Please note: This article is published as an archive copy from Philadelphia City Paper. My City Paper is not affiliated with Philadelphia City Paper. Philadelphia City Paper was an alternative weekly newspaper in Philadelphia, Pennsylvania. The last edition was published on October 8, 2015.

June 28–July 5, 2001

cover story

Rat Race

Why have the building trades made developer Mark Nicoletti their Public Enemy No. 1? The unions say it’s because he’s "the largest unfair contractor in the city." But he insists the real story is the unchecked influence of organized labor.

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Rallying point: Philadelphia’s building trades unions stage a May 23 demonstration in Kensington to protest Nicoletti.

photo: Eddy Palumbo

When the doors of the El slide open at the Allegheny Avenue stop on the afternoon of May 23, the sound of Bruce Springsteen crooning "Born in the U.S.A." assaults the eardrums. Passengers exiting the train peer down at the spectacle on the street, 35 feet below.

The intersection of Kensington and Allegheny Avenues is a sea of at least 1,000 husky men in baseball caps and jeans. Logos for the laborers, carpenters, electricians and roofers unions are displayed on their chests. Some of the guys wave American flags or take swigs from cans of Budweiser. All of them carry picket signs declaring, "No Nicoletti."

Squinting into the bright sun, the union demonstrators face a makeshift stage surrounded by three gigantic inflatable rats. The rodents, with beady red eyes as large as saucers and buckteeth to match, loom 15 feet tall. Long banners are draped down the front of each blow-up rat, like nametags. "Nicoletti," they read.

The Springsteen tune abruptly cuts off, and the crowd begins a rowdy chant that reverberates for several minutes. "No Nicoletti! No Nicoletti! No Nicoletti!"

Clearly, a theme is emerging.

The stage is set, symbolically, in front of a massive pit, the site of a planned Walgreens that was scheduled to have opened this past February. Philadelphia Suburban Development Corporation (PSDC) is in charge of the project, and the company’s owner — you guessed it — Mark Nicoletti doesn’t hire organized labor on his job sites. That, among Nicoletti’s other business practices, has incensed the heads of the building trades unions. They’ve successfully delayed construction on the store for months. But anyone listening to this rally last month at the intersection of K&A could guess that this Walgreens store is just one battlefield in an escalating feud between Nicoletti and Philadelphia’s building trades.

Pat Keenan, organizer for the Sheet Metal Workers Union, is the first speaker to step up. The crowd roars in anticipation.

"Is it right for some developer who lives in a mansion in Villanova to come into our city and build nonunion?" he asks.

"NOOOOOO!"

Soon after Keenan steps down, Michael Hnatkowsky, business representative for the International Brotherhood of Electrical Workers (IBEW), takes the mic and suggests that "everyone here" phone Nicoletti’s office once a week.

"That would tie all his phones up. I’d like to see how he does business after that," Hnatkowsky laughs. "Alright, let’s stick together, it’s for the brotherhood. Peace."

Ed Coryell, business manager for the United Brotherhood of Carpenters and Joiners of America’s Metropolitan Regional Council, follows him.

"All we want is fair wages and fair benefits," Coryell says. "And in Philadelphia, that means union wages and union benefits."

Keenan’s brother, Ed, works as business manager for the Plumbers Union Local 690. He interrupts the whistles and cheers emanating from the throng.

"This is a helluva turnout," he marvels. "I know guys who died for the labor movement. Then you got scumbags like Nicoletti who want to take it away from all of us."

Clapping, hooting and hollering ensue.

Next, Wade Stevens, head of the Laborers District Council, screams a message directly at the man of the hour.

"Mr. Nicoletti! You’re a scumbag rat developer! We’ve been chasing this man for over 10 years, and for 10 years he’s been puttin’ his finger in our eye and his foot up our ass," he declares.

Next in the all-star lineup is Pat Gillespie, business manager for the local Building Trades Council. He pushes the level of rhetoric several notches higher.

