencies, that 16 prohibit, or at least prove onerous, for the 17 construction industry to contend with. 18 And chief among those -- and I'll skip the 19 next five paragraphs -- is the Scaffold Law. 20 And the only thing I will -- you have it in 21 our written testimony. 22 The only thing I will add is a thank you for 23 to Senator Gallivan for introducing the legislation 24 in the Senate. 25 In terms of other specific regulations 1 affecting the construction industry, I'd like to 2 call your attention to an impediment that many 3 contractors face when complying with the State 4 Department of Labor's "annualization of benefits" 5 mandate. 6 Contractors working on public projects must 7 pay prevailing fringe supplements to a bona fide 8 benefit program. 9 Annualization forces the contractor to 10 calculate the total hours worked on both public and 11 private jobs, and must divide the actual amount 12 contributed by the total number of hours worked to 13 determine the hourly cash equivalent of 14 prevailing-wage fringe paid to an employee. 15 If this calculated hourly cash equivalent is 16 less than the posted prevailing-wage fringe 17 supplement rate, the employer is deemed to have 18 underpaid the required fringe supplements. 19 This is often the case because private work 20 hours are annualized into the fringe calculation. 21 The only way for a contractor to avoid 22 annualization is to pay the fringe benefit as a cash 23 supplement in the employee's paycheck. 24 There's no question that the total fringe 25 benefit must be paid. 1 It's the annualization process. 2 This growing practice of putting it in the 3 employee's paycheck eliminates the annualization on 4 private work, but exposes the employee to higher 5 income taxes, and the employer to higher payroll 6 taxes and other burdens, such as worker's comp 7 insurance which is based on payrolls. 8 ABC is strongly in support of annualization 9 reform. 10 We believe that creating greater consistency 11 between state law and the federal Davis-Bacon Act, 12 including adoption of the federal annualization 13 methodology, will go a long way towards removing an 14 impediment to business growth, and providing 15 employees with the benefits our prevailing-wage laws 16 were designed to encourage. 17 As you are aware, the State Senate passed 18 Senate Bill 3361, introduced by Senator DeFranciso, 19 which is a legislative solution to address the 20 problem. 21 And I would encourage you to push the 22 Assembly, on Assembly Bill 7800, for adoption of the 23 bill. 24 However, I would also suggest that persuasion 25 from the Legislature might help to encourage 1 State DOL to make these changes administratively. 2 Our written testimony submitted today carries 3 an example, comparing Davis-Bacon rules to those in 4 New York State. 5 A final regulation that ABC supports would be 6 the halt of the mandated use of project labor 7 agreements; and, instead, adopt a neutrality option, 8 as outlined in the Public Construction Savings Pilot 9 Act. 10 Senate 3484, Assembly 6523, sponsored by 11 Senator Ranzenhofer, and Assemblymember Schimminger. 12 Less than 30 percent of the construction 13 workforce in New York State is unionized. 14 This pilot legislation would only affect 15 construction projects initiated by state agencies 16 and public authorities as they relate to project 17 labor agreements. 18 As we know, a PLA is a pre-hire agreement 19 negotiated between a public owner and 20 building-trades unions, whereby, the contractor is 21 required to hire the vast majority of project 22 workers, usually about 85 percent, through union 23 hiring halls. 24 In exchange, unions agree not to strike, and 25 also agree to certain work-rule changes in an effort 1 to reduce costs. 2 PLAs are unfair to merit-shop or non-union 3 contractors because a PLA forces the contractor to 4 use a majority of union labor; thus, idling the vast 5 majority of the non-union contractor's employees. 6 This fact alone results in many open-shop 7 contractors refusing to bid on public projects, 8 resulting in a lower number of bidders, less 9 competition, and an estimated cost increase to a 10 project of 12 to 20 percent. 11 In addition, the purported savings from PLAs 12 are illusory. 13 Merit-shop employees do not strike, and are 14 not subject to conflicting and onerous work rules. 