California Bill Would Allow Contractors and Workers to Maintain Their Existing Health Insurance Under a Project Labor Agreement
AB 842 “would provide that a contractor that bids on or has been awarded work covered by a Project Labor Agreement that provides health care coverage to workers on the project that is the subject of the agreement, that includes essential health benefits, as described in the PPACA [federal Patient Protection and Affordable Care Act], and that provides evidence of that coverage to the entity awarding the contract, is exempt from a requirement to pay into a trust or custodial benefit plan for health and welfare or similar benefits for those workers an amount equal to the amount that the contractor would have been required to pay into that trust or custodial benefit plan for health care costs for those workers.”
In other words, a non-union employer that has a bone fide health insurance benefit program equivalent to or better than what is offered by the applicable multi-employer union-affiliated trust for the same trade in the same geographic region does not have to pay the health insurance component to the union trust fund. It can make employer payments to the company health insurance program on behalf of its employees. The company does not need to pay to both the union program and ALSO its own company program (the costly “double payments” dilemma) so that its employees can maintain their existing health insurance.
What does this mean in practice? The Salinas Taxpayers Association took a position in support of AB 842 because the bill was relevant to Project Labor Agreement controversies in Salinas. Here is the Salinas Taxpayers Association letter on Assembly Bill 842:
Several of the more than 200 government-mandated Project Labor Agreements imposed in California have included such language for not just health insurance but for ALL legitimate fringe benefits. One prominent example is the San Diego Unified School District. A Project Labor Agreement administrator was given the authority to determine if non-union contractors provided equivalent benefit plans. (Below, see the relevant language from the Project Labor Agreement.)
Note that unions (as well as labor compliance programs or personnel) monitor contractors that claim equivalent fringe benefit plans. Unions have also challenged decisions of PLA administrators concluding that non-union contractors have equivalent benefits. Two examples at San Diego Unified School District:
The United Union of Roofers, Waterproofers and Allied Workers Local Union No. 45 went after A Good Roofer, Inc. because the company did not submit its fringe benefit package to the Project Labor Coordinator for evaluation to determine if it was equivalent or better than the union package. The Roofers union demanded that A Good Roofer, Inc. pay employee fringe benefits (as designated in the union collective bargaining agreement) to the applicable union trust funds, along with interest, costs, and liquidated damages. See SDUSD PLA Grievance – A Good Roofer, Inc.
The San Diego County Building and Construction Trades Council went after the San Diego Unified School District claiming it improperly determined under Section 5.2 of the Project Labor Agreement that Standard Electronics had a fringe benefit program equivalent to the program administered by the International Brotherhood of Electrical Workers (IBEW) Union Local No. 569. See SDUSD PLA Grievance SDUSD & Standard Electronics.
Here is the language from the San Diego Unified School District Project Labor Agreement:
Section 5.2 Benefits. (a) Contractors shall pay contributions to the established employee benefit funds in the amounts designated in the appropriate Schedule A; and make all employee authorized deductions in the amounts designated in the appropriate Schedule A: provided, however, that the Contractor and Unions agree that only such bona fide employee benefits as accrue to the direct benefit of the employees (such as pension and annuity, health and welfare, vacation, apprenticeship, and training funds) shall be included in this requirement and required to be paid by the Contractor on the Project; and provided further, however, that such contributions shall not exceed the contribution amounts set forth in the applicable prevailing wage determination.
Unless otherwise required by law, Contractors who have fringe benefits for their core workforce equal to or better than those designated in the Schedule A do not have to pay the fringe benefit contribution designated in the Schedule A on the core work force and may utilize their own fringe benefits. The Project Labor Coordinator will be responsible for determining whether the benefits are equal to or better than those designated in the Schedule A’s. Contractors must submit their fringe benefit packages to the Project Labor Coordinator for evaluation prior to bidding. Contractors may only take credit against the prevailing wage in accordance with the Prevailing Wage Statute and the difference between the hourly cost, if any, of the fringe benefit provided and the hourly cost of the applicable fringe benefit portion of the wage determination must be paid to the worker as wages. Benefits designated in the Schedule A will be paid on all employees dispatched by the Union.
(b) Where applicable, the Contractor adopts and agrees to be bound by the written terms of the applicable, legally established, trust agreement(s) specifying the detailed basis on which payments are to be made into, and benefits paid out of, such trust funds for its employees. The Contractor authorizes the Parties to such trust funds to appoint trustees and successors’ trustees to administer the trust funds and hereby ratifies and accepts the trustees so appointed as if made by the Contractor.
(c) Each Contractor and Subcontractor is required to certify to the Project Labor Coordinator that it has paid all benefit contributions due and owing to the appropriate Trust(s) or fringe benefit programs prior to the receipt of its final payment and/or retention. Further, upon timely notification by a Union to the Project Labor Coordinator, the Project Labor Coordinator shall work with any Contractor or Subcontractor who is delinquent in payments to assure that proper benefit contributions are made, to the extent of requesting the District or the prime Contractor to withhold payments otherwise due such Contractor, until such contributions have been made or otherwise guaranteed.
This example shows that Assembly Bill 842 proposes a feasible policy. In fact, AB 842 could be expanded to encompass ALL bone fide fringe benefit plans and not just health insurance. Nevertheless, expect the State Building and Construction Trades Council of California and individual unions to oppose the bill.
West Sacramento School District Uses Union-Only Apprenticeship Policy to Boot Lease-Leaseback Contractor
Tonight (April 23, 2015), the board of trustees for the Washington Unified School District (in West Sacramento) will reject a construction company from a lease-leaseback contract because unions will not agree to dispatch apprentices to the company.
