Revised: A Timeline of Activity Concerning What Will Be $9.95 Billion Borrowed through Proposition 1A Bond Sales for California High-Speed Rail

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UPDATE – April 13, 2014: I’ve added information at the bottom of the chart below based on two additional Official Statements issued by the State of California since I wrote the original article.

“Long-Term Bonds Outstanding” for California High-Speed Rail Prop 1A remained at $703,530,000 as of September 1, 2013 but dropped (for the first time) to $623,705,000 as of February 1, 2014.

I presume some of the money borrowed by the State of California through these bond issues is being used to fund the “connectivity projects” authorized for $950 million in a part of Proposition 1A (now California Streets and Highways Code Section 2704.095):

2704.095. (a) (1) Net proceeds received from the sale of nine hundred fifty
million dollars ($950,000,000) principal amount of bonds authorized by this
chapter shall be allocated to eligible recipients for capital improvements to
intercity and commuter rail lines and urban rail systems that provide direct
connectivity to the high-speed train system and its facilities, or that are part of
the construction of the high-speed train system as that system is described in
subdivision (b) of Section 2704.04, or that provide capacity enhancements and
safety improvements. Funds under this section shall be available upon
appropriation by the Legislature in the annual Budget Act for the eligible
purposes described in subdivision (d).

SB 1029 (enacted in July 2012) appropriated $819,333,000 for state, regional, and local agencies other than the California High-Speed Rail Authority to help fund connectivity projects. (Note: this does not include the $1,100,000,000 appropriated for “bookend” projects, which includes $600,000 to electrify and update the Caltrain rail system and $500,000 to upgrade unspecified rail systems under a Southern California Memorandum of Understanding with the California High-Speed Rail Authority.)

Some questions to which I don’t know the answers:

  1. Why did the amount for “Long-Term Bonds Outstanding” go down between September 1, 2013 and February 1, 2014?
  2. How was the California State Treasurer able to issue bonds under Proposition 1A before the state legislature appropriated money in July 2012?
  3. Have any of the proceeds from Prop 1A bonds been spent on “bookend projects?” What happens if some of the $1.1 billion appropriated for “bookend” projects is spent but doesn’t become part of the California High-Speed Train System in the end? Will that money be transformed into connectivity funding?

Are the $1,274,000,000 in appropriations listed below for “Connectivity?” Or are they for “Bookends?” (Only $950,000,000 Can Be Spent Outside of High-Speed Train Service)

$706,000,000 Peninsula Corridor Joint Powers Board (Caltrain) - Electrification Installation of an electric rail system that phases out diesel trains and blends the Caltrain system with the high-speed rail line. With matching funds, total spending is $1.456 billion.
$42,000,000 Peninsula Corridor Joint Powers Board (Caltrain) - Advanced Signaling System: Communications Based Overlay Signal System (CBOSS) Positive Train Control (PTC) Project Design, installation, testing, training and warranty for an intelligent network of signals, sensors, train tracking technology, computers, etc. on the Caltrain Corridor to meet mandated federal guidelines. With funds from BART and the Santa Clara Valley Transportation Authority, total spending is $231 million. This work began in September 2013.
$26,000,000 Santa Clara Valley Transportation Authority (Caltrain) - Advanced Signaling System: Communications Based Overlay Signal System (CBOSS) Positive Train Control (PTC) Project Design, installation, testing, training and warranty for an intelligent network of signals, sensors, train tracking technology, computers, etc. on the Caltrain Corridor to meet mandated federal guidelines.
$500,000,000 Southern California Memorandum of Understanding Regional rail projects that improve local networks and facilitate high-speed rail travel to Southern California. Projects will be selected by local transit agencies, in conjunction with the High-Speed Rail Authority, and state funding will be matched by additional investments to make the total investment in these projects $1 billion.

Original Post – May 13, 2013: It seems that 99.999% of Californians are unaware of how, when, and how much the State of California has borrowed for California High-Speed Rail by selling bonds to investors. My requests at two board meetings of the California High-Speed Rail Authority to be open and transparent about the details of the bond sales – even to the point of having an agenda item at each meeting dedicated to the topic – have been ignored, of course. Their strategy is to keep the public and the news media uninformed, probably because the details are not comforting.

It appears the California State Treasurer has sold about $700 million worth of Proposition 1A bonds to date. While early bond sales for California High-Speed Rail appear to be segregated from bond sales for other purposes, recent sales suggest that California State Treasurer Bill Lockyer was correct when he said the high-speed rail bonds were “mixed together” with bonds for other purposes. That was his response to my questions at the California League of Bond Oversight Committees annual conference on May 10, 2013. Someone in the bond industry told me this mixing was “unusual,” but perhaps we’re misunderstanding what’s going on.

People have asked me how the state was able to sell California High-Speed Rail bonds before the legislature and governor first authorized the sale of bonds in July 2012. I do not know.

I have not been able to figure out how much in interest has been paid so far, where the money was obtained to pay the interest so far (perhaps appropriations for the California High-Speed Rail Authority from the General Fund?), and the current debt service on the bonds.

Basically, we’re all ignorant peons left in the dark by the forces that control everything.

Here’s a preliminary timeline of activity concerning bond sales for California High-Speed Rail, with links to source documents. It’s nothing great, but it’s a step in the right direction for people to fill in the blanks and try to figure out what’s going on. If you see a mistake or know something to be added to it, please let me know.

Amount Borrowed Through Bond Sales (Principal, Does Not Include Interest) Date and Action Link to Source Documents
$0 August 26, 2008 – Governor Schwarzenegger signs into law Assembly Bill 3034, which puts the “Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century” (Proposition 1A) on the November 4, 2008 California ballot. According to the bill, the state would borrow $9.95 billion through bond sales in order to “encourage the federal government and the private sector to make a significant contribution toward the construction of the high-speed train system.” Borrowed money would be available for the California High-Speed Rail Authority to spend under specified conditions and criteria for planning, land acquisition, design, engineering, and construction. The California High-Speed Rail Authority would be required to pursue and obtain other private and public funds, including, but not limited to, federal funds, funds from revenue bonds, and local funds. The California State Treasurer would sell the bonds as authorized by an appointed California High-Speed Passenger Train Finance Committee under terms and conditions specified in committee resolutions. Bonds could have a maturity period as long as 40 years. The committee would consider program funding needs, revenue projections, financial market conditions, and other necessary factors in determining the term for the bonds to be issued. Each year, the state would collect taxes and fees for the General Fund that would pay principal and interest to bond investors. In addition, the board of the California High-Speed Rail Authority could request a loan from the Pooled Money Investment Board to make a loan against the amount of authorized but unsold bonds. Assembly Bill 3034 - Proposition 1A
$0 November 4, 2008 – 52.7% of California voters (including 78.4% of San Francisco voters) approve Proposition 1A. November 2008 Election Results
$0 January 16, 2009 – the High-Speed Passenger Train Finance Committee approves Resolution I under the Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century, authorizing the issuance of State of California High-Speed Passenger Train Bonds or Commercial Paper Notes in the principal amount not to exceed $32,010,000. The committee also approved Resolution II under the Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century, authorizing the issuance of State of California High-Speed Passenger Train Refunding Bonds in the aggregate principal amount outstanding not to exceed $32,010,000. January 16, 2009 Minutes - Resolution I - Resolution II
$0 February 1, 2009 – Long Term Bonds Outstanding State Public Works 2009
$0 April 6, 2009 – “The High Speed Rail Authority had been financed via a commercial paper issue.” April 6, 2009 Minutes
>$0< April 15, 2009 – the High-Speed Passenger Train Finance Committee approves Resolution III under the Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century, (i) amending the provisions of Resolution I authorizing the issuance of State of California High-Speed Passenger Train Bonds or Commercial Paper Notes in the principal amount not to exceed $32,010,000, and (ii) authorizing the issuance of State of California High-Speed Passenger Train Bonds or Commercial Paper Notes in the principal amount not to exceed (a) the principal amount unissued under Resolution I of $32,010,000 and (b) an additional principal amount not to exceed $448,790,000, for a total principal amount not to exceed $480,800,000. The Committee also approves Resolution IV under the Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century, authorizing the issuance of State of California High-Speed Passenger Train Refunding Bonds in the aggregate principal amount outstanding not to exceed $480,800,000. April 15, 2009 Minutes - Resolution III - Resolution IV
$90,045,000 April 22, 2009 – the California State Treasurer sells $90,045,000 of Safe Reliable High Speed Passenger Train 21st Century Series A Build America Bonds, Federally Taxable.CDIAC Number: 2009-0940 Standard & Poor’s Rating: A Moody’s Rating: A2 Fitch Rating: A –Term: 30 years Rate: VAR%

At the August 6, 2009 board meeting, the Authority executive director noted that this money was a piece of a $4-5 billion state bond sale and would be used by the Authority in FY 2009-10.