15 Such issues are frequently used to justify 16 PLAs, even though such comparisons with non-union 17 firms are irrelevant. 18 PLAs are a gift to organized labor. 19 Mistakenly, PLAs are often tied to the 20 payment of prevailing wage. 21 All contractors must pay prevailing wage on 22 any public project regardless of a PLA on the 23 project, or not. 24 Even worse, there's strong evidence that PLAs 25 do not save money for taxpayers, and the feasibility 1 studies which purport to identify such savings are 2 often little more than subjective opinion 3 masquerading as fact. 4 There have been instances, notably, in 2011 5 on State Department of Transportation's Exit 122 6 project, where the studies have been manipulated to 7 bring about a result desired by PLA proponents. 8 This Exit 122 project in Orange County is a 9 perfect case in point, as the lowest bidder on that 10 job, by $4 1/2 million, was denied that job by DOT, 11 despite meeting all qualifications, because the 12 low-bid contractor refused to utilize a PLA. 13 The matter is still the subject of litigation 14 which has delayed this important infrastructure 15 improvement. 16 The Public Construction Pilot Act seeks to 17 avoid these disputes by simply allowing a contractor 18 to enter a responsive bid regardless of whether he 19 agrees to utilize a PLA. 20 PLAs would be completely optional to the 21 contractor and the lowest responsive bidder would be 22 awarded the job. 23 The bill also will sunset after five years, 24 to allow a thorough review of the effectiveness of 25 the provision. 1 Lastly, the legislation would only impact 2 construction contracts for buildings and 3 transportation projects that are entered into by 4 state agencies and authorities. 5 This commonsense, simple approach will go far 6 in helping put more New York construction employees 7 back to work, and will measure the real impact to 8 the taxpayers in New York. 9 In conclusion: 10 Regulatory changes I've provided for your 11 consideration seek to simply ensure a fair and 12 competitive field that would promote safety, 13 quality, and competitiveness, resulting in job 14 growth. 15 Your adoption of these proposals would do 16 great justice to all New York workers in the 17 construction industry regardless of labor 18 affiliation. 19 In the interest of time, our submitted 20 testimony also contains some positions on: 21 A dedicated infrastructure fund, not useable 22 for General Fund obligations; 23 A study on proposed elimination of the 24 highway use tax; 25 And tax reforms for LLC and S corps which 1 apply to a vast majority of construction companies. 2 I thank you for your time this afternoon, and 3 I'm happy to answer any questions. 4 SENATOR MARTINS: Thank you for your 5 testimony. 6 Let's -- I noted here, less than 30 percent 7 of the construction workforce in New York State is 8 unionized. 9 Can you break that down, or do you have the 10 ability to break that down, between the construction 11 workforce in Upstate New York as opposed to the 12 construction workforce in New York City and in the 13 metropolitan area? 14 STEPHEN LEFEBVRE: In the entire state, the 15 actual number is 24.8 percent. 16 Nationally, it's 11.3 percent. 17 But, New York City and Long Island have the 18 heaviest component, which is why I used the term 19 "less than 30 percent." 20 By metropolitan statistics, it is right just 21 about on 30 percent downstate versus the 24 upstate. 22 SENATOR MARTINS: Would you consider, as part 23 of your suggestion, that there be a -- some form of 24 an apprenticeship program associated with the 25 trades? 1 I think part of what we're discussing today 2 is a realization and a recognition that it is a 3 rather unsafe place to work, traditionally. 4 There are things that we do in order to 5 combat and to impose some safety requirements on our 6 work sites. 7 The idea of bringing someone in who doesn't 8 have the requisite training concerns -- certainly, 9 concerns me. 10 Would you include, as part of your 11 suggestion, a requirement that the workforce also 12 have, besides a prevailing-wage requirement, which 13 is merely paying someone a wage, but also a 14 requirement that that person who is hired has the 15 requisite competence and training to be able to 16 conduct themselves on a work site? 17 STEPHEN LEFEBVRE: In project labor 18 agreements, safety is always one of the high points 19 stressed, that the unions are safer than the 20 non-union shops. 