The staff report for “Adopt Resolution 1415-22 for the Bryte Career Technical Education Campus Phase #1 Project (Implement the Capital Investment Program for Sustainability Initiatives / Facility Improvements through Measure V Funds)” states the following:
Bid #3, Landmark Construction, was highest bid by almost $1,000,000 (17%). Bidder #1 and #2, the point spread between them was significant (10%) and after the formal interviews the team felt that the best value of the three (3) submittals received was from Bobo Construction (bidder #2). The team began contract negotiations with Bobo Construction to finalize a lease lease-back (LLB) document. Unfortunately, during contract negotiations it was determined that the District’s pre-apprenticeship requirements could not be met by Bobo Construction. As a result, the team is reaching out to Landmark Construction in an effort to negotiate and finalize a contract.
At various times over the past 15 years, construction trade unions have lobbied Northern California local governments for local apprenticeship policies that supplant existing state law. Of course those self-interested policies are meant to cut bid competition and limit workers’ freedom of choice in training programs.
Those policies have been rejected by elected boards at some local governments and passed by others, often after amendments. But until now there has not been a high-profile case in which a construction company lost a major project because of such a policy.
The Washington Unified School District board of trustees quietly passed the union-backed apprenticeship policy in November 2013 that requires all contractors to obtain apprentices from union-affiliated programs. Now unions have been able to use this policy as the basis to get the school district to deprive a Merit Shop construction company of a contract. This action raises the cost of the project by $1 million (17%).
Here is the discriminatory policy: Washington Unified School District Resolution #1314-10 – Resolution Establishing Apprenticeship Graduation and Local Hire Requirements for Hiring on School Construction Projects.
For details, see the email below from the Coalition for Fair Employment in Construction to the elected board and administrators of the Washington Unified School District.
From: “Eric Christen”
Subject: URGENT: IMMEDIATE ATTENTION REQUIRED REGARDING BOARD AGENDA ITEM
Date: April 23, 2015 at 9:40:01 AM PDT
Board of Trustees,
As your staff and legal counsel have been unresponsive to our earlier email I am now forwarding this issue on to you.
The Washington Unified School District has implemented illegal pre-qualification requirements and is arbitrarily using these requirements to favor certain construction contractors, certain state-approved apprenticeship programs, and certain apprentices at the expense of others.
On April 21, 2015, the Coalition for Fair Employment in Construction (CFEC) learned that your selected (but not contracted) lease-leaseback contractor Bobo Construction will not be working on the district’s Bryte Culinary Arts project or on the District Office project. The vague reason given by a district consultant for this decision: “During contract negotiations, it was determined that the District’s Apprenticeship requirements could not be met by Bobo Construction.”
We inquired with Bobo Construction representatives, who informed us they left voice mails and sent emails to the Washington Unified School District asking specifically what requirements it did not meet, how the district determined that it could not meet the requirements, and who determined it could not meet the requirements. Suspiciously but not surprisingly, there has been no official response from the school district.
This unusual and disturbing incident, based on both the current situation and previous attempts to discriminate against non-signatory firms using similar tactics leads us to conclude that unions have engineered this latest episode so as to benefit its members. We will be submitting a public records request to confirm the involvement of union officials in these discussions leading to this decision and to determine specifically why the district ceased communication with Bobo Construction.
Bobo Construction had submitted a pre-qualification questionnaire and was approved and deemed eligible to work on these projects. It also submitted bids by the deadline. We will be checking on this to ensure Bobo Construction complied with every requirement.
Bobo Construction representatives say they typically request Carpenters and Laborers apprentices from the state-approved unilateral apprenticeship programs operated by the Northern California Chapter of Associated Builders and Contractors (ABC). These programs are approved by the California Division of Apprenticeship Standards to train apprentices on public works projects in Yolo County.
But the Washington Unified School District insists in its regulations that its contractors have to request and train apprentices exclusively from programs overseen by Joint Apprenticeship Training Committees (JATCs) affiliated with trade unions. Unilateral (union-free) apprenticeship programs are not regarded as eligible or legitimate training programs. The attached resolution, that the board approved in November of 2013, is where this language comes from.
Apprentices in these JATC programs pay union dues and fees and their fringe benefits indicated in prevailing wage determinations are paid into union-affiliated trust funds. The district’s decision to only accept apprentices from those programs is clearly favoritism for union apprentices, for union-affiliated apprenticeship programs overseen by Joint Apprenticeship Training Committees, and for construction companies that have agreements to train through union-affiliated apprenticeship programs overseen by Joint Apprenticeship Training Committees.
Nevertheless, to try to keep the peace and comply with this illegal requirement, Bobo Construction contacted representatives of the Carpenters and Laborers unions to arrange for a one-job subscription agreement to use union apprentices on Washington Unified School District projects. By refusing to arrange such agreements (an illegal action), these union officials disqualified Bobo Construction.
Basically, the Washington Unified School District has given union officials the power to decide which contractors get construction contracts at the district. Unions – not contractors – have the authority to dispatch apprentices. A union apprenticeship program can withhold its apprentices from being dispatched to any contractor (including a union contractor) and thus disqualify it.
Subcontractors for Bobo Construction are now reportedly being told that Bobo Construction was “kicked off the job” because it was non-union, and anyone wanting to work at the district better be unionized. Reportedly union officials had been lobbying the elected board of trustees and district administrators and contractors to deny the work to Bobo Construction. We will be submitting a public records request to confirm the extent of these communications.