2009 Annual Report
$90,045,000 July 1, 2009 – Long Term Bonds Outstanding 2009 Treasurer Publication
$90,045,000 August 1, 2009 – Long Term Bonds Outstanding Official Statement
$90,045,000 October 1, 2009 – Long Term Bonds Outstanding Official Statement
$258,395,000 October 8, 2009 – the California State Treasurer sells $168,350,000 of Safe Reliable High Speed Passenger Train 21st Century Series B Build America Bonds, Federally Taxable. CDIAC Number: 2009-1481 Standard & Poor’s Rating: A Moody’s Rating: Baa1 Fitch Rating: BBB Term: 30 years Rate: 6.933% 2009 Annual Report
$258,395,000 January 20, 2010 – the High-Speed Passenger Train Finance Committee amends Resolution III with resolution V and Resolution IV with Resolution VI. These two resolutions reflect changes to the General Obligation Bond Law that became effective January 1, 2010, and other technical amendments. January 20, 2010 Minutes - Resolution V - Resolution VI
$258,395,000 February 1, 2010 – Long Term Bonds Outstanding Official Statement
$258,395,000 June 30, 2010 – Long Term Bonds Outstanding Official Statement
$258,395,000 October 1, 2010 – Long Term Bonds Outstanding >Official Statement
$309,060,000 November 19, 2010 – the California State Treasurer sells $50,665,000 of Safe Reliable High Speed Passenger Train 21st Century Series C, Federally Taxable.CDIAC Number: 2010-1714Standard & Poor’s Rating: A-Moody’s Rating: A1Fitch Rating: A –Term: 30 yearsRate: 7.438% 2010 Annual Report
$410,050,000 November 22, 2010 – the California State Treasurer sells $100,990,000 of Safe Reliable High Speed Passenger Train 21st Century Series D. CDIAC Number: 2009-1695Standard & Poor’s Rating: A-Moody’s Rating: A1Fitch Rating: A-Term: 30 yearsRate: 5.133% Official Statement - see earlier Official Statement
$410,050,000 June 30, 2011 – Long Term Bonds Outstanding 2011 Annual Report
$410,050,000 September 21, 2011 – High-Speed Passenger Train Finance Committee approves Resolution VII, which amends Resolution III authorizing the issuance of State of California High-Speed Passenger Train Bonds or Commercial Paper Notes in the principal amount not to exceed $480,800,000, and (ii) authorizing the issuance of State of California High-Speed Passenger Train Bonds or Commercial Paper Notes in the principal amount not to exceed (a) the principal amount unissued under Resolution III of $70,750,000 and (b) an additional principal amount not to exceed $59,250,000, for a total principal amount not to exceed $130,000,000. The Committee also approves Resolution VIII under the Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century, authorizing the issuance of State of California High-Speed Passenger Train Refunding Bonds in the aggregate principal amount outstanding not to exceed $540,050,000. September 21, 2011 Minutes - Resolution VII - Resolution VIII
$410,050,000 August 1, 2011 – Long Term Bonds Outstanding Official Statement
$499,285,000 October 25, 2011 – the California State Treasurer to sell $91,225,000 of Safe Reliable High Speed Passenger Train 21st Century bonds as Series E. Official Statement
$499,285,000 November 1, 2011 – Treasurer Lockyer Comments on Revised High-Speed Rail Business Plan. November 1, 2011 Press Release
$499,285,000 January 1, 2012 – Long Term Bonds Outstanding Official Statement
$499,285,000 February 1, 2012 – Long Term Bonds Outstanding Official Statement
$499,285,000 June 30, 2012 – Long Term Bonds Outstanding 2012 Annual Report
$499,285,000 July 18, 2013 – As required under Proposition 1A, Governor Jerry Brown signs into law Senate Bill 1029, which appropriates $2,609,076,000 in Proposition 1A funds plus $3,240,676,000 in federal funds for the first operating segment of the High-Speed Rail between Madera and Bakersfield, $1,100,000,000 for “Bookend” funding, $106,000,000 to CalTrans for capital improvement projects to intercity and commuter rail lines and urban rail systems that provide direct connectivity, and an appropriation of $713,333,000 for “Connectivity” funding. Senate Bill 1029 (2012)
$499,285,000 February 1, 2013 – Long Term Bonds Outstanding Official Statement
$499,285,000 March 18, 2013 – California High-Speed Rail Authority approves Resolutions #13-03 and #13-04 requesting the California High-Speed Passenger Train Finance Committee to authorize the sale of $8,599,715,000 in bonds. Resolution #13-03 - Resolution #13-04
$499,285,000 March 18, 2013 – the High-Speed Passenger Train Finance Committee approves Resolution IX and Resolution X to authorize sale of $8,599,715,000 in bonds. Resolution X
$499,285,000 March 29, 2013 – the High-Speed Passenger Train Finance Committee previously adopted Resolution III authorizing the issuance of State of California High-Speed Passenger Train Bonds or Commercial Paper Notes in the Principal Amount Not to Exceed $480,800,000 (“Resolution III”) and Resolution VII authorizing the issuance of State of California High-Speed Passenger Train Bonds or Commercial Paper Notes in the Principal Amount Not to Exceed $130,000,000 (“Resolution VII”). As of March 29, 2013, the State had issued $100,990,000 State of California High-Speed Passenger Train Bonds, Series D, currently outstanding in the principal amount of $99,000,000 (the “Resolution III Bonds”) pursuant to Resolution III. $38,775,000 remains in principal amount of bonds or commercial paper notes under Resolution VII, and the Committee now desires to authorize the issuance of bonds to refund any bonds issued from time to time under Resolution VII (the “Resolution VII Bonds”). Resolution XI
$538,060,000 April 11, 2013 – the California State Treasurer to sell $38,775,000 of Safe Reliable High Speed Passenger Train 21st Century bonds as Series F. Official Statement
$703,530,000 April 11, 2013 – the California State Treasurer to sell $165,470,000 of Safe Reliable High Speed Passenger Train 21st Century bonds as Series G. Official Statement
$703,530,000 September 1, 2013 – Long Term Bonds Outstanding Official Statement
$623,705,000 February 1, 2014 – Long Term Bonds Outstanding Official Statement

As Predicted! Unions Target Sacramento Kings Arena Ancillary Development Using California Environmental Quality Act (CEQA)

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Here’s an email I sent to the City of Sacramento Planning and Design Commission about the Sacramento Central Labor Council’s interference in the proposed approval of the Final Environmental Impact Report (FEIR) for the Entertainment and Sports Center (the new Sacramento Kings basketball arena). The Planning and Design Commission will consider recommending city council approval of the EIR at its April 10, 2014 meeting. (See meeting agenda for more information.)


From: Kevin Dayton
Sent: Wednesday, April 09, 2014 10:54 PM
To: City of Sacramento Planning and Design Commission
Cc: City of Sacramento planning staff
Subject: Planning & Design Commission: Speak Out at 4/10 Meeting Against “Greenmail” – Unions Exploiting CEQA for Economic Objectives on ESC – Kings Arena

Dear Members of the City of Sacramento Planning and Design Commission:

According to an article on the Sacramento Business Journal web site today (Union Group Makes Noise Over Development Around Arena – April 9, 2014), the Sacramento Central Labor Council is demanding that the Planning Commission extract the ancillary development from your proposed approval of the Environmental Impact Report under the California Environmental Quality Act (CEQA) for the Entertainment and Sports Center Special Planning District (SPD).

Unions threatening to use CEQA as a tool to extract economic benefits such as labor agreements is no surprise to anyone who has followed proposed developments in the Sacramento region over the past 15 years. Look at the history of environmental review for these projects:

  • Sacramento Railyards
  • Sutter Medical Center Expansion
  • Promenade at Natomas
  • Greenbriar
  • Delta Shores
  • Township 9
  • Metropolitan Hotel
  • West Roseville Specific Plan
  • Roseville Galleria Expansion
  • Rio del Oro in Rancho Cordova
  • Placer Vineyards
  • Regional University Specific Plan
  • Roseville Energy Center
  • Cosumnes Power Plant

This new threat from the Sacramento Central Labor Council was expected. I wrote a comprehensive article published in www.UnionWatch.org on March 11, 2014 predicting how the Entertainment and Sports Center Final Environmental Impact Report would be targeted with union CEQA objections as a strategy to get a union Community Benefit Agreement/Project Labor Agreement on ancillary development. (See text below.)

Most of the development partners targeted in this union CEQA greenmail attempt will lay low and wring their hands hoping this costly CEQA exploitation can be settled somehow without raising costs to the point that it jeopardizes the entire project. But as members of the Planning and Design Commission, you have the authority and the responsibility of service to the public to investigate the objectives of these CEQA complaints.

