A state housing agency rejected Lt. Gov. Peter Kinder's proposal Friday to suspend new federal wage standards for Joplin-area tornado recovery projects aimed at low-income residents.
The Missouri Housing Development Commission agreed Friday to continue paying the prevailing federal wage to builders after learning a change could delay by at least six months construction projects already in line for state tax credits and low-interest loans. The move failed without a vote when no other commissioners agreed to second the motion from Kinder, who participated by telephone.
The housing agency voted last year to adopt the federal pay standard for residential projects receiving state subsidies. But that was before the prevailing wage rose substantially in September — in some cases by nearly 300 percent — in the first adjustment to the standard in decades.
"It was a timing thing," said commission chairman Jeffrey Bay, a Kansas City lawyer. "If we move to amend the (recovery plan), we have to start over. ... We need construction to start in Joplin, not wait another year."
The Sept. 30 revision of the federal wage rules boosted the prevailing wage for a carpenter in the Joplin area from $7.98 an hour to $21.47 an hour, plus $12.65 in benefits. The federal prevailing wage for a roofer in the Joplin area rose from $7.25 an hour to $21.30 an hour plus $8.08 in benefits.
Kinder, who is also a commission member, said such hikes would boost the cost of an $8.5 million project in Joplin by nearly $2 million. The price of $125,000 single-family home would increase to $147,000 if built with MDHC aid, the lieutenant governor said. He shared a letter of support from the eight state lawmakers whose Joplin area districts cover tornado-damaged areas.
"None of us, at the time we voted on this last year, anticipated the historic devastation from natural disasters we had here in Missouri," said Kinder. "Our broad new requirement is having a negative effect on the rebuilding of Joplin."
The commission has committed about $100 million in tax credits and loans over the coming decade to spark the construction of low-to-moderate income rental units and single-family, owner-occupied homes in the Joplin area, where a May 22 tornado killed 161 people and destroyed more thousands of residences. Later Friday, the panel endorsed $4.5 million in state tax credits for six Joplin projects that would add 340 affordable housing units in the city.
A city housing study after the deadly tornado found that Joplin needs 1,400 rental housing units, of which 560 would be classified as affordable.
The housing panel did not hear public comments Friday, but several representatives of building trade unions who attended the meeting hailed its decision to proceed as planned.
"Joplin doesn't need a wage cut at this point and time," said Dave Wilson, a union organizer with the Carpenters' District Council of Greater St. Louis and Vicinity, which covers Missouri, Kansas and southern Illinois. "This was a drastic increase in wages because a wage survey hadn't been done since 1980, and the wage rates hadn't been updated since 1990. It was long overdue."
Wilson said that the higher wage rate attracts "much more qualified candidates who can produce a higher level of output.
"He was mistaken on the impact of prevailing wage," Wilson said, referring to Kinder. "To say it's going to result in 20 to 30 percent fewer homes is a fantasy, plain and simple."
The housing commission decided in August to give Joplin $90 million of the $250 million in state and federal tax credits expected to be awarded under its primary incentive program next year. Although the actual tax credits are spread out over a 10-year period, developers typically generate cash upfront by selling their tax-credit vouchers on a discounted basis.
The commission also set aside $10 million for loans to developers of single-family homes that can be sold to families with incomes of up to about $84,000 annually.
The Joplin rebuilding effort received another boost Friday when the U.S. Department of Agriculture agreed to include the city in a low-interest loan program for small rural communities.
The USDA waived the population requirement for Joplin, which has approximately 50,000 residents.