21 ABC maintains about -- we have five regional 22 offices with training centers. 23 We support training. 24 We run education classes. 25 We run safety training. 1 We run management classes. 2 We're approved by the State Department of Ed 3 to run related instruction for apprentice programs, 4 and a large majority of our members already have 5 apprentice programs. 6 For our smaller contracts, maintaining an 7 apprentice program is a difficulty, because it 8 forces, not the training -- 9 And we have those who are in some of our 10 training programs as craft trainees because they're 11 not registered apprentices, but they're in training 12 programs. 13 -- but for a small contractor who has to take 14 on the task of applying the DOL, and go through a 15 process that may take him a year to two years to get 16 an approved program; then has to put an apprentice 17 on, to maintain his program; move that apprentice 18 through, and let's say it's a laborer, it will take 19 two years to move them through; has to add another 20 laborer, in order to maintain his program with the 21 State; it isn't the training that's the issue. It's 22 continually adding employees, when the contractor 23 may not have the ability to sustain adding an 24 employee, continually, to support the apprentice 25 program. 1 We support training, we support 2 apprenticeship as well, for the right-sized 3 companies. 4 But for small contractors, and here on 5 Long Island, I mean, if you don't have an apprentice 6 program, it's very difficult to build. 7 SENATOR MARTINS: I will tell you that, 8 frankly, here on Long Island, and in other areas as 9 well, there is a tendency among some of the 10 medium-sized and smaller contractors, not the larger 11 contractors, because the larger contractors, 12 certainly, we have examples upstate and downstate 13 where they do have training programs, but I can 14 assure you that, as sure as I'm sitting here today, 15 and if you and I were to leave and go to specific 16 areas, we could see, at certain times of the day, 17 trucks pull up, people hopping into trucks, and off 18 they go to work in construction on construction 19 sites, building public-works projects, building 20 large- and medium-sized projects. 21 And that person who is jumping on the back of 22 a truck or into a truck is not someone who has been 23 trained; is not someone who necessarily has the 24 requisite training to protect themselves. 25 And, unless we, from a policy standpoint, 1 take the position from a state policy standpoint, as 2 to how we're going to protect that person from the 3 realities and economics of finding work, but at the 4 same time, keeping them safe, I think we're doing 5 ourselves a disadvantage. 6 There is a line there, and I think we have to 7 work towards that as well. 8 STEPHEN LEFEBVRE: And we'd be happy to work 9 towards that, because we do believe in training and 10 safety and a safe workplace. 11 SENATOR MARTINS: Thanks. 12 SENATOR GALLIVAN: One thing. 13 I pronounced your name wrong. 14 I'm sorry. 15 STEPHEN LEFEBVRE: It's okay. 16 You got closer than most people did. 17 Thank you very much. 18 SENATOR GALLIVAN: You're welcome. 19 Thank you. 20 Is Mark Hamer [ph.] here? 21 Scott Hobson, Lawsuit Alliance of New York. 22 SCOTT HOBSON: Senators, thank you for the 23 opportunity to address you today. 24 I'll keep this relatively short and to the 25 point. 1 I think most of the speakers before me have 2 addressed in great detail much of what I had planned 3 to discuss today. 4 So, just by way of background: 5 The Lawsuit Reform Alliance of New York is a 6 nonpartisan, nonprofit association of businesses, 7 professionals, doctors, growers, membership 8 organizations, and taxpayers dedicated to reform of 9 the legal system in order to foster a better 10 business climate, promote job growth, and address a 11 growing cost of lawsuit abuse. 12 Our members represent a diverse cross-section 13 of the state's economic base, and employ thousands 14 of New Yorkers statewide. 15 So, the regulation I'm here to discuss today 16 is, of course, the Scaffold Law. 17 We've heard a lot today about the impacts of 18 the Scaffold Law, particularly on taxpayers and on 19 the construction industry. 20 And I'd like to address, Senator Martins, 21 something you addressed earlier regarding safety. 