At the April 10, 2014 Planning and Design Commission meeting, please ask the union representatives and their lawyers the following questions:

  1. What does the City of Sacramento and Sacramento Basketball Holdings (SBH) need to do to resolve your concerns about the environmental impact of the ancillary development around the new Entertainment and Sports Center (aka Sacramento Kings Arena)?
  2. Does a Community Benefit Agreement or Project Labor Agreement have to be part of any settlement to relieve your environmental concerns?
  3. Do you believe backroom deals such as this one to end union CEQA objections against the San Diego Convention Center Phase 3 Expansion are an appropriate way to resolve environmental concerns? (Link to email outlining the deal between the Mayor of San Diego and the head of the San Diego-Imperial Counties Labor Council, AFL-CIO)
  4. Who will you designate to negotiate any settlements with the City of Sacramento and Sacramento Basketball Holdings (SBH)?

For a project of such importance for the Sacramento region, the ulterior motives of groups that identify shortcomings under CEQA need to be examined and aired for the public good. Thank you for the courage to investigate and expose this scheme. See you at the meeting.

Kevin Dayton
President and CEO
Labor Issues Solutions, LLC

 

How a Basketball Arena Would Expand the Unionized Workforce in Sacramento: Part 3

by KEVIN DAYTON on MARCH 11, 2014 · LEAVE A COMMENT

This is Part Three, explaining how unions may attempt to win control of the construction and permanent jobs at the ancillary development around the arena. Part One explained the background of how construction trade unions have already obtained a monopoly on the construction workforce for the arena itself. Part Two explained the union plot to monopolize the service jobs at the arena.

Factions in the Construction Industry: Trusting Pragmatism Versus Principled Cynicism

Leaders of the Sacramento regional construction industry were on the sidelines as the new ownership of the Sacramento Kings basketball team privately negotiated a Project Labor Agreement with trade unions for construction of the new downtown arena. Yet construction business associations such as Associated General Contractors (AGC) and Associated Builders and Contractors (ABC) still supported the city’s plan for the arena.

In a pragmatic decision, these construction associations took the risk to trust that private developers for buildings near the arena will not require their contractors to sign Project Labor Agreements. This development will supposedly include 475,000 square feet of office, 350,000 square feet of retail and commercial space, up to 550 new residential units, and up to 250 hotel rooms, for a grand total of as much as 1.5 million square feet. Up to 11,000 jobs would result.

In exchange for acquiescing to the Project Labor Agreement on the arena, these associations expect fair and open competition for adjacent projects within the city’s Entertainment and Sports District. TheSacramento Bee reported this perspective expressed at a January 27, 2014 rally of contractors and union leaders in support of the arena:

John Cooper of Associated General Contractors said his group, which represents both union and nonunion builders, supports the arena project. “We see an opportunity for huge leaps and bounds when it comes…to job creation,” said Cooper, the AGC’s regional manager.

But Cooper said he’d “pull my support” if the ancillary development – a hotel, retail and more – isn’t open to all bidders. He said “I’ve been assured” there won’t be a project labor agreement covering this ancillary development, like there is for the arena itself.

Political consultant Chris Lehane, who is part of The4000′s leadership, said it’s “premature to ask those questions” about how the ancillary development would be built.

“Our focus right now is to make sure we get those 11,000 jobs,” Lehane said.

A handful of electrical contractors objected vehemently to this arrangement. They felt that allowing unions to have a monopoly on construction of the basketball arena would set a precedent for other major projects in the region. In addition, they did not trust union leaders or the politicians backed by union leaders to resist such a lucrative target once it was definite.

Dissenting from the major trade associations, these contractors individually provided enough campaign funding to revitalize a floundering signature-gathering campaign on petitions for a ballot measure for voters to establish a city charter provision requiring voter approval of a public subsidy for an entertainment or sports facility. Arena supporters feared – and arena opponents expected – that Sacramento voters would approve this check and balance against the proposed $258 million public subsidy for the basketball arena.

Enough signatures were collected to qualify the petition for the June 2014 ballot, but the city clerk disqualified the petitions because of numerous technical errors. The campaign then sued to overturn the city clerk’s decision, but a Sacramento County Superior Court judge agreed with the city clerk’s judgment and also ruled that the city charter could not be amended in this manner.

Can Unions Resist Grabbing More Work Through CEQA Greenmail?

Which of these two positions among bickering groups of contractors will be proven right? One possible indication of the future is an ultra-last-minute attempt by unions to amend a last-minute bill in the California State Legislature providing certain breaks to the arena and surrounding development from the California Environmental Quality Act (CEQA), the primary tool of unions to extort concessions from private developers. (This practice is known as “greenmail.”)

Late in the 2013 session, Senate President pro Tem Darrell Steinberg (D-Sacramento) amended Senate Bill 743 to make some minor modifications to the California Environmental Quality Act and “expedite judicial review of the entertainment and sports center project” for the Sacramento Kings basketball team. Despite some griping from Left and Right, SB 743 passed 56-15-7 in the Assembly and 32-5-2 in the Senate. This occurred early in the evening of the last day of the 2013 session.

As the midnight deadline for legislative action approached, Assembly Bill 852 mysteriously appeared on the Assembly floor, courtesy of Assemblyman Roger Dickinson (D-Sacramento). This bill supposedly made technical corrections to SB 743, passed earlier in the evening.

Reportedly a specific individual senior staffer for the Assembly Republican Caucus became suspicious of the bill and investigated it. This staffer realized that it was some sort of union scheme to remove the CEQA breaks for development around the downtown Sacramento arena.

The Sacramento Bee described what happened next:

In a final flare of end-of-session drama, Assembly Republicans led the defeat of a last-minute labor-inspired cleanup bill related to legislation passed earlier in the evening to hasten the building of a new arena in downtown Sacramento.

Assembly Bill 852 surfaced late on Thursday evening, after both houses had passed Sen. Darrell Steinberg’s SB 743 to streamline the construction of a new arena for the Sacramento Kings. AB 852 was cast as a minor cleanup bill, making just a small change to the arena bill by further restricting which projects could be exempted from some environmental review.

It was requested by labor unions, Steinberg said, who feared that other businesses would get in on the streamlined environmental review procedures intended for the arena.”The concern from labor was that Wal Mart and the big box stores could potentially take advantage of that part of (SB) 743 to get an exemption,” he said.

The 2013 legislative session wrapped up in anger and partisan rancor as the Assembly Republican leadership refused to support AB 852 and accused the Democrats of trickiness. The bill only received 28 votes in the Assembly, and the legislature adjourned for the year with SB 743 intact.

Of course, there was no plan for a Wal-Mart next to the Kings arena. But the distaste of the Left for Wal-Mart provided a politically-potent rationale to “fix” SB 743. An article in Salon provided a perspective on SB 743 otherwise neglected by the news media:

Along with special exceptions for a new stadium for Sacramento’s basketball team, the new law restricts some grounds for CEQA lawsuits. “It’s going to give much more leeway to big companies to just come in and ram these projects through,” said James Araby, who directs the Western States Council of the United Food & Commercial Workers union…

The UFCW and Wal-Mart – and allies on both sides – faced off with particular fury not long before the final SB 743 vote, as legislators considered language labor argued was needed to stop the bill from becoming a loophole for unchecked Wal-Mart expansion…

[Assemblymember Lorena] Gonzalez, a former labor council secretary-treasurer, told Salon that in fights with Wal-Mart, “one of the only tools we’ve been able to use is CEQA, and specifically the traffic impact of Wal-Mart.” Following what she called “massive lobbying by the Chamber of Commerce” and “mainly by Wal-Mart,” the labor-backed amendment failed.

An official with the union-aligned Planning and Conservation League acknowledged in the article that “We all know that Wal-Mart is one of the biggest targets of CEQA lawsuits.”

Is it likely that the amendments backed by the United Food & Commercial Workers union will reappear at the last minute in a budget trailer bill or some other gut-and-amend bill in 2014? Of course it is, and every union will benefit from ending the CEQA break.

More evidence that unions will use environmental laws to target the ancillary development around the Kings arena comes from comments submitted to the City of Sacramento concerning the Draft Environmental Impact Report for the Entertainment and Sports District. As noted in Part 2, the UNITE HERE Local Union No. 49 submitted objections to the report along with remarks about wanting to retain and represent service workers at the new arena.

In addition, a group called Sacramento Coalition for Shared Prosperity submitted objections in conjunction with a demand for a “Community Benefits Agreement” that developers must sign for ancillary development. That agreement, modeled on the L.A. Live Community Benefits Agreement for development around the Staples Center, could guarantee “union jobs” for hotels, restaurants, janitors, parking attendants, and construction trade workers, among various occupations.

