Archive for Prevailing Wage

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.

2013 Year in Review – Timeline of Political Activity at State & Local Level for California Public Works Construction

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My January 7, 2014 article “2013: A Dismal Year for Freedom in California Public Works Construction“ in www.UnionWatch.org includes a side-by-side chronological timeline of Accomplishments for Advocates of Economic and Personal Freedom and Accomplishments for Construction Trade Unions. It also has an introduction explaining why construction unions had a politically successful year in California in 2013.

I focus the timeline on Project Labor Agreements and government-mandated prevailing wage. There are a few items related to apprenticeship, contractor pre-qualification, and local elections.

“He’s Going to Be President One Day” – The Changing Positions of Candidate for San Diego Mayor Nathan Fletcher on Labor Policy Issues

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In the mid-2000s, establishment Republican Party officials would tell me that a young man named Nathan Fletcher was going to be President of the United States one day. He was a good-looking “war hero” – an up-and-coming model candidate whose wife was a top advisor for President George W. Bush and then for Governor Arnold Schwarzenegger.

Soon Nathan Fletcher ran for office in an affluent area of San Diego – not for a mere school board or city council, but for the California State Legislature, where political talents often launch their lifelong quest for power, fame, and wealth. He was an undistinguished member of the Republican minority in the California State Assembly for two terms, from 2008 to 2012. He quit the Republican Party in March 2012 after the Republican Party of San Diego County didn’t endorse him among three Republican candidates running for Mayor of San Diego.

Ditching the Republican label transformed Fletcher into an innovative paragon of political enlightenment. His decision even received national attention and praise when New York Times columnist David Brooks wrote about it in A Moderate Conservative Dilemma.

Ordinary voters weren’t impressed. Fletcher came in third in the primary for Mayor of San Diego. He spent a lonely year unaffiliated with a political party, got himself some gigs as a corporate executive and as a “professor” at the University of California at San Diego, then joined the Democratic Party in May 2013. Now he’s running for Mayor of San Diego again, this time as a Democrat backed by power-brokers such as Assemblywoman Lorena Gonzalez, a friend of Fletcher who was the president of the San Diego-Imperial Counties Labor Council in 2012.

No one would identify Fletcher today as a “moderate conservative.” He has remade himself as a Silicon Valley-style liberal Democrat, glorifying a vague concept of “innovation” while endorsing government intervention in commerce and personal behavior to make the world a better place.

Just before the San Diego City Council ended 33 years of autonomy on city construction contracts and voted 5-4 to submit to state prevailing wage law, the San Diego Daily Transcript published an op-ed signed by Fletcher entitled Prevailing Wage: Good for Local Economy, Local Workers. He had opened his mind and decided that charter cities should let the state government set wage rates for city construction contracts based on employer payments indicated in union master labor agreements. I responded with the July 29, 2013 op-ed Did Nathan Fletcher Lose His Mind on Prevailing Wage?

It’s hard to pin down how Fletcher would act on specific issues, as his shtick is portraying himself as a pragmatist who doesn’t stoop to the abstract ideologies and philosophies that bind the thinking of bad people. However, behind the scenes he makes commitments to ensure campaign support from powerful political groups, such as labor unions.

After someone leaked Nathan Fletcher’s September 5, 2013 candidate questionnaire for the San Diego Imperial County Labor Council, Tony Krvaric, executive director of the Republican Party of San Diego County, analyzed the astonishing change in Fletcher’s positions on economic and labor issues in 18 months. Read the analysis and the signed questionnaire here:

Nathan Fletcher’s Labor Council Questionnaire

The October 31, 2013 article Critics Focus on Fletcher’s About-Face on Issues in the UT San Diego notes Fletcher’s conversion (or “evolution”) on high-profile labor issues, including Project Labor Agreements:

Much has been made of Nathan Fletcher’s political evolution from Republican to independent to Democrat, but what truly irks his most vehement critics is the 180-degree turn he’s made on several key issues. Some of those issues — project labor agreements, pension reform and managed competition — have formed the bedrock for the dividing line in San Diego between the two major political parties in recent years…

“I’m very comfortable as a Democrat, a pro-jobs Democrat.”…That’s a far cry from March 2012 when Fletcher sought the local Republican Party’s endorsement in the mayor’s race. He told party leaders he was a lifelong Republican who supported the June 2012 ballot initiative (Proposition B) to replace pensions with 401(k)-style plans for most new city workers, a ban on project labor agreements that call for city contractors pay union-level wages and benefits, and outsourcing city services…

Fletcher filled out a questionnaire in September for the San Diego and Imperial Counties Labor Council that outlined several stark changes. Specifically, he indicated support for project labor agreements and public employee pensions and opposition to putting city services up for competitive bid, a process also known as managed competition…

Fletcher has also said the ballot measure to ban project-labor agreements that voters approved last year is the type of divisive initiative meant to stir up the electorate.

Nathan Fletcher now thinks that simply asking voters to preserve fair and open bid competition on taxpayer-funded construction contracts is “divisive” and “meant to stir up the electorate.” If only we could set aside our differences and come together for the common good under the benevolent leadership of Nathan Fletcher!

It isn’t surprising that occasionally people warn that Nathan Fletcher is “creepy” and “dangerous” because he lacks solid principles and runs for office under a cult of personality based on a distorted portrayal of his background. He seems to be popular among high-tech executives, bicycle advocates, and other who fit the demographic description of “bourgeois and bohemian” (see David Brooks’ excellent 2001 book Bobos in Paradise). Is that enough to win a special election in a city of 1.3 million people? It worked for Gavin Newsom in San Francisco, but San Diego is more diverse and more conservative.

All of this vindicates the warning in my May 7, 2013 commentary Know Thyself, Republican: You Could Be the Next Nathan Fletcher in www.FlashReport.org. I concluded that “Even the strongest among us on the Right are always only a few temptations away from second-guessing ourselves and going the same direction as Nathan Fletcher. The rewards of holding fast are few right now, and the relief and rewards of being acceptable are enticing.”

As the Republican Party on the national level, in the State of California, and at the California local level splits into factions based on the degree of willingness to compromise principles of limited government and fiscal responsibility for the sake of the alleged “common good,” I expect more Republicans will follow the path of Nathan Fletcher. Will voters buy it?

California Charter Cities and State Prevailing Wage Mandates in 2013 – A Compilation of More than 150 News Articles

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Attorneys for charter cities and California citizens: you are welcome and encouraged to use this compilation as a resource and exhibit when you sue the State of California to overturn Senate Bill 7.


Capitol Weekly described Senate Bill 7, signed into law by Governor Jerry Brown on October 13, 2013, as “arguably the most important bill to emerge this year from the Legislature.” The new law prohibits the State of California from disbursing funds for construction to any of the 121 cities with charters that exercise their “home-rule” right under Article XI of the California Constitution to establish their own government-mandated wage policies for purely municipal construction contracts and for private projects receiving government financial assistance only from the city.

To preserve their ability to get state funding, cities with charters must stop deviating in their construction contracts from state prevailing wage laws defined in the California Labor Code. Sacramento Bee columnist Dan Walters described SB 7 as “a significant departure from Brown’s oft-voiced support of ‘subsidiarity,‘ the principle that locally elected officials should have maximum discretion to make decisions for their constituents.” The League of California Cities had asked Governor Brown to veto the bill, noting that “using political leverage to punish those exercising rights provided by the Constitution is unjust.”

SB 7 was a significant attack on constitutional rights, local control, and fiscal responsibility. The new acting mayor of the City of El Cajon, whose citizens approved a charter in June 2012, called the bill “a classic overreach of the state government, to the cost of the rights of sovereign cities.”

Surely SB 7 confirmed the assertion of former Murrieta City Councilmember Doug McAllister, in his February 2013 argument for city charters as the best way to improve the lives of citizens, that “the Left believes the power to reach that goal radiates from top to bottom, while the Right reverses that flow.” Construction union leaders and lobbyists at the state and local levels of California government have been intent on derailing the movement for cities to use charters in order to free themselves from the costly mandates imposed by the state legislature and the governor.

The charter city movement is based on the eroding constitutional principle of federalism – a check and balance against the excesses of centralized government. In October 2012, a professor of public administration at Chapman University (in Orange County) described the City of Costa Mesa as the ideological “ground zero for virtually everything taking place in the country” and its proposed (and ultimately defeated) charter as “a political manifesto of how government should be organized in the 21st century.” Some of the recent intellectual backing for California’s charter city movement has come from the limited-government perspective of www.LaborIssuesSolutions.com and the report (soon to be published in its 4th edition) entitled Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions?

Below are more than 150 news articles and opinion pieces from 2013 revealing the nature of the battle over local control and state-mandated prevailing wage. The year starts with a city adopting its own prevailing wage policy, city councils in several general law cities deliberating over charter language to propose to voters in 2014, and three powerful anecdotes showing the practical implications of state prevailing wage mandates: a planned private hotel stopped after the state determined it was a “public work” subject to prevailing wage, a bill introduced to end outrageously high state-mandated wage rates for janitorial work, and a state enforcement action revealing that prevailing wage increased the cost of a private hotel by more than $8 million.

Then the unions strike back, with the 5-4 votes of the San Diego City Council during the summer to enact a high-profile ordinance backed by disgraced Mayor Bob Filner to impose costly state-mandated prevailing wage on city projects. The ordinance ended 25 years of city control over its prevailing wage policies for city contracts. At the same time, union-backed Senate Bill 7 advanced through the California State Legislature despite significant opposition. Governor Brown signed SB 7 on October 13, even as the charter commission for the City of Costa Mesa was developing another charter and the Mountain View City Council imposed state prevailing wage mandates on private affordable housing developments receiving city financial assistance. Union lobbyists are now moving aggressively to suppress the uprising.