22 In our experience, and what we've seen from 23 the research, the impact of the Scaffold Law is 24 not -- in its current form, it is not, empirically, 25 a driver of safety in workplaces. 1 As I think Walter and some others mentioned 2 earlier today, the experience in Illinois, 3 historically, after they repealed their version of 4 the Scaffold Law, was actually an improvement in 5 workplace safety and decrease in workplace 6 fatalities. 7 I'd just like to point out that 8 Albany Law School actually undertook their own study 9 of the Scaffold Law and its impacts relative to 10 safety. 11 And they concluded that the Scaffold Law, in 12 fact, was not a primary driver of workplace safety, 13 and that it was improved training methods and 14 increased awareness of workplace issues that was 15 driving a national trend in increasing safety. 16 Also, I'd just like to highlight an editorial 17 recently authored by the "Buffalo News," in which 18 they actually expressed strong support for, 19 Senator Gallivan, your proposal to reform the 20 Scaffold Law. 21 And they noted in their own independent 22 journalistic study that they were not able to find 23 any evidence, anywhere, that would link the 24 Scaffold Law to increased workplace safety. 25 So I think it's important to note that, as 1 we're talking about, you know, the significant 2 impacts that the law is having on the construction 3 industry and on taxpayers, that I think reform to 4 the law could be achieved without any impact on 5 workplace safety, any negative impact. 6 So what we're essentially looking at is a net 7 gain in -- excuse me, in both areas. 8 The other thing I'd like to address, 9 something that hasn't been touched on, or at least 10 slightly, is the reason, or at least a significant 11 reason, why the Scaffold Law in recent years, 12 particularly the past three years -- two to 13 three years, has driven such a dramatic change in 14 the insurance market. 15 And I think, from what we've heard from our 16 members in the industry, that is significantly being 17 driven by a case in 2009, which is, Runner vs. the 18 New York State Stock Exchange, which is a case that 19 was decided by the New York Court of Appeals. 20 And, essentially, what the Court determined 21 in that case, was that the Scaffold Law should be 22 interpreted to apply to all injuries that were a 23 product of the application of gravity rather than 24 elevation. 25 And that perpetuated a significant increase 1 in the scope of the law, and a corresponding 2 increase in the number of lawsuits. 3 We are seeing that now borne out, in the -- 4 you know, as far as carriers leaving the market, 5 increased insurance premiums, which are a reflection 6 of increased insurance costs, and, certain coverage 7 exclusions. 8 I'd like to address -- 9 Again, much of my testimony has already been 10 covered earlier, so, that's great. 11 -- public defendants and taxpayers. 12 In 2012, 16 of the 30 largest civil 13 settlements were a result of the Scaffold Law. 14 So, it is a tremendous -- it's a very 15 significant source of lawsuits among all of the 16 civil statutes in New York. 17 And of those 16 settlements, 25 percent were 18 public defendants; so, that's public authorities. 19 In one case was Gem -- or, I'm sorry, 20 Union -- Uniondale Union School District, which is 21 right near here. 22 So there's a -- in addition to the cost of 23 public construction, there's a significant direct 24 cost on taxpayers as well, when local governments 25 and public authorities are sued under the statute. 1 That's about all I've got. 2 Senator Gallivan, I'd like to thank you for 3 your continued leadership on this issue, and your 4 support for reform. 5 We're very supportive of it. 6 SENATOR GALLIVAN: Thanks, Scott. 7 SENATOR MARTINS: Do you have a cite on that 8 Runner case? 9 SCOTT HOBSON: Yeah, I can send that to you. 10 I think -- let me see if it's cited in here. 11 SENATOR MARTINS: I'll get it. 12 SCOTT HOBSON: Yeah, I can e-mail that to 13 your office. 14 Unfortunately, I don't have it on my 15 testimony. 16 SENATOR MARTINS: Thank you. 17 SENATOR GALLIVAN: Thanks, Scott. 18 We do have your written testimony that's in 19 more detail. 20 Thank you. 21 SCOTT HOBSON: Thank you very much. 22 SENATOR GALLIVAN: Kevin Schwage. 23 Did I pronounce that correctly? 24 KEVIN SCHWAGE: Yes. 25 SENATOR GALLIVAN: Excellent. 1 When you're ready. 2 KEVIN SCHWAGE: Good afternoon, gentlemen. 