Perhaps the biggest threat to the downtown arena is the possibility that SB 743 is unconstitutional and that the arena doesn’t even qualify under the criteria in SB 743. If a court agreed with either of these claims, the environmental review would probably need to start from the beginning.

How will the Sacramento Kings basketball team ownership and the City of Sacramento respond to these costly union demands, packaged with the grounds for potential environmental lawsuits? If unions exploit the weakness of SB 743, they may get the whole package – provided the resulting cost increase allows the Entertainment and Sports District to get built in the first place.

The Three-Part Series: How a Basketball Arena Would Expand the Unionized Workforce in Sacramento

 

1. See How a Basketball Arena Would Expand the Unionized Workforce in Sacramento: Part 1 (how construction trade unions have already obtained a monopoly on the construction workforce for the arena)

2. See How a Basketball Arena Would Expand the Unionized Workforce in Sacramento: Part 2 (how unions are likely to win representation of the food and service workers at the new downtown Sacramento arena)

3. See How a Basketball Arena Would Expand the Unionized Workforce in Sacramento: Part 3 (how unions will likely target the ancillary development around the arena)

Sources

 

Union Leaders and Building Contractors Rally in Support of Arena – Sacramento Bee – March 11, 2014

UNITE HERE Local 49 comments on Draft Environmental Impact Report

Sacramento Coalition for Shared Prosperity comments on Draft Environmental Impact Report

California Senate Bill 743

California Assembly Bill 852

Legislature Rejects Late Night Attempt to Tweak Kings Arena Bill – Sacramento Bee – September 12, 2013

Very Sneaky, Walmart: How The Mega-Retailer Rolled Back California Regulations – Salon – October 14, 2013

Regional Sports and Entertainment Facilities in the Urban Core Attract Costly Political Meddling: Sacramento Kings as a Case Study – www.FlashReport.org – December 16, 2013

After Seven Years, California High-Speed Rail Still Lacks Comprehensive and Credible Plan for Financing System

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The California State Senate Transportation and Housing Committee held an informational hearing on March 27, 2014 entitled “Toward a World-Class Passenger Rail System in California:  Evaluating High-Speed Rail’s Potential for Success.” (See agendabackground information, a report from the California Legislative Analyst’s Office, and the video of the hearing.)

Of greatest concern to committee chairman Mark DeSaulnier (D-Concord) was the lack of a comprehensive and credible plan for financing the system in the California High-Speed Rail Authority Draft 2014 Business Plan.

Some things never change!

I have saved this old email from Governor Arnold Schwarzenegger’s office forwarding an opinion piece published in the May 4, 2007 Fresno Bee. In it, he claims to support High-Speed Rail but doesn’t want to provide significant money for it in the 2007-08 state budget because “there is still no comprehensive and credible plan for financing the system.” He compares the speculative nature of funding sources for High-Speed Rail with the well-outlined plan for complete funding of projects authorized in a proposed water bond – a ballot measure that has never come before California voters.

See the phrases highlighted in bold font below.


From: governorsofficeofexternalaffairs@gov.ca.gov

Date: Fri, 4 May 2007 08:57:45

Subject: Must Build High-Speed Rail

 

Fresno Bee: State Must Build High-Speed Rail

Governor Arnold Schwarzenegger

As the recent Bay Area freeway collapse illustrated — and as a recent Bee editorial correctly pointed out — Californians need and deserve a diverse array of transportation options. I absolutely believe high-speed rail should be one of those alternatives.

A network of high-speed rail lines connecting cities throughout California would be a tremendous benefit to our state.

Not only would its construction bring economic development and the creation of hundreds of thousands of new jobs, but once completed, we would also see improvements to our air quality, reductions in greenhouse gas emissions, congestion relief on our highways and greater mobility for people living in the Valley and other areas of our state currently underserved by other forms of transportation.

Yet it’s been more than 10 years, and the state has already spent more than $40 million in initial planning for the rail line. But there is still no comprehensive and credible plan for financing the system so we can get construction under way.

The High-Speed Rail Authority, the commission in charge of developing a plan for high speed rail in California, estimates the cost of building the system to be more than $40 billion.

Yet so far, the only financing party identified with specificity is the state, which the Authority proposes float a $9.95 billion bond. The remaining 75% of the project cost, or more than $30 billion, has yet to be identified with any specificity or confidence.

Before asking taxpayers to approve spending nearly $10 billion plus interest, it is reasonable to expect the authority and its advisers to identify with confidence where we will find the remaining $30 billion.

A perfect example of what I’m talking about is my $5.9 billion water infrastructure package. By using a public-private partnership approach, we’ve identified a plan that lays out exactly how we are going to pay for every piece of the proposal, from the reservoirs to the groundwater storage to fixing the Delta to our conservation efforts.

For the reservoir portion, the estimated building cost is $4 billion. We’ve proposed $2 billion in general obligation bonds for the public portion and $2 billion in lease revenue bonds to be paid for by the water users themselves, i.e. water agencies, irrigation districts, cities, etc. And to ensure that this funding materializes, we are requiring that contracts be in place to pay for the lease revenue bonds before public dollars are spent on the projects.

Identifying the exact funding sources for large transportation projects is more problematic, which is why we need the authority to come up with a well-thought out financing proposal before moving forward.

I want to commend the authority for its great progress so far in completing the necessary environmental studies and identifying future rights-of-way that we would need to acquire.

Yet even the authority’s executive director, Mehdi Morshed, says the longer the state waits to build a high-speed rail network, the more expensive it will get. I could not agree more.

That’s why I have directed my recent appointees to work with the authority and its financial advisers to develop a comprehensive plan for financing the project in its entirety, so we can make high-speed rail a reality in California once and for all.

Last year, my administration increased funds for the authority to continue its work, and this year, my budget proposes additional funding.

I am willing to explore multiple approaches in order to fund the balance and execute this project — whether through federal grants, local participation, vendor support, co-development opportunities, public-private partnerships or any other realistic financing plans in which the authority expresses confidence.

I look forward to working with the authority and reviewing its proposal as soon as possible.

But let me be clear: I strongly support high-speed rail for California, and especially for the San Joaquin Valley. Increasing the Valley’s transportation options, especially after voters passed Proposition 1B to repair Highway 99, would better serve the region’s growing population and enhance the Valley’s critical importance to our state’s economy.

The promise of high-speed rail is incredible. Looking forward to the kind of California we want to build 20 and 30 years from now, a network of ultra-fast rail lines whisking people from one end of the state to the other is a viable and important transportation alternative and would be a great benefit to us all.

With a responsible plan in place, we can feel secure in delivering high-speed rail and bringing greater opportunity — and a brighter future — to all Californians.

###

Background

Governor Schwarzenegger had initially included only $1.2 million in his original proposed 2007-08 state budget to keep the California High-Speed Rail Authority operating. (The California High-Speed Rail Authority reportedly had requested $103 million.) The Los Angeles Times reported in the April 29, 2007 article State Puts Brakes on Bullet Train Plan that “Schwarzenegger’s budget would reduce the authority to an office with no more than six full-time employees — without the 75 consulting firms with 300 employees it has now. Outside contracts would need to be canceled, route planning put on hold and environmental and engineering work frozen.” He also proposed again postponing the 2008 ballot measure to authorize bond sales.

Environmental and transit groups criticized this. They claimed he was betraying a commitment to reduce greenhouse gas emissions through Assembly Bill 32, the Global Warming Solutions Act of 2006 that he signed into law.

In the end, the budget signed by the Governor included $1,159,000 for support of the High-Speed Rail Authority.

California High-Speed Rail 2014 Draft Business Plan Doesn’t Depict Project Labor Agreement Accurately or Usefully

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By law, every two years the California High-Speed Rail Authority needs to prepare a “business plan,” which includes publishing a draft at least 60 days before final publication so that the public can review it and submit comments to the Authority about it. The Authority is required to “take into consideration comments from the public hearing and written comments” before publishing the final business plan. It is required to approve the final business plan at a board meeting and publish it by May 1, 2014.

My article California High-Speed Rail Business Plan Misrepresents Project Labor Agreement posted on March 18, 2014 in www.UnionWatch.org identifies ten distortions of just one paragraph of the 2014 Draft Business Plan. That paragraph describes the Authority’s “Community Benefits Policy,” which was implemented for construction through a Project Labor Agreement (“Community Benefit Agreement”) with the State Building and Construction Trades Council of California.

The Western Electrical Contractors Association (WECA), Plumbing-Heating-Cooling Contractors Association of California (CAPHCC), Air Conditioning Trade Association (ACTA), and Associated Builders and Contractors (ABC) – San Diego Chapter have already submitted comments to the California High-Speed Rail Authority based on my post about how the 2014 Draft Business Plan depicts the Project Labor Agreement:

March 20, 2014 Comments to California High-Speed Rail Authority on Project Labor Agreement.