News and Opinion Articles on California Charter Cities, State-Mandated Prevailing Wage, and Senate Bill 7 in 2013

1

Assemblyman Curt Hagman to Introduce Bill on Prevailing Wages for Final Cleanup WorkersSan Bernardino Sun – January 2, 2013

2

California Bill Would Create a New Construction Trade Classification for Final Cleanup and Janitorial Work – by Kevin Dayton – www.LaborIssuesSolutions.com – January 5, 2013

3

Prevailing Wage Scams Steal from Taxpayers - www.CalWatchdog.com - January 11, 2013

4

Newport Beach to Discuss Dock Fees (and exemption of city contracts from prevailing wage requirements) - Newport Beach/Costa Mesa Daily Pilot - January 19, 2013

5

Council Closes Book on Dock Fee Increases (In other business…)Newport Beach/Costa Mesa Daily Pilot – January 23, 2013

6

Newport Triggers Dock-Fee Increases, Cost-Saving Labor ContractsOrange County Register – January 23, 2013

7

City Eschews Prevailing Wages – Newport Beach/Corona Del Mar Patch – January 24, 2013.

8

Newport Beach Is Latest California Charter City to Establish Its Own Prevailing Wage Policy: 7-0 Unanimous Vote for Fiscal Responsibility and Common Sense – by Kevin Dayton – www.LaborIssuesSolutions.com – January 24, 2013

9

Study Under Way to Find Out if Arroyo Grande Should Try to Become a Charter CitySan Luis Obispo Tribune – January 27, 2013

10

Arroyo Grande Considering City Charterwww.CalCoastNews.com – January 28, 2013

11

Unions Win Prevailing-Wage Case vs. Turtle BayRedding Record-Searchlight – January 29, 2013

12

Fate of Hotel at Turtle Bay in Limbo – Ruling: Park Must Pay Workers Prevailing Wage to build Sheraton HotelRedding Record-Searchlight – January 30, 2013

13

One More Costly Delay on Road to Turtle Bay Hotel – editorial – Redding Record-Searchlight – January 30, 2013

14

Redding Needs a Charter to End Nonsense Definition of Private Hotel as a “Public Works” Project – by Kevin Dayton – www.LaborIssuesSolutions.com – January 31, 2013

15

Got It Backward – letter to the editor by Michael Stanton – San Luis Obispo Tribune – January 31, 2013

16

Redding Needs a City Charter – letter to the editor by Kevin Dayton – Redding Record-Searchlight – February 4, 2013

17

Turtle Bay Nearing Compromise with Unions Over Hotel ConstructionRedding Record-Searchlight – February 7, 2013

18

Buellton Continues “Home Rule’ TalkSanta Ynez Valley News – February 7, 2013

19

Charting Best Path to Buellton’s Future – editorial – Santa Ynez Valley News – February 7, 2013

20

Prevailing Wage Supports Skilled Workers and Their Families – op-ed by Tom Curato – Redding Record-Searchlight – February 10, 2013

21

UA Local 228 Rep. Defends the Prevailing Wage for Redding, Californiawww.WePartyPatriots.com – February 13, 2013

22

Unions Rise to Defense of “Prevailing Wage” Rates Jeopardizing Hotel Project in Redding - by Kevin Dayton - www.LaborIssuesSolutions.com - February 15, 2013

23

Reasons to Consider Becoming a Charter City - op-ed by former Murrieta City Council member Doug McAllister - UT San Diego - February 19, 2013

24

State May Close Prevailing Wage Gap for Charter CitiesCentral Valley Business Journal – February 19, 2013

25

Escondido Mayor Touts Urban Renewal, Embracing DiversitySan Diego Union-Tribune – February 20, 2013

26

Bill Introduced in State Senate to Suppress Authority of California’s Charter Cities to Establish Their Own Policies on Government-Mandated Construction Wage Rates – by Kevin Dayton – www.LaborIssuesSolutions.com – February 20, 2013

27

Republican Lawmaker Touts Bill Pushed by Labor Bullieswww.CalWatchdog.com – February 21, 2013

28

County Offers $200,000 Tax Rebate to Attract $12 Million Business ExpansionBakersfield Californian – February 24, 2013 (States that “Kern County has not extended an economic incentive package to a prospective employer in about 10 years. Sometimes what stands in the way of making such offers, she said, is California’s requirement that building projects supported by public money pay construction workers prevailing wages.”)

29

Moreno Valley: Charter City Committee Could Be CreatedRiverside Press-Enterprise – February 25, 2013

30

Moreno Valley: City to Explore Becoming Charter CityRiverside Press-Enterprise – February 26, 2013

31

Turtle Bay Says It Can’t Afford Prevailing Wage Rate to Build HotelRedding Record-Searchlight – February 27, 2013

32

California’s Pro-Prevailing Wage Bill, SB7, Enjoying Broad Supportwww.WePartyPatriots.com – February 28, 2013

33

With Senate Bill 7, California Unions Advance Plot to Neuter City Charters – by Kevin Dayton – www.UnionWatch.org – February 28, 2013

34

Explain Why Moreno Valley Needs a Charter – editorial – Riverside Press-Enterprise – March 2, 2013

35

Turtle Bay Will Ask Judge for Relief on Hotel Prevailing-Wage RulingRedding Record-Searchlight – March 5, 2013

36

Turtle Bay to Challenge Prevailing Wage Findings – KNVN-24/KHSL-12 News – March 5, 2013

37

Unions Determined to Battle Turtle Bay’s Prevailing-Wage Court ChallengeRedding Record-Searchlight – March 6, 2013

38

Unions Fight Against Slave Labor – op-ed by Greg Beale – Redding Record-Searchlight – March 9, 2013

39

Buellton at ‘Crossroads’ for Decisions, Mayor SaysSanta Ynez Valley News – March 12, 2013

40

Senate Industrial Relations Committee Passes Controversial SB 7 – League of California Cities bulletin – March 13, 2013

41

Prevailing Wage’ Battle Shaping UpStockton Record – March 18, 2013

42

State Seeks to Hamper City Wage Policies – op-ed by Oceanside City Councilman Jerry Kern – UT San Diego – March 21, 2013

43

Oceanside Pol to Steinberg: Fix Your Own Mess and Leave Us Alonewww.CalWatchdog.com – March 22, 2013

44

Modesto Opposes Bill to Require ‘Prevailing Wage’ on ProjectsModesto Bee – March 24, 2013

45

City of Stockton should listen to their Development Oversight Committee’s Recommendation – ABC NorCal Blog (Northern California Chapter of Associated Builders and Contractors) – March 28, 2013 (Recommendation was that “the City Council give direction to City staff and the Commission, as to whether or not they should continue working on the Prevailing Wage Exemption, so that the City Can Declare Itself Exempt from Prevailing Wage Laws on Local Projects.”)

46

Grover Beach to Again Look at Becoming a Charter CitySan Luis Obispo Tribune – March 29, 2013

47

Tulare County Board of Supervisors Opposes Wage BillVisalia Times-Delta – April 3, 2013

48

Senate Bill is Nothing More than a Power Grab – editorial – Porterville Recorder – April 5, 2013

49

Grass Valley: Prevailing Wage Bill is State ‘Overreach’The Union (Grass Valley) – April 16, 2013

50

Officials: Prevailing Wage Bill is an Overreach by CaliforniaTahoe Daily Tribune – April 23, 2013

51

Pair of Assembly Bills to Protect the Prevailing Wage Move Through California Committeewww.WePartyPatriots.com – April 26, 2013

52

SB 7 Will End Loophole to Avoid Paying Prevailing Wage – From the President, State Building and Construction Trades Council of California – May 2013

53

Labor, Charter Cities Clash Over Prevailing WageCapitol Weekly via www.CaliforniaCityNews.org - May 7, 2013

54

Mountain View Council Shifting Stance on Prevailing WageSan Jose Mercury-News – May 8, 2013

55

City to Review Mayor’s Proposal to Expand Prevailing Wage Requirements on Public Works Projects – KGTV-10 – May 15, 2013

56

Council Moves to Require Prevailing Wage on ContractsSan Diego Daily Transcript – May 16, 2013

57

City Council Should Reject ‘Prevailing’ Wage Proposal – op-ed by George Hawkins – San Diego Daily Transcript – May 28, 2013

58

Truckee, Grass Valley Watching California Prevailing Wage BillTahoe Daily Tribune – June 4, 2013

59

Prevailing Wages Will Lift San Diego Economy – op-ed by Tom Lemmon – San Diego Daily Transcript – June 5, 2013

60

Don’t Impose ‘Prevailing” Wage on More Cities – editorial – Riverside Press-Enterprise – June 13, 2013

61

Labor Commissioner Collects Over $8 Million in Wages for Public Works Job at Hilton Hotel in San Diego – California Department of Industrial Relations press release – June 17, 2013

62

SB 7 Represents Arrogance of Sacramento’s Local Policy Breakerswww.PublicCEO.com – June 18, 2013

63

SB 7 Subverts Charter Cities’ Autonomywww.CalWatchdog.com – June 19, 2013

64

Committee OKs Prevailing Wage Ordinance – KGTV-10 News – June 19, 2013

65

Hilton Bayfront Construction Workers Collect $8M in Wages - San Diego Daily Transcript - June 20, 2013

66

California Cities Ramp Up Fight Against Union Wage Bill - Sacramento Bee - June 21, 2013

67

Bill Would Push Prevailing WagesUT San Diego – June 21, 2013

68

Mayor Says SB 7 Could Strip Public Works Funding for GilroyGilroy Dispatch – June 25, 2013

69

Senate Bill 7 Limits Charter Cities’ Control – editorial – Modesto Bee – June 24, 2013

70

Charter Panel Digs into Public-Works ContractingNewport Beach/Costa Mesa Daily Pilot – June 24, 2013

71

Steinberg’s Bill Would Infringe on Local Control – editorial – Sacramento Bee – June 25, 2013

72

The Assault on Charter Cities and Taxpayers – editorial – UT San Diego – June 25, 2013

73

San Diego Takes Next Step Toward Lowering the Threshold for Prevailing Wages to $25,000www.WePartyPatriots.com – June 25, 2013 (includes claim that “The prevailing wage issue is gaining momentum across the state of California.”)

