Tag Archive for Community Benefits Agreement

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

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


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

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

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

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

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

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

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

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

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

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

Kevin Dayton
President and CEO
Labor Issues Solutions, LLC

 

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

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

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

Factions in the Construction Industry: Trusting Pragmatism Versus Principled Cynicism

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

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

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

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

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

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

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

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

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

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

Can Unions Resist Grabbing More Work Through CEQA Greenmail?

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

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

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

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

The Sacramento Bee described what happened next:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

Sources

 

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

UNITE HERE Local 49 comments on Draft Environmental Impact Report

Sacramento Coalition for Shared Prosperity comments on Draft Environmental Impact Report

California Senate Bill 743

California Assembly Bill 852

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

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

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

Getting to the Bottom of it: Backroom Administrative/Executive Deliberation Leading to Project Labor Agreement on California High-Speed Rail

UPDATE: I emailed this message to the California High-Speed Rail Authority at 4:51 p.m. on Friday, December 20, 2013:

Today is December 20, 2013, the date cited in the last correspondence from the California High-Speed Rail Authority.

“Under Government Code §6253(a), the Authority invoked a 14 day extension in order to further research your request and make a determination. A determination letter would be sent to you no later than November 18, 2013. The Authority will provide all responsive documents to you by December 20, 2013.”

http://laborissuessolutions.com/wp-content/uploads/2013/11/2013-11-18-CaHSRA-letter-to-Dayton-on-Public-Records-Request.pdf

Any news on progress to fulfill the October 24, 2013 request?

At 5:58 p.m., the California High-Speed Rail Authority emailed me this letter notifying me that “The amount of electronic records that are responsive to your request are too large to send via email. A CD-ROM with electronic records will be sent via U.S. Mail to your attention no later than December 20, 2013.”

December 20, 2013 California High-Speed Rail Authority Letter to Kevin Dayton on Public Records Request

Then, at 6:14 p.m., the California High-Speed Rail Authority emailed me this batch of letters:

Associated Builders and Contractors of California – State Building and Construction Trades Council of California – California High-Speed Rail Authority 2013 letter exchange on Project Labor Agreement

UPDATE: In a November 18, 2013 letter, the California High-Speed Rail Authority informed me that it will provide me with the requested public records by December 20, 2013.

UPDATE: In a November 4, 2013 letter, the California High-Speed Rail Authority informed me that it is taking an additional 14 days (as allowed by law) to provide me with the requested public records.


On April 29, 2013, I posted the results of my request to the Fresno County Workforce Investment Board for public records related to the development of the Project Labor Agreement with the State Building and Construction Trades Council of California for construction of the California High-Speed Rail system. (See Newly Obtained Documents Reveal Which Elected Official Was the Catalyst for the Project Labor Agreement on California High-Speed Rail: Fresno Mayor Ashley Swearengin.)

I also listed seven questions that remain to be answered about how this costly union construction monopoly was implemented. It was done without any public discussion or vote by the board of the California High-Speed Rail Authority, obviously because public scrutiny and discussion would have further damaged its reputation in California and even in Washington, D.C.

Today I submitted another request for public records related to the Project Labor Agreement, this time directly to the California High-Speed Rail Authority. I expect these records will answer those seven questions and give the public a complete picture of the backroom wheeling and dealing.


From: Kevin Dayton [mailto:kdayton@laborissuessolutions.com]
Sent: Thursday, October 24, 2013 10:45 AM
To: ‘records@hsr.ca.gov’; ‘xxxxx’
Subject: Public Records Request to California High-Speed Rail Authority: Community Benefits Agreement/Project Labor Agreement

October 24, 2013

Lisa Marie Alley
Assistant Deputy Director of Communications
California High-Speed Rail Authority
770 L Street, Suite 800
Sacramento, CA 95814

Re: Public Records Request – Community Benefits Agreement/Project Labor Agreement

Dear Ms. Alley:

Under the authority of the California Public Records Act, I am requesting the following records to determine the following:

The administrative/executive branch deliberative process within the California High-Speed Rail Authority that led to the execution of the “Community Benefits Agreement” (aka Project Labor Agreement) as signed by Robbie Hunter, President of the State Building and Construction Trades Council of California, on August 7, 2013 and by Jeff Morales, Chief Executive Officer of the California High-Speed Rail Authority, on August 13, 2013. Here’s a link to that Project Labor Agreement: Project Labor Agreement with Unions for California High-Speed Rail.

“Public records” include any writing containing information relating to the conduct of the public’s business prepared, owned, used or retained by the California High-Speed Rail Authority regardless of physical form or characteristics. “Writing” means handwriting, typewriting, printing, photostating, photocopying, photographing, transmitting by electronic mail or facsimile, and every other means of recording upon any tangible thing, any form of communication or representation, including letters, words, pictures, sounds or symbols or any combination thereof, and any record thereby created, regardless of the manner in which the record has been stored.

“Public records” shall include writing from private email addresses used by the Board and staff of the California High-Speed Rail Authority for public business. For example, if a staff member sends electronic mail through a Google mail account to schedule a meeting with Robbie Hunter, that email is a public record.

Please provide the following public records – in electronic form if possible – from the California High-Speed Rail Authority:

  • All records dated after January 1, 2012 concerning consideration, rejection, and approval from any federal or state agency for a Community Benefits Agreement/Project Labor Agreement and/or “Targeted Hiring Agreement” based on a similar agreement adopted at the Los Angeles County Metropolitan Transportation Authority.
  • All records dated after January 1, 2012 concerning evaluation or deliberation of the conditions, benefits, challenges, and negative impact of a Community Benefits Agreement/Project Labor Agreement.
  • All records dated after January 1, 2012 referencing the Community Benefits Agreement/Project Labor Agreement in communications from, to, or citing the following individuals:

a) Robbie Hunter (Current President, State Building and Construction Trades Council of California)

b) Bob Balgenorth (Past President, State Building and Construction Trades Council of California and past board member, California High-Speed Rail Authority)

c) Ashley Swearingen (Mayor of Fresno)

d) Tom Richards (Chair of Fresno Regional Workforce Investment Board and current board member, California High-Speed Rail Authority.)

e) Lee Ann Eager (Economic Development Corporation serving Fresno County)

f) Chuck Riojas (International Brotherhood of Electrical Workers – IBEW)

g) Blake Konczal (Executive Director, Fresno Regional Workforce Investment Board, and Fresno Works Consortium)

h) Ken Price (counsel for Fresno Regional Workforce Investment Board)

i) Michael Bernick (Applied Development Economics)

j) Robert Padilla (Small Business Advocate, California High-Speed Rail Authority)

  • All records dated after November 1, 2012 referencing the Community Benefits Agreement/Project Labor Agreement in communications from, to, or citing the following individuals:

a) Eric Christen (Coalition for Fair Employment in Construction)

b) Nicole Goehring (Associated Builders and Contractors, Northern California Chapter)

c) Kevin Dayton, Labor Issues Solutions, LLC

  • Any other records related to the Community Benefits Agreement/Project Labor Agreement.