The Coalition for Fair Employment in Construction is committed to ensuring that all capable and responsible bidders and their capable and qualified workers are able to work on taxpayer-funded construction projects. Following are the next steps we will be taking to ensure that all contractors, workers, and apprentices are treated equally and fairly:
Submission of the aforementioned public record request the goal of which is twofold: Show who in 2013 gave you the discriminatory language you voted to approve and secondly, what special interests have been involved in seeing that Bobo Construction was rejected in favor of a signatory firm whose bid was $1 MILLION HIGHER.
Undertake a public relations campaign to inform community leaders, the general public, and area media about how staff and elected officials of the Washington Unified School District are breaking the law and manipulating the district’s bidding process to raise construction costs and benefit union special interests. Your decision to choose Landmark Construction over Bobo alone will cost the District $1 million!
We will be researching the origin of this discriminatory apprenticeship requirement(s) and will expose it to the public.
Should this issue not be resolved by the board at your meeting tonight (April 23rd) we will recommend that Bobo Construction file a lawsuit against the Washington Unified School District over its patently illegal apprenticeship requirements.
Finally, a stench of corruption envelopes this entire process. CFEC has been protecting the rights of contractors, workers, and apprentices in California for almost 16 years and I have never seen such a blatant political power play as I have witnessed in the past few days. CFEC will do everything within its considerable resources to see to it that whomever is behind this attempt to play favorites using taxpayer dollars will be held accountable to the people for those actions, especially if public records or other documents unearthed in various stages of litigation reveal what the District has done in pursuit of political ambition.
In conclusion, we encourage you to work with Bobo Construction, which is a well-established company willing to resolve reasonable differences in order to perform the outstanding work that your district expects. The alternative is getting to deal instead with this organization, exceptional for its zeal to expose the bidding corruption eroding many school districts in California.
We look forward to hearing that Bobo Construction is back performing the best work at the best price for the taxpayers and students of the Washington Unified School District. We also look forward to hearing that the Washington Unified School District will no longer implement illegal policies that favor unionized contractors, unionized apprenticeship programs, and unionized apprentices. It’s not necessary, it’s wrong, it’s not desired by the public, and it’s illegal.
You are encouraged to contact me at xxx or xxx.
Eric Damian Christen
Coalition for Fair Employment in Construction
The typical Project Labor Agreement deliberation at California local governments often endures for hours, with several dozen speakers pounding away with their arguments and attacks on their opponents. Presiding officers of local agency boards routinely declare that the Project Labor Agreement item has set a record for most submitted speaker cards. Arguably this is the most intense and contentious issue now encountered on the local level in California.
Now the elected board of the Chula Vista Elementary School District is trying to slip a Project Labor Agreement through the process without experiencing the obligatory legislative agonies. The meeting agenda for April 15, 2015 assigns the item to the consent calendar as Item 5P.
In 2010, 56% of voters in the City of Chula Vista voted for Measure G, which prohibited the city from entering into contracts that require construction companies to sign Project Labor Agreements with unions. Nevertheless, the board decided to put the item on the consent calendar.
Update: at the meeting, a board member removed the item from the consent calendar, and several supporters and opponents spoke on it. The board then approved it on a 4-1 vote.
Here’s my email to the Cuesta College (San Luis Obispo Community College District) elected board of trustees and top administrators regarding the sneaky effort to require its construction contractors to sign a “Project Labor Agreement” with unions as a condition of working on projects funded by Measure L. In November 2014, 62.6% of voters authorized the district to borrow $275 million for construction projects by selling bonds to investors.
Subject: Public Needs to Be Informed About Project Labor Agreement for Measure L Projects at Cuesta College
From: Kevin Dayton
Date: February 2, 2015 at 2:42:59 PM PST
Dear Cuesta College Board of Trustees:
I haven’t been able to find any official information provided to voters before Election Day about the plan of Cuesta College to require construction companies to sign a “Project Labor Agreement” with unions as a condition of working on projects funded by Measure L.
To try to alert taxpayers, students, and other interested parties about the Project Labor Agreement plan, I have provided concise information about it to various media entities, including the San Luis Obispo Tribune, KSPY, KCOY, KEYT, KVEC News/Talk 920, the Tolusa Press newspapers, CalCoastNews.com, New Times SLO, the Cuestonian, and Paso Robles Daily News. See below.
Since you had a representative of the Tri-Valley Building and Construction Trades Council make a presentation to the board after Measure L passed, I suggest you invite some local construction company representatives to make a presentation, so that you have a range of viewpoints on this highly-controversial and costly proposal. Were local construction trade associations informed about the December 10 Project Labor Agreement presentation?
Also, shouldn’t Cuesta College officially inform ordinary citizens about the Project Labor Agreement plan, since they will be paying back the principal and interest on the borrowed money obtained through bond issues? I don’t see any News Releases from Cuesta College about it.
President and CEO
Labor Issues Solutions, LLC
From: Kevin Dayton
Subject: Cuesta College board mtg 2/4 – proposal for union monopoly on construction funded by Measure L
Date: February 2, 2015 at 11:55:28 AM PST
Cuesta College board of trustees is discussing at its February 4 meeting whether its construction contractors should be required to sign a “Project Labor Agreement” with the Tri-Valley Building and Construction Trades Council as a condition of working on projects funded by Measure L.
This plan was kept quiet until 62% of voters approved the bond measure last November. Then the construction unions were invited to make a one-sided presentation about Project Labor Agreements:
Project Labor Agreements cut bid competition and raise construction costs for the benefit of unions. Here is a 2011 study from the National University System Institute for Policy Research: “Our research shows that PLAs are associated with higher construction costs. We found that costs are 13 to 15 percent higher when school districts construct a school under a PLA.”
Your readers might be interested in this proposed policy. Voters had no idea last November that this union plan was going to happen.