74

Charter Cities: Senate Bill 7 Threatens Voting Rights – op-ed by Chris McKenzie, executive director of the League of California Cities – San Jose Mercury-News – June 26, 2013

75

Steinberg’s SB 7 Would Tie Charter Cities’ Hands – editorial – Fresno Bee – June 26, 2013

76

Prevailing Wage Bill for Public Works AdvancesUT San Diego – June 27, 2013

77

Union Wages Shouldn’t Be Forced on Cities – editorial – Orange County Register – June 27, 2013

78

Dems Push for Prevailing Wages – KMJ 580 AM News (Fresno) – June 27, 2013

79

SB 7 Limits Charter City Wage Control – editorial – Merced Sun-Star – June 30, 2013

80

Prevailing Wage: Moving Forward in California, Backward in Other States – From the President, State Building and Construction Trades Council of California – July 2013

81

Prevailing Wages Hurt City – column by Joseph Perkins – UT San Diego – July 6, 2013

82

Prevailing Wage Bill for Charter Cities Inches Closer to GovernorThe Union (Grass Valley) – July 18, 2013

83

City Officials Say Prevailing Wage Bill Threatens ProjectsBakersfield Californian – July 18, 2013

84

Union Operatives Infiltrate Office of San Diego Mayor Bob Filner to Push Costly and Burdensome Prevailing Wage Mandate for City Contracts – by Kevin Dayton – www.LaborIssuesSolutions.com – July 25, 2013

85

Prevailing Wage: Good for Local Economy, Local Workers – op-ed by Nathan Fletcher – San Diego Daily Transcript – July 26, 2013

86

Did Nathan Fletcher Lose His Mind on Prevailing Wage? – op-ed by Kevin Dayton – San Diego Daily Transcript – July 29, 2013

87

City Faces Higher Costs Under Wage PlanUT San Diego – July 29, 2013

88

Vote ‘No’ on Expanding ‘Prevailing Wage’ in San Diego – editorial – UT San Diego – July 29, 2013

89

Simple List of Official Documents Relevant to July 30 San Diego City Council Vote to Require State Prevailing Wage on City Contracts – by Kevin Dayton – www.LaborIssuesSolutions.com – July 29, 2013

90

After 33 Years, San Diego Submits to State Prevailing Wage Law – by Kevin Dayton in www.UnionWatch.org – July 30, 2013

91

City Council Approves Prevailing Wage Proposal – City News Service, posted on several news web sites, such as KPBS – July 30, 2013

92

U-T San Diego Ignores Growing Evidence Of Prevailing Wage Benefits - Media Matters for America – July 30, 2013

93

City Council Passes Prevailing-Wage OrdinanceSan Diego Daily Transcript – July 30, 2013

94

Council Approves Higher Wages for Projects: City already pays prevailing wages on big developmentUT San Diego – July 30, 2013

95

San Diego Passes Prevailing Wage Bill: Council votes 5-4 to expand policy to work contracts, following Filner’s leadUT San Diego – July 31, 2013

96

Smart Cities Prevail Applauds San Diego Decisionwww.SmartCitiesPrevail.org - July 31, 2013

97

Prevailing Wage Will Force Out Small Guy; Prevailing Wage is All About Payback to Unions; Big Labor Dominates City Hall – letters to the editor – UT San Diego – July 31, 2013

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A Day to Remember, Not Fondly, at San Diego City Hall – editorial – UT San Diego – August 1, 2013

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San Diego Political Celebrity Nathan Fletcher Now Supports Government-Mandated Construction Wage Rates – by Kevin Dayton – www.LaborIssuesSolutions.com – August 1, 2013

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Statewide Poll Shows Broad Support for Prevailing Wage – Substantial Opposition to Going Charterwww.SmartCitiesPrevail.org - August 1, 2013

101

The Stories the Scandal Swallowed – Voice of San Diego – August 2, 2013 (San Diego City Council 5-4 vote to submit to state prevailing wage law for city construction contracts.)

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Three Recent Polls Show Strong Support for Prevailing Wage Policieswww.SmartCitiesPrevail.org - August 8, 2013

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Modesto Claims Prevailing Wage Bill Would Punish the CityModesto Bee – August 12, 2013

104

Central Valley City Officials Publicly Voice Opposition to SB 7 in Stockton – League of California Cities bulletin – August 13, 2013

105

Charter Panel Tackles Public WorksNewport Beach/Costa Mesa Daily Pilot – August 15, 2013

106

Merced Mayor, Other Officials Gather in Modesto to Protest Prevailing Wage BillMerced Sun-Star – August 16, 2013

107

Unions Tempt Republicans with “Bipartisanship” Lure: Five Tips for Resistance – by Kevin Dayton – www.FlashReport.org – August 17, 2013

108

CEOs and Business Leaders for Prevailing Wage – op-ed by Mark Breslin, executive for a unionized construction company association – Modesto Bee – August 19, 2013

109

La Mirada Eyes to Become a Charter CityWhittier Daily News – August 19, 2013

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Prevailing Wage: Consider Variables – letter to the editor – Modesto Bee – August 21, 2013

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CEO Comes Out Swinging in Favor of SB7, Prevailing Wages, and the Race to the Topwww.WePartyPatriots.com – August 22, 2013

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Senators Try To Compel Charter Cities to Pay Prevailing Wages – Capitol Public Radio – August 23, 2013

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Just What is a ‘Prevailing Wage?’ – op-ed – Pomerado News – August 24, 2013

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This Week in the War on Workers: Fending Off the ALEC of the Construction Industry in California – Daily Kos – August 24, 2013

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Reject Push to Blackmail Cities on Wage RulesRiverside Press Enterprise – August 25, 2013

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Why the Prevailing-Wage Ordinance is a Bad Idea – op-ed by Fred Schnaubelt – San Diego Daily Transcript – August 26, 2013

117

Something is Bothering California Union Leaders and Lobbyists – by Kevin Dayton in www.UnionWatch.org – August 27, 2013

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Prevailing Wage Panders to Unions, Costs Taxpayers – op-ed by Michael Saltsman of Employment Policies Institute – Orange County Register – August 30, 2013

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Prevailing Wage Standard Empowers Middle Class – op-ed by Dale Howard of www.SmartCitiesPrevail.orgOrange County Register – August 30, 2013

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Cities Shouldn’t Ignore Prevailing Wage Economics – op-ed by Tracy Emblem, Democratic candidate for Congress – UT San Diego – August 30, 2013

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Costa Mesa Mayor: Charter is Sure to PassOrange County Register – September 5, 2013

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Charter Cities Challenge: State Dollars or Prevailing Wage?UT San Diego – September 7, 2013

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SB 7: Cities Stand to Lose Home Rule over Municipal Affairswww.PublicCEO.com – September 9, 2013

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Three Bad Bills that Gov. Jerry Brown Should Veto – editorial – Sacramento Bee – September 9, 2013

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City Council Reaffirms Prevailing WageSan Diego Daily Transcript – September 10, 2013

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Legislative Sampler: 2 to Sign, 2 to Veto – editorial – Riverside Press-Enterprise – September 18, 2013

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‘Prevailing Wage’ Fact and Fiction – op-ed by George Hawkins – San Diego Daily Transcript – September 24, 2013

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Costa Mesa Charter Committee Takes Up Prevailing WageOrange County Register – September 26, 2013

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Prevailing Wage Bill Deserves a Veto - editorial - UT San Diego - October 4, 2013

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Has Labor Leader Overreached? - columnist Dan Morain - Sacramento Bee - October 9, 2013

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Stifling Unions - editorial - Victorville Daily Press - October 9, 2013

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Costa Mesa Charter to Remove ‘Prevailing Wage’Orange County Register – October 10, 2013

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Mountain View: City-Funded Affordable Housing Projects to Pay Prevailing WageSan Jose Mercury-News – October 10, 2013

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Council OKs Union Wages for Affordable Housing: Policy Will Add about 10 Percent to Cost of New ProjectsMountain View Voice – October 10, 2013

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City of Mountain View Expands Prevailing Wage Mandate to Private Affordable Housing Developments Getting City Funds – by Kevin Dayton – www.LaborIssuesSolutions.com – October 10, 2013

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Governor Should Veto Wage bill – editorial – Modesto Bee – October 11, 2013

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If Gov. Brown Doesn’t Like Intrusion, He Should Veto SB 7 – editorial – Sacramento Bee – October 12, 2013

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Jerry Brown Signs Prevailing Wage Bill for Charter CitiesSacramento Bee – October 13, 2013

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Governor Brown Signs Union-Backed Senate Bill 7 and Continues Erosion of Constitutional Checks and Balances - by Kevin Dayton in www.FlashReport.org - October 13, 2013

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Brown Signs Prevailing Wage Bill - Capitol Weekly - October 14, 2013

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Brown Signs Prevailing Wage Bill for CitiesCentral Valley Business Journal – October 14, 2013

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Governor Brown Signs Prevailing Wage Bill – A Bubbling Cauldron (blog in Costa Mesa) – October 14, 2013