Note: the California High-Speed Rail Authority does not need to provide board meeting agendas, minutes, board meeting transcripts, or staff reports for meetings already provided to the public as posted on the California High-Speed Rail Authority web site in association with board meetings. It does not need to provide the Addendum 8 version of the Project Labor Agreement (Addendum 8 Project Labor Agreement for Initial Construction Segment) or the revised Project Labor Agreement linked above (Project Labor Agreement with Unions for California High-Speed Rail).

Upon receiving this request for a copy of records, please, within 10 days, determine whether the request, in whole or in part, seeks copies of disclosable public records in the possession of the California High-Speed Rail Authority and promptly notify me of the determination and the reasons therefor.

In unusual circumstances, the time limit may be extended by written notice, setting forth the reasons for the extension and the date on which a determination is expected to be dispatched. No notice shall specify a date that would result in an extension for more than 14 days, and the notice shall provide the estimated date and time when the records will be made available.

###

New Website www.CaliforniaHighSpeedRailScam.com Brings Experienced, Pugnacious, Relentless Opposition to the Effort to Terminate California High-Speed Rail

Here is a press release from the California-based Coalition for Fair Employment in Construction about a new web site:

www.CaliforniaHighSpeedRailScam.com

 


BREAKING NEWS! CFEC UNVEILS NEW WEBSITE EXPOSING HIGH SPEED RAIL SCAM!

Coalition for Fair Employment in Construction Banner 2013

PRESS RELEASE
January 31, 2013
Contact: Eric Christen
(858) 431-6337

 

New Website www.CaliforniaHighSpeedRailScam.com Brings Experienced, Pugnacious, Relentless Opposition to the Effort to Terminate California High-Speed Rail 

Union-Only Project Labor Agreement Provokes Professional Response to Train Debacle  

CA – The Coalition for Fair Employment in Construction today announces the launch of its comprehensively-researched opposition website www.CaliforniaHighSpeedRailScam.com, with the tag line “The Debacle to End All Debacles.” This website helps build the case to terminate what would be the most expensive construction project in human history.

“There are several grassroots organizations in California valiantly challenging the High-Speed Rail Authority’s taxpayer-funded public relations machine from various angles,” said Eric Christen, executive director of the Coalition for Fair Employment in Construction (CFEC). “We are now bringing their work together in one place, while adding our own expert perspective on construction and labor relations.”

The Coalition for Fair Employment in Construction has 14 years of high-profile experience pugnaciously and relentlessly fighting construction schemes in California that entangle wasteful government projects with labor union entitlements known as Project Labor Agreements (PLAs). Among its victories is the derailment of a proposed Project Labor Agreement backed by former Governor Gray Davis for the construction of the new University of California campus in Merced.

The Request for Proposals for the Madera to Fresno first segment of the Initial Operating Section includes two provisions (Sections 7.11.3 and 10.1)  giving construction trade unions a monopoly on the project by requiring all construction companies to sign a Project Labor Agreement.

A  Project Labor Agreement (disguised under the deceptive name “Community Benefits Agreement”) negotiated with officials of the State Building and Construction Trades Council was also included in the bid specifications, to ensure that the five prequalified design-build consortiums fully understood the directive to give unions a monopoly on construction.

The website so far includes the following sections:

1. Your One-Stop Source for Information about the California High-Speed Rail Debacle – Yes, Your Doubts Are Justified

2. Top-40 Donors to Campaign to Convince California Voters to Borrow $10 Billion to Start Building High-Speed Rail

3. How Much Will This California High-Speed Rail Cost? Making Up Numbers

4. Losing Bidders for High-Speed Rail Design-Build Contract Will Get Up to $2 Million from Taxpayers For Their Trouble

5. Construction Trade Unions Get Costly Monopoly on High-Speed Rail Construction with Project Labor Agreement (“Community Benefits Agreement”)

6. Timeline of the California High-Speed Rail: This Train Has Hurtled Down the Track for 20 Years

7. The #11 Campaign Contributor to Proposition 1A in 2008: A Mysterious Organization Called “Californians For A Safe & Reliable High Speed Rail”

8. Fighting Back Against the California High-Speed Rail Authority’s Taxpayer-Funded Public Relations Machine

9. Why Lowest Responsible Bidders Don’t Necessarily Win Rail Construction Contracts: Explaining Design-Build Procurement and Best Value Criteria In California Law

10. Art Inspired by the High-Speed Rail (parody art sponsored by Activist Artists 4 California)

“I’m meeting constantly with Californians who express utter disbelief that this California High-Speed Rail debacle is still chugging along toward its inevitably catastrophic conclusion,” said Christen. “This project stinks of failure, waste, and lack of accountability. The typical Californian is intrigued by the idea of high-speed rail but alarmed and disgusted by its disorganized implementation.”

###

The Reason for Murky Bidding on California High-Speed Rail: A Law Enacted in 1996, When the Bullet Train Was Just a Twinkle in California’s Eye

On January 15, 2013, the Bay Area News Group (San Jose Mercury-News) reported in California High-Speed Rail Cost Figures Coming In, but No One Will See Them Yet that the chairman of the California State Senate Transportation and Housing Committee was upset about the sealed bids for the first segment of the California High-Speed Rail project.

…sealed envelopes containing the actual cost for the first leg of the high-speed rail line will finally be hand-delivered to state offices this week. But you won’t see the bid prices yet – and neither will the officials planning the project. They’ll be filed away in sealed containers, with the supporting documents locked up in fireproof cabinets…

But some outsiders are questioning why the state is taking so long to look at the price, particularly with so many taxpayer dollars on the line and a groundbreaking just months away.

“The process is supposed to be transparent,” said state Sen. Mark DeSaulnier, D-Concord, chairman of the Senate’s transportation committee. “Once the bid is in, it’s in the public domain, and the public needs to (be able to see) what the bids look like, especially on a project like this.”

Actually, the process is NOT supposed to be transparent. And Jeff Morales, CEO of the California High-Speed Rail Authority, is correct to point out that this practice is common for big projects around the nation and state. “It is the industry standard in design-build projects to open bid prices following initial evaluations as not to skew the process,” Morales stated.

Here’s the origin of what’s happening today with the murky High-Speed Rail bids. In 1996, Governor Pete Wilson signed into law Senate Bill 1420, introduced by Senators Quentin Kopp (a former High-Speed Rail Authority board member who has criticized the current manifestation of the project) and Jim Costa (who is now a member of Congress), to create the California High-Speed Rail Authority and “prescribe various powers of the authority relative to planning, contracting for the construction of, financing, and operating, a high-speed rail system.”