President and CEO
Labor Issues Solutions, LLC
Want to Protest On-Site at the California High-Speed Rail Groundbreaking on January 6, 2015 in Fresno?
A media advisory released by the California High-Speed Rail Authority on December 30 provides an update on how the California High-Speed Rail Authority will host an official High-Speed Rail groundbreaking ceremony on January 6, 2015 in Fresno. (Excerpts from the media advisory are below, or see it on the California High-Speed Rail Authority website.)
The media advisory bluntly tells the public that “This event is open to invited guests and credentialed media only.” But concerned citizens and taxpayers who weren’t invited to the event will express their First Amendment right to freedom of speech by protesting at the groundbreaking ceremony.
Are you interested in participating in the protest? Contact me at (916) 439-2159 or at kdayton [ at ] laborissuessolutions.com for information.
Fresno, Calif. – The California High-Speed Rail Authority (Authority) will join government, community, transportation, business and labor leaders on Tuesday, January 6, 2015 to commemorate the start of sustained construction on the nation’s first high-speed rail system at a ceremonial groundbreaking in Fresno.
WHAT: Official High-Speed Rail Groundbreaking Ceremony
WHEN: Tuesday, January 6, 2015 12:00 p.m.
WHERE: Site of Future High-Speed Rail Station
1625 Tulare Street
Fresno, California 93706
Media Tour Scheduled for 10:00 a.m.
Prior to the groundbreaking ceremony, there will be a tour available to media to highlight progress being made on the high-speed rail program in the Central Valley. Credentialed media on the tour will visit the old Del Monte Plant, which was recently demolished and is now having steel, asphalt and concrete recycled. Media will also view a building that is being prepared for demolition, and interview Authority staff and construction crews working on the first segment of high-speed rail in California.
NOTE: This event is open to invited guests and credentialed media only.
“Something Fishy About County Water Agency, AB 155 & PLA” – commentary by Nicole Goehring in Salinas Californian – July 2, 2014
“Will a Few Republican State Legislators Open Floodgates for Costly Union Control of California Water Projects?” – commentary by Kevin Dayton in www.FlashReport.org – July 10, 2014
“Interlake Tunnel Sparks Labor Controversy” – Salinas Californian – September 5, 2014
“Labor Agreements Key to Monterey County Interlake Tunnel, Unions Say” – Salinas Californian – September 5, 2014
Dan Walters: “Three Obscure Bills Show How Big Policy Gets Buried” – column in Sacramento Bee – September 16, 2014
“Documents Expose Union Lobbying Scheme to Control Water Project Construction” – www.UnionWatch.org – September 16, 2014
“California Lawmakers Throw Business New Roadblock” – WorldNetDaily – September 24, 2014
How a Bill Becomes a Law (California Assembly Bill 155 – 2014) – Labor Issues Solutions, LLC
“Interlake Tunnel Bill Signed by Brown Despite Opposition” – Monterey Herald – October 1, 2014
“Interlake Tunnel Project In Line for State Water Bond Funding” – Monterey Herald – October 15, 2014
“Assemblymember Alejo: No Design-Build, No Interlake Tunnel Funding” – Monterey Herald – October 15, 2014
“Legislator Tells County How It Must Bid a Project to Get Prop 1 Water Bond Funds” – commentary by Kevin Dayton in Flash Report – October 17, 2014
“Debate Over Interlake Tunnel Project Rages On” – Monterey Herald – October 29, 2014
“Labor Issue, Data Stall Interlake Tunnel Approval” – Salinas Californian – October 29, 2014
“Interlake Tunnel Project Funding, Labor Agreement Considered” – Monterey Herald – December 8, 2014
“Unions Win First Victory to Control Projects Funded by Water Bond” – www.UnionWatch.org – December 9, 2014
“Interlake Tunnel Project Gets Green Light” – Salinas Californian – December 9, 2014
“Ferrini Ranch Gets Nod on 3-2 Board of Supervisors Vote” (article includes report on vote for Project Labor Agreement on Interlake Tunnel Project) – Monterey Herald – December 9, 2014
Arguing Against a Project Labor Agreement Policy with a $500,000 Project Cost Threshold in the City of Martinez
Below is an email I sent today to the Martinez City Council and top staff regarding their vote tonight on instituting a Project Labor Agreement policy for all city projects over $500,000. Here is the staff report for the agenda item: Policy on Project Labor Agreements.
Dear Martinez City Council:
Tonight you will consider a Project Labor Agreement policy for “all City construction projects awarded by the City with a bid amount of more than $500,000 (the “Threshold”).”
According to the proposed resolution, this threshold will encompass “certain large, complex City construction projects involve numerous contractors and employees in different trades.” According to the proposed resolution, the purpose of this policy is the city’s recognition that “it is essential that construction on such projects proceed without the labor disruptions that can occur on projects both from external labor relations problems and from the frictions that often arise when a large number of contractors and their employees work in proximity to one another on a job site.” The resolution also adds that “in the private sector, project labor agreements have been used for years on large, complex construction projects” and “in the public sector, project labor agreements have been used successfully by the County of Contra Costa and other public entities in Contra Costa County for hospital, reservoir, wastewater, and other large, complex construction projects.”
You may be aware that this language has to be included in the resolution because that’s the basis in the National Labor Relations Act to justify a Project Labor Agreement. “Favoritism for contractors that are signatory to collective bargaining agreements in the construction trades” is not a legal purpose for a Project Labor Agreement, despite what anyone claims.
There’s a good chance you’ll be sued if you vote for this policy tonight. I recommend you delay a vote on the policy until you have a report prepared by an outside consultant clearly and thoroughly outlining the following:
1. What is a “large, complex construction project?”
2. What is a “large number of contractors and their employees?” Is it five employees or 736 employees? Is it five contractors or 23 contractors?