I analyzed the provisions of the Project Labor Agreement in detail in my January 11, 2013 post in www.LaborIssuesSolutions.com entitled Analysis of the Phony Community Benefits and Other Provisions in the Union Project Labor Agreement for the First Segment of California’s High-Speed Rail. I also explained the origins of the Project Labor Agreement in my April 29, 2013 post entitled Newly Obtained Documents Reveal Which Elected Official Was the Catalyst for the Project Labor Agreement on California High-Speed Rail: Fresno Mayor Ashley Swearengin.

Here is the final version of the Project Labor Agreement:

Project Labor Agreement with Unions for California High-Speed Rail

To submit comments on the depiction of the Project Labor Agreement or other aspects of the California High-Speed Rail 2014 Draft Business Plan, go to High-Speed Rail Authority Releases Draft 2014 Business Plan.

Unions and the Sacramento Kings Arena: The Three-Part Series in www.UnionWatch.org

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A new “Entertainment and Sports Center” planned for downtown Sacramento is intended to keep the Kings professional basketball team from moving to another city. A non-binding term sheet approved by the Sacramento City Council on March 26, 2013 indicated a $447 million cost for construction of the arena, to be supplemented by a $258 million public subsidy funded primarily by a city arrangement involving parking revenue.

This project will be a financial bonanza (as well as a public relations triumph) for unions, union-affiliated fringe benefit trust funds, and labor-management cooperation committees. My three-part series in www.UnionWatch.org entitled “How a Basketball Arena Would Expand the Unionized Workforce in Sacramento” provides the best public explanation available about how unions have schemed and will likely scheme to gain control of as many jobs as possible through construction and operation of the arena and surrounding development.

  • Part One explains the background of how construction trade unions have already obtained a monopoly on the construction workforce for the arena itself.
  • Part Two explains the union plot to monopolize the service jobs at the arena.
  • Part Three explains how unions may attempt to win control of the construction and permanent jobs at the ancillary development around the arena.

In addition, my December 16, 2013 article in www.FlashReport.org entitled Regional Sports and Entertainment Facilities in the Urban Core Attract Costly Political Meddling: Sacramento Kings as a Case Study provides a broader perspective on the ideological agenda grafted onto this new sports and entertainment facility:

…the arena is entangled in idealistic schemes that impose significant financial and logistical costs. Progressive community activists recognize the potential of the downtown arena as a social engineering project. They can get away with using the arena as a vehicle to change the world because so many ordinary people and influential business and community leaders seem to want it at any cost…[business leaders] have to align themselves with leftist political leaders and organizations to secure the Kings arena in a downtown location.

Of course, unions will transfer some money collected through their representation of workers at the downtown arena district to their various in-house political operations and to the Democratic Party in the Sacramento region. This money may hasten and solidify the ongoing transition of Congressional seats, state legislative seats, and local government seats in the Sacramento suburbs from Republican to Democrat control.

In the long term, elected officials will need to figure out how to pay off the bond debt for the Entertainment and Sports Center (and the remaining debt from what is now Sleep Train Arena) if revenue projections for parking aren’t realized by the City of Sacramento. Political pressure will be on the suburbs to share in this cost:

Be vigilant for an ambitious politician from the City of Sacramento to propose some sort regional tax or fee system, perhaps implemented through the Sacramento Area Council of Governments (SACOG), the regional metropolitan planning organization.

As Vote Nears on Binding Term-Sheet for Sacramento Kings Arena, Sacramento City Council to Repeal an Open Government Policy for Contracts

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UPDATE: The Sacramento City Council ended up keeping the 10-day posting requirement for contracts greater than $1 million. Here’s an excerpt from the editorial Don’t Pull Back on Open Government in the March 12, 2014 Sacramento Bee:

Safeguarding open government is a constant struggle. Backsliding can happen easily if people aren’t vigilant…Yet there was a proposal before council members to kill the 10-day rule for big contracts – at least until The Bee’s editorial board starting nosing around and a local watchdog group raised a stink.

Tuesday night, the council said it would keep the “sunshine” rule, and several members spoke in favor of transparency. But even the prospect of backtracking was disturbing, and the timing was curious, to say the least. It only fed suspicions that the city is trying to ram through the downtown arena deal.

As watchdog group Eye on Sacramento pointed out in a Monday letter to council members, next month they are to consider the final financing agreement for the planned downtown arena. It’s a deal that could use as much public and media scrutiny as possible, given how important the project is for the city and how much taxpayers have at stake. Last March, the council was criticized for making a mockery of transparency by approving the current arena “term sheet” only three days after it had been made public.

The group Eye on Sacramento probably prevented the Sacramento City Council from repealing the policy without controversy. See the group’s alert letter, below.


One week before the annual “Sunshine Week” to recognize and promote open and accessible government practices, the Sacramento City Council has an item on its March 11, 2014 meeting agenda to repeal its policy that all agreements greater than $1,000,000 shall be posted on the city’s website and be made available to the public at least 10 days prior to council action (unless waived by a 2/3 vote of council).
See the staff report: Council Rules of Procedure.

The item is disguised on the city council meeting agenda as the innocuous-sounding “Pass a Resolution approving the Council Rules of Procedure.” I’ll admit looking at the agenda on Friday, March 7 but not recognizing this as anything significant. They fooled me.

The City of Sacramento did not fool Craig Powell of the watchdog group Eye on Sacramento. He sent this email to the city council and other Sacramento leaders this afternoon:

From: Craig Powell
To: Sacramento City Council and Others
Sent: 3/10/2014 3:38:40 P.M. Pacific Daylight Time
Subj: EOS Objects to Repeal of the 10-Day Sunshine Rule on $1MM+ City Contracts

Dear Mayor Johnson and Members of the City Council,

We are writing to express our strongest possible objection to the proposal before you tomorrow evening to gut the current city council rule that requires that all city contracts involving more than $1 million be posted on the city’s website and be made available to the public at least 10 days before the council takes action on such contracts.

This 10-day posting/disclosure rule is commonly known as the city’s “Sunshine Rule” and was adopted to assure that the public and the media have adequate time to review and provide feedback to you on the terms of major city contracts before you vote on them (Council Rules Chapter 7, Section E-2-d; http://sacramento.granicus.com/MetaViewer.php?view_id=21&event_id=2435&meta_id=412675 ).

The council’s adoption of the Sunshine Rule has been the single most important upgrade in city government transparency in the past 20 years.

Had the Sunshine Rule been in place when the city was considering approval of its 20-year exclusive, no-bid prime garbage contract with BLT Enterprises (now Waste Management) in 2010, it is unlikely that such an unfair and grossly burdensome contract would have been imposed on hapless city utility ratepayers.  Because the Sunshine Rule was not in place at the time, the egregious city/BLT Enterprises contract was jammed through late at night during the final session of the term of the city council with zero public or media awareness or analysis.  The Sacramento County Civil Grand Jury has castigated the city for both the atrocious terms of the BLT contract and the shady circumstances under which it was approved (Grand Jury, 2011-2012 Reports, page 39; New Tab).

The proposed draft of the new council rules proposes that the Sunshine Rule apply in the future only to city labor contracts – which are already covered by the current Rule since every city union contract involves more than $1 million.  Gutting the Sunshine Rule would return us to the council’s bad old days when it all too often provided de minimis notice to the public and the media of the terms of large contracts that have a lasting and major financial impact on the city.  That is simply unacceptable.

How can you expect the citizens of Sacramento to trust the city council and city government when you are taking active steps to hide from them the details of major city contracts?  When you intentionally change the rules so you can provide inadequate public notice of the terms of major contracts you only breed public cynicism and suspicion over what it is you are trying to hide from the public.

For example, is it sheer coincidence that this move to gut the council’s Sunshine Rule is occurring just three weeks before you are set to approve a massive public subsidy of a new sports and entertainment facility, set for April 1st?  Somehow we doubt it.

There has been no showing whatsoever of any need to water down the Sunshine Rule.  The council already has a relief valve in place in cases of exigent circumstance: the council, by a 2/3rds vote, can choose to waive the 10-day posting requirement.

We can only surmise that some council members are seeking to gut the Sunshine Rule now in order to deprive the public and the media of a reasonable opportunity to review the several hundreds of pages of legal documents that will comprise the “arena deal.”  We can only conclude that you don’t want the public and the media to have adequate time to review the documents, determine the impacts and provide citizen feedback to you, their elected representatives.

If you approve this rule change tomorrow evening you will be sending a clear signal that you want to keep the public and media in the dark for as long as possible about the final terms of the arena deal and deprive them of the time needed to adequately review the final deal and provide informed feedback to the council. No council member voting to gut the Sunshine Rule could ever again creditably claim to be supportive of transparency and openness in city government.

