As now-indicted labor leader and political kingmaker John “Johnny Doc” Dougherty tells it, the East Market Street complex of residential towers and office buildings covering a full city block would never have risen were it not for him.
Dougherty lured the project’s union-affiliated financial backer, National Real Estate Advisors LLC, to the site between 11th and 12th Streets, and engineered a labor agreement at the nearby Convention Center to boost the area’s commercial fortunes, he said late last year at an event marking the completion of the project’s first phase.
“We need you to start making some serious purchases on East Market Street,” Dougherty recalled telling Jeffrey Kanne, National’s president and chief executive, who sat nearby in the complex’s courtyard, awaiting his turn to speak.
As prosecutors press their case against Dougherty in the coming months, alleging embezzlement, bribery, and theft, the East Market project, which is said to be on the cusp of expansion, could mark one of the labor leader’s last imprints on the city.
In a sweeping, 153-page indictment unsealed Wednesday morning, federal prosecutors portray Dougherty as an influential and vengeful kingpin, who enriched himself on the backs of Electricians union members, and used friends and allies to shape his political vision from behind-the-scenes.
But it was Philadelphia’s real estate and construction landscape where the influence of Dougherty and the city’s construction unions really played out. From protesting and disrupting construction sites that used nonunion labor to throwing his weight behind or against real estate legislation, Dougherty shaped Philadelphia’s skyline one job site at a time.
“The rat balloon is pretty visible," said Joe Perpiglia, president and CEO of the Eastern Pennsylvania chapter of Associated Builders and Contractors, in reference to the inflatable rodents that often show up at protests of nonunion job sites in the city. But, he said, "there are things that are seen and not seen.”
Most obviously, developers in the industry say, Dougherty used his clout to make sure Philadelphia’s biggest construction projects were done by union labor.
One developer interviewed this week called it a monopoly. And another developer who was seeking to join Perpiglia’s group mistook the staffing tradition as Philadelphia law, Perpiglia said. His chapter of the Associated Builders and Contractors represents union and nonunion workers and employers in the city and suburbs.
Dougherty’s aim, as he has consistently maintained, was to make sure the electricians under his leadership as business manager of International Brotherhood of Electrical Workers Local 98, as well as the workers he led as the head of the Philadelphia Building Trades Council, had good-paying employment and weren’t undercut by what he described as less-skilled and less-careful nonunion workers willing to do the jobs for less.
“There are construction cranes up all over this city,” said Frank Keel, spokesperson for Local 98 and Dougherty, referencing both Dougherty’s labor leadership as well as his time heading the Philadelphia Redevelopment Authority. “John Dougherty deserves great credit for making it happen through nothing more than hard work and determination.”
But by enforcing the dominance of organized labor on Philadelphia job sites, some see Dougherty as contributing to the high construction costs in the city, which have been a drag on development and the broader economy.
While few expert analyses exist to quantify the difference between union and nonunion wages, the Bureau of Labor Statistics' most recent data, from May 2017, offers a glimpse. Average hourly wages for construction and extraction occupations, a group covering everything from sheet-metal workers to carpenters' helpers, stood at $27.98 for metropolitan Philadelphia, which included the city and Delaware County.
Nationally, those wages averaged $24.01.
Multiple developers contacted by the Inquirer declined to be identified or comment for this story, citing the need to maintain relationships with the construction unions they employ. But, they said, Dougherty’s influence at job sites — and on the construction industry — is palpable.
Some described union employees as skilled, well-trained, and reliable, able to deliver jobs on time and with fewer accidents. But, they said, union labor requires high levels of staffing, making it more difficult for projects to pencil out. One developer said that if it were not for the 10-year tax abatement acting as a subsidy for Philadelphia’s higher costs, it would be impossible to make a profit.
Those who know Dougherty often call him a man of contradictions, someone who is just as comfortable mixing with the city’s elite as he is being at job sites on the street.
It’s at the latter where Dougherty began to gain his reputation for opposing nonunion work.
Matthew Pestronk, president of the Post Bros. development group, was targeted by labor leaders including Dougherty when his company used a mix of union and nonunion contractors for the conversion of a former industrial building into the Goldtex apartments, just north of Center City. He said Dougherty’s tactics effectively violated what should be his right in a free market to employ the labor he chooses.