3. What is “proximity to each other?” Within spitting distance?
4. Speaking of spitting, what are some of the “frictions” that arise when people are working together to build a project, and what are the basic and immediate causes of those frictions?
5. When does the City of Martinez plan to build an airport, reservoir, or hospital for $500,000? (Note: this would be a valuable service for entities that are spending billions of dollars on similar large, complex construction projects.)
6. What are the recent or anticipated labor disruptions that this policy would prevent? Please indicate the controversies and the parties that caused the disruptions. (Note: this would be a valuable service for union contractors unaware that their unions plan to disrupt upcoming work.) The list of upcoming labor disruptions should include any planned incidents of “the unions and their members, agents, representatives, and employees” endeavoring to “incite, encourage, condone, or participate in any strike, walkout, sit-down, stay-in, boycott, sympathy strike, picketing, hand-billing, work stoppage, work slowdown, or other labor disruption or unrest.”
7. Please provide examples of workers outside of a Master Labor Agreement or Project Labor Agreement who have recently disrupted projects.
8. Please provide examples of workers covered by a Project Labor Agreement who have recently disrupted projects, and describe how those disruptions were resolved.
Here is a link to a report entitled From Peace to Absurdity – The Emergence of Cost Thresholds and Multi-Project Coverage for Project Labor Agreements in California: Shifting the Purpose from Labor Peace to Cutting Merit Shop Competition. I can email this to you directly as a PDF attachment if you want it in that format.
Please regard this email as Exhibit One and the report linked above as Exhibit Two for any future litigation.
In my June 24, 2014 article in UnionWatch.org entitled Union Abuse of California Environmental Laws Goes On, Unabated, I report on my exposure of construction union “greenmail” against the Basin Street Properties Riverfront Mixed-Use Project to the Petaluma Planning Commission. As usual, getting a Project Labor Agreement on construction is apparently the purpose of the relentless union objections under the California Environmental Quality Act (CEQA) to the development.
The Planning Commission approved the project on a 5-0 vote. It now goes to the Petaluma City Council, where unions will likely continue to threaten the developer with CEQA complaints.
Here are the four sets of objections so far:
“Uncancel the Meeting!” First California Bill to Mandate Project Labor Agreement Was Backroom Deal: Public Discussion Needed
Here’s an email I sent this morning (June 23, 2014) to the Monterey County Board of Supervisors about the need for openness and transparency concerning the state-mandated Project Labor Agreement provision in Assembly Bill 155, which authorizes the Monterey County Water Resources Authority to use design-build procurement for the interlake pipeline project. I propose that the board’s Legislative Committee “uncancel” its June 30 meeting to discuss AB 155.
Subject: Board of Supervisors: Request to “Uncancel” and Convene 6/30 Legislative Committee Meeting – AB 155 and Project Labor Agreement
Date: June 23, 2014 at 12:19:22 PM PDT
To: Monterey County Board of Supervisors
Dear Monterey County Board of Supervisors:
Assemblyman Luis Alejo has gutted and amended Assembly Bill 155 to become an “urgency” bill to authorize the Monterey County Water Resources Agency to use the design-build procurement procedure in bidding the interlake pipeline project. That bill includes a provision never-before included in a design-build authorization bill that requires the design-build entity to enter into a project labor agreement with construction trade unions that will “bind all of the contractors performing work on the project.”
See June 19, 2014 report: Monterey County Water Resources Agency: Target of First State-Mandated Project Labor Agreement
A Project Labor Agreement requires a construction company to pay employee fringe benefits into union-affiliated trust funds, obtain most or all journeymen and apprentice workers through the applicable union hiring hall dispatching system, and requires workers to pay union dues and initiation fees. Government-mandated Project Labor Agreements institute favoritism for unions and unionized contractors. Project Labor Agreements are an unnecessary bid specification that discourages bid competition and increases costs of public works construction for taxpayers.
Your Legislative Committee has not discussed design-build authorization for the Monterey County Water Resources Agency, nor Assembly Bill 155, nor the government-mandated Project Labor Agreement. And inexplicably, the next meeting of the Legislative Committee scheduled for June 30 is now cancelled!
On behalf of the Western Electrical Contractors Association (WECA) and other construction companies and trade associations, I ask you to convene a Legislative Committee meeting on June 30 with AB 155 on the agenda for discussion.
Do you believe your constituents should have the opportunity to comment on AB 155 in a public forum in Monterey County? Surely representatives of construction trade associations, unions, and water customers should be able to provide remarks on this highly-controversial issue in a public forum, so that the Board of Supervisors is able to deliberate adequately and make an informed decision on AB 155 and a government-mandated Project Labor Agreement.
Right now the People of Monterey County have no idea what led to the inclusion of the first government-mandated Project Labor Agreement in a California legislative bill meant to benefit them. Shouldn’t the justification be out in the open?
Let’s bring this state government mandate out into the open, so the People and their representatives on the Board of Supervisors can evaluate whether or not it provides the best quality work at the best price. Please convene your Legislative Committee on June 30 to discuss the Project Labor Agreement mandate in AB 155
President and CEO
Labor Issues Solutions, LLC
On June 3, 2014, the Monterey County Board of Supervisors voted to proceed with a plan and $500,000 in funding to construct a $25 million pipeline between the Lake Nacimiento and Lake San Antonio reservoirs that will allow more storage of water for the Salinas Valley. A few days later, Assemblyman Luis Alejo, who represents the Salinas Valley, gutted the contents of his Assembly Bill 155 and inserted language that authorized the Monterey County Water Resources Agency to use the design-build procurement method for bidding the interlake pipeline project.