We beseech you: please show a higher level of respect for your constituents and reject this misguided effort to gut the city’s Sunshine Rule.  Thank you.

Very truly yours,

Craig Powell, President
Phone: (916) 718-3030
cc:  Mr. John Shirey, City Manager
Ms. Shirley Concolino, City Clerk
Mr. James Sanchez, City Attorney
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Project Labor Agreement Is Top Concern at Contractor Outreach Event for Sacramento Kings Arena

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Sign for Contractor OutreachToday (March 6, 2014), the City of Sacramento, the Sacramento Kings ownership, and construction manager Turner held a contractor outreach meeting to “start a conversation” with companies interested in potential work opportunities in building the new $447 million Entertainment and Sports Center in downtown Sacramento. More than 250 people registered for the event, and many attendees had to stand in the back of the room.

Line for Contractor OutreachA substantial number of these companies were construction-related firms. I overheard several conversations in which contractors were discussing the requirement to sign a Project Labor Agreement with unions as a condition of work. People were unsure about what this union deal meant for their companies if they won a contract.

Crowd at Contractor OutreachI suspected that the formal presentation at the contractor outreach meeting would evade references to the more reprehensible provisions of the Project Labor Agreement (aka “Community Workforce and Training Agreement”). I also expected that copies of the Project Labor Agreement would not be provided to attendees of the meeting. (Six months after the deal was announced by Sacramento Mayor Kevin Johnson at a September 4, 2013 press conference, the public still does not have access to the union deal.) And in fact the outreach event did not provide copies of the Project Labor Agreement. During the question-and-answer period, I asked when the Project Labor Agreement would be available for the public to see. Attendees were told that it will be on a web site soon, perhaps in a few weeks.

For those curious in knowing more about this minor little issue, a handout was provided at a table at the far side of the meeting room. It had a “Fact Sheet” on one side and answers to “Frequently Asked Questions” on the other side. This handout was referenced by a representative of Turner during his presentation and by the head of the Sacramento-Sierra’s Building and Construction Trades Council during the question-and-answer period.

But the most effective and honest handout at the event was distributed by the Coalition for Fair Employment in Construction. Any contractor at the outreach event who read this handout would learn much about the Project Labor Agreement and the politics behind it.March 6, 2014 - Sacramento Kings Arena Contractor Outreach Flyer - Project Labor Agreement - Front

March 6, 2014 - Sacramento Kings Arena Contractor Outreach Flyer - Project Labor Agreement - Back

News Coverage

Sacramento Makes Court Push to Get Control of Former Macy’s Men’s Store – Sacramento Bee – March 6, 2014 (last paragraph reports on workshop and protest against union deal)

Contractors Attend Kings Build Arena Workshop – FOX 40 News (Sacramento) – March 6, 2014

Federal Judge Declines to Throw Out New Union-Sponsored California Prevailing Wage and Apprenticeship Mandate Bill for Refineries

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Today (March 5, 2014), in the U.S. District Court for the Eastern District of California – Sacramento Division, Judge John A. Mendez rejected a petition from construction contractors and construction workers to suspend Senate Bill 54, signed into law by Governor Jerry Brown on October 13, 2013. This occurred after 90 minutes of oral arguments.

It was a victory for the State Building and Construction Trades Council of California, the sponsor of Senate Bill 54. Enacted under the guise of promoting public health and safety, this law fulfills on the state level the 30-year unsuccessful effort of construction trade unions in Contra Costa County to gain control of the construction contract workforce at petrochemical refineries.

What Is Senate Bill 54?

Alleged “findings of the legislature” in the preface to SB 54 provide the justification for the law. “Unskilled and untrained workers” at petrochemical refineries are a risk to public health and safety. In addition, outside contractors are a high risk to public health and safety because “they generally will be less familiar with the operations of the facility and its emergency plans” and because “the owner or operator of the facility will have less incentive to invest in their training.”

Therefore, the state now requires refinery contractors to pay workers “at least at a rate equivalent to the prevailing journeyperson wage for the occupation, or be registered in a state-approved apprenticeship program.” And in a phased plan, contractors will eventually need to have 60% of their journeypersons be graduates of a state-approved or federally-approved apprenticeship program.

Why Is Senate Bill 54 a Problem for Some Contractors?

Prevailing Wage

Senate Bill 54 attempts to graft state-mandated prevailing wage rates implemented for public works projects onto exclusively private construction projects. A contractor employing workers in trades for which the contractor is not signatory to a union Master Labor Agreement will likely have to increase wages to incorporate the various employer payments included in state determinations of the general prevailing rate of per diem wages. (For example, the employer payments for “Other” as indicated in California Labor Code Section 1773.1(a)(7-9) are not excluded from the refinery contractor wage requirement, although employer payments for travel and subsistence and holiday pay are specifically excluded.)

Industrial contractors that choose to entangle themselves with this complicated law will pass the increased costs in bids to refineries. Refineries will then pass the increased costs to consumers through higher gasoline and jet fuel prices. In turn, these higher gas prices change consumer behavior in ways some legislators regret, but other legislators appreciate.

This prevailing wage requirement in SB 54 appears to be a violation of the 1995 decision of the U.S. Court of Appeals for the Ninth Circuit in Chamber of Commerce of the U.S. v. Bragdon. In that decision, the court ruled that an ordinance enacted by the Contra Costa County Board of Supervisors in 1990 (“Prevailing Wages for Industrial Construction”) requiring employers to pay state-mandated prevailing wage rates to their trade workers on wholly private construction projects was preempted by the National Labor Relations Act (NLRA).

Apprenticeship Training Requirements

Two training requirements are of more immediate concern to refinery contractors and their employees who are independent of unions. One provision of SB 54 requires trainees to be enrolled in a state-approved apprenticeship program. Another requires a significant percentage of the skilled journeypersons employed by a contractor to be graduates of a state-approved or federally-approved apprenticeship program.

In the counties where most refineries are located (Contra Costa and Solano, Kern, and Los Angeles), unions have a monopoly on training through state-approved apprenticeship programs for many construction trades. To complicate matters, state law requires contractors on state or local public works projects to train workers only through state-approved apprenticeship programs, so the presence of federally-approved apprenticeship training programs in California is minimal.

Apprenticeship training is highly politicized in California, because it can be used to control who and how many people enter the construction workforce. In particular, unions use the notorious “needs test” in the California Labor Code to block approval of new programs or expansion of existing programs. Getting a new program approved generally requires years of administrative actions and litigation costing hundreds of thousands of dollars.

For more details about the needs test, see my March 5, 2007 article in www.FlashReport.org entitled: California Law Discourages Vocational Education, But the Feds Are Cracking Down.

Arguments of the Plaintiffs (Contractors and Workers)

Attorneys for the contractors and the employees did not hold back from asserting that SB 54 was a law carefully designed to favor union contractors and union workers on refinery projects. The State of California sets prevailing wage rates based on union Master Labor Agreements. Unions monopolize state-approved apprenticeship programs for most construction trades and aggressively exploit state law to fight any threats of competition in training. Unions outside of the traditional construction trades are excluded from the state’s prevailing wage and apprenticeship system.

They argued that Senate Bill 54 is causing imminent harm by forcing companies now to make business decisions that relate to future bids that fall under the requirements of the new law. Contractors either have to begin adjusting their workforce and their hiring and training practices to comply with SB 54 or begin a long process of challenging SB 54 as unconstitutional.

Meanwhile, employees who are not graduates of an apprenticeship program become “suspect” despite having significant experience and skills. If unions monopolize apprenticeship training for their trade, these employees may eventually need to apply to union apprenticeship programs to pursue years of classroom work and on-the-job training – even the plaintiff in this case who has 31 years of experience working in the trade.

Attorneys presented a scenario in which a contractor lacking employees who graduated from a state-approved or federally-approved program would need to lay off workers and then try to find replacement workers who met the requirement, either by requesting a union to dispatch workers or by advertising for workers in places and ways (such as a newspaper advertisement in Texas) that would encourage workers who met the requirements to apply for the jobs.

If a contractor or group of contractors decided to establish new apprenticeship programs and seek approval from the state to operate them in order to comply with SB 54, unions would immediate challenge the approval by declaring that the existing union programs could serve all training needs and therefore a new program was not justified under state law.

Arguments of the Defendants (State of California and Construction Trade Unions)

Not surprisingly, the arguments of the State Building and Construction Trades Council of California were condescending and dismissive of refinery contractors that are not unionized or have Master Labor Agreements with unions outside of the building trades, such as the Steelworkers. They insinuated that construction trade unions already have skilled workers and adequate wages, while non-union contractors were resisting SB 54 because it would prevent them from bringing untrained workers from out-of-state at low wages into the refineries.

