Title
Adoption of Resolution Regarding Project Stabilization Agreement Policy at Alameda Point. (City Manager 2110)
Body
To: Honorable Mayor and Members of the City Council
From: John A. Russo, City Manager
Re: Adopt Resolution Regarding Project Stabilization Agreement Policy at Alameda Point
BACKGROUND
On September 24th, the City Council held a study session to discuss Project Labor Agreements and other related pre-hire negotiated collective bargaining agreements, and to expose how such agreements might be used within the City of Alameda. After a detailed presentation and question and answer session with Michael Vlaming, an attorney with considerable expertise in the area, Council requested a follow-up report to address certain issues raised during the study session, with a matrix of choices to be considered by the City Council should it chooser to move forward in the policy arena.
DISCUSSION
Project Labor Agreements and other related agreements, such as Project Stabilization Agreements and Community Benefit Agreements (referred to collectively herein as "PLAs") are agreements negotiated between a developer, public entity or general contractor, and the unions belonging to the building trades council for the affected area. For Alameda, this would be the Building and Construction Trades Council of Alameda County, AFL-CIO ("BTC"). A public entity can require a developer or a contractor to agree to utilize a PLA as a condition of entering into a development agreement, lease or construction contract for a public work with the public entity, or a private contract subject to a Development Agreement with the City. These agreements tend to work best when they affect long term construction projects requiring multiple contractors or subcontractors who employ workers in multiple crafts or trades. A PLA is generally considered to be inappropriate on small, short term construction projects involving one or two trades or very specialized construction work that can be performed by only a limited number of contractors.
Typically, PLAs contain the following provisions:
· All contractors and subcontractors on the job are bound to the provisions of the PLA;
· Guarantees are given against lockouts, strikes or other labor disruptions;
· Binding procedures for resolving labor disputes that may arise during the term of the PLA;
· Various mechanisms for labor and management cooperation on matters of mutual interest and concern such as productivity, quality of work, safety and health; and
· Requirements that an agency deems beneficial to the community, such as local hire goals or apprenticeship programs.
History - General Provisions and Results
Nationwide
Labor Analysts from the Congressional Research Service (CRS) issued reports on PLAs in 2010 and 2011 that detailed their practical advantages and disadvantages. Advantages cited included bringing uniformity to the workplace in terms of wages, hours and working conditions, which in turn could bring stability, especially to a large job, which can help ensure that a project is brought in on time and within budget. PLAs can also help train workers when they require contractors to participate in apprenticeship and training programs. Opponents argue that PLAs increase costs and discourage contractors from using their own non-union workforce, as labor is hired exclusively through the union hiring hall process.
The CRS study came to no set conclusion regarding the economic effects of PLAs, as some projects studied resulted in higher costs, while others, had savings. One study involving construction at the Department of Energy's Lawrence Livermore National Laboratory in Livermore, CA, found that the project contractor estimated that the PLA lowered the cost of the project by about 0.4 percent. Most of the estimated savings were due to lower costs for overtime, shift differentials, and holiday pay, as well as the greater use of apprentices instead of higher-paid journeymen. Another study of 62 school construction projects in the Boston area between 1995 - 2003 concluded that PLAs raised the costs by approximately 12 percent. In 2003, a study of 92 school construction projects in Massachusetts, Connecticut and Rhode Island concluded that PLAs did not have a statistically significant effect on the costs of construction. In all, the Department of Labor's study concluded that the evidence on economic impacts of PLAS was inconclusive, although all of these studies involved very large construction projects using a multidisciplinary labor force.
A potential PLA benefit is the requirement of apprenticeship programs. Large construction projects that involve multiple trades over a long period of time are always challenged by the need to find and retain skilled craftspeople. This is true for union or non-union shops. Access to hiring halls and strong apprentice training programs provide a stable work force, help ensure quality, and set a foundation for good health and safety practices. Union apprentice programs and hiring halls are presently linked with a program called "Helmets to Hardhats." This program specifically targets returning veterans and is designed to help them transition back into civilian life through training in skilled craft areas.