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Governor Signs Prevailing Wage Bill for Charter CitiesSacramento Business Journal – October 14, 2013

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Charter Cities to Lose Authority Over Public Works Projectswww.PublicCEO.com - October 14, 2013

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Gov. Brown Signs SB 7 to Neuter Charter Citieswww.CalWatchdog.com – October 14, 2013

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New Law Requires Charter Cities to Pay Prevailing Wages - East County Magazine – October 14, 2013

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Prevailing Wage Law Could Raise CostsUT San Diego – October 14, 2013

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Unions Smile, Cities Frown at Prevailing Wage LawBakersfield Californian – October 14, 2013

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Modesto Fears Harm from New Prevailing Wage LawModesto Bee – October 14, 2013

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California Construction Unions Get Two Big Wins – columnist Dan Walters – Sacramento Bee – October 15, 2013

151

Thumbs Up, Thumbs Down: Autonomy is good – but only for state? - editorial – Santa Rosa Press-Democrat - October 15, 2013

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Charter Could Cost City FundingNewport Beach/Costa Mesa Daily Pilot – October 16, 2013

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Governor Signs SB 7: Charter Cities Required to Pay Prevailing Wage - Porterville Recorder – October 16, 2013

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Governor Does Disservice to All Charter Cities – editorial - Porterville Recorder – October 20, 2013

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Prevailing Wage Now Irrelevant – A Bubbling Cauldron (blog in Costa Mesa) – October 22, 2013

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Oppose a Charter with ‘Prevailing Wage’ Exemption – letters to the editor – Newport Beach/Costa Mesa Daily Pilot – October 22, 2013

157

Groups Accuse Grover Beach of Violating State Open Meeting LawSan Luis Obispo Tribune – October 22, 2013 (One group is www.SmartCitiesPrevail.org)

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Facts Wrong – letter to the editor by Robbie Hunter, president of the State Building and Construction Trades Council of California – Porterville Recorder – October 24, 2013

159

Wage Law Costs Cities More than Money – op-ed by El Cajon Acting Mayor Bill Wells – UT San Diego – October 25, 2013

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Unions “Using Political Leverage to Punish Those Exercising Rights” in California Constitution – by Kevin Dayton in www.UnionWatch.org – October 29, 2013

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Brown Inconsistent on Local-Control Issues: Is ‘subsidiarity’ little more than a platitude?UT San Diego – October 30, 2013

 

City of Mountain View Expands Prevailing Wage Mandates to Private Affordable Housing Developments Receiving City Funds

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Construction unions and allied organizations continue their campaign to stop California’s charter cities from exercising their constitutional right to adopt their own city policies concerning wage rates on purely municipal public works construction contracts or on private construction receiving government financial assistance only from the city.

On October 8, 2013, the council of the City of Mountain View (in Santa Clara County) voted 6-1 for a resolution to end its policy of not requiring affordable housing developers receiving city funds to impose state prevailing wage rates on construction trade work or professional construction services.

While not explaining how the State of California actually determines “prevailing wage” rates, the staff report was fairly blunt about the increased cost of the proposed resolution:

…to get a better understanding of the impact, staff contacted BRIDGE Housing, a major nonprofit developer constructing affordable housing throughout California. BRIDGE Housing’s Vice President, Tom Earley, stated that the cost increase due to prevailing wage averages about 10 percent. His figure is based on actual projects and direct experience and not from estimates or studies. This is consistent with ROEM’s estimate for the Franklin Street Family Apartments, shown in the table below, which compares the prevailing and nonprevailing wage budgets for the recently constructed Franklin Street Family Apartments. In this case, a prevailing wage increased the project cost by 10 percent.

Among the members of the Mountain View City Council, only Mayor John Inks voted against the government mandate for state prevailing wage rates. You can thank him via e-mail.

Two city council members cited the support of prevailing wage by Congressman Paul Ryan (the 2012 Republican candidate for Vice President) in defense of their votes. Advocates for California’s prevailing wage law like this “bipartisan” argument: it was used at the San Diego City Council meetings earlier this year.

Staff noted there weren’t any pending affordable housing projects on which this new policy would apply. It’s likely this vote was a political stunt orchestrated by union officials as additional momentum to convince Governor Jerry Brown to sign Senate Bill 7, which would withhold state funds for construction from any charter city that establishes its own policy concerning prevailing wage on city projects or city-funded projects. The Governor has to make a decision on this bill by October 13.

News Media Coverage

Council OKs Union Wages for Affordable Housing: Policy Will Add about 10 Percent to Cost of New ProjectsMountain View Voice – October 10, 2013

Mountain View: City-Funded Affordable Housing Projects to Pay Prevailing WageSan Jose Mercury-News – October 10, 2013

This article reported the following:

The discussion drew a large and mostly supportive crowd Tuesday. Among those who addressed the city council was Mountain View resident Matt Savage, who said he works multiple jobs but still struggles to pay his rent.

“Prevailing wage helps preserve the middle class here in Mountain View,” he said. “It’s not just Google employees at the top and the people who wash their cars and mow their lawns at the bottom.”

I posted a comment in response to the article:

Mountain View resident Matt Savage struggles to pay his rent? You would think the United Food and Commercial Workers Union Local No. 5 would pay more money to its organizers/political consultants.

http://www.linkedin.com/pub/ma…

Few ordinary citizens know that emotional anecdotes made at public meetings are usually manipulative distortions for political effect.

San Diego Political Celebrity Nathan Fletcher Now Supports Government-Mandated Construction Wage Rates

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UPDATE – August 9, 2013: This morning Nathan Fletcher “chimed in” and spoke to Fox News 5 KSWB in San Diego about the Filner scandals. An excerpt from Fletcher May Run for Mayor if Filner Resigns:

Fletcher even told Fox5 that he’d consider throwing his hat in the ring if the mayor’s seat opens up.

“I’d have to consider it. I’ve been humbled by the number of folks that have reached out for the last few weeks and provided a lot of encouragement,” Fletcher said. “But as of right now, the office isn’t open. If it becomes open than that’s a decision that I’ll have to make.”

Until that happens, Fletcher can be found teaching at University of California, San Diego, working for Qualcomm and with his family.


Unexpectedly, former California State Assemblyman and once-and-future San Diego mayoral candidate Nathan Fletcher (R) (I) (D) declared his new position in support of state-mandated wage rates (“prevailing wages”) for contracts on public works construction projects. See the July 26, 2013 San Diego Daily Transcript commentary Prevailing Wage: Good for Local Economy, Local Workers.

He claims his position is a “no-brainer” that resulted from approaching the issue in a “thoughtful, open-minded way.” But why did he approach the issue in the first place? Mr. Fletcher has never before exhibited extraordinary interest or unusual expertise in arcane construction labor issues, including as a state legislator voting on such issues.

Tom Lemmon – the head of the San Diego County Building and Construction Trades Council – would have had credibility in submitting this professionally-written piece under his name. But few people would have read it. In contrast, Nathan Fletcher has a cult following in San Diego, apparently because many people can relate to his lack of principles – a condition that I warned Republicans to avoid in my www.FlashReport.org article Know Thyself, Republican: You Could Be the Next Nathan Fletcher.

Some people are suspicious of Fletcher’s authorship of his prevailing wage manifesto. On July 30, 2013, campaign consultant Duane Dichiara posted an article on San Diego Rostra - Notes on Fletcher’s Pro-Prevailing Wage Article - speculating that Fletcher didn’t write it because of the obvious rhetorical skill of the writer. Richard Rider of San Diego Tax Fighters then commented that ”it’s TOO well written. I’d bet dollars to doughnuts that Nathan didn’t pen it. Doubtless it was written by labor union professionals (or their PR contractors), with Nathan dutifully signing it as the author.”

Regardless of who actually wrote it, representatives of www.SmartCitiesPrevail.org were quick to post comments in support of Mr. Fletcher and his position, and he received some impressive tweets of support.

I responded to Fletcher’s piece with a rebuttal published on July 29, 2013 entitled Did Nathan Fletcher Lose His Mind on Prevailing Wage? A representative of the union-oriented public policy organization Working Partnerships USA and a Colorado State University economics professor commented in response to defend their work as cited by Fletcher. I have commented in response to their comments. Meanwhile, Nathan Fletcher has not given the public any additional insight into his understanding or views on prevailing wage policies.

My Article “After 33 Years, San Diego Submits to State Prevailing Wage Law” Published on www.UnionWatch.org

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On July 30, I reported in www.UnionWatch.org on the 5-4 vote of the San Diego City Council to impose state prevailing wage rates on city construction contracts at After 33 Years, San Diego Submits to State Prevailing Wage Law.

News Coverage of the Vote

San Diego Passes Prevailing Wage Bill: Council votes 5-4 to expand policy to work contracts, following Filner’s leadUT San Diego - July 31, 2013 – a follow-up to Council Approves Higher Wages for Projects: City already pays prevailing wages on big developmentUT San Diego – July 30, 2013

City Council Approves Prevailing Wage Proposal – City News Service, posted on several news web sites - July 30, 2013

City Council Passes Prevailing-Wage OrdinanceSan Diego Daily Transcript – July 30, 2013

City Costs Would Rise Under Prevailing Wage Plan: Rule would expand to all municipal projects - UT San Diego – July 30, 2013

A Day to Remember, Not Fondly, at San Diego City HallUT San Diego (editorial) – August 1, 2013

Vote ‘No’ on Expanding ‘Prevailing Wage’ in San Diego - UT San Diego (editorial) – July 30, 2013

Prevailing Wage Will Force Out Small Guy; Prevailing Wage is All About Payback to Unions; Big Labor Dominates City Hall: UT San Diego (letters to the editor) – August 1, 2013

Simple List of Official Documents Relevant to July 30 San Diego City Council Vote to Require State Prevailing Wage on City Contracts

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Tomorrow afternoon (July 30, 2013), the San Diego City Council is scheduled to vote on a proposal from Mayor Bob Filner to abandon its own policy concerning government-mandated wage rates on city construction contracts and adopt union-backed state laws.