3 How are you? 4 SENATOR GALLIVAN: Good afternoon. 5 KEVIN SCHWAGE: Thank you for letting me talk 6 to you. 7 SENATOR GALLIVAN: Sure thing. 8 KEVIN SCHWAGE: I've never done this before, 9 so if I'm a little rough around the edges. 10 SENATOR GALLIVAN: Don't worry about it. 11 SENATOR MARTINS: You're doing fine. 12 Better than most. 13 KEVIN SCHWAGE: I started as an electrician 14 when I was 16 years old. 15 I went into the Coast Guard. 16 I was an electrician in the Coast Guard for 17 five years. 18 When I got discharged, I went through 19 Local 25's apprenticeship program. 20 I got out. 21 I worked as an apprentice, a journeyman, a 22 foreman. 23 I got my Suffolk County master electrician's 24 license in 1985. 25 I got a whole bunch of the Nassau County ones 1 following that. 2 That's my background. 3 A couple of things: 4 I'm one of the small contractors that 5 everybody was talking about. 6 I'm it; I'm a one-man shop. 7 I bid the work, do the work, take out the 8 garbage, do the whole deal. 9 All right? 10 So, one thing that the fellows from the 11 insurance industry were talking about, the 12 State Fund, man, bad news. 13 Bad news. 14 They've come a long way, but not far enough. 15 The whole thing about -- and I got caught up 16 in this because I had them, tried to get rid of 17 them. 18 I actually finally did, and then went back to 19 them. 20 I have never, in my entire life, been exposed 21 to something where have you to ask permission to 22 cancel. 23 I couldn't believe it. 24 "Oh, no, you still have insurance." 25 They sent me a bill, and then all kinds of 1 legal stuff. 2 And I'm, like, What? Are you kidding me? 3 "Oh, no, we still cover you." 4 I said, "I told you guys that I didn't want 5 you." 6 "Oh, no, you have to ask our permission to 7 cancel." 8 You know, that, not good. 9 What I guess, really, the most important 10 thing that took me away from what I was doing, and 11 everything, and I want to again thank you, is 12 I really hope you guys put your full support behind 13 the bill by Senator Zeldin. 14 I believe it's 5132-2013, that Charlie spoke 15 about, as far as establishing the board. 16 Okay? 17 Suffolk County is headed in a very, very 18 wrong direction when it comes to licensing. 19 They got it right the first time with the 20 Suffolk County License Law. 21 I believe it was 1972, one county, one 22 license. 23 That's great. 24 In 1985, when I got it, I was able to work, 25 unimpeded, in all 10 towns. 1 I also possess a Connecticut state license, 2 E1 unlimited. 3 I can work in the entire state of 4 Connecticut, town to town, city, it doesn't matter. 5 I can go wherever I please, without anything. 6 In 2006, the Town of South Hampton decided, 7 I don't know if it was as much revenue as it was to 8 massage the ego of certain officials, that they were 9 going to have this registration thing. 10 And I was told by the certain official, when 11 I had a meeting with the town supervisor and Charlie 12 and a few other guys, "Oh, it's not a license, it's 13 a registration." 14 Well, what the hell is it? 15 If I can't work there, you know, it's not -- 16 it's not nothing. 17 It's extortion, is what it is. 18 I show them a copy of my master 19 electrician -- I got to take time out of my day, 20 I got to go get this stupid paper notarized. 21 Send them paper copies of all my truck 22 registrations so that their super-sacred sticker can 23 go on the side of my truck exactly where they tell 24 me to put it. 25 And then, you know, I got to -- and then 1 I got to deal with this nonsense? 2 And then I know, for a fact, because when 3 this thing first came around, the building 4 department was in a little bit of turmoil. 5 It was taking up to a month to get a rough 6 inspection, a rough electrical inspection, from the 7 town inspector. 8 Now, you try and tell the GC, Hey, man, you 9 got to wait a month. 10 Nobody, they were deathly afraid of this guy, 11 because he was using this thing as -- and, believe 12 me, I'm not -- 13 I guess this is my own perception, I'm not 14 accusing him. 15 You know how it goes, I guess. 16 -- but, these guys were afraid of this, 17 because this guy was holding this (indicating), you 18 know. 19 And then the other thing is, I'm a licensed 20 master electrician. 21 I'm very proud of that. 22 I'm very proud of the fact that I'm a 23 Local 25 electrician. 