California Public Utilities Code Section 185036 (added to law by SB 1420) states the following:

185036. Upon approval by the Legislature, by the enactment of a statute, or approval by the voters of a financial plan providing the necessary funding for the construction of a high-speed network, the authority may do any of the following: (a) Enter into contracts with private or public entities for the design, construction and operation of high-speed trains. The contracts may be separated into individual tasks or segments or may include all tasks and segments, including a design-build or design-build-operate contract.

In the mid-1990s, California was beginning to experiment with the design-build procurement process for public works projects. Instead of using the traditional “design-bid-build” method of designing a project, bidding out contracts for construction, and then building the project, a state or local government would request proposals that combined design and construction for single-source delivery.

The idea is that design-build allows different facets of a project to be coordinated and integrated, and as a result construction is less expensive and completed faster. See the web site of the Design-Build Institute of America for its arguments in support of design-build.

However, there are potential drawbacks to public agencies using design-build procurement for taxpayer-funded construction. With design-build, state and local governments are allowed to award the contract to an entity that is not the lowest responsible bidder. Instead, the government chooses a design-build entity based on “best value” criteria that includes price but can also include other objectives, such as “community benefits.” (In the case of California High-Speed Rail, bidders fulfill the so-called “community benefits” criteria through a commitment defined in Section 7.11.3 to sign a specific union-only Project Labor Agreement with the State Building and Construction Trades Council of California.)

This somewhat subjective scoring system allows the government to avoid awarding a contract to an inexperienced or overreaching entity that submits a low bid, but it also invites temptation for government officials to subtly manipulate the scoring criteria to achieve a desired outcome, such as making sure their favored company wins the contract. In the worst circumstances, it opens up the possibility for outright cronyism, nepotism, and fraud.

Authorizing this kind of alternative procurement and delivery system for public works projects would seem to conform with California Public Contract Code Section 101, which states that “California public contract law should be efficient and the product of the best of modern practice and research.” But it seems to betray the principles in California Public Contract Code Section 100, which declares the intent of the Legislature in enacting the Public Contract Code to achieve the following objectives:

(a) To clarify the law with respect to competitive bidding requirements.

(b) To ensure full compliance with competitive bidding statutes as a means of protecting the public from misuse of public funds.

(c) To provide all qualified bidders with a fair opportunity to enter the bidding process, thereby stimulating competition in a manner conducive to sound fiscal practices.

(d) To eliminate favoritism, fraud, and corruption in the awarding of public contracts.

Obviously, the long-term success of design-build procurement relies on transparent procedures and promptly-accessible public records.

As the 1990s ended, state agencies and local governments throughout California were eager to win authorization in state law to award projects to design-build entities instead of using the design-bid-build method. Laws multiplied from 2000 to 2011 explicitly authorizing and reauthorizing “best value” bid criteria and establishing a methodology for many categories of local government entities. Language for these authorizations expanded from the crude, simple statement authorizing design-build for High-Speed Rail in Public Utilities Code Section 185036.

On January 20, 2011, the California State Senate Local Government Committee held an oversight hearing on design-build, specifically focusing on the authorization for counties (which was about to expire). The report produced from this 90-minute, 19-panelist hearing is probably the best available source for the public and the news media about the actual implementation in California of design-build procurement, as opposed to theory and rhetoric. See Faster, Cheaper, Better? How Counties Use Design-Build Contracting. The Summary Report from the Oversight Hearing – Wednesday, January 20, 2010 – California State Local Government Committee (also still posted on the California State Senate web site).

In his role of vociferously opposing the privatization of engineering work through design-build, Ted Toppin, Legislative Director of the Professional Engineers in California Government (a public employee union), revealed the weakness of design-build at the oversight hearing:

Taking a self-described “contrary view,” Ted Toppin told legislators that the Professional Engineers in California Government doesn’t support design-build contracting for four reasons: (1) design-build laws favor contractors over taxpayers, (2) design-build contracts avoid competitive bids in favor of best-value lump sum bids, (3) the design-build selection process is highly subjective, and (4) design-build methods eliminate public inspection of the public works projects. His group is neutral on extending the sunset clause for the counties’ design-build statute, provided that the Legislature requires expanded objective reporting. Toppin then specifically alleged that Sonoma County’s report to the LAO incorrectly reported the cost of its design-build contract. Toppin also claimed that Stanislaus County officials ignored state law when awarding their design-build contract for a swimming pool, failing to consider cost, life-cycle costs, and safety records, as required by law. Further, Toppin said that Solano County incorrectly reported contract costs and didn’t consider the cost criterion when awarding the contract. He told legislators that PECG opposes the expansion of design-build contracting to other projects and opposes a standard statute. [Written reactions from Stanislaus County and Solano County appear in the yellow pages.] Senator Price asked Toppin if design-build contracting has “any redeeming social value at all,” to which Toppin replied that state law should follow the approach for state highways that relies on early involvement and inspection.

While generally supporting the concept of design-build procurement on behalf of my former employer – Associated Builders and Contractors (ABC) of California – and addressing some obscure technical issues related to pre-qualification, I also criticized some of the historical problems with design-build procurement that we now see emerging in 2013 with the California High-Speed Rail:

Dayton criticized the project labor agreement signed as part of the design-build process for the San Joaquin County administration building. His group had difficulty in obtaining public records such as the subcontractors’ bid lists and payroll records. Dayton recommended that future design-build laws ensure public access to those documents, and submitted specific draft language. After the hearing, Dayton provided the Committee with six other proposed amendments to the design-build statutes.

As you can see in the final version of Senate Bill 879 (2010), the ABC of California lobbyist Juli Broyles of California Advocates and I succeeded in getting the law amended to included this new public records accessibility language in California Public Contract Code Section 20133 (g):

(g) Lists of subcontractors, bidders, and bid awards relating to the project shall be submitted by the design-build entity to the awarding body within 14 days of the award. These documents are deemed to be public records and shall be available for public inspection pursuant to this chapter and Article 1 (commencing with Section 6250) of Chapter 3.5 of Division 7 of the Government Code.

But such a requirement does not apply to the design-build procurement for California High-Speed Rail. Why? Because the California State Legislature never adopted this recommendation of the California Legislative Analyst’s Office in its February 3, 2005 report Design-Build: An Alternative Construction System:

Instead of separate legislation providing the design-build authority for different time spans for different groups of state and local entities, as currently exist, we recommend that a single statute be adopted that applies to all public entities providing the same authority and limitations, if any.

Nor did the California State Legislature adopt the exact same recommendation five years later from the California Legislative Analyst’s Office in its January 8, 2010 report Counties and Design-Build (also still posted on the LAO web site):

Instead of separate legislation providing the design-build authority for different time spans for different groups of state and local entities, as currently exist, we recommend that a single statute be adopted that applies to all public entities providing the same authority and limitations.

