When the D.C. Council unanimously passed aggressive new hiring rules for contractors in December, it seemed to cap a lengthy debate about how best to employ more District residents in city-funded work.

Instead, with the new rules set to go into effect shortly, the disagreement they spawned is expanding and could end up in court next month.

In 1984, the District first created a program called First Source, which required the city’s development partners to employ District residents, but the goals frequently went unmet. Last year the D.C. Council strengthened the requirements and added penalties for those who failed to meet them.

Under the new rules, contractors working on projects that receive $5 million or more from the District will be required to hire District residents for 70 percent of laborer hours worked, 60 percent of apprenticeship hours, 51 percent of skilled laborer hours by trade and 20 percent of journeyman hours. There are new reporting requirements and, for those who fail, penalties, including debarment from city contracting for those found in violation of First Source compliance twice in a 10-year period. Other businesses with District contracts of more than $5 million will be subject to similar provisions.

Following dozens of meetings about the bill, and its subsequent passage, Council member Michael A. Brown (I-At large), issued a statement saying the legislation “finally closed the loopholes of our city’s First Source law to ensure that projects funded with billions of D.C. taxpayer dollars will be used to hire D.C. residents.”

“You are discriminating against non-District residents,” says Debbie A. Schoonmaker, president of Associated Builders and Contractors of Metro Washington. (Jeffrey MacMillan/Capital Business)

But as the city’s jobs agency determines how best to implement the new rules, the contracting industry and labor leaders are still debating them. Debra A. Schoonmaker, president and chief executive of the Associated Builders and Contractors of Metro Washington, said the hiring requirements are unattainable because of a lack of qualified workers in the city.

Schoonmaker acknowledged that the city’s unemployment rate, 9.9 percent in January, was a “huge” problem, but pointed out that even city-managed construction projects, such as the Walter E. Washington Convention Center, Nationals Park and the Marriott Marquis convention center hotel (currently under construction) have failed to meet similar goals.

“Overall, we think that First Source is not the solution to the unemployment problem in the District,” she said. “In particular, the amendments to the law have established or mandated these percentages that are completely unattainable.”

Schoonmaker said ABC Metro Washington and some contractors are considering a legal challenge to the rules next month. “You are discriminating against non-District residents, whose jobs may well be at-risk. They may currently be working at D.C. jobs but have to be laid off to accommodate D.C. residents,” she said.

That prospect has raised the ire of the local laborers’ union, which operates construction training programs that organizers say could help District residents fill the skills gap. Steve Lanning, director at the Mid-Atlantic Regional Organizing Coalition of Laborers’ International Union of North America, said labor and church leaders were planning to hold lobbying and press events in coming weeks to show support for the rules in the face of ABC’s expected challenge.

“They’re bringing forth the legal argument, we’re bringing forth the emotional argument that the contractors that continue to profit off city contracts and taxpayer dollars don’t want to do their fair share to employ District residents,” Lanning said.

The D.C. Building Industry Association has not yet decided whether to fight the new law, according to the group’s president, Ernie Jarvis. Jarvis, senior vice president at First Potomac Realty Trust, said he wasn’t sure how many projects each year would be affected by the new rules but said he hoped that the council would reconsider the hiring requirements because he didn’t think there were a sufficient number of qualified D.C. residents to fill those positions.

“We want to employ D.C. residents,” Jarvis said. “You have to first improve K-12 education.”