Here’s a collection of relevant documents.

Provided to the San Diego City Council from the Office of Mayor Bob Filner

May 8, 2013 memo from San Diego Mayor Bob Filner calling on the city council to impose state prevailing wage on city contracts

July 16, 2013 Report to the City Council from the Office of Mayor Bob Filner, coauthored by Jennifer Badgley, Office of the Mayor, Director of Special Projects and Labor Affairs, formerly Organizer/Political Director for International Brotherhood of Electrical Workers (IBEW) Local Union No. 569 in San Diego

July 22, 2013 request from San Diego Mayor Bob Filner to put the proposed prevailing wage ordinance on the city council meeting agenda for final approval

The ordinance proposed by Mayor Bob Filner imposing on the City of San Diego a requirement for contractors to pay state prevailing wage rates on city construction contracts

Provided by the City of San Diego Office of the Independent Budget Analyst

June 18, 2013 report from the Office of the City of San Diego Independent Budget Analyst “Review of Proposal to Require Compliance with the State’s Prevailing Wage Laws on all City Public Works Projects”

…the CIP Budget includes 190 construction contracts totaling $331 million anticipated to be awarded in FY 2014. About 21% or 16 of these contracts, totaling about $70 million, require payment of prevailing wages since they are funded with State or federal monies. If prevailing wages are required to be paid on the remaining $261 million construction contracts, a 5% or 10% increase would increase total costs by $13 million or $26 million respectively. Given tight financial constraints and competing budget priorities, this would likely reduce the number of capital projects that the city can implement.

July 26, 2013 report from the Office of the City of San Diego Independent Budget Analyst: “Key Issues Related to Requiring Payment of Prevailing Wages on all City Public Works Projects”

…our best judgment is that prevailing wages will increase total project costs for the City. The potential for increased total project costs is particularly important in light of the high priority the Council has assigned to addressing the City’s infrastructure challenges, including a backlog in deferred capital for buildings/facilities, streets, and storm drains currently estimated at $898 million.

Provided by the City Attorney for the City of San Diego

June 17, 2013 memo from City Attorney of San Diego noting that “The California Supreme Court also recently reaffirmed that charter cities like San Diego do not have to pay prevailing wages” and explaining various legal questions about Mayor Bob Filner’s proposed ordinance

Provided by Other Agencies of the City of San Diego

Chart #1 FY 2013 City of San Diego construction projects with and without state prevailing wage mandate

Chart #2 of recent City of San Diego construction projects with and without state prevailing wage mandate

June 20, 2013 Construction Industry Quarterly Meeting of City of San Diego Public Works Department where prevailing wage proposal was reportedly discussed. It included a presentation by Murtaza Baxamusa, City of San Diego, Office of the Mayor, Special Advisor for Public Policy, formerly with the San Diego County Building Trades Family Housing Corporation and the union-oriented Center on Policy Initiatives

Documents That Should Have Been Officially Provided to the San Diego City Council

Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions? – 92-page guidebook to status of prevailing wage policies in California’s 121 charter cities

State Building and Construction Trades Council of California, AFL-CIO v. City of Vista et al. - California Supreme Court decision of July 2, 2012 upholding constitutional right of charter cities to establish their own policies concerning government-mandated wage rates for municipal construction contracts

Union Operatives Infiltrate Office of San Diego Mayor Bob Filner to Push Costly and Burdensome Prevailing Wage Mandate for City Contracts

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As of today, San Diego Mayor Bob Filner says he will remain in office despite women accusing him of sexual harassment. For the mayor, this is the most damaging of several recent scandals that include a mysterious trip to Paris, a generous complimentary refurbishing of the mayor’s office reception area, and alleged demands for payments in exchange for project approval.

While some of Mayor Filner’s staff have resigned in recent weeks, other people are coming into his administration to fill the power vacuum. And who better to become entrenched in this scandal-ridden administration than union officials?

Jennifer Badgley, Director of Special Projects and Labor Affairs

Apparently the mayor has brought on a former (or current) professional organizer and political director of San Diego’s International Brotherhood of Electrical Workers (IBEW) Local Union No. 569. Jennifer Badgley has recently become the “Director of Special Projects and Labor Affairs” for Mayor Filner, according to her Linked In profile.

Jennifer Badgley – San Diego Mayor’s Office and IBEW Local Union No. 569

According to a lobbying report filed by the IBEW Local 569, Badgley had lobbied Mayor Filner and staff on a few issues during the second quarter of 2013 (April 1 to June 30), including “good green local jobs and career pathways for local workers,” Community Choice Aggregation, and “responsible construction and development,” including on the San Diego Convention Center Expansion. She also “sat in with business” concerning a “potential San Diego energy project.”

She arrived just in time! A vote at the San Diego City Council is scheduled on July 30, 2013 to adopt a union-backed ordinance proposed by Mayor Filner to require construction companies with city contracts to pay wage rates (“prevailing wages”) set by the State of California. Since 1980, the City of San Diego has exercised its authority as a charter city to issue contracts for most purely municipal projects without state-mandated wage rates, as a result saving money for taxpayers. Filner’s proposal would submit the City of San Diego to state law regarding wage rates on public works projects.

Circumstances have now allowed the mayor’s Director of Special Projects and Labor Affairs to be the coauthor of a July 16, 2013 propaganda memo to the San Diego City Council arguing why city taxpayers should pay more for construction and why the city bureaucracy should be entangled in $250,000 worth of monitoring and enforcement of cumbersome unfunded state mandates per $100 million spent on construction. Some of the highlights of this memo:

  • It disparages the city’s Office of the Independent Budget Analyst, which issued a Review of Proposal to Require Compliance with the State’s Prevailing Wage Laws on All City Public Works Projects. The review estimated a cost increase of 5 to 10 percent on projects and noted “the likely trade off in the form of higher capital project costs and the resulting impact to infrastructure programs which are a high priority for the City.”
  • It claims that the state exempts volunteers from prevailing wage requirements, but doesn’t note that the exemption has an expiration date and that certain unions have objected to this exemption.
  • It cites and provides text of the 2010 Azusa Land Partners v. Department of Industrial Relations California appellate court decision that expanded prevailing wage to certain private housing developments, but it doesn’t mention the much more relevant 2012 California Supreme Court decision in State Building & Construction Trades Council of California v. City of Vista. Unions lost this case badly when the California Supreme Court upheld the right of charter cities to establish their own policies concerning government-mandated wage rates for purely municipal contracts.
  • It reports that “staff presented this proposal to construction industry stakeholders at their quarterly meeting on June 20, 2013,” apparently through a presentation by Murtaza Baxamusa, City of San Diego, Office of the Mayor, Special Advisor for Public Policy. (See more about Baxamusa below.) The association representatives at the meeting were reportedly delighted about the proposal; of course, the groups listed as attending the meeting represent and provide contract negotiation and administration services to companies that choose to be bound under the requirements of union collective bargaining agreements. They have a financial interest in government increasing project costs.

Such an rigid approach to public policy as reflected in Badgley’s memo is consistent with her history of advancing the union agenda. In the summer of 2009, at a time when 20% of IBEW Local 569 members were unemployed, Badgley expressed pride in what she identified as her greatest accomplishment: derailing the plan of Gaylord Entertainment to build a $1.2 billion hotel and convention center in Chula Vista because the company wouldn’t sign a Project Labor Agreement guaranteeing 100% of the construction trade work to unions. A July 6, 2009 profile on the now-defunct San Diego News Network web site reported her perspective as part of an interview to reveal her “journey” as she sought to “create broader social change.”

Badgley is or was married to Tefere Gebre, the executive director of the Orange County Labor Federation, AFL-CIO, who is expected to become the next Executive Vice President of the national AFL-CIO. In 2012 he proclaimed The Truth About the Right-Wing’s Latest Scheme to Punish Workers in Costa Mesa, and in 2009 he decried “The assault on Orange County by Colorado-based zealot Eric Christensen (sic) and Supervisor John Moorlach.” Gebre caused a stir in August 2007 when he sent Eric Christen of the Coalition for Fair Employment in Construction a bizarre email claiming that he saw Christen “on TV as a gay whitehouse corspondent.” (sic)

Murtaza Baxamusa, Special Advisor for Public Policy

Murtaza Baxamusa used to churn out policy reports for the union-backed Center on Policy Initiatives in San Diego. He was a founder of the phony Middle Class Taxpayers Association, which advocates for union-backed initiatives that increase costs to taxpayers. In 2011 he was hired as Director of Planning and Development for the San Diego County Building Trades Council Family Housing Corporation. The San Diego County Building Trades Family Housing Corporation contributed $85,000 to the November 2012 campaign to pass Proposition Z, a $2.8 billion bond measure with a Project Labor Agreement for the San Diego Unified School District. It’s unclear if Baxamusa is still employed at the union housing corporation.

Mayor Bob Filner’s Support for the Union Political Agenda

Bob Filner, the Mayor of the City of San Diego, has long supported the political agenda of construction trade unions. Eric Christen of the Coalition for Fair Employment in Construction wrote in an opinion piece in Voice of San Diego on July 20, 2007 that Filner had “an almost canine affection for doing the unions’ bidding.”