As a result, the California High-Speed Rail Authority has broad authority to develop its own “best value” criteria and scoring system, while keeping the details out of the public eye.

See an American Recovery and Reinvestment Act (ARRA) California High Speed Authority Design Build Program Plan produced by Parsons Brinckerhoff for the California High-Speed Rail Authority. ARRA was the stimulus package enacted by President Obama in 2009.

Does Senator Mark DeSaulnier Read the Legislation He Supports?

Despite his complaining about the murky bidding process for California High-Speed Rail, Senator Mark DeSaulnier has repeatedly voted for bills that authorize or reauthorize design-build procurement or other alternative delivery systems that include “best value” criteria and the same kind of scoring system that California High-Speed Rail is using.

For example, in 2012 he voted for Senate Bill 1509, which reauthorized design-build for K-12 school and community college districts. He also voted for Senate Bill 1549, which authorized design-build for projects of the San Diego Association of Governments (SANDAG). And he supported the use of design-build procurement by Contra Costa County when he served on the Board of Supervisors, and on more than one occasion.

Nevertheless, it’s good to have him pointing out some of the questionable practices of the bidding procedure for the California High-Speed Rail, although he surely won’t be criticizing the Authority’s requirement that contractors sign a Project Labor Agreement.

Concise Statement (With Citation Links) on How a Project Labor Agreement Would Increase the Cost of California High-Speed Rail Construction

Based on a December 6, 2012 statement made by the executive director of the HSR Authority to a Fresno Bee reporter, it seems that all five pre-qualified design-build construction consortiums have negotiated or agreed to negotiate a Project Labor Agreement with the State Building and Construction Trades Council of California (an umbrella lobbying group for construction unions) for construction trades work on the first segment of the High-Speed Rail project.

Section 7.11.3 of the Request for Proposal for Design-Build Services for the first segment of the California High-Speed Rail project states that “Proposers are advised that, subject to FRA [Federal Railroad Administration] approval, the Authority intends to develop a Community Benefits Agreement consistent with the Community Benefits Policy adopted by the CHSRA [California High-Speed Rail Authority] Board at its December 6, 2012 meeting with which the Contractor will be required to comply.”

And Section 10.1 of the Request for Proposal states that  “The Authority [that is, the California High-Speed Rail Authority CEO Jeff Morales] will not make a recommendation for award of the Contract [to the California High-Speed Rail Authority Board of Directors] unless the successful selected Proposer has submitted the following: Escrowed Proposal Documents and corrected any deficiencies identified by the examination of the EPDs, and A letter of assent executed by the Proposer agreeing to be bound by the Community Benefits Agreement.” This indicates a government-mandated Project Labor Agreement!

In fact, a “draft” Project Labor Agreement is included as Addendum 8 in the High Speed Rail Authority’s bid documents for the Request for Proposal. This indicates that bidders that declare their intention to sign a Project Labor Agreement will boost their scores for “community benefit” in the somewhat-subjective best value procurement criteria.

Where this especially matters in terms of cost to taxpayers is the construction of the building structures, such as the stations in Merced and Fresno.

A 2011 study done by the National University System Institute for Policy Research determined that construction projects for which California school districts required contractors to sign Project Labor Agreements with unions were 13-15% higher in final cost than similar California school construction projects built under fair and open competition. This matches anecdotal evidence collected over the past 15 years on California construction projects with government-mandated Project Labor Agreements.

Why are costs higher? The union provisions included in Project Labor Agreements discourage non-union contractors from bidding. As expected, the resulting reduction in bid competition results in higher costs.

Analysis of the Phony Community Benefits and Other Provisions in the Union Project Labor Agreement for the First Segment of California’s High-Speed Rail

At the link immediately below is a copy of the DRAFT Project Labor Agreement (aka Community Benefits Agreement) between the California High-Speed Rail Authority and the State Building and Construction Trades Council of California and the Signatory Craft Councils and Local Unions. It was Addendum 8, issued on December 26, 2012, for the Request for Proposal for Design-Build Services for the first construction segment between Madera and Fresno. Tutor Perini/Zachry/Parsons, a Joint Venture, won the contract.

California High-Speed Rail Authority Addendum 8 Community Benefits Agreement

At the link immediately below is the FINAL executed version of the Project Labor Agreement for California High-Speed Rail, signed by the CEO of the California High-Speed Rail Authority on August 13, 2013.

California High-Speed Rail Authority Executed Community Benefits Agreement


A draft Project Labor Agreement for the first segment of the California High-Speed Rail is now included as Addendum 8 in the Request for Proposal (RFP) to the five pre-qualified design-build consortiums. These entities have a January 18, 2013 deadline to bid on design and construction of the first 28-mile segment of the high-speed rail line in the San Joaquin Valley, from Madera through Fresno.

Consistent with the Community Benefits Agreement resolution approved at the December 6, 2012 meeting of the California High-Speed Rail Authority board of directors, the Project Labor Agreement is disguised under the term “Community Benefits Agreement.” But as you’ll see below, it’s the standard boilerplate language used in most Project Labor Agreements that contractors must sign with unions to work on government projects in California. And a close reading of the specific provisions in the agreement shows that the alleged benefits are nothing but efforts, goals, acknowledgement, an exercise of full support, and even one recognition of a desire!

And a close reading of the specific provisions in the agreement shows that the alleged benefits are nothing but efforts, goals, acknowledgement, an exercise of full support, and even one recognition of a desire!

Here’s a little more, buried deep in the bid documents:

Section 7.11.3 of the Request for Proposal for Design-Build Services for the first segment of the California High-Speed Rail project states that “Proposers are advised that, subject to FRA [Federal Railroad Administration] approval, the Authority intends to develop a Community Benefits Agreement consistent with the Community Benefits Policy adopted by the CHSRA [California High-Speed Rail Authority] Board at its December 6, 2012 meeting with which the Contractor will be required to comply.”

And Section 10.1 of the Request for Proposal states that  “The Authority [that is, the California High-Speed Rail Authority CEO Jeff Morales] will not make a recommendation for award of the Contract [to the California High-Speed Rail Authority Board of Directors] unless the successful selected Proposer has submitted the following: Escrowed Proposal Documents and corrected any deficiencies identified by the examination of the EPDs, and A letter of assent executed by the Proposer agreeing to be bound by the Community Benefits Agreement.” This indicates a government-mandated Project Labor Agreement.California High-Speed Rail Project Labor Agreement Mandate

Obviously the California High-Speed Rail Authority‘s inclusion of this Project Labor Agreement as an addendum in the RFP is also a strong suggestion for pre-qualified design-build entities to commit to signing this agreement in order to fulfill the conditions of the Community Benefit Agreement resolution. A contractor who commits to sign the union agreement will likely receive the full amount of points assigned to this objective in the “best value” scoring criteria used by the California High-Speed Rail Authority as the basis to award the design-build contract.