Local Examples:
Berkeley - The City of Berkeley currently has a Community Workforce Agreement (CWA) in place for projects of over $1 Million. This Agreement contains many of the standard PLA features; its main community benefit is a good faith goal to employ 30 percent local residents on covered projects. The Agreement provides that the contractor must first look to Berkeley residents to fulfill the local hire goal then, if this threshold is not reached, the contractor would look to Alameda County cities participating in the "green corridor" (Alameda, Oakland, Berkeley and other surrounding cities). If the goal is still not reached, then contractors could employ labor from throughout Alameda County.
Berkeley issued a status report on their CWA approximately one year after implementation and found that the 30 percent goal was realized when taking into account workers from all three permissible categories. Berkeley also found that implementation required a combined City staff FTE of approximately 0.3 to 0.4, not including staff performing incidental work on the implementation. This work was largely performed by their in-house employment coordinator. The Berkeley program charges $0.10 per hour of labor to fund administrative costs for the CWA.
Unfortunately, this surcharge only brought in approximately $3,000, which did not begin to cover the costs of implementation.
Berkeley also found that in the first year, project costs for six of the seven projects covered by the CWA experienced higher than expected costs, while one project came in lower than estimated. When interviewed about current experiences, staff has informally reported that there has been a 15 percent increase on smaller projects between $1 and $2 million, but almost no cost increase for projects over $2 million.
Alameda Landing (Catellus) already has a PLA in place governing construction work. This agreement generally covers all on-site construction work except tenant improvement work by a single tenant with estimated construction costs below $200,000. The agreement between Catellus Development Corporation and the BTC encompasses BTC's "Schedule A Agreements". Schedule A Agreements are collective bargaining agreements previously negotiated between an individual Building Trades Union and its historically recognized employer bargaining party (such as the Associated General Contractors). Similar to Catellus' PLA, these would simply be adopted as part of any PLA we negotiate.
Exclusions to the Alameda Landing PLA include:
1. Any contract for which there are fewer than five (5) bidders bidding as Prime contractor and/or three (3) unrelated and qualified bidders, bidding as sub-contractors (BTC must be notified beforehand and they shall find sufficient minimum number of qualified bidders to insure that the total number is no fewer than as required.);
2. Tenant improvement work if the total construction cost of the tenant work contracted by a single tenant is less than $200,000; and
3. All tenant improvement work performed more than one year after issuance of the certificate of completion of the project. There are no local hire, or any community benefit provisions in this agreement.
BART - In 2005, the BART Board passed a policy requiring that, as a condition of final approval for any new development agreement concerning a Transit Oriented Development Project (TOD), the developer and all of its contractors agree to enter into a PSA with the relevant BTC where the TOD is located. Staff was directed to negotiate a PSA with local hire provisions and that if the developer/contractor fails to achieve such goal, documentation showing good faith efforts to achieve the goal must be furnished to the Board.
Answers to Questions Raised Regarding PLAs:
Does a PLA require that only Union Shops get to bid on City construction jobs?
· No, a PLA does not require all workers to be union workers; in fact, the law prevents such discrimination against non-union workers. Workers are hired, however, through the union halls.
How much does a PLA raise costs of a project?
· As explained earlier in this report, it is difficult to attribute project cost experience-positive or negative-merely to the presence of a PLA. Generally, the research, which is hotly contested by interested groups, suggests that PLAs increase project costs by 5 to 15 percent. Berkeley's experience echoes this result on its smaller projects. Cost increase may be caused by lower competition, as smaller or less sophisticated contractors may choose to opt out of bidding on a project because they do not want to comply with a PLA, or they are simply unfamiliar with such agreements.
Does having a PLA prevent a contractor from using his or her own workers?
· No, an agreement can be structured so that a contractor can use a defined number of his or her core group of workers on a project. Generally, a maximum number of allowable core workers is five, and these workers are referred through the union hiring halls on a one-for-one basis with other workers on the "out of work" list.
What would the City's role be in administrating the PLA?