24 And, now, let's just say that somebody has a 25 complaint about me. 1 Well, like under Mr. Gardner's 2 Consumer Affairs, I went and I was judged by the 3 Suffolk County Electrical License Board, by 4 gentlemen who were electricians, and they 5 understood. 6 And if I was a real screw-up, well, the boot 7 I got. 8 If not, they understood. 9 If I go to South Hampton in front of this 10 rinky-dink license board they got, I got to wait in 11 line between plumbers, carpenters, and taxi drivers, 12 and then explain my thing, and hope that a bunch of 13 carpenters can -- 14 You know, it's -- it's, just, it's got to go. 15 I'm sorry guys if I'm yelling at you, but it 16 just really upsets me, greatly. 17 And one other thing that, along those lines. 18 Section 137 of the town law empowers building 19 inspectors or town clerks to issue home-improvement 20 licenses. 21 I know it really doesn't affect me directly, 22 but I believe building inspectors should not be 23 allowed to issue these licenses. 24 It should rest solely with the town clerk's 25 office, because what happens is, number one, if you 1 guys want to streamline government, the town clerk 2 is the issuer of all licenses, keeper of records, 3 and stuff like that. 4 That's where you go. 5 Number two, it does provide a little bit of 6 checks and balances, where, if the chief building 7 inspector doesn't like you, you know, This guy, 8 well, maybe we'll get you a license, maybe not; 9 threaten you, all that kind of stuff. 10 So that's pretty much it, guys. 11 I really thank you, and sorry if I yelled at 12 you. 13 I get all wound up, you know. 14 SENATOR GALLIVAN: That was fine. 15 My only question is more just out of 16 curiosity than anything else. 17 In Nassau County, how many licenses do you 18 have? 19 KEVIN SCHWAGE: I had have three. 20 I had five. 21 I let the Freeport one go. 22 And, I forgot the other one. 23 But I have Oyster -- well, yeah, see, now 24 here's -- I have Oyster Bay, Hempstead, and 25 North Hempstead. 1 And, also, because I'm a Suffolk -- well, 2 when I went to get the Oyster Bay one, that was a 3 bit of an-eye opener, because I brought copies of 4 all the stuff they require, and I was told, Oh, you 5 know, we don't need to see your Suffolk County 6 license? We don't recognize that. 7 And I was like, you know, it's the next 8 county over. 9 It's not like I brought them something from 10 Mars, or something. 11 You know? 12 [Laughter.] 13 KEVIN SCHWAGE: And then also because I'm-- 14 now, I understand why the Nassau system is so 15 vulcanized, because they don't have a county 16 license, so you can see where this came from; as 17 opposed to Suffolk, where we've got the license, and 18 now it's going backwards. 19 But to get back to the point: 20 As a Suffolk County resident, I had to take 21 and treat each application for each license as 22 though I was -- I'd never been licensed by any other 23 jurisdiction before. 24 And that all is the town's own -- 25 SENATOR GALLIVAN: So you have three 1 licenses. 2 KEVIN SCHWAGE: So right now, I possess -- 3 SENATOR GALLIVAN: What does it cost you, 4 collectively? 5 KEVIN SCHWAGE: Approximately -- 6 approximately $400. And that's over a two-year 7 span. 8 All right? 9 And just a little quick math: 10 If every town signed on to South Hampton's 11 shenanigans, that would be $1,000 a year for me, 12 just to walk out the door to purchase -- to purchase 13 the right to work -- to purchase the right to pursue 14 an occupation that I am licensed in now by the 15 County of Suffolk. 16 And this registration thing, there is no -- 17 you send them a copy of your Suffolk County license. 18 There's no practical. 19 The closest thing they come to a written 20 exam, is to be able to write "The Town of 21 South Hampton" and "75" on a check. 22 There's your written exam. 23 Guaranteed, you've purchased the right to 24 work. 25 You're done. 1 [Laughter.] 2 KEVIN SCHWAGE: And you don't -- you know, 3 New York is to try and get back to where it was, 4 this is a pretty good place to start. 5 And there's a lot, a lot of guys, one- and 6 two-man shops like myself that feel this way. 7 SENATOR MARTINS: The three licenses you have 8 in Nassau County, are there reciprocity between the 9 three towns? 10 Because the three towns are, essentially, 11 Nassau County. 12 They only have three towns. 13 KEVIN SCHWAGE: Yes, sir. 14 If I was a Nassau County resident, there 15 would be reciprocity. 