This long-anticipated union agreement will be signed by Robbie Hunter, new President of the State Building and Construction Trades Council of California, by a representative of the California High-Speed Rail Authority, and by representatives of the design-build entity and its subcontractors.

The Project Labor Agreement’s Phony Community Benefits: Just Nice Words 

Pages 3 and 4 of the draft Project Labor Agreement identifies certain kinds of special workers who will allegedly get the community benefits:

Section 1.15 states that aNational Targeted Worker” means (a) an individual whose primary place of residence is within an Economically Disadvantaged Area or an Extremely Economically Disadvantaged Area in the United States; or (b) a Disadvantaged Worker.

Section 1.9 states that anEconomically Disadvantaged Area” means a zip code that includes a census tract or portion thereof in which the median annual household income is less than $40,000 per year, as measured and reported by the U.S. Census Bureau in the 2010 U.S. Census and as updated by the parties upon the U.S. Census Bureau issuing updated Median Annual Household Income data by census tract in the American Community Survey.

For some reason, this definition does not limit the area to the San Joaquin Valley or even to California. And how many zip codes qualify?

Section 1.10 states that anExtremely Economically Disadvantaged Area” means a zip code that includes a census tract or portion thereof in which the median annual household income is less than $32,000 per year, as measured and reported by the U.S. Census Bureau in the 2010 U.S. Census and as updated by the parties upon the U.S. Census Bureau issuing updated Median Annual Household Income data by census tract in the American Community Survey.

Once again, this definition does not limit the area to the San Joaquin Valley or even to California. And how many zip codes qualify?

Section 1.8 states that aDisadvantaged Worker” means an individual who, prior to commencing work on the project, resides in an Economically Disadvantaged Area or Extremely Economically Disadvantaged Area as defined in Sections 1.9 and 1.10, and faces at least one of the following barriers to employment: (1) being homeless; (2) being a custodial single parent; (3) receiving public assistance; (4) lacking a GED or high school diploma; (5) having a criminal record or other involvement with the criminal justice system; (6) suffering from chronic unemployment; (7) emancipated from the foster care system; (8) being a veteran; or (9) being an apprentice with less than 15% of the apprenticeship hours required to graduate to journey level in a program as described in Section 1.2.

Keep in mind, this definition does not limit the area to the San Joaquin Valley or even to California.

Seven – and possibly eight, depending on the individual veteran – of the nine barriers to employment listed in the definition of “Disadvantaged Worker” are significant liabilities for getting into a state-approved apprenticeship program and more importantly, staying in it. But it’s easy to see that #9 is a loophole for how the contractors and unions could fulfill the goal for a “Disadvantaged Worker” – they’ll simply dispatch apprentices who are in their final 15% of the number of hours needed to qualify to graduate from their union apprenticeship program.

The language in the Project Labor Agreement associated with actually finding and employing National Targeted Workers is vague and sometimes unintentionally humorous in its exaggerated sincerity.

The language in the Project Labor Agreement associated with actually finding and employing National Targeted Workers is vague and sometimes unintentionally humorous in its exaggerated sincerity:

[Page 15] Section 7.1  The Unions will exert their best efforts to recruit and identify individuals, particularly National Targeted Workers, as well as those referred by the Jobs Coordinator, for entrance or reentrance into the labor/management apprenticeship programs, and to assist individuals in qualifying and becoming eligible for such programs.

[Page 17] Section 7.3.1  The C/S/Es [that is, the contractors, not the unions] must document all efforts made to comply with the targeted hiring process to locate and hire National Targeted Workers.

Note that the unions give the responsibility for documenting recruitment and hiring to the contractor, even though it’s the unions that run the hiring halls and dispatch the workers.

[Page 17] Section 7.4  Unions will make their best effort to recruit sufficient numbers of skilled craft persons to fulfill the requirements of the Contractors/Employers.

[Page 17] Section 7.5.1  The Unions will make every effort to recruit National Targeted Workers and to refer and utilize National Targeted Workers on the Project.

This provision also contains a subtle but useful conditional loophole: “National Targeted Workers” will be recruited, referred, and used “as long as they possess the requisite skills and qualifications…” How many National Targeted Workers (such as homeless people) can be reasonably expected to possess these skills and qualifications?

[Page 18] Section 7.5.3 (A)  All Contractors/Employers performing Project Work will every effort [sic] to employ the maximum number of Apprentices allowed by State Law.

[Page 19] Section 7.8.1 The C/S/Es and Unions recognize a desire to facilitate the entry into the building and construction trades of veterans…

How touching!

[Page 2] WHEREAS, the Parties signatory to this Agreement acknowledge the Authority’s Small Business Policy and established overall 30% Small Business Goal, inclusive of microbusinesses, a 10% DBE and a 3% DVBE goal within the 30% overall goal and shall exercise full support of this Policy in the implementation of this Agreement in ensuring maximum utilization of Small Businesses on the project…

The “Jobs Coordinator” is going to be busy.

Section 1.12 defines “Jobs Coordinator” as “the Prime Contractor designee responsible for the facilitation and implementation of the Targeted Hiring Requirements of this Agreement. The Jobs Coordinator must be able to demonstrate or document to the AUTHORITY the requisite qualifications and/or experience to fulfill the duties and responsibilities.”

Section 7.6 states that “Disadvantaged Workers will be referred to the Unions from the Jobs Coordinator qualified to perform construction jobs coordination and related services…” 

It appears that the design-build consortium will need to hire internal staff or an outside firm to handle the Jobs Coordinator responsibilities. Once again, the unions give the responsibility for documenting recruitment and hiring to the contractor, even though it’s the unions that run the hiring halls and dispatch the workers.

Hiring of Veterans: A Lot of Talk, but What Is the Actual Performance?

Section 7.8 of the Project Labor Agreement is a vague summary of Helmets to Hardhats. Unions that are pressuring public officials for Project Labor Agreements focus quite a bit of their lobbying and public relations message on their “Helmets to Hardhats” program, meant to initiate veterans into careers in the construction trades – or more accurately, careers in the unionized construction trades. The program is operated through a union-affiliated program authorized by the Labor-Management Cooperation Act of 1978. The program appears to be a contact point for veterans looking for construction trade work. It refers them to the applicable local union office.

The one case I’ve seen in which someone tried to measure the success of Helmets to Hardhats revealed a stunning 100% failure. See my article www.PublicCEO.com Exposes Empty Promises of Helmets to Hardhats Program Under Project Labor Agreement in Northern California.