In 1999, then-Congressman Filner recognized Art Lujan of the San Diego-Imperial Counties Labor Council, AFL-CIO for his leadership in the San Diego labor movement. He noted that “Art successfully secured a Project Labor Agreement with the County Water Authority resulting in over $700 million in construction projects throughout the next eight years.” This was the first government-mandated Project Labor Agreement in San Diego County.

As a member of Congress in 2007, Filner blamed Chula Vista Mayor Cheryl Cox for the decision of Gaylord Entertainment to withdraw its proposal to build a $1.2 billion hotel and conference center on the Chula Vista Bayfront. Unions were threatening to block the project with environmental objections unless the company signed a Project Labor Agreement to build the project. Filner apparently felt that Cox should have pressured Gaylord to give the unions what they wanted.

A letter to the editor in the July 15, 2007 San Diego Union-Tribune explained Filner’s political attack:

So now the finger-pointing begins. And the show is being led by Rep. Bob Filner, who demonstrated political grandstanding at its finest by swooping in to defend the unions. How much has he been involved in this process before now? And without demonstrating any personal effort in advancing the project, how does he justify a self-appointed role as the arbiter of who did what wrong?

In 2010, Filner wrote a letter on Congressional stationery (in apparent violation of U.S. House of Representatives ethics rules) to the Chula Vista Chamber of Commerce telling them to oppose Proposition G. Prop G was a “fair and open competition” ballot measure to enact an ordinance prohibiting the City of Chula Vista from entering into contracts that required construction companies to sign a Project Labor Agreement as a condition of work. Filner claimed that it would be a “fool’s errand” to obtain federal funding for the City of Chula Vista if voters approved Proposition G. On June 6, 2010, 56% of Chula Vista voters supported Proposition G, and Filner subsequently played the fool and continued to send federal money there.

Of course Filner supported the Project Labor Agreement that the board of the San Diego Unified School District imposed on $4.9 billion in construction (not including state matching grants) approved by voters as Proposition S in 2008 and the subsequent Proposition Z in 2012. And citing arguments from the International Brotherhood of Electrical Workers (IBEW), he wrote letters to the U.S. Department of Energy in 2009 and 2010 opposing Sempra Energy’s construction of an electricity transmission line between Mexico and San Diego County.

And notably, he recognized Murtaza Baxamura in 2012 in the Congressional Record. Now Baxamura is on his staff, pushing for government-mandated construction wage rates.

How to Get Your Money if You Were a Construction Trades Worker Building the Hilton San Diego Bayfront Hotel

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Did you work on the construction of the Hilton San Diego Bayfront Hotel? A June 17, 2013 press release issued by the California Department of Industrial Relations (DIR) - Labor Commissioner Collects Over $8 Million in Wages for Public Works Job at Hilton Hotel in San Diego - states that you may be owed money, but it did not explain how workers can collect their money.

As a result of my June 17, 2013 blog post about the State of California determining that the Hilton San Diego Bayfront Hotel was a public works project (Contractor Has to Shell Out $8 Million After Unions Win Argument That Hilton San Diego Bayfront Hotel Was a “Public Works” Project), I’m receiving communications from some of the 2000+ workers on that project who want to know how to get their payments. The California Division of Labor Standards Enforcement (Labor Commissioner’s office) gave me the following information about what to do if you are one of those 2000+ workers:

Send your contact information to this California Division of Labor Standards Enforcement district office address (presumably via a letter or postcard) explaining that you were a trades worker on the Hilton San Diego Bayfront Hotel:

California Division of Labor Standards Enforcement
7575 Metropolitan Drive, Room 210
San Diego, CA  92108

According to a representative in the DIR Legal Division, payments to former workers (in the form of checks) are supposed to be available 60-90 days after the June 17, 2013 official announcement. A third-party administrator is handling the processing of the payments.

The phone number for this San Diego district office is (619) 220-5451 and the web site for all California Division of Labor Standards Enforcement district offices is http://www.dir.ca.gov/dlse/districtOffices.htm.

As one attorney remarked to me, it’s unclear how the Department of Industrial Relations is going to determine exactly what is owed, because contractors would not necessarily have maintained certified payroll records for a project that was originally assumed to be a private construction job and not a public works job. For example, how will job classifications be determined for work done several years ago? Are any of the alleged 172 subcontractors on that project now out of business after several years of economic distress in the construction industry? Have employment records been saved? Will all workers be regarded as journeymen? How does the agency know there were 2,051 workers in total?

Contractor Has to Shell Out $8 Million After Unions Win Argument That Hilton San Diego Bayfront Hotel Was a “Public Works” Project

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Are you one of the 2000+ construction trade workers who built the Hilton San Diego Bayfront Hotel? The California Division of Labor Standards Enforcement (Labor Commissioner’s office) gave me the following information about what to do:

Send your contact information to this California Division of Labor Standards Enforcement district office address (presumably via a letter or postcard) explaining that you were a trades worker on the Hilton San Diego Bayfront Hotel:

California Division of Labor Standards Enforcement
7575 Metropolitan Drive, Room 210
San Diego, CA 92108

According to a representative in the DIR Legal Division, payments to former workers (in the form of checks) are supposed to be available 60-90 days after the June 17, 2013 official announcement. A third-party administrator is handling the processing of the payments.

The phone number for this San Diego district office is (619) 220-5451.


This morning (June 17, 2013) the California Department of Industrial Relations (DIR) issued a press release declaring that the Labor Commissioner Collects Over $8 Million in Wages for Public Works Job at Hilton Hotel in San Diego. Surely unions will portray this settlement as a victory for exploited workers against greedy capitalists. Actually, it is a symptom of absurd, ambiguous, union-backed definitions of public works in state law.

Right off the bat, you notice something odd: the headline of the press release includes the clarification that the hotel was a “public works job.” How did a Hilton hotel become a public works job? You thought “public works jobs” were government projects such as schools, courthouses, libraries, and post offices.

You thought wrong. In 2001, Governor Gray Davis signed the union-backed Senate Bill 975 into law. It expanded the definition of a “public works” project to include just about any assistance of any financial value from a government:

For purposes of this section, “paid for in whole or in part out of public funds” means the payment of money or the equivalent of money by a state or political subdivision directly to or on behalf of the public works contractor, subcontractor, or developer, performance of construction work by the state or political subdivision in execution of the project, transfer of an asset of value for less than fair market price; fees, costs, rents, insurance or bond premiums, loans, interest rates, or other obligations that would normally be required in the execution of the contract, which are paid, reduced, charged at less than fair market value, waived or forgiven; money to be repaid on a contingent basis; or credits applied against repayment obligations.

In 2012, the Assembly Labor and Employment Committee rejected (on a party-line vote – Democrats opposed and Republicans in support) Assembly Bill 987, sponsored by Associated Builders and Contractors of California and introduced by Assemblywoman Shannon Grove (R-Bakersfield). This bill would have simplified a section of California Labor Code 1720 defining “public works” that two court decisions have described as ”As statutes go, Section 1720 is hardly a triumph of the drafter’s art.” Unions like the law as written, and their triumph described below shows why they oppose any reasonable amendments to the law.

The United Port of San Diego owns property on the San Diego waterfront next to the San Diego Convention Center. In 2002, the Port issued a Request for Proposals for an entity to lease the land and build a hotel on the site. After choosing Hilton San Diego Convention Center, LLC to lease the land and build the hotel, the Port negotiated a lease that included a rent credit equal to 60 percent of the rent due each month for 11 years, not to exceed a total of $46.5 million. Subsequently the Port provided a “rent credit acceleration” for the hotel developer.

Hilton San Diego Convention Center, LLC chose Hensel Phelps, an investor in the project, as the general contractor. In April 2004, Hensel Phelps asked the Port if the hotel project was a public works job subject to the payment of state-mandated construction wage rates (so-called “prevailing wages”) to trade workers. In a memorandum dated May 12, 2004, the Port considered the available information and concluded that “the Hilton Hotel development is not considered a public works project subject to the payment of prevailing wages.” See that memo here: May 12, 2004 – Port Says Hilton San Diego Not Public Works.

After construction began in 2006, the Carpenters Contractors Cooperation Committee (CCCC) and Southern California Labor/Management Operating Engineers Contract Compliance Committee, two union-affiliated labor-management cooperation committees, referenced the rent credit and asked the California Department of Industrial Relations (DIR) to determine whether or not the Hilton Hotel was a public works project subject to state-mandated prevailing wage laws. The DIR began its own analysis of the project. See September 14, 2006 DIR Request to Port of San Diego for Hilton San Diego Documents.

In a response to the DIR dated October 2, 2007, Port of San Diego staff stated that it “believes that given the specific conditions of the RFP; challenges caused by extensive site remediation; the extent of public improvements; location; and size of the site, the transaction that was negotiated with Hilton represents the market for this particular site,” thus denying that the rent credit exceeded fair market value. The Port also warned that if the state decided to declare the hotel a public works project, it would discourage additional development of the area:

Port staff has received inquiries from other tenants, who are in the process of developing leaseholds, regarding this matter. We are concerned that attempts to treat private leaseholds as public projects will set off a chain reaction and have a chilling effect on redevelopment and reduce rental revenue to the Port, which will in turn negatively impact the Port’s ability to further its own capital projects.

Associated Builders and Contractors (ABC) of California (my former employer) and Associated General Contractors (AGC) of California submitted letters to the DIR arguing that the Hilton hotel was not a public works project. The Southern California Labor/Management Operating Engineers Contract Compliance Committee submitted a rebuttal to the ABC and AGC arguments.