"The trouble with Nicoletti is he has political friends. And those political friends are about to know that if they’re a friend of Nicoletti’s, they’re an enemy of the Philadelphia building trades," Gillespie warns. "And we’re taking names and we’re gonna figure out who’s who, and then we’ll decide they’re no longer in politics. We’ve got that kind of power."

As soon as the last speaker finishes, the crowd begins to disperse. Robert Burns, a business agent for the carpenters union who is orchestrating the campaign against PSDC, rushes up to the stage.

"Everybody, please, we need you to stick around for just a few more minutes," he urges. "Please, the TV cameras are on their way."

 

It is obvious by the fiery speeches made during the rally that Mark Nicoletti has become public enemy No. 1 for Philadelphia’s building trades unions. Nicoletti is the vice president of PSDC, a development company that has amassed about 70 properties in distressed neighborhoods — Germantown, North Philadelphia, West Philadelphia and Kensington. The company has been renovating and constructing buildings in the city since 1956, when his father, Robert, founded the business. Robert Nicoletti remains president of PSDC.

Typically, the Nicolettis line up government leases before they start construction, then renovate their buildings to spec. They’ve also constructed offices for private nonprofits and ventured into some commercial development, including the K&A Walgreens and another drugstore scheduled to open in Germantown July 20.

The building trades, led by the IBEW and the carpenters union, contend that Nicoletti’s business practices are destroying wage and benefit standards for all contractors in the city. In a nutshell, they believe the Nicoletti family has gotten rich off the backs of exploited workers.

The building trades resent that such a large developer refuses to hire union contractors. But they are even more outraged that Nicoletti employs prisoners from several halfway houses — facilities operated by another company he owns, Liberty Management Services — to perform some low-skill tasks on his job sites. The unions contend PSDC pays these guys about minimum wage for work that even nonunion contractors start out paying $10 an hour.

If Nicoletti’s name rings a bell, it’s probably because he made headlines for several weeks back in October. That’s when the state revoked a $7.3 million contract for a community-based corrections facility in Germantown that it had awarded Liberty Management six months earlier. The Department of Corrections (DOC) did an about-face after community members accused Nicoletti of telling them he was building transitional housing at 20 E. Woodlawn St., when, in fact, the facility was to house 120 state inmates. (After that project fell through, Nicoletti sold the property to Covenant House, a home for runaway youth).

The incident even prompted State Rep. John Myers to request that the Pennsylvania Attorney General’s office pursue charges against Nicoletti by investigating whether he made any "criminal misrepresentations."

The unions seized on that negative attention, believing Nicoletti was vulnerable, and have been making his life hell ever since. They’ve mounted a no-holds-barred crusade against him, culminating with the May 23 rally.

The building trades charge that Robert and Mark Nicoletti make generous political contributions in exchange for sweetheart government contracts. The unions are also attempting to block two applications Nicoletti has pending before the city’s zoning board, and members have packed those hearings and testified against PSDC’s proposals. Unions routinely picket the company’s construction sites. They also drop by City Hall and PSDC’s South Philly headquarters to distribute anti-PSDC flyers. (Collect all five!)

Carl Primavera, a zoning lawyer and current chancellor of the Philadelphia Bar, says that as a friend of both the Nicoletti family and union leaders, he is baffled by their feud. The situation has become "unseemly," Primavera says, fearing it could have a "chilling effect" on other developers.

"I’ve never seen the unions target a developer like Nicoletti has been targeted," he says. "The Nicolettis are nice people. Why should they be humiliated like this?"

Primavera thinks what started out as a business dispute has transgressed into "a game of trying to see whose hat is bigger." And now, neither side is willing to make concessions.

"These are intelligent people on both sides with such vested interest in the city. Somebody needs to be an honest broker and sit down with both parties," he says.

