Posted on August 31, 2016
Recently, this blog has been tracking developments in the enactment of House Bill 180 (“Bill”) – which prohibits local governments from imposing residency requirements on contractors, or giving preference to contractors that employ a certain number or percentage of local laborers. Over the last week, things have really heated up, as the City of Cleveland filed a lawsuit challenging the constitutionality of R.C. §9.49, the statute resulting from the Bill (“Statute”), and, yesterday, the Cuyahoga County Court of Common Pleas issued an order granting Cleveland’s request to prevent the Statute from going into effect today.
Cleveland, whose “Fannie Lewis” law requires that local residents perform 20 percent of work on all city construction projects costing $100,000 or more, was one of the affected municipalities. Cleveland’s lawsuit alleges the Statute is as an unconstitutional violation of the Ohio Constitution’s Home Rule Amendment. “Home Rule” is a legal concept which allows certain cities to pass laws pertaining to matters of local self-government, as long as they don’t conflict with the “general laws” of the State. According to Section 3 of Article XVIII of the Ohio Constitution:
Municipalities shall have authority to exercise all powers of local self-government and to adopt and enforce within their limits such local police, sanitary and other similar regulations, as are not in conflict with general laws.
There are approximately 230 home rule municipalities in Ohio, including the six largest cities (Cleveland, Columbus, Cincinnati, Toledo, Akron, and Dayton).
With regard to Cleveland’s lawsuit, the Cuyahoga County Court of Common Pleas evaluated the constitutionality of the Statute under a framework adopted by the Ohio Supreme Court in City of Canton v. State, 95 Ohio St. 3d 149, 2002-Ohio 2005, 766 N.E.2d 963,119. City of Cantonestablished a three-part test to determine whether a provision of a state statute takes precedence over a local ordinance. A state statute takes precedence over a local ordinance when: (1) the ordinance is in conflict with the statute; (2) the ordinance is an exercise of the police power, rather than of local self- government; and (3) the statute is a general law.
The Court determined that Cleveland’s ordinance conflicted with the Statute, satisfying the first prong of the test and requiring an analysis of whether the ordinance is an exercise of “police power.” Police-power ordinances “protect the public health, safety, or morals, or the general welfare of the public.” Ohioans for Concealed Carry, Inc. v. City of Clyde, 120 Ohio St. 3d 96, 2008-0hio-4605, 896 N.E. 2d 967.
The Court found that, “while the Fannie Lewis Law benefits City residents, it is not a use of the City’s police power” because it does not protect the general welfare of the public but rather a job creation tool and therefore an exercise of local self-government. This determination could have ended the Court’s analysis, but it continued, concluding that the Statute was not a general law.
To constitute a general law, a statute must: (1) be part of a statewide and comprehensive legislative enactment; (2) apply to all parts of the state alike and operate uniformly throughout the state; (3) set forth police, sanitary, or similar regulations, rather than purport only to grant or limit legislative power of a municipal corporation to set forth police, sanitary, or similar regulations; and (4) prescribe a rule of conduct upon citizens generally.
Applying this test, the Court found:
The Court ultimately decided to grant Cleveland’s request for a preliminary injunction to block the Statute from taking effect, and scheduled a trial for November 7, 2016, to determine whether to make the injunction permanent. In the meantime, the State will likely appeal the Cuyahoga County Court of Common Pleas’ decision to the Eighth District Court of Appeals, a process that could take months. This means that, for the time being, Fannie Lewis remains the law of the land in Cleveland.
In other parts of Ohio, however, the Statute has eliminated residency requirements. One such municipality affected by this is Akron, which had an ordinance requiring contractors to hire 30% of their workers on a project from within City limits, a percentage that was set to increase to 50% by 2018. It is still unknown what, if anything, Akron will do to challenge the Statute.
Even if Akron were to file its own lawsuit, the Summit County Court of Common Pleas could rule in the State’s favor. Or, even the Summit County Court of Common Pleas sided with Akron, the Ninth District Court of Appeals could overturn that decision. Regardless of what happens, it seems like this dispute is on its way to the Ohio Supreme Court. Even then, however, the Ohio Supreme Court would have discretion whether or not to consider the case, unless there was a conflict between the District Appellate Courts.
For questions regarding the provisions of R.C. §9.49, the City of Cleveland’s challenge to the Bill, or any other aspect of Ohio’s construction law, please contact the attorneys at Harpst Ross, Ltd. – Business Lawyers for the Construction Industry®, at (330) 983-9971.
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