Defendants pointed out that SB 54 did not make any distinctions between union and non-union workers. They claimed that union training programs dispatch apprentices to non-union contractors. They claimed that workers who graduated from a union apprenticeship program and then subsequently resigned their union membership might be looking for jobs.

A theme from defendants was that it was quite possible for contractors to comply with SB 54, but these contractors simply chose not to do it. In addition, defendants argued that SB 54 could not be shown to affect bid awards. “Maybe the refineries don’t want to hire them under their own free will” and will make future decisions to spurn non-union contractors and award bids to union contractors without consideration of SB 54.

If refineries end up succumbing to union demands for Project Labor Agreements on all future construction contract work, “freedom of choice in the market” will surely be the claim from unions.

Comments from the Judge

Throughout oral arguments, Judge Mendez expressed concern that the plaintiffs did not have standing in the case because they had submitted nothing for the record that clearly showed injury was “concrete and particularized” and “actual or imminent, not conjectural or hypothetical.” He pointed out how plaintiffs frequently used the words “maybe” and “may.” He noted there was no evidence of a refinery bidding any work under SB 54 or any employees looking for a new job or being threatened with termination because of SB 54.

Of importance to Judge Mendez was the lack of participation in the case by refineries, which were the primary regulatory target of SB 54. “Should I be concerned?” he asked. Judge Mendez asked how harm could be proven if the refineries did not make a declaration for the record.

Finally, Judge Mendez warned that the power of a federal court to throw out a law approved by the state legislature and governor, with a stated reason for enactment, should be used sparingly. He saw possibilities – but not evidence – of harm to the contractors and employees. It’s “not impossible to come into compliance” with SB 54.

Senate Bill 54 continues to be state law. And as the State Building and Construction Trades Council of California stated in an October 14, 2013 bulletin following the signing of SB 54, “we encourage all affiliated trades to take this opportunity to unionize non-union contractors that are now working in the refineries.”


The case is Timec Company, Inc. v. Brown, Case No. 2:13-CV-02521 JAM DAD.

Timec Company, Inc. v Brown – Filed Memorandum of Points and Authorities

Plaintiffs were three companies (Timec Company, Inc., Petrochem Insulation, Inc., SSP Industrial Plant Reclamation, a Joint Venture), and two employees, Anthony Gillespie and Rodolfo Lopez.

Defendants were Director of the Department of Industrial Relations Christine Baker, Chief of the Division of Apprenticeship Standards Diane Ravnik, and Secretary for Environmental Protection Matt Rodriguez.

On February 10, 2014, the judge dismissed initial defendants Governor Jerry Brown, Attorney General Kamala Harris, and the California Environmental Protection Agency.

On February 3, 2014, the judge granted permission for the State Building and Construction Trades Council of California, AFL-CIO to intervene as a defendant in the case.

Marin County Citizens Didn’t Know about Project Labor Agreement When Voting in 2013 on Measure F for General Hospital Replacement

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At the January 14, 2014 meeting of the Sonoma County Board of Supervisors, a representative of the Northern California Carpenters Regional Council read a letter dated January 13, 2014 from Jon Friedenberg, Chief Administrative Officer of Marin General Hospital. This was unexpected.

In the letter, Friedenberg expressed his support for Project Labor Agreements. He also noted that a union agreement had been approved with the “North Bay Building Trades” (actually the Marin Building and Construction Trades Council) for the Marin General Hospital replacement project.2014-01-13 Marin General Hospital signed PLA

I was not aware of that government-mandated Project Labor Agreement, although I had assumed that this project would be a union target after 68.49% of Marin County voters approved Measure F, on the November 5, 2013 ballot, to borrow $394 million via bond issues (up to 40 years in maturity) to fund the project.

On January 15, 2014, I began my effort to obtain background about this Project Labor Agreement. I soon found out that the elected Marin Healthcare District Board of Directors had voted on June 11, 2013 to require the future construction management firm to sign a Project Labor Agreement with unions.

No opponents or members of the public spoke about the proposal at the June 11, 2013 meeting. One union official spoke in support of it, and Michael Vlaming of Vlaming & Associates made a presentation about it.

The Marin Healthcare District apparently hired Vlaming to prepare an official justification for the Project Labor Agreement. Formerly with Scarth-Lyons & Associates, Vlaming has obtained contracts to justify, negotiate, and administer Project Labor Agreements for local governments such as the Contra Costa Water District and the City of Brentwood.

On March 3, 2014, I finally obtained a copy of the “draft tentative” Project Labor Agreement. It was real, but everyone had overlooked it, for obvious reasons.

Board meeting agendas and minutes for the Marin Healthcare District are not easily accessible for review on its web site. There was no reference to this now-celebrated Project Labor Agreement in the Measure F ballot description (approved by the board on July 16, 2013) or arguments. Unions were not acknowledged even where the ballot argument described an “extraordinary coalition of Marin County leaders” supporting Measure F. No news stories about Measure F referenced the Project Labor Agreement, and a representative of the Marin Independent-Journal newspaper (which endorsed Measure F with a routine argument) admitted that supporters of Measure F had never mentioned it.

Basically, the Project Labor Agreement was hidden from Marin County voters, whose support for Measure F barely exceeded the required two-thirds threshold. If voters had known about the costly Project Labor Agreement monopoly for unions, it probably would have failed.

There was one indication that unions had a commitment for a Project Labor Agreement.

Out of $904,216.64 in monetary and in-kind contributions to the “Citizens for Marin General Hospital – Yes on Measure F – Sponsored by and with major funding from Marin General Hospital” campaign, $834,311.84 came from Marin General Hospital itself. But almost all of the supplemental contributions came from construction unions:

Northern California Carpenters Regional Council Issues PAC in Oakland

$12,004.80

Northern California District Council of Laborers Issues PAC in Sacramento

$10,000

Sheet Metal Workers’ International Association Local No. 104 Issues Committee in San Ramon

$8,000

International Brotherhood of Electrical Workers Local 551 Issues PAC in Sacramento

$5,000

Operating Engineers Local No. 3 Statewide PAC in Alameda

$5,000

San Francisco Laborers Local 261 PAC in San Francisco

$5,000

U.A. (Plumbers) Local 38 COPE Fund in San Francisco

$5,000

Sprinkler Fitters & Apprentices Local 483 PAC in Hayward

$5,000

Bricklayers & Allied Craftworkers Local No. 3PAC in San Leandro

$2,000

Carpet, Linoleum & Soft Tile Workers Local Union 12 in San Jose

$2,000

Glaziers, Architectural Metal & Glass Workers Union Local 718 in San Francisco

$2,000

Painters Local 83 in Petaluma

$2,000

Heat & Frost Insulators & Allied Workers in Benicia

$2,000

California Teamsters Public Affairs Council Issues Account in Sacramento

$1,000

DRIVE – Democrat, Republican, Independent Voter Education (Teamsters) in Washington, DC

$1,000

Teamsters Local Union No. 665 in Daly City

$1,000

International Union of Painters & Allied Trades District Council 16 in Livermore

$1,000

Total from Construction Unions

$69,004.80


Sources

Draft Project Labor Agreement for Marin Healthcare District – General Hospital Replacement Project

Marin Healthcare District Board of Directors June 11, 2013 meeting agenda, staff report, and minutes, with the subsequent Chief Administrative Officer letter endorsing the Project Labor Agreement

November 5, 2013 Marin County Election: ballot description and arguments for Measure F

November 5, 2013 Marin County Election: election results for Measure F

Measure F is about Safety and Modern Hospital Care - editorial - Marin Independent-Journal – September 8, 2013

Campaign Contributions as of September 21, 2013 to Citizens for Marin General Hospital

Campaign Contributions as of October 19, 2013 to Citizens for Marin General Hospital

Campaign Contributions as of December 31, 2013 to Citizens for Marin General Hospital

Time for City of Tracy to Reveal Identity and Plot of Horizon Planet, a Mysterious Group Using the California Environmental Quality Act (CEQA)

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Here’s an email I sent to the Tracy City Council and top management of the City of Tracy.

 

From: Kevin Dayton
Sent: Monday, March 03, 2014 10:09 PM
To: ‘council@ci.tracy.ca.us’
Subject: For Tracy City Council: 3/4/14 closed session item – Horizon Planet v. City of Tracy, et al.

Dear Tracy City Councilmembers:

During your closed session meeting tomorrow (March 4, 2014), you will discuss Pending Litigation – Horizon Planet v. City of Tracy, et al. (San Joaquin County Superior Court Case No. 39-2013-00302508-CU-WM-STK).

I urge you to inform the public about the true identity of this alleged group known as “Horizon Planet” and reveal the concessions it is demanding from the City of Tracy and/or the parties planning to develop the Cordes Ranch project.