The building trades say that even with dozens of developers in Philadelphia opting not to use union contractors, they have their reasons for singling out Nicoletti.

"He is the largest unfair contractor in the city right now," says Burns, of the carpenters. "That’s why this has escalated."

PSDC has been on the unions’ radar screen for a decade, he adds.

"Nicoletti would pop up and a business agent would throw a picket sign up against him," Burns says. "Nobody aggressively tried to change his business practices until recently."

 

If forcing Nicoletti to "change his business practices" means running him out of the city, then the unions may have succeeded. After finishing up the Walgreens and a charter school, Nicoletti says PSDC will not be doing any more construction in Philadelphia.

"The unions have moved our focus to outside the city," he says. "We’re doing projects as far out as Wilkes-Barre… Everybody we do business with is heartbroken that we’re leaving for the suburbs."

Nicoletti finds it hypocritical for the building trades to accuse him of exploiting society’s most vulnerable members. In reality, he says, it is organized labor that feeds off the weak by rallying people in poor neighborhoods. Unions no longer exist to fight for the working man, he says.

"When union [members] are making $100,000 a year like they do now, the pendulum of power has swung," he says. "Their message is supposed to be on behalf of the poor, but there are no poor people in their ranks."

Although Philadelphia’s major developers use union contractors, it is not by choice, according to Nicoletti.

"Anyone who is pro-union is afraid of the unions," he asserts. "It boils down to whether you can afford to pay their street tax. It reminds me of The Godfather: The unions have rules, and when you break ’em, you die."

Nicoletti claims the charges lodged against him by the building trades are bunk.

Because he builds in distressed communities, Nicoletti says, he can’t afford to use union labor. The costs would be 50 percent higher and projects couldn’t get built, he insists. While a Center City developer can charge significantly more — a typical tenant in One Logan Square pays up to $32.50 per square foot and Commerce Square rents start at about $28 — Nicoletti says his properties command one-third that.

Most developers involved in government/nonprofit projects use a combination of government funds and private investment to acquire and renovate property, says Mark Schwartz, executive director of Regional Housing Legal Services.

By contrast, PSDC buys vacant buildings with bank mortgages and renovates them, acting as its own contractor — Nicoletti’s father and brother-in-law oversee all the construction sites — so PSDC is not competing with any other contractors. And by controlling construction costs, Nicoletti says, his firm is able to offer inexpensive leases to agencies that assist underserved communities.

Based on a list of 13 properties throughout Philadelphia that PSDC currently rents out to state agencies, Nicoletti collects an average of $12 per square foot in rent.

Nicoletti currently leases seven buildings to the state Department of Public Welfare for county assistance offices. The welfare department pays a total of $2.3 million annually for those 10-year leases. The state Department of Revenue and the Public Utility Commission both rent office space in PSDC’s headquarters at 700 Packer St., paying a total of nearly $190,000 each year. Pennsylvania’s police department, labor department and parole board also currently hold 10-year leases with PSDC, worth a total of $511,268 annually.

Primavera says that union contractors perform higher quality work, but he acknowledges that "as you get into the neighborhoods and farther away from Center City, the issues become more difficult."

Still, some neighborhood developers go union, swapping higher costs for fewer hassles. Bart Blatstein, who is snatching up properties in Northern Liberties — including the former Schmidt’s Brewery site — is among them.

"The quality of workmanship is second to none," he says. "If there is a problem with a union contractor, you can call the union and resolve it. Otherwise, the contractor isn’t accountable."

Nicoletti argues that PSDC invests private funds to develop real estate in neighborhoods that otherwise have no economic activity.

State Rep. Curtis Thomas says this is not enough and has been criticizing Nicoletti’s development projects since 1985. Most recently, Thomas testified against Nicoletti during an April 11 hearing before the zoning board, when members were considering whether to allow a substance abuse center that leases space from PSDC to move to another Nicoletti property in Germantown.

