San Jose Weighs Compromise on Union-Backed Measure Requiring Local Hires, Prevailing Wages

Developers would have to pay prevailing wages and hire local workers for publicly subsidized construction projects in San Jose under a measure up for debate at Tuesday’s City Council meeting.

Mayor Sam Liccardo pitched the compromise to get labor unions to drop a ballot measure that he fears would stifle job growth and construction of desperately needed below-market-rate housing. The union-backed initiative would extend prevailing wages and local hiring to all development citywide, subsidized or not.

Liccardo’s workforce standard proposal would require contractors on subsidized projects to pay geographically specific prevailing wages and benefits and submit to stricter oversight. It would also mandate nearly a third of workers to live within 50 miles of the job site and a quarter of them to represent a systemically disadvantaged population.

Subsidies, as defined in the mayor’s proposal, include any money, land, fee waivers or tax breaks. But the council will consider whether to create a minimum threshold for applicability of the workforce standards—that is, projects worth $3 million or more.

The council already approved a new set of workforce standards last fall, requiring prevailing wage as well as local and union hires for public projects valued at $6 million or more. But the South Bay Labor and Santa Clara-San Benito Counties Building Trades councils along with other local unions drafted a ballot measure that would expand those standards to all public projects. It then revised the initiative to include even projects without subsidies.

Liccardo’s compromise comes after months of negotiations with organized labor, which sought stronger worker protections to prevent developers from profiting off of local construction at the expense of the people who live here. According to the U.S. Census Bureau’s American Community Survey, 37 percent of construction jobs in Santa Clara County from 2014 to 2016 went to workers from outside the region.

The first draft of the union-supported ballot measure prompted strong opposition from the business community. The Silicon Valley Organization (SVO)—a regional chamber of commerce that represents more than 1,400 companies—applauded the mayor’s compromise, but suggested some changes, including the $3 million threshold.

Councilman Johnny Khamis raised several concerns about Liccardo’s plan, however, particularly a proposal to revise city charter language requiring San Jose to accept the “lowest responsible bidder.”

“The suggested change to ‘best value bidder’ might as well be call the ‘best friend bidder’ because it could open the door to favoritism and cronyism,” Khamis wrote in a memo to the council. “We recommend that no change be made to the charter and that, instead, the city work within the definition of ‘responsible’ to ensure that bidders that don’t perform are not included as finalists, even if they are the lowest cost.”

Capitulating to unions would drive up the cost of construction and prevent the city from collecting as much tax revenue, Khamis cautioned. The Almaden councilor said the $6 million workforce standard threshold adopted by the city last fall should’ve been enough.

“It’s been less than six months since the City Council acted on the policies demanded by union leaders,” he wrote, “and we are once again being asked to find a solution to a problem that doesn’t exist.”

Khamis pointed to studies cited in the mayor’s Oct. 23 memo about how project labor agreements drive up construction costs by about 15 percent. When that memo came out last fall, however, unions pointed out that some of that research came from the Beacon Hill Institute, a right-wing, climate change-denying think tank funded by the Koch brothers and other corporate donors.

Labor groups cited a competing study from the UC Berkeley Labor Center, which found that the pre-hire collective bargaining deals had no effect on project costs or the number of bidders. The peer-reviewed 2017 university report analyzed 263 public projects to come up with its findings.

More from the San Jose City Council agenda for April 3, 2018:

  • Mayor Liccardo is bringing forward another major construction-related proposal: a $300 million capital bond measure. He wants the city to conduct polling this spring and return to the council next month with a list of proposed projects the bond revenue could pay for. The plan is to get all that worked out in time to include it on the November ballot. Councilman Don Rocha said he’d like to see $92 million of it pay to fix 58 miles of the city’s most dilapidated streets, even if that means asking voters to approve a bigger bond measure.
  • With Santa Clara County putting its ambulance contract out to bid next year, the city of San Jose is lobbying for a system that recovers more of the cost of responding to medical emergencies. The current public-private model depends on San Jose firefighters to arrive on scene first to administer advanced life support before the ambulance company transports the patient. Since 65 percent of the San Jose Fire Department’s calls are medical, that puts a huge strain on the local agency. San Jose has been working with private consultants to come up with a model that would make more efficient use of fire department resources. Now that the county is looking for a new 9-1-1 service provider, however, the city wants to make sure those needs are addressed in the new contract.
  • Council members Sylvia Arenas and Raul Peralez asked to hear an update on the status of audit recommendations, which proposed ways to tighten controls on the city’s pensionable earnings. City Auditor Sharon Erickson found that the city made a mistake last spring when codifying changes for new second-tier police and fire pensions outlined in voter-approved initiative Measure F. Because the city didn’t revise its payroll system to reflect changes from the ballot measure until October, pensionable earnings for the pay periods from July through September last year had to be recalculated and applied retroactively. “This is a problem that we must solve and it is a shared responsibility of both the council and the administration,” Arenas and Peralez wrote in a memo.

WHAT: City Council meets
WHEN: 1:30pm Tuesday
WHERE: City Hall, 200 E. Santa Clara St., San Jose
INFO: City Clerk, 408.535.1260

Jennifer Wadsworth is the News Editor for San Jose Inside and Metro Newspaper. Email tips to [email protected] or follow her on Twitter at @jennwadsworth.

5 Comments

  1. Oh my gosh, another big fat bond measure proposed by Sam Liccardo! $300 million more to be foisted on the shoulders of taxpayers, specifically those who own real estate.

    Sure, Proposition 13 protects homeowners from tax increases greater than 2% per year. But our mayor and council (and county officials too) just love to stick it to us by adding bond measure after bond measure, driving up property taxes in leaps and bounds.

    How about increasing our sales taxes? That way, everybody who uses government infrastructure (roads, etc.) gets to pay their fair share.

  2. > a quarter of them to represent a systemically disadvantaged population.

    What is a “systemically disadvantaged population”?

    Is laziness a systemic disadvantage?

    I’m not a morning person. I like sleeping in, and it’s really been a disadvantage in finding and keeping a job.

    Is there some kind of benefit I can get for my plight?

    • No SJOTB it is not laziness that they are talking about its people like us. Since the invention of burrowing machines our natural gopher digging abilities have been passed over. As a gopher ally please join us in calling for the city council to enact stronger gopher and mole protections. You don’t even have to come in early as the city council meeting will run late. Hope to see you there!

  3. What this article fails to point out:

    PLAs increase costs because of 4 specific provisions contained in them. 1. All workers must pay union dues ($1000 or so) which means a non-union worker is forced to pay into a group they have no interest in joining. 2. All workers must pay union benefits which means a non-union worker will lose $20 per hour or so because it’s being sent to a plan they will not vest in during their short time on the job. This is called wage theft and it’s what unions push these days. 3. Non-union firms are reduced to using 3-5 of their own workers while the rest must come from a union hiring hall. So an owner is being asked to use unproven workers they have no relationship with on a job that might be worth $20 million. Really? 4. The only apprentices allowed are union apprentices which means that young men and women in union-free programs are told they don’t count. Nice huh? That’s what union leaders are pushing in 2018 America.

    The piece also labels the study that shows PLA increase costs (there are over 2 dozen studies FYI) as one conducted by a “right-wing, Koch Brothers founded group that denies climate change.” And we wonder where the term “fake news” comes from.

    Lastly and most ironically the piece quotes union bosses as saying the reason we need this solution to a non-existing problem is because local workers are being displaced by “out of town workers” so what they propose in the PLA is a 30% local hire goal. But the same article states that over 60% of workers on current projects are from within the region! So unions are actually lowering the local hire goals.

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