“The means of influence that Dougherty used to exert pressure on people to do what he wanted was illustrated in the indictment with CHOP, and we found that story to be consistent with our experiences.”
During the project’s development earlier this decade, union workers blocked entrances to the site, and Dougherty held a campaign-style event at IBEW Local 98′s headquarters to screen a union-produced documentary that purported to show rampant code violations and construction flaws at the building. Frequently, union workers deployed the inflatable rats.
Pestronk said some allegations in the indictment filed against Dougherty on Wednesday are consistent with his experience, such as those accusing the labor leader of having City Councilman Bobby Henon, who is also named as a defendant, use his sway over the Department of Licenses and Inspections to stop nonunion workers from installing MRI machines at Children’s Hospital of Philadelphia.
“The means of influence that Dougherty used to exert pressure on people to do what he wanted was illustrated in the indictment with CHOP, and we found that story to be consistent with our experiences,” Pestronk said. “It’s a very difficult regime to operate in.” He said the Goldtex site was also the subject of selective enforcement by L&I due to political pressure from unions.
Most developers in the city accede to hiring union crews to avoid such conflict, amounting to a “nonofficial tax” on construction that makes it much more expensive to build in Philadelphia than other similar cities.
Leo Addimando, managing partner of Alterra Property Group, whose projects include the recently completed Lincoln Square complex at Broad Street and Washington Avenue in South Philadelphia, said that trade unions' role in Philadelphia’s high labor costs is often overestimated.
Costs are also driven up by tight supply in a city where the building trades are less attractive as careers than in places with milder year-round climates, as well as by the fact that until recently there have not been many large construction projects to support much growth in builders' ranks, he said.
Addimando was also skeptical that Dougherty’s disappearance from the scene — were it to come — would result in more congenial relations between developers and labor unions.
“The last time I checked, the Electricians union was not the only union that aggressively protested against nonunion contractors,” he said. “On a given day, there are five rats around town. All of those five rats are not owned and operated by Local 98.”
Still, it’s hard to overstate Dougherty’s impact on how Philadelphia has and hasn’t developed in recent years.
Dougherty and the building trades have long been proponents of the 10-year property tax abatement, which was established two decades ago to help spur development when Philadelphia was bleeding population and investment. With Philadelphia experiencing an unprecedented real estate renaissance, many have criticized the abatement as a subsidy for the city’s wealthiest.
For all construction workers, including union laborers, keeping the abatement has helped keep work coming. So when members of City Council introduced a 1 percent tax on construction costs in April — something some developers feared would quash the current boom — Dougherty circulated a letter to Council members hours before the vote calling it an “onerous” tax proposal and “dumb.”
“The ill-conceived tax would have the net effect of ending the recent, prosperous run of new construction that is transforming neglected sections of the city," Dougherty wrote. The tax never passed.
Last year at the East Market complex unveiling, Dougherty also made a case for his role in advancing that project.
As a subsidiary of the International Brotherhood of Electrical Workers’ pension fund tasked with supporting constructions that create lots of union jobs, National Real Estate Advisors was already primed to back such a project.
But Kanne, the National CEO, was apprehensive about the site’s prospects due to its proximity to the Convention Center, which had been far underperforming centers in other cities. Many attributed the weak traffic to the high labor costs and hassles surrounding union rules.
“It’s a great environment," Dougherty recalled Kanne saying. "But I’m not sure. You’ve got to do something with the Convention Center.”
In the following years, Dougherty would lead his membership and other trades across a picket line maintained by union Carpenters and Teamsters in order to accept a labor agreement aimed at making the center more attractive to its customers.
“Most people don’t know his role in us fixing the Convention Center," Dougherty said of Kanne.
Keel, Dougherty’s spokesperson, said East Market “would never have happened without [Dougherty’s] leadership.”
Kanne was not available for an interview on the impact of Dougherty’s indictment on National’s Philadelphia projects but said in a statement that his group is “proud to work with the International Brotherhood of Electrical Workers, who represent thousands of electrical workers around the country.”
"While they are a relatively small investor, we’re proud to have worked with Local 98 and John Dougherty on many positive business developments throughout the Philadelphia region.”