"My concern is that he acquires public land with no rules and then secures state and local contracts. These are public dollars but private benefit," Thomas says. "I would like to see more development with a long-term focus."

Rather than come into a distressed neighborhood and open a welfare office that won’t attract other development, Thomas says PSDC should exhibit "a willingness to collaborate with community leaders."

He points to Michaels Development Co., which built Montgomery Townhouses near 20th and Diamond Streets.

"They set up computer-training and after-school programs," Thomas says. "It was public land, but the public got something in return that it can feel good about… I know of not one housing development or business you can point to because Nicoletti put it there."

PSDC goes into neighborhoods that few developers are willing to build in, Nicoletti counters.

"Most of our clients are social service organizations that are trying to help their neighborhoods by curing problems from the inside out," he maintains. "I can’t help it if other developers don’t follow me in, but the neighborhoods are happy with the projects we do. We wouldn’t survive if we didn’t work hand-in-glove with community organizations."

Anna Wiggins, who is active in her Southwest Philadelphia neighborhood, can attest to that. She met Nicoletti more than six years ago when PSDC built a homeless shelter at 70th Street and Woodland Avenue.

"They did a fantastic job," Wiggins says. "I often say God sent Mark to us because he was so honest."

That shelter has been followed up by a number of PSDC projects in Wiggins’ neighborhood. The company renovated a childcare center that Wiggins characterizes as "a blessing" for mothers coming off welfare. At the end of her block, Nicoletti renovated a run-down property, which he now rents to the state police. And most recently, the School District of Philadelphia purchased a long-abandoned orphanage at 68th Street and Greenway Avenue from Nicoletti after he renovated it.

"Mark has been such a positive force in the community," Wiggins says. "At Thanksgiving, he gives turkeys to people in need, and at Easter he gives hams. From time to time, we’d have community meetings at a little restaurant on Woodland Avenue, and Mark would pay for our meals."

But communities are losing out by not demanding more from PSDC, Thomas counters.

"Nicoletti may give you a turkey every Thanksgiving, but why not demand technology or summer reading programs?"

 

One of the accusations the unions fire at PSDC is that Robert and Mark Nicoletti make generous political contributions in exchange for lucrative contracts with the government.

Since 1991, PSDC has given $58,000 to Mayor John Street’s campaigns (going back to his days in City Council) and $51,000 to former Mayor Ed Rendell. An April 1997 Inquirer article identified Robert Nicoletti as a member of Gov. Tom Ridge’s "Governor’s Club." Anyone can join — for an initiation fee of $25,000.

Nicoletti insists political contributions are attempts to gain "access" to politicians and nothing more.

"When business people give money, they hope to set up a meeting with a politician and have a dialogue," he says. "Even the biggest political contributors can’t convince an elected official to do something."

Even as the building trades criticize Nicoletti for trying to buy off elected officials, they are busy dropping cash in the war chests of politicians who support their own efforts. During 2000 alone, IBEW gave $41,500 to Street, $23,000 to Councilman Rick Mariano and $12,000 to State Sen. Vincent Fumo. That year, the carpenters donated $57,450 to Fumo’s coffers and $10,000 to Street’s. The International Union of Operating Engineers wrote checks to the mayor totaling $7,750, while the sheet metal workers ponied up $11,000 for his re-election campaign. All of these unions showered smaller amounts of money on a dozen other elected officials, as well.

There is a big difference between the unions making political contributions and a private developer doing the same thing, insists Burns, of the carpenters union.

"When we give money, we’re collectively giving it on behalf of 30,000 people," he points out. "Nicoletti is giving it for himself."

But Nicoletti says that political contributions made by the unions are tied to the "real story." That story, in his view, has nothing to do with whom PSDC employs or how much profit the company earns. No, Nicoletti surmises, creating friction over PSDC is a tactic the unions use to divert attention from what’s actually going on in Philadelphia. Nicoletti says when he looks around at who is controlling this city, all signs point to organized labor. Just consider the people in powerful positions right now, he declares.

