Tag Archive for Redding City Council

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

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

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.

Construction Unions Demand Recount to Prevent Charter Supporter from Serving on Redding City Council

UPDATE: The recount determined that Gary Cadd won the Redding City Council seat by nine votes. Cadd’s original eleven-vote margin of victory (15,382-15,371) stands as the official record. The “Full Count for Redding 2012” organization spent $7,750 on the recount.

Construction trade unions of the Northeastern California Building and Construction Trades Council have filed paperwork with the Shasta County Clerk/Registrar of Voters office and established a Political Action Committee to prevent candidate Gary Cadd from being seated on the Redding City Council on December 4, 2012. Cadd defeated union-backed incumbent Dick Dickerson in the November 6, 2012 election by eleven votes: 15,382 to 15,371.

Although Redding voters would not know from local news media coverage why construction trade unions are spending $10,000 or more for a recount to try to overturn a city council election, this union challenge is related in part to an ongoing grassroots effort in Redding to ask voters to enact a charter. A charter would free the city from the costly 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, Cadd was part of a local group involved in promoting a charter, which union officials ultimately derailed through a Charter City Exploratory Committee appointed by the city council. Councilmember Dickerson had appointed a Carpenters Union representative to the committee. If Cadd is seated in place of Dickerson, there will be a 3-2 council majority in support of a meaningful charter to propose to city voters.

Union officials know they can’t allow this to happen. Considering that Democrats now have a veto-proof, unchecked two-thirds control of both houses of the legislature, the relatively conservative voters of Redding (a inland city of 90,000 near the Oregon border) will surely be eager to shake off the yoke of the Los Angeles union machine running the state capitol by the time they get the opportunity in the June 2014 election.

The union Political Action Committee funding the recount is called “Full Count for Redding 2012.” The chairman is Andrew Meredith with the International Brotherhood of Electrical Workers (IBEW) Local Union No. 340, and the treasurer is Bob Vanderpol with Operating Engineers Local Union No. 3, District 70. Meredith used to be a city council member in Galt and tried unsuccessfully in 2009 to pass a “local hire” ordinance there giving a competitive advantage to unionized construction companies. He resigned his office in 2010.

The recount will begin on Tuesday, November 27. The Cadd campaign is seeking contributions to pay the expenses of people overseeing the recount so that union lawyers are unable to manipulate it. If you’re interested in helping the Cadd campaign to ensure the recount is free of union mischief, please see the campaign web site: www.garycadd.com.

News Media Coverage

Redding Council Race Headed for a RecountRedding Record-Searchlight – November 21, 2012

Redding Trade Council Demands City Council Race Recount – KHTL – November 21, 2012

Group Files for Re-Count of Redding City Council Votes – KRCR – November 21, 2012