November 30, 2007 San Diego Hilton Not a Public Works – ABC of CA Comment

December 7, 2007 San Diego Hilton Not a Public Works – AGC of CA Comment

December 19, 2007 San Diego Hilton is a Public Works – Operating Engineers Union Response

On April 1, 2008, the Director of the California Department of Industrial Relations determined that “the construction of the Hilton San Diego Convention Center Hotel and related development” is “a public work subject to prevailing wage requirements.” See April 1, 2008 DIR Director’s Decision – San Diego Hilton – Public Works.

Hensel Phelps filed an administrative appeal of the decision, and the DIR sought additional comments. See April 25, 2008 DIR Notice of Appeal – San Diego Hilton. Among the commenters were Associated Builders and Contractors of California: see May 8, 2008 San Diego Hilton Not a Public Works – Comments on Appeal – ABC of California.

On June 23, 2008, the DIR Director denied the appeal and affirmed his original decision that the Hilton San Diego Convention Center Hotel was a public work subject to prevailing wage requirements. Four days later, Hensel Phelps filed a lawsuit (Hensel Phelps Construction Company vs. California Department of Industrial Relations) in San Diego County Superior Court to overturn the DIR Director’s decision.

On February 25, 2010, a San Diego County Superior Court judge ruled that the Hilton San Diego Convention Center Hotel and related construction was not a “public work” subject to prevailing wage requirements. On April 23, 2010, the Director rescinded his earlier decision and ruled that the Hilton San Diego Convention was not a public works project. See April 23, 2010 DIR Rescinds Coverage Determination for San Diego Hilton.

But the Carpenters Contractors Cooperation Committee appealed the judgment to the Court of Appeal, Fourth Appellate District. On July 26, 2011, the court reversed the Superior Court decision and ruled that the rent credit was a payment of public funds, regardless of whether or not the rent reduction had a realizable monetary worth. See July 26, 2011 Hensel Phelps v San Diego Port District Appeals Court Decision – Prevailing Wage on Hilton San Diego Bayfront Hotel.

The State Building and Construction Trades Council of California had filed an amicus brief in the case. In its July 21, 2011 bulletin Court of Appeal Rules Prevailing Wage is Required on San Diego Hilton Project, it expressed outrage that “the Schwarzenegger Administration refused to file an appeal to defend the Department of Industrial Relations’ coverage decision” and that “the Port District and the Developer should be ashamed of themselves.”

The DIR press release explains what happened next:

Hensel Phelps Construction Company and the Labor Commissioner then negotiated the amount of wages due to the workers. All 2,051 workers will receive the full prevailing wages they earned on this project. They performed every aspect of construction, from foundation drilling to concrete pouring to steel erection to landscaping.

Hensel Phelps Construction Company will pay a third party administrator to process payments to the workers. The prime contractor will also pay an additional $400,000.00 to the Labor Commissioner as reimbursement for investigative costs.

Now we know that state-mandated construction wage rates cost an extra $8 million for a specific $350 million hotel project built in downtown San Diego in the mid-2000s. You can imagine the cost of prevailing wage for a project in a rural area during the recent economic downturn.

Is it surprising that the developers of the proposed Turtle Bay Sheraton Hotel in Redding suspended their plans earlier this year to build the hotel when unions managed (on their second try) to get the DIR to determine that hotel would be a “public works” project? See my February 15, 2013 post Unions Rise to Defense of “Prevailing Wage” Rates Jeopardizing Hotel Project in Redding and my January 31, 2013 post Redding Needs a Charter to End Nonsense Definition of Private Hotel as a “Public Works” Project.

The Context for California’s Senate Bill 7: California Unions Advance Plot to Neuter City Charters (My Article in www.UnionWatch.org)

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My article With Senate Bill 7, California Unions Advance Plot to Neuter City Charters was posted on www.UnionWatch.org on February 28, 2013.

More than 30 California cities are likely to defy top union officials by asking their citizens in 2014 to vote on enacting a “home rule” charter for local control. Cities want to free their purely municipal affairs from costly union-backed state mandates…

It includes links to recent news stories about cities in California that are considering bringing a proposed charter before voters for approval in 2014:

Murrieta

A Former Mayor of a Southern California City Provides an Intellectual Argument for City Charters and Local Government Authority - www.LaborIssuesSolutions.com - February 19, 2013 (a commentary on Reasons to Consider Becoming a Charter City - San Diego Union-Tribune - February 19, 2013).

Costa Mesa

Outsourcing Back in for Costa MesaOrange County Register (editorial) – February 6, 2013

…passage of Measure V would have made the privatization task easier. But the union outspent Measure V proponents by more than seven-to-one. However, Mr. [Councilman Jim] Righeimer said he hopes a new charter measure will be put on the June 2014 ballot…Within 60 days the council will hold a study session on how to set up the independent committee for the new charter measure.

Stanford Professor Warns Costa Mesa about Pension DebtOrange County Register – February 27, 2013 and City’s Pension Outlook Called ‘Stark’ - Newport Beach/Costa Mesa Daily Pilot – February 27, 2013. (With the failure of the Measure V charter in November 2012, Costa Mesa is now in the union paradigm with a proposed solution to raise taxes.)

Redding

Unions Rise to Defense of “Prevailing Wage” Rates Jeopardizing Hotel Project in Reddingwww.LaborIssuesSolutions.com - February 15, 2013 and Redding Needs a Charter to End Nonsense Definition of Private Hotel as a “Public Works” Project - www.LaborIssuesSolutions.com - January 31, 2013.

Escondido

Escondido Mayor Touts Urban Renewal, Embracing DiversitySan Diego Union-Tribune – February 20, 2013

Delivering his annual State of the City address to nearly 300 residents and business leaders gathered at the city’s arts center… [Mayor Sam] Abed said he also wants the city to take another shot at becoming a charter city, which would increase Escondido’s independence from Sacramento and reduce the cost of some city construction projects.

Moreno Valley

Moreno Valley: City to Explore Becoming Charter City - Riverside Press-Enterprise – February 26, 2013

The Moreno Valley City Council on Tuesday, Feb. 26, unanimously approved establishing a subcommittee that would explore becoming a charter city and appointing two council members to it.

Moreno Valley: Charter City Committee Could Be Created  - Riverside Press-Enterprise - February 25, 2013

The Moreno Valley City Council on Tuesday, Feb. 26, is to follow through on plans to determine whether to become a charter city. The council is set to vote on whether to establish a charter exploratory subcommittee and appoint two council members to it.

Buellton

Buellton Continues “Home Rule’ Talk - Santa Ynez Valley News - February 7, 2013

The idea of changing Buellton to a “home-rule” city is on hold again after City Council members decided to set up a workshop for more discussion about a draft plan…City Manager John Kunkel said the committee wants voters to be comfortable with the measure and, if the council wants to have a dialogue with unions, there is no rush.

Charting Best Path to Buellton’s Future - Santa Ynez Valley News (editorial) – February 7, 2013

…being a charter city does mean that local elected officials and voters can make more of their own decisions, and are therefore better able to tailor policy to fit specific local needs…Being a charter city also lets local government off the hook for paying a prevailing wage. Labor unions don’t like that possibility…

Arroyo Grande

Arroyo Grande Considering City Charter - www.CalCoastNews.com - January 28, 2013

The Arroyo Grande City Council has created a committee to explore the idea of becoming a charter city in order to cut costs…Many union members oppose city charters because they allow exemptions from state-mandated prevailing wage agreements. City staff says adopting a charter could save Arroyo Grande $50,000 to $300,000 annually.

Study Under Way to Find Out if Arroyo Grande Should Try to Become a Charter CitySan Luis Obispo Tribune - January 27, 2013

A committee has been convened to study whether Arroyo Grande should try to become a charter city, a move that officials say could save money and give it more local control. The idea, however, faces stiff opposition from local union members…

Bill Introduced in State Senate to Suppress Authority of California’s Charter Cities to Establish Their Own Policies on Government-Mandated Construction Wage Rates

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California State Senate Majority Leader Darrell Steinberg issued a press release on February 19, 2013 announcing the introduction of Senate Bill 7, which would impose a financial disincentive on any of California’s 121 charter cities that establish their own policies concerning government-mandated construction wage rates (so-called “prevailing wages”). See Bi-Partisan Bill by State Senators to Require Prevailing Wage Jobs in California Charter Cities.

At least 53 of the 121 charter cities in California establish their own policies concerning government-mandated construction wage rates, with 43 of them providing for a complete exemption. (See page 18 of this guidebook and add two for Newport Beach and Bakersfield.)

Most recently, the charter city of Newport Beach established its own policy concerning government-mandated construction wage rates in January 2013, and the charter city of Bakersfield established its own policy concerning government-mandated construction wage rates in October 2012.

(For more details, see Newport Beach Is Latest California Charter City to Establish Its Own Prevailing Wage Policy: 7-0 Unanimous Vote for Fiscal Responsibility and Common Sense and Bakersfield Becomes Latest of California’s 121 Charter Cities to Free Itself from Government-Mandated Construction Wage Rates – So-Called “Prevailing Wage”)

In July 2012, the California Supreme Court (in State Building and Construction Trades Council of California, AFL-CIO v. City of Vista) upheld a longstanding practice among charter cities to use their local authority to implement their own policies concerning government-mandated construction wage rates (so-called “prevailing wages”). These policies can apply to public works projects receiving public funding only from the city or private projects receiving public assistance with monetary value that only comes from the city.

State-mandated construction wage rates can be 5%-30% higher than actual market wages in a locality, depending on the geographic region and the trade. Under current state law, the state does not conduct surveys of contractors or workers to determine “prevailing wages.” Instead, the California Division of Labor Statistics and Research collects union collective bargaining agreements, adds up all of the employer payments in the agreements (including payments to trust funds that are not employee wages or fringe benefits), and declares the total to be the prevailing wage.