IBEW Business Manager John Dougherty is director of the Philadelphia Redevelopment Authority; his brother, Kevin, won the Democratic primary for a judgeship in Common Pleas Court last month, making him a shoo-in for the seat; Joe Rauscher, president of the Philadelphia Council AFL-CIO, is a Philadelphia Housing Authority commissioner; Sheet Metal Workers Union president Tom Kelly chairs the zoning board; AFL-CIO political director Tom Logan is a zoning board member; Gillespie sits on boards for the Pennsylvania Convention Center Authority as well as the Philadelphia Convention and Visitors Bureau; and U.S. Congressman Bob Brady is a card-carrying member of IBEW and chair of Philadelphia’s Democratic committee.

The mayor owes much to the city’s labor unions. After all, it was their members who hustled votes for Street during his too-close-for-comfort win over Republican Sam Katz in 1999. Union leaders practically ran over one another as they clamored to stand near the newly crowned mayor on Election Night.

And Street has been repaying them ever since.

"You can’t imagine how proud I am to be the union mayor of the City of Philadelphia," Street announced during a fundraiser hosted by the building trades in December. "I’m not walking across the street without talking to the union movement in this city."

The mayor did not return calls for comment.

Nicoletti stresses that he has "no gripe" with Street. But Nicoletti also sees organized labor setting the tone for political decisions across the board in Philadelphia.

"If John Dougherty decides he doesn’t want John Street to be mayor in 2003, he won’t be," he says. "The minute Dougherty got behind [Bob Casey Jr.] for governor, he shut down Ed Rendell’s ability to win."

Gillespie certainly suggested the building trades possess this kind of power when he spoke at the rally. But Burns, of the carpenters union, seriously doubts if the building trades have as broad an influence over Philadelphia politics as Nicoletti implies. And even if they do, he adds, "I don’t think that changes someone exploiting workers."

Certainly, the unions would agree that their numbers are the source of their power. In the Nicoletti situation, they are ordering members to boycott Walgreens stores, which participate in the union’s prescription drug plans.

"Our little Walgreens is such a distraction," Nicoletti laughs. "They don’t want the real story told." The two Walgreens stores that PSDC is building require three or four carpenters and electricians each — a grand total of about 15 jobs, he says.

"But they had to coax out 2,000 people to rally here," Nicoletti adds.

(Burns says it is not about the number of jobs, but about principle.)

Carol Hivley, a Walgreens corporate spokesperson, says the K&A location was originally slated to open this past February.

Construction has not even begun, at least partially due to the building trades’ attempts to force the Walgreens Corporation to cancel the contract. And since that effort failed, the Electrical Mechanics Association is challenging a zoning permit granted to PSDC to build the store. A hearing for that appeal took place June 27.

Burns says organized labor is mystified that Nicoletti would attempt to build a chain retail store with "unfair contractors."

"It is the first drugstore in Philadelphia ever built from the ground up without union labor," he says.

Rite-Aid and CVS corporations exclusively use union contractors. But Walgreens developers "engage in a competitive bidding process that is open to all responsible developers," Hivley says.

On April 16, four Walgreens executives flew to Philadelphia from Deerfield, IL, to meet with building trades representatives, at Burns’ behest. As a result of that meeting, the company offered to pay Nicoletti the difference in wages if he would switch to union contractors.

"We did offer to pay for union labor, but apparently the project was too far along," Hivley says.

Nicoletti denies this offer was made and says it is too late to switch contractors.

"We’ve got millions invested at K&A between the cost of purchasing the property and demolishing the original building," he says. "We’ve already negotiated the rent there with Walgreens, and we can’t ask them to pay more. If we go union, the project dies."

Nicoletti is obviously not happy that the unions contacted Walgreens. "Now they’re blackmailing the corporation," he says.