At some point, someone in this state needs to have the gumption to reveal the extent of how the California Environmental Quality Act (CEQA) is used in actual practice behind the scenes. Hiding behind a law firm, the backers of the so-called “Horizon Planet” organization have been hounding your city concerning the approval of several projects. The public doesn’t know who they are or what they want. Yet the public is paying to defend your city from litigation and may end up paying some sort of settlement.

Time to flush them out.

Here’s an article I wrote in the fall of 2013 in www.FlashReport.org about Horizon Planet’s activities in Tracy: Space Aliens Abuse CEQA!

Here’s the Petition for Writ of Mandate – Horizon Planet v. City of Tracy, et al.: http://phonyuniontreehuggers.com/wp-content/uploads/2013/11/2013-10-02-Horizon-Planet-v.-City-of-Tracy-Cordes-Ranch-Project.pdf

Kevin Dayton
President and CEO
Labor Issues Solutions, LLC

My Comprehensive Report on Union Interference with Proposed Sacramento Kings Arena: Part 1 – the Arena Project Labor Agreement

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I’ve written several posts on www.LaborIssuesSolutions.com about the efforts of trade unions over the past ten years to win monopoly control of construction for a proposed Sacramento “entertainment and sports center” and future development around it. See New Sacramento Kings Arena for a compilation of these articles.

I’m summarizing the union activities and the response of the Merit Shop in a two-part series in www.UnionWatch.org. Part One of How a Basketball Arena Would Expand the Unionized Workforce in Sacramento describes circumstances related to the planning and execution of a Project Labor Agreement that construction companies would sign with unions as a condition of working on construction of the arena itself.

Part Two will explain the union plot to monopolize the service jobs at the arena and the construction and permanent jobs at the ancillary development around the arena.

Coalition for Fair Employment in Construction Wants Project Labor Agreement on Sacramento Kings Arena Released to Public

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Here’s a press release emailed today (February 19, 2014) by the Coalition for Fair Employment in Construction regarding the Project Labor Agreement for the proposed downtown Sacramento Entertainment and Sports Center (an arena for the Sacramento Kings basketball team).

PRESS RELEASE
February 19, 2014
Contact: Eric Christen
(858) 431-6337

Sacramento, CA - The Coalition for Fair Employment in Construction is demanding that the Sacramento Kings ownership and the Sacramento-Sierra Building and Construction Trades Council immediately release to the public a copy of an alleged Project Labor Agreement for the proposed Kings Arena. It is reported that construction companies will have to sign this contract with unions as a condition of building the proposed $447 million publicly-subsidized Entertainment and Sports Center.

“The Project Labor Agreement now plays an important role in the executive and judicial operations of the City of Sacramento,” said Eric Christen, executive director of the Coalition for Fair Employment in Construction, a statewide organization that supports fair and open bidding competition on public works projects.

“When will citizens get to see it themselves? When will the city’s political leadership have a chance to review this backroom deal? Why aren’t community leaders interested in verifying Mayor Johnson’s relentless claims about the wonders of this union agreement?” Christen adds.

“I’m guessing there is something embarrassing in that union deal,” said Christen. “The Kings have to suppress it, just like they suppress a public vote on the arena subsidy.”

Beyond the mere fact that a Project Labor Agreement is imposed on a public works project receiving a $258 million public subsidy, the Coalition for Fair Employment in Construction provides three examples to show why the Project Labor Agreement is a matter of public concern:

  • Mayor Kevin Johnson held a press conference on September 4, 2013 to announce the Project Labor Agreement. (The ill-fated press conference, coordinated by the elite Mercury Public Affairs firm, backfired when opponents of the backroom union deal held their own impromptu press conference immediately afterwards.)
  • At the State of the City address on February 12, 2014, Mayor Johnson extensively cited alleged benefits and conditions of the Project Labor Agreement, including a comment about a provision for homeless people and convicted criminals to build the arena.
  • Unions and community organizations filed a brief in court on February 14, 2014 in support of the City of Sacramento’s position that a petition for a public vote on the arena subsidy failed to qualify for the ballot. The basis for submitting that amicus brief is the alleged Project Labor Agreement.

A public records request submitted by Kevin Dayton of Labor Issues Solutions, LLC to the Office of the Mayor on October 16, 2013 failed to uncover the Project Labor Agreement, although it revealed correspondence about the deal between the mayor’s office, union representatives, and personnel of Mercury Public Affairs, an elite public relations firm working for the Sacramento Kings ownership. Dayton’s public attempts to obtain the backroom union deal and expose it have provoked mockery and derision from supporters of the Kings arena $258 million public subsidy.

“The Coalition for Fair Employment in Construction had to sue the City of San Diego in 2013 to wean the San Diego Convention Center Phase 3 Expansion Project Labor Agreement out of the hands of the wheelers and dealers,” said Christen. “In the process, we also obtained the actual union deal and the complete list of political payoffs to unions from the San Diego Mayor’s office.”

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Proof We Mean Business – Lawsuit Coughed Up a Union Deal in San Diego in 2013

2013 Lawsuit Against City of San Diego to Obtain Secret Project Labor Agreement:

http://sandiegoconventioncenterscam.com/wp-content/uploads/2013/04/Coalition-for-Fair-Employment-in-Construction-v-City-of-San-Diego.pdf

Secret Convention Center Union Deal Revealed in Private Email of Chief of Staff to Mayor:

http://sandiegoconventioncenterscam.com/new-secret-convention-center-union-deal-revealed-in-private-email-of-chief-of-staff-to-former-mayor-jerry-sanders/

We Got It: The Secret Project Labor Agreement for San Diego Convention Center:

http://sandiegoconventioncenterscam.com/san-diego-convention-center-phase-3-expansion-project-labor-agreement/

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Unions Fail to Retain San Diego Mayor’s Office Despite Advantages – My www.UnionWatch.org Article Compiles Union Campaign Spending

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Republican City Councilman Kevin Faulconer handily defeated Democrat City Councilman David Alvarez with 54.4% of the vote in a February 11, 2014 special election runoff for Mayor of San Diego. My February 14, 2014 www.UnionWatch.org article Unions Fail to Retain San Diego Mayor’s Office Despite Advantages builds on commentary since the election about how unions played a role in the defeat of Alvarez despite spending so much money.

It includes a compilation of campaign expenditures ranked by amount of money spent.

California High-Speed Rail Could Be Issue in Four Races for Statewide Office

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Today (February 11, 2014), my article 4 Democrat-Held Statewide Offices Vulnerable to GOPers Who Focus Campaigns on High-Speed Rail Fiasco is in www.FlashReport.org. It encourages Republicans to run for statewide offices and use the high-speed rail issue in their campaigns:

Four Democrat statewide elected officials are helping the California High-Speed Rail Authority to perpetuate its costly and deceptive operations at the expense of the People of California. At various times, the Governor, Treasurer, Controller, and Attorney General had the authority and the responsibility to serve as an appropriate check and balance against a looming boondoggle. Instead, they chose to support the continuation of the debacle or shirked their duties at pivotal moments, even after a court ended all doubts by confirming that the California High-Speed Rail Authority failed to comply with the law.

As of February 11, 2014, here are the candidates running for these four offices.

Four Democrat-Held Statewide Offices Vulnerable to Republicans Who Focus Campaigns on High-Speed Rail Fiasco

 

Another Tax Reform Group Backed by Unions: Don’t Be Fooled

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Perhaps the description “venerable” would be appropriate for a group called the California Tax Reform Association, which has been involved for almost 40 years in various campaigns to increase income taxes on “the rich” and corporate entities. (See Coalition Seeks to Eliminate Tax Breaks for Rich, CorporationsLos Angeles Times – November 21, 1991.) In recent years, the California Tax Reform Association made a public appearance when its executive director signed a support argument for Proposition 24, an unsuccessful ballot measure in November 2010 to “close corporate loopholes.”

On January 29, 2014, the Los Angeles Times ran a column by George Skelton (Lack of Leadership a Big Obstacle in Updating Prop 13) about proposed changes to Proposition 13 that would result in higher tax assessments against commercial property owners. It cited the executive director of the California Tax Reform Association, but did not indicate the agenda or backers of this organization for readers.

George Skelton began writing for the Los Angeles Times in 1974 and the California Tax Reform Association was founded in 1976, so perhaps it was assumed that everyone knew about this group and its historical influence. One might feel a little melancholy to see how the California Tax Reform Association has not kept up with changing times: it hasn’t posted on its web site since May 2012 and it does not appear to use social media.

My article Taxpayer Group Pushing to Gut California’s Prop. 13 is Union Front Group, posted on February 4, 2013 in www.UnionWatch.org, reveals the funding sources and leadership of this organization. It’s a front for public employee unions.