When COMIDA began to require companies that receive tax breaks or other benefits to exclusively use local labor on construction or renovation projects, it was held up as an innovator.

But the policy has a flaw, say labor leaders and activists. A loophole allows applicants to forgo hiring local labor if it costs too much. That part of the policy never sat well with local unions, who now say they are furious over a change that further loosens the local-labor requirement.

In the past, say labor groups, contractors who wanted to use non-local labor had to show that the project would cost at least 50 percent more if they used local workers. But COMIDA, they say, changed that threshold to 25 percent. They question when the change was made and whether it happened during a public meeting or behind closed doors. Judy Seil, COMIDA's executive director, said Monday that the threshold has been 25 percent at least since she became acting executive director in 2006.

Change or not, waivers based on labor costs have the potential to drive down wages and living standards for Rochester-area workers, says Chris Hollfelder, marketing representative for Sheet Metal Workers Local 46.

"That's a race to the bottom where everyone fails," Hollfelder says.

Labor leaders and the activist group Metro Justice spoke against the threshold change before the January 15 COMIDA board meeting.

Under the local-labor policy, workers must come from Monroe County or any of the other six counties in the region, unless COMIDA issues a waiver. And it's not just a difference in labor costs that can trigger a waiver. Other accepted reasons include a lack of laborers, specialty work where no local contractor is available, and warranty work. Waivers are issued by a three-person committee, which includes labor's representative on the COMIDA board and two other board members.

Since 2004, the year the policy requiring local labor was established, COMIDA has issued 26 waivers covering 95 jobs - 1.5 percent of the 6,134 total construction jobs generated.

There are times when waivers make sense, says Gary Swanson, business manager for Ironworkers Local 33. For example, when Frito-Lay installed solar panels at its Rochester distribution center in 2005, the panel manufacturer would only warrant the equipment if its workers did the job, Swanson says.

But when a Buffalo firm was granted a waiver last year for the Wegmans Culinary Center project in Chili, its winning bid included fewer benefits than what local  union workers would get. That's a worry among unions. When out-of-area bidders undercut local contractors, they often do it by paying workers less or cutting out benefits, say union officials. There was a 51 percent difference between local and out-of-area bidders on the Culinary Center project, Seil said, during the agency board's December meeting. The contract, which was for insulated iron work, was granted to Empire Erectors of Buffalo. In July, COMIDA approved about $1.8 million in tax breaks for the project.

In 2007, the agency also issued a waiver for carpentry work at the Park Point at RIT project, a mixed residential and commercial development being built by Wiljeff LLC next to the Henrietta campus. That angered union officials, who said there were plenty of capable workers in the Rochester region.

During the December meeting of the COMIDA board, Swanson argued that any developer could shop around for lower labor prices, hurting local workers and the local economy. He received a terse response. 

"We're not giving you a monopoly so you can artificially inflate your wages," said COMIDA attorney Mike Townsend.

There are, however, cases where COMIDA has withdrawn a company's benefits when it wasn't using local labor. In early 2007, for example, the agency revoked $100,000 in tax exemptions for Henrietta Lodging LLC after learning the company used non-local labor for renovations to the Rochester Marketplace Inn.

In 2006, the agency revoked benefits for a BJ's Wholesale Club project in Greece after auditors found non-local labor on the site.

The use of local labor on projects receiving public benefits is a statewide issue. Activist groups, who are pushing for a wide range of industrial development agency reforms, by and large call for local hiring provisions.

At least two bills in the State Legislature would make regional hiring mandatory when a project receives IDA benefits. The Assembly passed an IDA reform bill, sponsored by Rochester Democrat Susan John. Meanwhile, a Senate proposal introduced by Niagara County Republican George Maziarz has sat in committee for close to a year. Neither proposal has a companion bill in the other house. Both bills have received support from IDA reform advocates.