The company was "unaware" of problems between Nicoletti and the building trades when it awarded the two contracts, Hively adds.

 

The boxy hearing room in 1515 Arch St. assigned to the Philadelphia Zoning Board of Adjustment is always crowded. From restaurant owners hoping to set out sidewalk café tables to cell phone companies applying to build satellite towers, businesses in Philadelphia must seek the board’s approval.

Not surprisingly, then, operators of community prisons must do the same.

On April 11, the zoning board considered whether Eagleville Hospital, a 40-bed drug-and-alcohol treatment center that serves addicts coming out of state prison, could move from 1007 Lehigh Ave. to another building down the block, 1019 Lehigh. Because both properties involved are owned by PSDC, union members packed the meeting. Zoning Chair Tom Kelly, the Sheet Metal Workers head, recused himself from the matter, at Nicoletti’s request. AFL-CIO’s Tom Logan refused to do so.

Board members grilled Eagleville representatives. Nicoletti looked the consummate preppy — plaid trousers, a denim button-down shirt, argyle socks and buck suedes. He listened anxiously before finally standing up to defend the project himself.

The hearing became so heated and drawn out that board members suspended the matter. Nearly three months later, a special hearing still hasn’t been rescheduled.

But the very next day, the zoning board granted a waiver to the Kintock Group, based in Devon. That company has a Department of Corrections contract for a 333-bed halfway house at 301 E. Erie Ave. City Councilman Rick Mariano — an IBEW member and strong ally of all the building trades — wrote a letter of support on behalf of the project, which is being built with union labor.

And on Oct. 12, 2000, the zoning board granted permission for an existing 300-bed community prison at 600 E. Luzerne Avenue to expand. The developer, Min Sec Inc. based in Wallingford, submitted a letter from Mariano along with its application. A source says that job went to a union company, as well.

Mariano did not return calls for comment.

In a Feb. 16 letter, Nicoletti urges Mariano to "take immediate action" to improve the climate for nonunion businesses. Even though Robert Nicoletti contributed $1,000 to Mariano’s re-election campaign last year, the tone of the letter is tinged with threats.

Nicoletti writes that his company is "a microcosm" of what is happening to small business in Philadelphia. The building trades "are determined" not to allow PSDC to operate nonunion, he says.

"In fact, I personally have been the subject of a comprehensive attack by the unions… This attack has not been responded to until now. Actually, it wasn’t until the privacy of my own home was violated that I decided to respond," he writes. "As the father of five children, I am now concerned that the Building Trades will take any measure to inflict their agenda."

These personal attacks Nicoletti refers to involve handbills strategically distributed — and paid for — by the Philadelphia Building & Construction Trades Council. One flyer features a color photocopy of "Nicoletti’s Estate" in Villanova, his sprawling lawn blanketed in snow (the photo failed to capture his silver Mercedes convertible).

"NICOLETTI’S exploited workers don’t live like this!" it begins. "Taking advantage of your fellow man in this manner hasn’t been seen in these parts since the Great Depression."

Other versions of the flyer accuse PSDC of hiring contractors who lack business privilege licenses or building permits. "How much tax money is Philadelphia losing out on?" it asks, without substantiating any claims.

In his letter to Mariano, Nicoletti goes on to warn the councilman that "an investigation has begun" to determine if the unions’ actions amount to criminal conspiracy. "You may be contacted with respect to this investigation," Nicoletti writes. "I urge you to cooperate to the best of your knowledge."

On March 9, an attorney representing the carpenters and other building trades unions wrote Mariano after reading Nicoletti’s letter. Richard McNeill, of the firm Sagot, Jennings & Sigmond, informed the councilman that, if anything, Nicoletti is infringing on his clients’ rights.