· This issue requires Council direction. If the City is signatory to a PLA, then it may want to either assign an employee or contract out the performance of the PLA administration activities. If the City is not signatory to the PLA, then it may assign to a developer or the contractor the PLA administrative activities. In either case, the City may require the performing contractors to provide copies of certified payrolls for its projects.
Steps to Implementation:
1. Scoping - The City Council first determines key parameters for the intended scope of the PLA policy. Council has already directed that the policy apply only for projects at Alameda Point, at this time. Based upon Berkeley's experience, staff strongly recommends a threshold of $2.5 million for Development Agreements and major City-sponsored public works projects.
2. Give direction on key public benefit terms - The City Council should outline basic goals such as apprenticeship and basic local hire targets. While the law prohibits the use of strict quotas for local hire, other jurisdictions have established good faith targets, which are permissible.
3. Negotiation - The City Council authorizes staff to meet with the BTC and negotiate a tentative agreement whose final form would be subject to approval by Council and BTC membership.
4. Implementation - The City will be responsible to notify any affected parties before any agreement that triggers the PLA policy is negotiated or signed. For publicly bid projects, the PLA policy would be included in the bid package to give contractors proper notice before bidding that they and their subcontractors would need to sign a PLA policy and obligate all parties to abide by the terms of the PLA. For PLAs that would affect Development Agreements or leases, potential developers and lessees would need fair notice.
Decision Matrix:
Key Decision Points - Key Terms of the Agreement
1. Scope. Staff recommends that any PLA policy apply for now only to development projects subject to a Development Agreement or city-sponsored public construction projects at Alameda Point with an estimated labor cost of over $2.5 million. Staff further recommends that existing buildings/structures, and piers and other "in-water" improvements on Alameda Point be excluded.
2. Term - Staff recommends that this be left as a subject for negotiation, with the goal being a shorter term or the ability to exit the agreement if it is not achieving the City's objectives.
3. Community Benefit Provisions - staff recommends:
a. Local Hire - percentage to be determined by negotiation, with a goal of at least 30%, drawing first from the City of Alameda, then Alameda County.
b. Apprenticeship-allowing and facilitating Alameda Point Collaborative residents to enter into state approved Apprentice Programs and dispatching to PLA covered projects.
These provisions will be worked out by the negotiation team and brought back to the City Council for final approval.
FINANCIAL IMPACT
The financial impact of adopting such a policy is difficult to ascertain. Part of staff's recommendation for an approach that would target only Alameda Point development projects over $2.5 Million dollars is to ferret out any unknown negative financial or practical impacts of a PLA program and accustom staff to working with such a program before negotiating new PLAs with expanded scopes. In terms of staff impact, it should be expected that approximately .3 to .4 FTE of staff time will be needed to implement and support the program, which would be funded by the Base Reuse Special Revenue Fund (Fund 858) and be recovered from contractors and developers to the extent feasible
ENVIRONMENTAL REVIEW
No environmental review is required as a Project Labor Agreement policy is not a "project" under CEQA. CEQA Guidelines, section 15378 (b). The Policy, if adopted, would concern a governmental fiscal activity that does not involve a commitment to any particular project (section 15378 (b) (4)) and/or if adopted, it would be an administrative activity of government that will not result in direct or indirect physical changes to the environment (section 15378 (b) (5)).
RECOMMENDATION
Adopt a Resolution requiring all development projects subject to a Development Agreement and city-sponsored public works projects within the Alameda Point, in excess of a certain dollar amount, to be covered by a PSA which will require a minimum percentage threshold of local hire, to the extent allowed by law, with good faith efforts to involve residents of the Alameda Point Collaborative in an apprenticeship program as a part of local hiring efforts.
Authorize staff to begin negotiating with the BTC on a PSA, with local hire and apprenticeship provisions.
Respectfully submitted,
Elizabeth Warmerdam, Assistant City Manager
By,
Stephanie Garrabrant-Sierra, Administrative Services Director
Financial Impact section reviewed,
Fred Marsh, Finance Director