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Friday, November 23, 2007

Federal Appeals Court: U.S.-Funded Projects Exempt From Cleveland Preference Law

CINCINNATI (TDB) -- A federal appeals court says the U.S. Highway Administration had authority to revoke a $696,000 construction grant for Cleveland's Kinsman Road streetscape project. Cleveland's Fannie Lewis Law -- which requires that city residents comprise 20% of the workforce on public works projects -- was at the heart of the dispute. The federal agency said the local hiring-preference law violated U.S. rules requiring competitive bidding and non-discrimination in employment.

The Kinsman Road streetscape was supposed to run from East 130th Street to the city limits, and involved construction of a brick sidewalk, tree planting and installing pedestrian lighting. Its goal was beautification and safety in a depressed neighborhood struggling to shake off urban blight.

The complete text of the 6th Circuit U.S. Court of Appeals 18-page decision is available here. City officials contend the purpose of the Lewis Law -- an ordinance named for a veteran councilwoman and adopted in June 2003 -- is not anti-competitive. They say the goal of the measure is to alleviate unemployment and ensure that Cleveland residents can find jobs on City of Cleveland construction projects. On Kinsman Road, the feds were supposed to put most of the money into the $870,000 total price of the project; the city's share was about $175,000.

The ruling did not strike down the Lewis Law. It said the federal agency had discretion to reject the contract because the 20% Cleveland resident employment was not specifically advertised to prospective bidders. The court said federal law puts state and local governments are "on notice that substantive contract requirements must be specifically advertised to prospective bidders before they can be incorporated into a federally-funded contract."

Moreover, the 6th Circuit said federal agencies have discretion in whether to fund projects and their "decisions may be based upon any lawful factor that the agency deems relevant under its broad power to administer federal programs."

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