When Burns and other union members showed up at a community meeting to protest Liberty Management’s proposed correctional facility in Germantown last October, McNeill writes, Nicoletti’s attorney vowed to sue the unions. As a result of that threat, the unions filed a complaint with the National Labor Relations Board. The board ordered Liberty Management to post a notice recognizing union members’ rights of free speech.

McNeill’s letter goes on to mock Nicoletti’s "veiled threats" of an investigation. "Unfortunately for Mr. Nicoletti, no ‘criminal conspiracy’ exists, nor will one be uncovered by Mr. Nicoletti’s investigators. Rather, what exists is simply the exercise of protected rights by my clients…"

Perhaps, but another source points out that whenever law enforcement officials hear that labor unions could be involved in criminal activity, "their ears perk up." And rumor has it that when the zoning board met June 27 to consider a matter involving PSDC, an FBI agent anonymously sat in on the proceedings.

Nicoletti says he hasn’t taken legal action against the building trades for two reasons. For one thing, he says, there may be an actual "conspiracy" against him, which could give rise to a Federal investigation.

As an example, he cites an unsigned anti-PSDC flyer faxed over to a North Philly church just before the April 11 zoning hearing. The law firm that sent the flyer made the mistake of allowing its name to print at the top of the page "like a fingerprint," Nicoletti says.

"When you try to incite a riot or create chaos, it takes libel to another level," he comments. And while Michael Stiles, the EasternDistrict U.S. attorney under President Clinton, would not go after the unions, the political climate has changed dramatically. President Bush’s appointee, Pat Meehan, may have a mandate to pursue organized labor in Philadelphia — particularly in light of the fact that it was the union machine that allowed Bush to get whacked so badly in Pennsylvania last November.

The second reason Nicoletti hasn’t taken legal action against the unions is less complicated. "By the end of this year, all of our [construction] in Philadelphia will be finished, and I just want to move on."

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Hammering away: Bob Burns, of the carpenters union, is leading the anti-PSDC campaign.michael t. regandrug-free zone: The unions have delayed construction of PSDC’s Walgreens store.

photo: Eddy Palumbo

But another one of Nicoletti’s businesses isn’t going anywhere.

In 1997, Nicoletti branched out beyond developing properties when he applied for a state contract to run a halfway house for inmates just coming out of prison. Nicoletti says he got the idea because he’d been leasing out a building on the 1000 block of Lehigh Avenue to a privately operated facility that contracted with the Pennsylvania DOC. When that agreement expired, Nicoletti decided to bid on it himself, under the name Liberty Management Services.

Four years later, his company continues to operate that facility at Germantown with a capacity of 130 residents. The current contract, which began in July 1999 and continues through July 2004, is worth $7.53 million. Liberty Management leases out two floors of this same building to Eagleville Hospital for its drug-and-alcohol treatment program.

Liberty Management also operates a work-release program for the Philadelphia prison system at 600 University Avenue, not far from Penn’s campus. That center has a capacity of 192 men, and Nicoletti is paid $28.95 per inmate per day. PSDC is also building a city-contracted correctional facility for women at 17th and Cambria Streets. Liberty Management will run that center, as well, when it opens later this summer. The city will pay Liberty Management $27.50 per inmate, with a limit of 232 residents.

The building trades hope that Nicoletti’s routine of hiring correctional facility residents to work on his construction sites will turn out to be the developer’s Achilles heel. Two anti-Nicoletti flyers focus on this very issue.

"The rehabilitation you received in prison couldn’t possibly prepare you for the abuse Nicoletti’s corporation has in store for you," one flyer warns. "A requirement to stay in Nicoletti’s halfway house is that you have a job. Driven by greed, Nicoletti seizes the opportunity and gives these exploited men a job at one of his construction sites at or near minimum wage."

The handbill goes on to characterize this setup as the "modern-day company store."

A former Liberty Management resident named Anthony (he asked that his last name not be published) certainly tries to paint the picture that way.