Here’s something particularly outrageous in this Project Labor Agreement related to the Helmets to Hardhats program:

[Page 20] Section 7.8.3  In recognition of the work of the Center and the value it will bring to the Project, the Authority shall make a contribution of $2,000 per month to the Center on behalf of itself and all other Employers employing workers under the terms of this Agreement. The contribution shall begin the first month during which Project Work is performed and end upon completion of all Project Work. Section 7.8.5  If the Authority fails to pay contributions owed to the Center within thirty (30) days of the date when such contributions are due, it shall be liable to the Trust for all costs of collection incurred by the Trust, including, attorneys’ fees and court costs. The Trustees are empowered to initiate proceedings at law or equity, and to take any other lawful action necessary to collect contributions due.

These unions are so cheap that they are contractually requiring the taxpayer-funded California High-Speed Rail Authority to pay $2000 per month to their own Helmets to Hardhats program. And they threaten to take the High-Speed Rail Authority to court if it doesn’t pay on time!

Terms and conditions of employment and labor peace procedures are the real meat in this Project Labor Agreement, of course.

Terms and conditions of employment and labor peace procedures are the real meat in this Project Labor Agreement, of course. Here’s my analysis of key provisions:

[Page 1] The purpose of this Community Benefits Agreement (Agreement) is to facilitate careers in the construction industry and to promote employment opportunities during the construction of the High Speed Rail System (Project) awarded by the California High Speed Rail Authority, remove potential barriers small businesses may encounter in participating in this Project…

Comment: The requirement to sign a 29-page union agreement would normally be regarded as a barrier for a small business to participate in a project, rather than the removal of a barrier. Also, the requirement to pay union dues and fees (Article 6.2) and be referred to a job by a union (Article 7.1) would seem to complicate employment opportunities.

[Pages 1-2] The purpose of this Community Benefits Agreement (Agreement) is…to provide for the orderly settlement of labor disputes and grievances without strikes or lockouts…the interests of the general public, the Authority, the Unions, contractors, subcontractors, employers and workers would be best served if the construction work proceeded in an orderly manner without disruption because of strikes, sympathy strikes, work stoppages, picketing, lockout, slowdowns or other interferences with work…

Comment: Do union officials anticipate that there may be strikes and other union work disruption during the construction of the California High-Speed Rail unless all contractors sign the Project Labor Agreement with the unions? Someone needs to ask!

[Page 1] WHEREAS, increasing access to employment opportunities with prevailing wages is one way for the Authority to directly combat poverty and unemployment;

Comment: Contractors are already required by state law to pay state-mandated wage rates (“prevailing wages”) to construction workers on projects of the California High-Speed Rail Authority. And the Project Labor Agreement actually EXEMPTS the project from state monitoring and enforcement compliance programs that would normally apply!

California Labor Code Section 1773.1(b)(3) – enacted through Assembly Bill 436 (2011) and supported by the State Building and Construction Trades Council of California – exempts a project funded by state bonds from making payments to the State Public Works Enforcement Fund of the California Department of Industrial Relations for prevailing wage compliance and enforcement “if the awarding body has entered into a collective bargaining agreement that binds all of the contractors performing work on the project and that includes a mechanism for resolving disputes about the payment of wages.” This is the definition of a Project Labor Agreement.

Section 8.3 of the Project Labor Agreement states that “the Authority shall monitor the compliance of all Contractors and Subcontracts with all Federal and state prevailing wage laws and regulations. All complaints regarding potential wage violations shall be referred to the Authority for processing, investigation and resolution.” It appears that unions are using the Project Labor Agreement to compel the California High-Speed Rail Authority to establish a labor compliance program (internally or contracted to an outside firm) for prevailing wage compliance and monitoring (as opposed to using the Department of Industrial Relations Compliance Monitoring Unit). Are the unions too cheap to do it themselves through their own union-affiliated labor compliance programs?

[Page 4-5] Section 1.17 …On-site fabrication work includes work done for the Project in temporary yards or areas near the Project. All fabrication work over which the AUTHORITY possesses the right of control…and which is traditionally claimed as on-site fabrication shall be performed on-site…such work may be performed off-site. In that event, such fabrication work shall be performed in accordance with the union standards established by this Agreement for the appropriate craft Union or a fabrication agreement approved by the craft’s International Union. On-site construction shall also include…

Comment: This long section is meant to prevent a contractor from classifying work covered under union Master Labor Agreements (collective bargaining agreements) as off-site fabrication in order to evade the conditions of the Project Labor Agreement or state-mandated construction wage rate (“prevailing wage”) requirements. The Sheet Metal Workers Union is especially concerned about off-site fabrication of duct work, and the Project Labor Agreement specifically cites coverage of their classifications of work.

[Page 6] Section 2.3  Project Labor Disputes: The provisions of this Agreement, including the Schedule A Agreements, (which are the local collective bargaining agreements of the signatory Unions having jurisdiction over the work on the Project, as such may be changed from time-to-time and which are incorporated herein by reference) shall apply to the work covered by this Agreement. All Project Work shall be performed as provided in the applicable Schedule A Agreement. Where there is a provision in a Schedule A Agreement and not covered by this Agreement, the provision of the Schedule A Agreement shall prevail. Where there is a provision in this Agreement, it shall prevail over any conflicting provision of a Schedule A Agreement. All disputes relating to the interpretation or application of this Agreement shall be subject to resolution by the dispute resolution procedures set forth herein.

Comment: As acknowledged in the section of this provision surrounded by parenthesis, a contractor that signs this Project Labor Agreement is not only bound by its provisions, but is also bound by certain provisions of the standard Master Labor Agreement (collective bargaining agreement) that applies to work classifications within the jurisdiction of the applicable union in that applicable geographical region. Some non-union contractors foolishly sign a Project Labor Agreement without realizing that it extends to provisions in other union agreements.

However, notice that Section 3.1 states that “This Agreement is not intended to supersede collective bargaining agreements between any of the Contractors/Employers performing construction work on the Project and Union Signatory thereto except to the extent the provisions of this Agreement are inconsistent with such collective bargaining agreement, in which event the provisions of this Agreement shall apply.” In other words, the Project Labor Agreement is supreme. Some union contractors and unionized construction associations object to government-mandated Project Labor Agreements because those agreements – often negotiated with deference to the demands of the unions – subvert the collective bargaining agreements they worked hard to negotiate.

[Page 7] Section 2.4.6  Notwithstanding the foregoing, it is understood and agreed that Building/Construction Inspector and Field Soils and Material Testers (inspectors) are a covered craft under this Agreement. This inclusion applies to the scope of work defined in the State of California Wage Determination for that Craft. Every Inspector performing under these classifications pursuant to a professional services agreement or a construction contract shall be bound to all applicable requirements of this Agreement…

Comment: Construction trade unions such as the Operating Engineers continue their efforts to organize workers in construction-related professional services into unions, as if these occupations were traditional building trades. In 2000, Governor Gray Davis signed into law Senate Bill 1999, which added a section to the definition of “public works” in California Labor Code Section 1720(a)(1) to include “design and preconstruction phases of construction including, but not limited to, inspection and land surveying work.” This placed such work under state-mandated construction wage rate (“prevailing wage”) requirements.

