Matthew and Michael Pestronk, two young real-estate developers who came here from Virginia to attend Drexel, are trying to shake up the city's construction business by hiring nonunion labor at two huge apartment complexes they're renovating.
But members of the Philadelphia Building and Construction Trades Council aren't happy, and the heated battle of young developers vs. old-school Philadelphia union power has thrown their plans for the Goldtex Building in Callowhill into turmoil.
The Pestronks — Matt, 35, and Mike, 31 — haven't flinched as the ugly battle has escalated with charges that union members scattered bottles of urine around the Goldtex building at 12th and Wood streets, placed loose asbestos inside another development they're working on in Germantown and allegedly harassed Matt Pestronk's pregnant wife and child.
"We've had meetings with the business agents for a couple of the unions, and they've told us, 'You're trying to change the paradigm of how we operate in Philadelphia,' " Mike Pestronk said last week. "They thought we were a young company and they would be able to bully us into using 100 percent union labor."
The brothers have gotten a temporary injunction to keep protesters away from their $38 million project, but are now dealing with a stop-work order issued by the city's Department of Licenses & Inspections last week, after City Councilman Jim Kenney said constituents complained about safety issues.
The Pestronks say they won't be deterred by the unions.
The unions say they're not finished with their campaign to get the Pestronks to hire an all-union workforce.
"We're going to continue to embarrass the Pestronks until they start doing the right thing for our community and our society, and that is pay fair wages and standards that have been established," said Pat Gillespie, business manager for the Philadelphia Building and Trades Council.
The real story?
Mike Pestronk, a slim, sandy-haired man who looks younger than his 31 years, said he and his brother understood the city's strong tradition of union labor. Matt, stocky and dark haired, said that they are simply trying to develop high-quality apartments at the lowest cost possible.
The feud has aroused a bitterness between a developer and the labor unions that has not been this volatile in decades.
"Even some union contractors I've talked with said 'Wow, they're really fired up. They haven't acted like this in 25 years,'" Mike Pestronk said.
Court documents allege that union members have used violence and threats to intimidate the nonunion workforce. The complaint says union members placed fliers with a photo of Matt Pestronk's wife, with pictures of male genitals superimposed on them, around the Goldtex building. According to the complaint, union members have verbally harassed Pestronk's wife and took pictures of her and their 2-year-old child "in an attempt to intimidate and scare" her.
The Pestronks launched phillybully.com which shows videos of confrontations between union members and the brothers' employees and photos of the banners the unions have held up denouncing them for "killing our communities."
But Michael Katz, an attorney for the building trades, said the Pestronks aren't telling the real story.
"The real story is that this is a concerted effort by big business, big money and big corporations to come in here and take work away from responsible area contractors who are paying a living wage and benefits to Philadelphia-area workers," Katz said. "This is a fight for the fabric of social responsibility to pay a living wage and enable workers to support their families."
The temporary injunction orders the building trades to keep 15 yards away from the Pestronks' work sites. But the unions have made almost daily complaints of alleged safety violations to the federal Occupational Safety and Health Administration, said Mike Pestronk. A hearing on making the injunction permanent was postponed last Friday until June 13.
Gillespie said his union members haven't initiated violence and have only held up banners to protest the hiring of nonunion workers at lower wages.
"We have every right to protest that. My only concern is the preservation of the wage standards we have set in our community," said Gillespie, who claims that the Pestronks have hired a few "tough guys" who have threatened union protesters.
"They have a very high opinion of themselves. They were born on third base and think they hit a triple. They are not unlike a lot of other bottom-feeding-type developers who, [because of the] overwhelming greed that has consumed them," don't want to pay what the union considers a fair wage.
Mike Pestronk said he and his brother plan to use union electricians at the Goldtex site, but only nonunion contractors are working there while it's still being gutted. He said they had offered the unions a chance to do more of that job on a "mixed-job" site.
"We were ready to award at least 40 percent of the work at the Goldtex to union companies and we thought we'd worked out a deal," Mike said.
But he said the unionized companies "came back and told us they all not allowed to work on our site, and if they do, they will get in trouble with their unions. They said the job had to be 100 percent union or they couldn't work on it."
Gillespie said it's "absolutely false" that he told union contractors not to work with the Pestronks.
"That doesn't make sense. What purpose would that serve?" Gillespie said. "We are about finding job opportunities for our members."
Not going anywhere
The Pestronks plan to open a 163-unit apartment building in the once-vacant and graffiti-covered dilapidated former textile factory by the end of this year, and are also renovating the massive Rittenhouse Hill apartments on Rittenhouse Street near Wissahickon Avenue in Germantown.
They are the sixth and seventh apartment buildings the Pestronks have acquired since they started Post Brothers Apartments in 2006.
The Pestronks said the unions didn't make as much noise when they developed their first five apartment buildings, for which they say they used both union and nonunion workers. But because Goldtex is so close to Center City, they said, the unions felt they had to make a stand.
"I think we are the first [developer] to use mostly nonunion [subcontractors] on a big project on a high-rise that is visible on the skyline," Mike Pestronk said.
The latest hurdle for the Pestronks is the stop-work order slapped on the project last Wednesday issued because some of the Pestronks' subcontractors didn't have contractor or business-privilege licenses.
"It's very unusual to do a stop-work order when it is not a safety violation," Charles A. Ercole, the Pestronks' lawyer, said Friday.
"We've had a big push to eliminated unlicensed contractors from the city of Philadelphia," said Mike Maenner, deputy commissioner of L&I. "All contractors are required to have a license so we can contact them if there is an issue or safety issue at the job site."
The two subcontractors were approved by L&I Tuesday, but the city has now demanded that the Pestronks provide them with all of their contracts with subcontractors on the site, Mike Pestronk said. He said they hope to be working again by Thursday.
Kenney said he called L&I because of constituent concerns about whether the Pestronks were following city business rules. He wouldn't say whether he contacted L&I on behalf of the building trades and said it wouldn't be fair to reveal the name of a whistle-blower because the person could face retaliation.
"This isn't about union vs. nonunion," he said. "It's about legitimate contractors who follow the rules and who pay what they owe the city.
"When some contractors and developers are not paying wage taxes or workman's compensation, that gives them a distinct advantage over legitimate contractors who are following the rules."
To one observer of the city's real-estate scene, the L&I move represented "old Philadelphia politics at its finest."
Although the Goldtex building has been the epicenter of the union battle, the unions appear to have also targeted residents of the Rittenhouse Street apartments the Pestronks own.
One exhibit in the Pestronks' lawsuit filed April 19 is an anonymous letter the suit says the unions sent claiming the Pestronks would get rid of current tenants "by any means necessary." At the bottom, the letter screams: "THIS IS AND ALWAYS WAS OUR COMMUNITY. WORK WITH US OR GO BACK WHERE YOU CAME FROM!!!"
The Pestronks say they're staying.