Anthony was sentenced to the Lehigh Avenue facility in September 1999, after serving time in a state prison outside Scranton. As a member of Local 332, he quickly found work earning a union wage of $19 an hour plus benefits. But just before he was scheduled to leave the halfway house, Anthony says, "the contractor wrote me a bad check."

Every person living in a community correctional facility in Pennsylvania is required to turn his or her paycheck over to the halfway house so management can deduct 15 percent for room and board. The facility then writes a separate check to the resident for the balance.

By the time Liberty Management realized that the check from Anthony’s employer had bounced, he’d already spent his cut of the money. Local 332 had no luck forcing the contractor to "make good" on the check, Anthony says.

The halfway house told him he was responsible for paying back the money.

"In order for us to release you, you must work for Nicoletti," Anthony says a case manager told him.

Anthony says that PSDC was going to pay him $6.50 an hour — too low a rate for him to accept the job. "I’m skilled and in the union."

But by then, Nicoletti was at the top of the building trades’ hit list. Anthony’s union rep suggested he accept the job simply "to get in there" and report back to the union about his experience. So Anthony showed up at a site in North Philly.

"The conditions were dangerous… no hard hats, no safety goggles," he recalls. "So I quit after my first day."

He estimates that, at times, as many as 40 percent of the offenders living with him at 1007 Lehigh worked for PSDC.

"A lot of guys stick with Nicoletti because he has so many jobs all over the city," Anthony speculates. "The work is guaranteed, you don’t have to worry about background checks, and a lot of guys jump at $6.50 an hour."

Nicoletti says PSDC hires "a couple of guys" at his halfway houses when they are "idle" and need the work. "There are only a few at any given time."

The pay averages $10 an hour, equal to what any other contractor pays for "unsophisticated" labor, he says.

"The unions say I’m exploiting people, but ask them to show you where they are training poor black people in North Philly," Nicoletti says. "The unions are the greatest example of discrimination in the city — less than a fraction of the jobs created by construction on the stadiums or from the mayor’s blight plan will go to minorities."

The unions may not want to admit it, but the Pennsylvania DOC actually encourages managers of community corrections facilities to hire their residents.

"There is nothing to preclude residents from being hired as long as they are paid the same rate as every other worker and don’t receive special privileges," says Thomas Rogosky, director of the DOC’s bureau of community corrections. "Our contractors like to employee residents because they are good workers."

He disputes the unions’ characterization of PSDC as the "modern-day company town."

"Nicoletti does deduct 15 percent of a resident’s net income, as does every contractor we use in the state of Pennsylvania," Rogosky says. "That amount is then subtracted from the rate Nicoletti charges us, so there is no actual gain. Every state contract coordinator looks at rent and per diem costs to make sure they balance each other."

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Nick of time: Mark Nicoletti says he plans to stop building in Philadelphia.

John Hannah, president of the Community Corrections Association of Pennsylvania and the director of a halfway house in Erie, says he sees nothing "unethical" about Nicoletti’s arrangement "as long as the residents are paid fairly."

"I’m not going to let my guys build up someone’s business," he says. "What matters is whether he’s hiring them long-term, teaching transferable skills and providing references for future jobs."

As Nicoletti and his attorney rush toward the elevator after the April 11 zoning board hearing, they are trailed by a pack of angry protesters who push their way onto the elevator with Nicoletti.

"Slavery," "unfair wages" and "worker abuse" are among the catchphrases tossed at him.

Lori Peruto, both Nicoletti’s attorney and his sister-in-law, tries to counter their words. "No, the union doesn’t exploit anyone, does it?"

The two sides bicker all the way down to the lobby, 18 floors worth of acrimony.

"I hear what you’re saying," Nicoletti asserts. "And I’m the first to say there is a place for unions. But for our projects —"

"Put your money where your mouth is, then," someone shoots back.

When the elevator doors open, Nicoletti and Peruto bolt across the street, while the union protesters hang back.

The debate has ended, but only for the moment.

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