[Page 7] Section 3.2  It is understood that this Agreement constitutes a self-contained, stand-alone agreement…[the contractor] will not be obligated to sign any local, area or national collective bargaining agreement as a condition of performing work within the scope of this Agreement…Section 3.3  Contractors not signatory to the established Joint Labor/Management Trust Fund Agreements, as described in the Schedule A Agreement(s) for the craft workers in their employ, shall sign a “subscription agreement” with the appropriate Joint Labor/Management Trust Funds covering the work performed under this agreement before work is commenced on the Project.

Comment: This provision means that if a non-union contractor signs the Project Labor Agreement, it is not bound to the collective bargaining agreement for the applicable union for that trade in that geographic region. However, the contractor WILL have to sign “subscription agreements” binding it to the terms and conditions of the union-affiliated health insurance programs, pension programs, vacation programs, apprenticeship programs, and “other” union-affiliated slush funds used for labor compliance monitoring, contract administration, and a wide variety of vague “industry advancement” programs authorized under the obscure federal Labor-Management Cooperation Act of 1978. (Some of that “other” money is contributed to California state and local campaigns for and against ballot measures – a practice becoming more common each election.) All of these employer payments are incorporated into state prevailing wage determinations.

[Page 8] Section 3.4  So that the public, the Unions and the employees have complete information, the AUTHORITY shall immediately post copies of all executed Letters of Assent on a dedicated page on its website…[the contractor] shall be removed from the Project unless an executed Letter of Assent is posted within 48 hours.

Comment: As the former head of the Los Angeles-Orange County Building and Construction Trades Council, new State Building and Construction Trades Council of California president Robbie Hunter is surely aware of how small contractors sometimes try to slip in and out of construction projects for local governments such as the Los Angeles Unified School District without signing the Project Labor Agreement and making the fringe benefit payments to the union trust funds. There will be extra accountability on the High-Speed Rail project.

[Pages 9-14] Article 4  Work Stoppages and Lockouts

[Pages 21-24] Article 9  Dispute Resolution Procedure

[Pages 24-25] Article 11  Jurisdictional Disputes

[Page 25] Article 12  Employee Grievance Procedure

[Page 27] Article 16  Pre-job Conference

Comment: These are the substantial provisions about procedures and arbitrators in Project Labor Agreements that governments and developers hope will prevent strikes and other work disruption directed by top union officials. It doesn’t always work: sometimes workers decide on their own to walk off the job (note the provision in Section 4.4 that No Union shall be liable for independent acts of employees), and sometimes a union is simply determined to make a statement about a grievance during a jurisdictional dispute with another union over work classifications. Nevertheless, Section 4.3 states that “the Union will promptly make good efforts to cease such Project work disruption. (A For Effort.)

[Page 15] Section 6.1  [the contractors] recognize the Unions as the sole and exclusive bargaining representatives of all craft employees working within the scope of this Agreement.

Section 6.2  No employee covered by this Agreement shall be required to join any Union as a condition of being employed, or remaining employed, for the completion of the Project work…employees working on the Construction Contract…comply with the applicable Union’s security provisions for the period during which they are performing on-site Project work to the extent, as permitted by law, of rendering payment of the applicable monthly dues and any working dues…

Comment: Workers don’t have to be full-fledged members of the union, but they have to pay union initiation fees, monthly dues, and working dues as the cost of union representation. California is not a Right-to-Work state, and unions don’t want any “freeloaders” on the job who don’t pay dues and fees.

[Page 15] Section 7.1  [Contractors] recognize that the Unions shall be the primary source of all craft labor employed on the Construction Contract for the Project. For each craft, the local Union with geographic jurisdiction over the work to be performed shall make referrals of employees to the requesting [contractor]. [Contractors] utilizing core employees shall follow the procedures outlined below…

Section 7.2. [Contractors] shall be bound by and utilize the registration facilities and referral systems established or authorized by this Agreement and the signatory Unions…

Comment: Contractors will obtain their workers from the “hiring halls” of the construction trades through the unions’ internal dispatching procedure for workers waiting for a job. Unions have certain rules about who gets priority in the list of workers waiting to be dispatched.

[Page 16] Section 7.1.2  The number of Core Workers on the Project for C/S/Es covered by this Agreement shall be governed by the following procedure: one Core Worker shall be selected and one worker from the hiring hall of the affected trade or craft and this process shall repeat until such C/S/E’s requirements are met or until such C/S/E has hired five (5) such Core Workers for that craft., whichever occurs first. Thereafter, all additional employees in the affected trade or craft shall be hired exclusively from the applicable hiring hall list.

Comment: There is one limited exception in the Project Labor Agreement to the requirement that a contractor obtain workers via the union hiring hall dispatching process. As stated in Section 7.1, a contractor can keep a limited number of “Core Workers” whom the company has employed for 60 of the 100 days immediately before the job is awarded (apparently by the design-build entity) to the contractor. But the contractor has to alternate between using a Core Worker and getting a worker dispatched from the union, and no more than five Core Workers can be used.

[Page 21] Section 8.1  All employees covered by this Agreement (including foremen and general foremen if they are covered by the Schedule A Agreement) shall be classified and paid wages, benefits, and other compensation including but not limited to travel, subsistence, and shift premium pay, and contributions made on their behalf to multi-employer trust funds, all in accordance with the then current multi-employer Schedule A Agreement of the applicable Union. 8.2  Each [contractor] adopts and agrees to be bound by the written terms of the applicable, legally established, trust agreement(s), to the extent said trust agreements are consistent with this Agreement…[contractors] further agree to sign the applicable trust agreement “subscription” agreement(s) if required by the Craft Union on behalf of the Craft employees in order to make the employee contributions to the pension, annuity, health and welfare, vacation, apprenticeship, training trusts, etc.

Comment: Contractors pay fringe benefits (health care, retirement, training, etc.) to the unions. If contractors have their own employee benefit programs (401k, etc.) independent of unions, they are still required to pay their employees’ fringe benefits to the union programs. This can be a supplemental flow of money into underfunded union-affiliated pension plans, as such employees will not enjoy those benefits unless they remain with the union until eligible or vested.

The requirement for non-union contractors to pay fringe benefits to union programs instead of their own benefit plans (unless they want to pay benefits twice) is a major deterrence and competitive disadvantage for non-union contractors that might otherwise consider signing a Project Labor Agreement. Other ramifications of this provision include possible contractor liability for unfunded multi-employer pension plans and exposure of company financial data to union officials for audits.

Is this what 52.5% of California voters wanted in November 2008 when they approved Proposition 1A, the Safe, Reliable High-Speed Passenger Train ballot proposition? Of course not!