The State Building and Construction Trades Council of California (an umbrella lobbying group for construction unions) detests charter cities that establish their own policies concerning government-mandated construction wage rates. Unions want all local governments to submit to state law, which imposes these political demands of unions (1) broadly define public works to encompass many private projects; and (2) calculate so-called prevailing wage rates using union collective bargaining agreements.

Construction unions have also aggressively opposed proposed charters and have recently stopped movements for charters in Elk Grove, Redding, Rancho Palos Verdes, Auburn, Costa Mesa, Escondido, and Grover Beach.

For a comprehensive, authoritative guide to the status of policies concerning government-mandated construction wage rates in California’s 121 charter cities, see Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions?

Also, see general information about Charter Cities from the League of California Cities.

Unions Rise to Defense of “Prevailing Wage” Rates Jeopardizing Hotel Project in Redding

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Tom Curato, an official with the Plumbers & Pipefitters Union Local No. 228, had a opinion piece in the February 10, 2012 Redding Searchlight newspaper entitled Prevailing Wage Supports Skilled Workers And Their Families. It was a response to my February 4, 2013 letter to the editor Redding Needs a City Charter.

In 2011, construction unions used a Charter City Exploratory Committee to undermine a campaign to ask Redding voters to approve a charter that would have given the city authority to establish its own policies concerning government-mandated construction wage rates. Ultimately, the Redding City Council voted 3-2 to reject the concept of a charter, pleasing top union officials in Sacramento.

At the same time, the Plumbers & Pipefitters Union Local No. 228 and other unions were repeatedly trying to get the California Department of Industrial Relations to issue a determination declaring a private hotel project as a “public works” project subject to state laws that define and calculate construction wage rates. Under an administrative appeal, they finally won their desired outcome from the Department of Industrial Relations in January 2013.

See comprehensive information at Redding Needs a Charter to End Nonsense Definition of Private Hotel as a “Public Works” Project.

The union op-ed defending state-mandated construction wage rates received 58 posted comments, showing the intense debate on this issue in Redding (and elsewhere). My earlier letter to the editor had 39 posted comments – some about prevailing wage, some about the concept of charter city status for Redding.

The exchange of opinions was reported in the union-oriented web site www.wepartypatriots.com: see UA Local 228 Rep. Defends the Prevailing Wage for Redding, CA. Of course, the article never mentions that taxpayers ultimately pay for “public works” projects.

For more information on charter cities and prevailing wages, see Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions?

Redding Needs a Charter to End Nonsense Definition of Private Hotel as a “Public Works” Project

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UPDATE: My letter to the editor Kevin Dayton: Redding Needs a City Charter is in the February 4, 2013 Redding Record-Searchlight. Comments in response misrepresent “prevailing wage” as “living wage” just like at the Newport Beach City Council meeting on January 22, 2013. It’s possible that a political consultant has suggested using this strategy to take advantage of public ignorance about the calculation of “prevailing wages” and the resulting rates.


The City of Redding has been hit with a union-instigated obstacle to economic growth and job creation imposed by Senate Bill 975, enacted into law in 2001. This law (described below in greater detail) expanded the state’s definition of “public works” to include many private construction projects, thereby requiring companies working on these projects to pay state-mandated construction wage rates (so-called “prevailing wages”) instead of wages that reflect local market conditions.

On January 27, 2013, the California Department of Industrial Relations reversed an earlier decision from December 27, 2011 and determined that a proposed Sheraton hotel to be built in Redding by the Turtle Bay Exploration Park is a “public works” project after all.

Turtle Bay Exploration Center in Redding Loses to Unions

Turtle Bay Exploration Center in Redding Loses to Unions

This new decision was sought by three unions: the Plumbers & Pipefitters Union Local No. 228, the International Brotherhood of Electrical Workers (IBEW) Union Local No. 340, and the Sheet Metal Workers Union Local No. 162 (now absorbed into Sheet Metal Workers Union Local No. 104). As a result of a 22-page appeal of the original decision by the law firm of Adams Broadwell Joseph & Cardozo, the state has now decided that the privately-owned hotel would a public works project, equivalent to a courthouse, because the City of Redding waived rental payments on the land where the hotel will be built.

Now the proposed hotel project may be in jeopardy because the anticipated increased cost of construction may compromise the financial success of the hotel. A January 30, 2013 article in the Redding Record-Searchlight newspaper (Fate of Hotel at Turtle Bay in Limbo - Ruling: Park Must Pay Workers Prevailing Wage to build Sheraton Hotel) outlined the current status of the planned 130-room hotel:

…a park spokesman said he could not say when construction will start or whether the project is in jeopardy. Groundbreaking for the hotel had been scheduled this month.

“At this point we still hope to build the hotel, and operate a hotel there,” Turtle Bay’s Toby Osborn said Wednesday. “There is just a lot of uncertainty due to the ruling.”

…“Everybody woke up this morning and it was a different ballgame,” Osborn said. “Now we need to sit down and identify all the knowns and try to identify all the unknowns.”

But don’t worry, magnanimous union officials say they will help:

Andrew Meredith of the International Brotherhood of Electrical Workers Union Local 340 – one of the unions that appealed the ruling – said they were always confident the state would overturn its prevailing wage decision.

“That said, we are still committed to working with Turtle Bay to find a way to get this project off the ground,” Meredith said. “We know this is something that is important to the community.”

Turtle Bay met with the unions Wednesday to discuss how to move forward, including how the ruling will affect costs of building the hotel and restaurant.

What Is Senate Bill 975 and Why Is It an Obstacle to Private Construction Projects?

In 2001, Governor Gray Davis signed into law Senate Bill 975, a bill sponsored by the State Building and Construction Trades Council of California that expanded the definition of “public works” under California Labor Code Section 1720 to include many private projects. Existing law had defined “public works” as various types of construction “done under contract and paid for in whole or in part out of public funds.” Senate Bill 975 added a list of various kinds of non-monetary government assistance that qualified as public funds:

“paid for in whole or in part out of public funds” means the payment of money or the equivalent of money by a state or political subdivision directly to or on behalf of the public works contractor, subcontractor, or developer, performance of construction work by the state or political subdivision in execution of the project, transfer of an asset of value for less than fair market price; fees, costs, rents, insurance or bond premiums, loans, interest rates, or other obligations that would normally be required in the execution of the contract, which are paid, reduced, charged at less than fair market value, waived or forgiven; money to be repaid on a contingent basis; or credits applied against repayment obligations.

As business groups and Republican legislators predicted, the increased costs of construction labor resulting from prevailing wage requirements triggered by Senate Bill 975 scuttled numerous private commercial projects and private affordable housing projects, especially in the Central Valley, North State region (Redding and Chico), and other rural areas.

In these parts of the state, away from the coastal metropolitan cities, the disparity between state-mandated construction wage rates (so-called prevailing wages but actually based on union collective bargaining agreements) and actual median wages in the local market region is quite significant – as much as 30% or more, depending on the trade. See An Analysis of Market and Prevailing Wage Rates for the Construction Trades in California (2004) and The Effects of Prevailing Wage Requirements on the Cost of Low-Income Housing (2005).

Unions Derailed an Easy Local Solution to This Problem in 2011

Sundial Bridge in Redding, California

Sundial Bridge in Redding, California

There has been an ongoing grassroots effort in Redding to ask voters to enact a charter in order to circumvent costly and intrusive state meddling in local affairs. A charter would free the City of Redding from the mandates of the union-controlled California State Legislature, including state-mandated construction wage rates (so-called “prevailing wages”). See Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions?

In 2011, various local groups and individuals wanted voters to consider approving a robust charter, but union officials ultimately derailed the movement through a Charter City Exploratory Committee appointed by the city council.

The citizens of Redding need to enact a charter so their city has the same authority as the 121 California charter cities to establish its own prevailing wage policies. Why are the people of Redding acquiescing to the demands of unions and allowing the state legislature and a state agency to determine the fate of this hotel?

News Coverage of the Turtle Bay Hotel Prevailing Wage Saga:

Redding City Council Abandons Charter, Saves Prevailing Wage – State Building and Construction Trades Council web site – June 8, 2011

Cost of Turtle Bay Hotel Rests with Department of Industrial Relations; Prevailing Wage in Dispute - Redding Record-Searchlight - August 18, 2011

Turtle Bay Wins Ruling on Wages; Hotel Plan Not Subject to Prevailing Pay - Redding Record-Searchlight - December 28, 2011

Hotel construction cost estimates range from $13 million to $14.8 million. Total project costs are pegged at $21.2 million. Prevailing wage would have added roughly $1.25 million to that price tag, Osborn has said.

Hotel at Turtle Bay May Break Ground in JanuaryRedding Record-Searchlight - December 12, 2012

Unions Win Prevailing-Wage Case vs. Turtle BayRedding Record-Searchlight - January 29, 2013

Fate of Hotel at Turtle Bay in Limbo - Ruling: Park Must Pay Workers Prevailing Wage to build Sheraton Hotel - Redding Record-Searchlight - January 30, 2013

One More Costly Delay on Road to Turtle Bay Hotel - Redding Record-Searchlight (editorial) – January 30, 2013

Turtle Bay Nearing Compromise with Unions Over Hotel Construction - Redding Record-Searchlight - February 7, 2013

Finally, the Redding Employees Association of the Service Employees International Union (SEIU) is now suing the City of Redding for approving a contract with Vertex Business Solutions (Orcom Solutions), a provider of outsourced billing and customer care services to utilities, to take over billing and a call center from the city-owned Redding Electric Utility. It appears this contract would have been umambiguously legal if Redding operated as a charter city. See Union Sues Redding Over Outsourcing REU Call CenterRedding Record-Searchlight – January 18, 2013.