Because of the drought, AB 155 is designated as an “urgency” bill that will take effect immediately when the Governor signs it. A two-thirds vote in the Assembly and Senate is required to pass an urgency bill.
But what immediately attracted attention was this provision in AB 155:
(2) If the agency does award a design-build contract as authorized under paragraph (1), it shall do the following:
(C) Ensure that the design-build entity selected for the project enters into a project labor agreement that will bind all of the contractors performing work on the project.
This is the first state mandate for a California local government to require its construction contractors to sign a Project Labor Agreement with unions, and whoever arranged the plot was able to keep it unnoticed until AB 155 was amended. Reportedly the phrase “Project Labor Agreement” was uttered once during discussion of the pipeline project at the June 3, 2014 Monterey County Board of Supervisors meeting, to the visible satisfaction of the head of the Monterey/Santa Cruz Building and Construction Trades Council, who was in the audience.
I went to the June 18, 2014 meeting of the Salinas River Basin Management Planning Committee of the Monterey County Water Resources Agency to ask the committee to seek the removal of the Project Labor Agreement mandate from AB 155. (The meeting agenda included a report from the agency’s general manager on the status of the interlake pipeline project.)
By this time, the business community in the Salinas Valley was aware of the state-mandated Project Labor Agreement as a condition of design-build procurement. A representative of the Salinas Valley Water Coalition complained that the Project Labor Agreement in AB 155 was never discussed in a public forum despite changing the Agency’s bidding process. A representative of the Monterey County Farm Bureau also expressed concern that the mandate was never discussed in a transparent manner. He said “politics is changing this” and the agency was “taking what Sacramento dishes out.”
The committee discussed the Project Labor Agreement at length. Some committee members objected to the language and noted that it had been inserted without local deliberation or even knowledge. One board member asked staff what other special interests in Sacramento were planning to “latch onto the bill” and said “We shouldn’t just roll over on this one despite the threat.”
Staff acknowledged that the Project Labor Agreement mandate was added to the bill to neutralize opposition to AB 155 from the State Building and Construction Trades Council of California. One board member who seemed to be fully aware of what happened claimed the union mandate was necessary in order to fast track the bill and the project. He said the agency would lose seven to twelve months and would not be “shovel-ready” for grants: “Without union support, we can’t do it. It’s too late to push back; it really is.” He also reported that the head of the Monterey/Santa Cruz Building and Construction Trades Council said unions would oppose the bill unless a Project Labor Agreement was in it. He also claimed that Republicans would vote for AB 155 even with the Project Labor Agreement in it, so the threat of derailing passage of the bill with one-third opposition was not real.
On June 10, 2014, the U.S. House of Representatives voted on an amendment to a transportation appropriations bill to prohibit federal funds from being used for high-speed rail in the State of California or for the California High-Speed Rail Authority. It was offered by Congressman Jeff Denham (R-California), chairman of the Subcommittee on Railroads, Pipelines and Hazardous Materials of the U.S. House Committee on Transportation and Infrastructure.
The amendment passed 227-186. See Congressional Record – Roll Call #288.
Six Democrats voted YES on the amendment. Four were from California. Why did they vote YES?
California’s Ten Most Vulnerable Democrat Members of Congress and Their June 10, 2014 Votes on Cutting Off Federal Funding for California High-Speed Rail
Debate on the Amendment (from the Congressional Record)
Amendment Offered by Mr. Denham
Mr. DENHAM. Mr. Chairman, I have an amendment at the desk.
The Acting CHAIR. The Clerk will report the amendment.
The Clerk read as follows:
At the end of the bill, before the short title, insert the following:
Sec. __. None of the funds made available by this Act may be used for high-speed rail in the State of California or for the California High-Speed Rail Authority.
The Acting CHAIR. The gentleman from California is recognized for 5 minutes.
Mr. DENHAM. Mr. Chairman, this is a very simple amendment. Again, it reads: “None of the funds made available by this Act may be used for high-speed rail in the State of California or for the California High-Speed Rail Authority.”
As chair of the Subcommittee on Railroads, Pipelines, and Hazardous Materials, I am a big supporter of high-speed rail. I have seen some of the greatest high-speed rail in other countries, and here, even in the United States, we are going to see the first high-speed rail in Texas and then in Florida–two projects that are moving forward with private dollars.
Yet, in California, in 2008, we passed Proposition 1A, which was a guarantee to the voters that a $33 billion project would not only be built but would be built on time, with equal parts of funding from the State voters, from the Federal Government, hopefully, and then from the private investors. Today, 5 years later, after $3.8 billion in stimulus funds for shovel-ready projects were dedicated to this, still not one shovel is in the ground. It is a project that has been held up in court. The $9.95 billion cannot be used, and there are no private investors.
So the question is: Why should the Federal Government be putting more money into a project that is nonexistent today?
It is a project that, even by its own definition, is $32 billion short, not in the project, but in the initial operating segment, which is guaranteed to the voters to be completed. This is a project that has grown out of control. When they found out that they were in default in April, rather than fixing the problem, they committed to next year’s budget, utilizing $250 million in cap-and-trade funding.
There is a reason the judges have struck this down to this point, and there is a reason that voters wanted to have this go back before them: it is a project that has no end in sight. Again, no shovels have been put into the ground even though the Federal Government has obligated $3.8 billion–money that could be used for other priorities. Today, we are in a situation. With a $32 billion shortfall, there is no proposal from the President to fill that gap, and there is no proposal from the Governor to fill that gap. Yet there is the hope that the Federal Government will continue to find new money to throw at something that is nonexistent.