Board of Emeryville Unified School District Approves Union-Only Community Benefit Agreement for Idealistic Center for Community Life

Construction trade unions are getting a monopoly on building a multi-government collaborative San Francisco Bay Area project tangled up in trendy “progressive” concepts about how government should require private companies to create and operate their businesses.

As an item on the consent calendar of its “special meeting” agenda on December 17, 2012, the board of trustees of the Emeryville Unified School District approved a “Community Benefit Agreement” to be incorporated in a lease-leaseback contract signed by the prime contractor for the construction of the Emeryville Center for Community Life. This project is coordinated by the City of Emeryville and the Emeryville Unified School District and “touted as a model for the 21st century urban environment.”

Unions and other activist organizations routinely pressure local governments in urban areas of California to require developers to sign a “Community Benefit Agreement” as a condition of providing a permit or financial assistance for a project. Not surprisingly, these Community Benefit Agreements usually include a requirement for developers or contractors to sign a Project Labor Agreement with construction unions or adopt some other program (often a “First Source Hiring” program) that gives construction unions control of the work.

California has been on the cutting edge of local governments forcing developers to support union political agendas; in fact, four California regional think tanks backed by labor unions and other interests came together as the “California Partnership for Working Families” to develop a guidebook on using Community Benefit Agreements. These policy organizations are the East Bay Alliance for a Sustainable Economy (San Francisco Bay Area), Working Partnerships USA (San Jose), Los Angeles Alliance for a New Economy (aka LAANE), and the Center on Policy Initiatives (San Diego). The work of these groups to make “economic development subsidies more accountable and effective” generally goes unchallenged, as California is devoid of free market-oriented policy institutes that study state and local union interference with commerce.

The Community Benefit Agreement for the Emeryville Center for Community Life was developed by a consulting firm called A Squared Ventures, which worked with community “stakeholders” including the Residents United for a Livable Community (RULE), a group “concerned that the City has handed out tens of millions of public dollars to large developers without asking for many benefits for the community in return.” This same group has worked with the East Bay Alliance for a Sustainable Economy and UNITE-HERE Union Local No. 2850 to seek a Community Benefit Agreement for Phase II of the Bay Street project in Emeryville.

This Community Benefit Agreement for Emeryville’s Center for Community Life does not include a Project Labor Agreement, nor does the Community Benefit Agreement contain provisions that resemble provisions in a traditional pre-hire labor agreement. Instead, this Community Benefit Agreement sets employment goals for the project and simply requires the prime contractor and its subcontractors to obtain their workers through the union hiring hall dispatching process. For example, it requires contractors to “utilize name call procedures with the representative union hiring halls” to obtain workers classified as journeymen. Although it does not specifically indicate that contractors must request or obtain apprentices from union-affiliated Joint Apprenticeship Training Programs, this is apparently assumed in the additional provision that requires the prime contractor to “work with the construction trade unions to identify and implement local apprentice worker rotation opportunities” on a quarterly basis.

In addition to requiring contractors to obtain trade workers from unions, the Community Benefits Agreement requires the prime contractor to encourage Emeryville Unified School District students and their parents to attend recruitment events and meetings for a 16-week pre-apprenticeship program run by the Cypress Mandela Training Program, an organization with close ties to construction trade unions.

All of these requirements are intended to find jobs for people who live in certain zip codes in Emeryville, Berkeley, and Oakland, or within a wider “East Bay Green Corridor.”

But that’s not all. The prime contractor will be required to set up a “Learning Lab” on the job site to show students how the project achieves “environmental sustainability.” The Community Benefits Agreement requires contractors to pay the state-mandated prevailing wage to their trade workers (but that was required by state law anyway). There is a “living wage” requirement for workers not in the construction trades, based on the City of Emeryville’s living wage ordinance. The prime contractor will commit to using subcontractors and other construction-related contractors that are local small businesses.

California law allows school districts to choose “lease-leaseback” contractors using somewhat subjective “best value” criteria, rather than awarding the contract to the lowest responsible bidder. Surely the school district will chose its prime contractor based on its proposal to fulfill the requirement of the Community Benefits Agreement. A Project Labor Agreement is likely to be part of any proposals for the lease-leaseback contract.

Which developers and contractors will agree to meet these government-mandated conditions (or at least make it look like they’re going to meet these conditions)? I’m guessing a lot of the activists behind the Community Benefit Agreements expect these businesses to reduce their profit margin (and not increase the price) to fulfill these conditions for the good of the People, just like contractors allegedly have reduced their profit margins for the honor of working under the union Project Labor Agreement for the San Diego Unified School District. It will be interesting to see how the cost of the Emeryville Center of Community Life compares to other similar projects in the San Francisco Bay Area.

You are invited to go to the web site “dedicated to sharing information and encouraging an open conversation about the Emeryville Center of Community Life.” As it says, “From here you can participate in the emerging community dialog and gain access to current and background information that will help inform the exchange of ideas and allow for an authentic community engagement process.” You can share conversation and dialogue about fiscal responsibility, capitalism, free markets, profit, private property, etc.


Editorial Comments

1. I was surprised to see the provision in the Community Benefit Agreement requiring the prime contractor and the unions to rotate apprentices among various tasks, because union leaders like to claim that their apprenticeship programs provide comprehensive training for many tasks to their indentured apprentices, while non-union unilateral apprenticeship training programs exploit their apprentices by making them do the same task over and over again, in violation of their own program standards. Inclusion of this requirement suggests to me there is a problem with the scope of on-the-job training for union apprenticeship programs, at least in Alameda County.

2. Wouldn’t it be better to eliminate economic development subsidies altogether? Ask defeated California Assemblyman Chris Norby, author of Redevelopment: The Unknown Government, who was not rewarded for being alone in this position at the California state legislature. As government power has grown at the state and local levels in California, one of the easiest ways for corporations to make big money in this state is to avoid competing in the messy, insecure free market and instead feed off the compulsory tax payments of ordinary citizens and small businesses. In response, unions and other leftist groups pressure government officials to impose costly and burdensome requirements on these corporations, who in turn pass these costs along to consumers, and the cycle of crony capitalism continues at the expense of the fleeing middle class.

The Superintendent of the Emeryville Unified School District reported on April 10, 2012 that “because rent in the Bay Area is expensive and unemployment remains high, approximately 30 families in EUSD have been so impacted by the recession that they have opted to relocate to other cities.” It’s not a friendly place for ordinary families.

3. Which investors plan to buy the $95 million in bonds that 1,982 Emeryville voters authorized in November 2010 to be sold through Measure J in order to borrow money to pay for projects such as the Emeryville Center for Community Life? Interest and transaction fees for Measure J bond sales seem to be a loophole that allows the One Percent to make money off of this project. Or maybe the People’s Republic of China will buy the bonds.