16 I would be allowed to show -- as a matter of 17 fact, in the renewals they state, you send a copy of 18 your hometown license to the other -- you know, to 19 the town that you're renewing, and that's your 20 reciprocity. 21 But as a Suffolk resident, no, it's -- 22 they're all treated as three individual entities. 23 SENATOR MARTINS: So you had to apply in each 24 one? 25 Did have you to take an exam in each one of 1 those three towns in order to qualify for that 2 license? 3 KEVIN SCHWAGE: Yes, sir, I did. 4 I had to take a written and a practical exam 5 in Oyster Bay, in North Hempstead, and Hempstead. 6 The Freeport license, all they wanted was a 7 copy of my Hempstead license, and they were glad to 8 issue that, which is, you know, not unreasonable. 9 And, again, I can see where that's coming 10 from, because of the lack of a county license. 11 The South Hampton nonsense is just 12 unacceptable, because, you know, like I said, you're 13 gonna look like -- you're gonna have so many 14 stickers on the back of your truck you won't be able 15 to see out the window, for God's sake. 16 [Laughter.] 17 SENATOR MARTINS: And when you talk about 18 these three towns, I think it's important that we 19 contextualize that. 20 The town of Hempstead has 700,000 residents, 21 600,000 residents. 22 The town of North Hempstead has 240,000. 23 The town of Oyster Bay has 350,000 residents. 24 The village of Freeport has 50,000 residents. 25 You know, these are large municipalities. 1 KEVIN SCHWAGE: Oh, absolutely. 2 SENATOR MARTINS: They have the ability. 3 We're not dealing with any of the 4 municipalities that are smaller, and, perhaps, there 5 may be some redundancy there. 6 The ones you have, happen to be the ones 7 where, either you've had work or you intend to work. 8 KEVIN SCHWAGE: Right. 9 The town of South Hampton has, I think, 10 I don't know, 40,000 residents. 11 What does the village of Mastic Beach have? 12 92 people? 13 [Laughter.] 14 KEVIN SCHWAGE: And, you know, I got to get 15 that, too. 16 You know I mean, now here's a village. 17 You know, you're on this side of the street, 18 you can work; you're on that side of the street, you 19 can't? 20 It's retarded. 21 SENATOR MARTINS: So, I do appreciate it. 22 And, you know, I won't speak for my 23 colleagues, but I'm sure I will, you gave great 24 testimony. 25 Thank you. 1 KEVIN SCHWAGE: Well, thank you, gentlemen. 2 And I sure do appreciate your time. 3 Take care. 4 SENATOR GALLIVAN: Did we miss anybody that 5 was supposed to be testifying? 6 SENATOR BOYLE: In closing, I'd like to thank 7 Chairman Gallivan for holding this hearing. 8 And, Senator Valesky as well. 9 It was ironic that, during the hearing, 10 "Forbes Magazine" came out with their annual ranking 11 of business climates, and New York ranked Number 21, 12 in large part, because of the regulations we have in 13 this state. 14 I want to see legislation coming out of this, 15 through the leadership of Senator Gallivan, to do 16 away with a lot of the overregulation in this state, 17 and next year, maybe we'll be closer to Number 1 in 18 New York. 19 Thank you, Chairman. 20 SENATOR GALLIVAN: Thanks, Phil. 21 I'd like to thank everybody who participated 22 today, and the members of the local delegation here 23 for helping to put this on. 24 We anticipate, as I mentioned at the 25 beginning, a report, mid to late November, that will 1 form a basis of part of our agenda as we start the 2 next legislative session. 3 And, you should be able to find it online 4 right at the Senate website, which is real easy: 5 nysenate.gov. 6 And then you can just look for any of us, and 7 click on one of our links, and you'll be able to get 8 to it. 9 We appreciate your testimony. 10 If you think of something later on, that you 11 didn't think of today, an e-mail address is on the 12 table right on your way out. You can grab that. 13 That will conclude the hearing today. 14 Thank you. 15 (Whereupon, at approximately 3:34 p.m., 16 the public forum on manufacturing regulatory 17 reform held before the New York State Senate 18 Majority Coalition concluded, and adjourned.) 19 ---oOo--- 20 21 22 23 24 25

Public Forum/Town Hall Construction Regulatory Reform - To Learn from Businesses and Industry Experts Which Regulations Are the Least Useful, Least Cost-Effective, And, Therefore, Should Be Eliminated

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