This doesn’t meet the Prop 1A guarantee. There is no State match, and the cost has more than doubled. Again, the jobs that have continued to be talked about for the last 5 years are nonexistent.
Mr. Chairman, I would urge an “aye” vote on this amendment. We have got to stop this train wreck.
I yield back the balance of my time.
Ms. LOFGREN. Mr. Chairman, I rise in opposition to the amendment.
The Acting CHAIR. The gentlewoman from California is recognized for 5 minutes.
Ms. LOFGREN. Mr. Speaker, on behalf of the California Democratic congressional delegation, I rise in opposition to this amendment.
This misguided amendment would prohibit additional Federal investment in California’s high-speed rail project. As we know, California is in the midst of constructing the Nation’s first truly high-speed rail system.
The project was approved by a strong majority of California voters in 2008 because we Californians know that high-speed rail is the most effective and environmentally sustainable way to increase mobility across the State.
Now, the project is already creating jobs for Californians. In fact, more than 70 firms that have committed to performing work on this project have offices in the Central Valley, and many of these firms, happily, are veteran-owned.
In San Jose, the California high-speed rail project is already providing immediate benefits by investing $1.5 billion in the Caltrain Modernization Program. This program will create over 9,500 jobs, over 90 percent in the San Francisco Bay area.
Now, the government’s independent watchdog, the GAO, conducted an extensive audit of the project. And you know what? They gave high marks to the authority’s business plan for high-speed rail.
Members of Congress are right to conduct proper oversight of infrastructure projects across the country. However, regardless of your views on the merits of this project, I think most of us would agree that attempting to kill a single project through the appropriations process is bad public policy and sets a horrible precedent.
I would note that electrified trains are really part of the future. China already has 5,000 miles of high-speed rail, and they intend to double that. Spain has 1,600 miles of high-speed rail, and they are building more. More than a dozen other countries have their own successful high-speed rail systems. Even Morocco is building a high-speed rail system. But we don’t have anything in the United States except for what California is doing.
I would note that California is almost always on the leading edge of progress for our country. We are leading in energy conservation. We are leading in alternative energy, and we have the best public university, the University of California, in the entire United States. We always lead.
Now, it is important that the State of California has identified an ongoing source of funds to support high-speed rail, and that is the cap-and-trade funds. Is that appropriate? Yes, it is, because the cap-and-trade funds are generated through energy conservation, and the high-speed rail system is going to help move Californians in an environmentally suitable way.
It is important to be visionary here. You know, when we started building the interstate highway system, when the first mile of highway was built, we didn’t know that 50 years later we would still be identifying interstates to build.
We need to begin with high-speed rail in California. California is behind this project. The California Democratic delegation is behind this project.
I urge my colleagues to reject the amendment, put our neighbors back to work, and allow California to continue building the Nation’s first true high-speed rail project. We will all be proud of that project as it nears completion.
Mr. Chairman, I yield back the balance of my time.
Mr. LaMALFA. Mr. Chairman, I move to strike the last word.
The Acting CHAIR. The gentleman from California is recognized for 5 minutes.
Mr. LaMALFA. Mr. Chairman, I rise in support of Mr. Denham’s amendment.
High-speed rail has been a boondoggle in California pretty much since day one. The voters, when they had it presented in front of them as Prop 1A in the 2008 election, they were shown a $33 billion project that would connect San Francisco to Los Angeles with a continuous high-speed rail project.
What we found out, within 3 years, was after the price went up initially $45 billion, that a true audit turned out it would be $98.5 billion. After that, the Governor real quick decided to change the project and use the connectivity of the Bay Area and Los Angeles, their local systems, to make up for it, which is illegal under Prop 1A. It has to be continuing from San Francisco to LA. You can’t use local transit systems under Prop 1A.
So now what we see is that they were able to downsize the cost to only $68 billion over what the voters, by a 52 percent, not an overwhelming margin, merely 52 percent, approved.
They were sold a bill of goods. That is why we shouldn’t spend another Federal dollar or State dollar which enables–the Federal dollars enable the State dollars to be spent. We need to stop that here until they come up with a real plan that shows the financing.
They haven’t shown the financing yet. We can identify $3 billion worth of Federal money, $9.95 billion worth of State money, approximately $13 billion for a project in the downsized illegal form that is only $68 billion, they say.
Where does the other $55 billion come from?
They have no idea. There is no private sector money. There is no more Federal money that is going to happen, other than the $3 billion that has been captured from the stimulus package of a couple of years ago.
We need to take that money and channel that into something else that we need to do desperately, such as our transportation infrastructure which we are speaking about here this week. Or in California we have a desperate need for water supply during our drought, instead of a boondoggle which is going to pave through a bunch of our ag land in California, as well as important other infrastructure.
What do we hear about it?
Oh, it is going to save CO2. It is going to be a panacea for global warming. You know, for 30 years it won’t even help toward this project of global warming. Instead, part of their plan is they are going to have to plant trees to offset the construction of high-speed rail because it is going to have a higher CO2 footprint than what we already have.
It is boondoggle after boondoggle. We talk about jobs. These aren’t real jobs. The numbers have been inflated since day one. They tried to tell us 3 years ago that it was going to cause a million new jobs for California.
When we finally pinned them down in a State committee, they said, well, that means a million job years. It turns out to be it might be 5,000, 10,000 jobs under construction, not a million jobs. It is deceit after deceit.
We need to plow this money that we have federally back into something that would help our transportation infrastructure in California or in the Nation, help build water supply, anything but this project here, which is full of deceit and empty promise after empty promise.
Mr. Chairman, I yield back the balance of my time.
