Builders get their pick

By Emily Richmond

Friday, July 14, 2006 | 7:37 a.m.

As a plumber helping to build Kermit Booker Elementary School, Dave Kerzetski earns $46.52 per hour, more than double the wage of his last job in the private sector.

Kerzetski, 24, knows plenty of construction workers who use the cash from lucrative jobs with the Clark County School District to buy all-terrain vehicles, trucks, Jet Skis and other "toys." Kerzetski admits to owning four televisions but says his biggest purchase to date was a house.

He's 24 and owns a home? That's impressive.

"Actually, I was 19 when I bought it," said Kerzetski, who has worked steadily in both the public and private sectors since graduating from Bishop Gorman High School.

Competition for workers like Kerzetski has never been fiercer. To keep schools opening on time, the School District butts up against commercial and residential builders, as well as municipalities and other public agencies, all of whom tap the same limited pool of contractors, subcontractors and labor.

While Clark County may be the nation's fifth-largest and fastest-growing school district - spending more than $400 million annually on construction - it is David to the local private sector's Goliath. Over the next five years more than $20 billion in new construction is expected to be added to the Las Vegas Strip. MGM Mirage's Project CityCenter alone is estimated at $7 billion.

So in the battle to get the construction industry's attention, the School District doesn't always win. And to at least keep pace with growth, it is paying top dollar for new-school construction.

On Thursday, the district's construction department withdrew a request that the School Board approve a contract to build new headquarters for School Police because the lowest of three bids was still almost twice the amount budgeted to pay for construction.

The reason: There's more work in the Las Vegas Valley than there are contractors, allowing companies to pick and choose the choicest of jobs and bypass the potential headaches. Or they'll bid high on the school jobs to make it worth their while.

The police substation is the most recent project to be stalled, but it's far from the only example of the district's ongoing problem.

While individual tradesmen might prefer public works jobs because they usually pay better, their bosses prefer bidding on private jobs where terms can be negotiated, there's less red tape and they can set their own wage scales.

"If they're given the choice of bidding on a public works contract versus a privately funded negotiated contract, they'll go with the private job every time," said Fred Smith, construction manager for the district. "It's more lucrative, there's less hassle, less bureaucracy."

The problem will only worsen from the School District's point of view when CityCenter is fully under way, committing about 8,000 construction workers to the site. It will be the largest private construction project in the country.

Even now, the wealth of construction work on the Strip means fewer contractors are available or even interested in bidding on public works projects.

But the district "has been having problems recruiting contractors to bid on their jobs since before we ever heard of CityCenter," said Steve Holloway, executive vice president of the Las Vegas chapter of Associated General Contractors.

"In a public works job, you have a lot of people standing over your shoulder, a lot of red tape, and the profit margin is minimal."

"The School District has probably done more to address the problem than any other public works agency in the state," Holloway says.

Two years ago the district began meeting with industry leaders to facilitate bids, said Paul Gerner, associate superintendent of facilities.

"We asked people to tell us why the district may not be at the top of the list of people they would like to do work for as well as suggestions for changes to our designs that could save us money," Gerner said. "Both of those categories of discussion have been quite fruitful."

The district is two-thirds of the way through the 10-year capital improvement plan and expects to ask voters in 2008 for additional property tax revenue to pay for new-school construction, renovations, remodeling and replacement schools.

Because of a scarcity of qualified bidders and soaring costs of construction materials, school projects routinely end up with bids of 20 percent to 40 percent above district estimates.

Officials have the option of scaling back plans or asking the School Board for more money.

"It's a fair assessment that everyone in our business is busy - very, very busy," said Terry Stratton, chief operating officer of Martin-Harris Construction, which is working on dozens of district projects.

Martin-Harris commits to some school-related work annually even though the profit margin is typically lower, Stratton said, because of the company's ties to the community. (President Frank Martin graduated from Rancho High School in 1965, and his company is now getting paid $75 million to replace the school.)

Smaller companies that use nonunion labor are reluctant to bid on school projects because of the requirement that they pay "prevailing wage," a minimum pay scale set by the state and required on public works projects. "Prevailing wage" may be higher than what subcontractors normally pay their employees.

A significant discrepancy in hourly wages can be tough for an employer to justify to the worker assigned to the lower-paying job, Stratton said. And that's just one more reason for contractors to decide a public works project isn't worth the hassle.

"You end up with one guy working for $30 per hour at a private job and $40 per hour at a school site - and they're doing exactly the same work," Stratton said. "Some companies don't want to go there."