Mr. PASTOR of Arizona. Mr. Chairman, I move to strike the last word.
The Acting CHAIR. The gentleman is recognized for 5 minutes.
Mr. PASTOR of Arizona. Mr. Chairman, I rise in opposition to the amendment, and I yield to the gentlewoman from California (Ms. Lofgren).
Ms. LOFGREN. I thank the gentleman from Arizona. I just wanted to make a couple of quick points. First, it is easy to be a critic and it is hard to be a builder. The high-speed rail project is a big project, it is difficult to do, but we are going to get it done.
Sometimes I wonder, when people say don’t do high-speed rail, how they plan to deal with the millions of additional Californians that are anticipated to clog our roads and need transportation infrastructure.
It has been suggested by dispassionate engineers that we would need at least two or three additional airports in California. We would need several, as many as five, additional lanes, north-south, in the middle of California to match the capacity of high-speed rail.
How are we going to do that?
Do we think that that is not going to be expensive?
The alternative to high-speed rail is not nothing. That is impossible for a State as vibrant as California, with an economy as booming as it is, and a future as bright as we have.
I would note also that the idea that it is inappropriate to use cap-and-trade funds, I just simply disagree with. California is among the first in the Nation, I would say, and it has got wide approval in the State, to do this cap-and-trade system, to bring down carbon emissions. Funds will be generated through that project. Some of those funds will go to this very worthy project. So I disagree very much with this amendment. I don’t believe that we will be successful–my God, I hope we are not–in stopping this visionary project that is going to allow the State of California to continue to prosper and for transportation north-south needs to be met into the future.
I thank the gentleman for yielding.
Mr. PASCRELL. Mr. Chairman, I yield back the balance of my time.
The Acting CHAIR. The question is on the amendment offered by the gentleman from California (Mr. Denham).
The question was taken; and the Acting Chair announced that the ayes appeared to have it.
Mr. DENHAM. Mr. Chairman, I demand a recorded vote.
The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further proceedings on the amendment offered by the gentleman from California will be postponed.
The fourth edition of Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions? has been released by the California Construction Compliance Group. If you want to free your city from costly state mandates imposed by special interests at the state capitol, you need to consider asking your fellow citizens to enact a charter or asking your city council to exercise its local authority under a charter.
The 121 California cities that operate under a charter (a local constitution granting “home rule” authorized by the California constitution) have the right to establish their own policies concerning government-mandated wage rates (“prevailing wages”). Cities can apply these policies to public construction contracts receiving funding solely from the city or private construction contracts receiving funding solely from the city.
The new edition is 115 pages. Here’s the Table of Contents:
- Background on Charter Cities, Public Works Construction, and California’s State-Mandated Construction Wage Rates
- Examining the Right of Charter Cities to Establish Their Own Policies Concerning Government-Mandated Construction Wage Rates
- Under What Authority Does a Charter City Exempt Its Local Construction from State-Mandated Construction Wage Rates?
- The Prevailing Wage Exemption Is Legal: the California Supreme Court Ended Five Years of Legal Uncertainty and Upheld the Constitutional Right of Charter Cities to Establish Their Own Prevailing Wage Policies
- There Are Many Good Reasons for a Charter City to Avoid State Laws Concerning Government-Mandated Construction Wage Rates
- The Term “Prevailing Wage” Is a Misnomer That Deceives California Citizens
- State-Mandated Construction Wage Rates Now Include Fees for Union Programs
- “Public Works” Now Encompasses Much More than Government Projects
- Laws Imposing Costly State-Mandated Construction Wage Rates Also Impose Duties on Local Governments Such as Notifications, Monitoring, Recordkeeping, Legal Interpretation, Compliance, and Enforcement
- The State Maintains a Sunset Provision That May Require Volunteers to be Paid State-Mandated Construction Wage Rates in the Future
- Charter Cities Can and Do Adopt Many Kinds of Policies for Government-Mandated Wage Rates on Purely Municipal Construction
- Studies and Anecdotes Show High Costs of State-Mandated Construction Wage Rates
- How Is the State Retaliating Against Charter Cities That Set Their Own Policies Concerning Prevailing Wage Mandates? Senate Bill 7
- The Specific Status Of Policies Concerning Government-Mandated Construction Wage Rates In California’s 121 Charter Cities
- Summary of Findings
- City-Specific Data (for the 121 charter cities)
- Political Analysis And Considerations 76 Ten Categories of Cities Recently Involved with Decisions Involving Charters and Government-Mandated Construction Wage Rates
- Recent Political Dynamics of Charter Consideration at the City Level
- Who Opposes Charters, and What Are Their Messages and Tactics?
- Strategies for Exempting Your Charter City from State-Mandated Construction Wage Rates
- Waiting for the California State Legislature to Reform State-Mandated Construction Wage Laws Is a Futile Exercise – It Is Not Going to Happen
- Understanding the Debate Over State-Mandated Construction Wage Rates: Governor Pete Wilson’s Mid-1990s Reform Proposals
- Understanding the Debate Over State Prevailing Wage Rates: A Legislative Analysis of Senate Bill 7 (2013)
- California Charter Cities and State Prevailing Wage Mandates in 2013 – A Compilation of More than 150 News and Opinion Articles
- For More Information
Read the fourth edition of Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions?
The People Express Frustration and Outrage about California High-Speed Rail in Comments about 2014 Business Plan; Read All Comments
What were the comments submitted to the California High-Speed Rail Authority about its 2014 Draft Business Plan? Here’s what was submitted through April 10, 2014, when the board approved the draft (with some minor changes) to be sent to the California State Legislature. I classified the comments based on three perspectives: critical, concerned, and supportive.