Title
Adoption of Resolution Requiring a Project Stabilization Agreement for Certain Construction Projects. (City Manager) [Continued from January 19, 2021; Public Comment Closed]
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
To better ensure timely and quality delivery of critical local construction projects involving City of Alameda (City) funds or a City subsidy, a Project Stabilization Agreement (PSA) is recommended by staff with respect to certain construction projects, as more fully described in this report. The proposed PSA sets out the City’s expectations for applicants, owners and developers working on certain types of construction projects. Prior to City approval of a construction project to which a PSA applies, the applicant, owner or developer will work with the Building and Trades Council of Alameda County (BTC) to negotiate in good faith a PSA.
BACKGROUND
A PSA, sometimes referred to as a project labor agreement, is a type of contract used by project applicants, owners and/or developers and the building trade unions to clarify expectations related to the use of craft workers for certain types of projects. In recent years, project developers who have entered into a development agreement (DA) or disposition and development agreement (DDA) with the City have often also entered into a PSA with the trades.
In 2017, the City adopted a resolution whereby it entered into a PSA with the BTC which requires all contractors who are awarded Public Works contracts over $1 million to sign a letter of intent agreeing to meet the requirements of the City’s PSA. This policy will remain in place and is not impacted by the City Council’s consideration of a requirement that developers/owners of certain properties negotiate in good faith a PSA with the BTC.
To ensure timely and quality delivery of critical local construction projects, create more predictability, and clarify the City’s expectations with respect to certain development projects, including construction associated with certain leases, staff has been working with the BTC over the last several months on a resolution that would require applicants, owners and developers of particular projects to negotiate in good faith a PSA unless the requirement is otherwise suspended by the City Council by majority vote.
DISCUSSION
The proposed PSA seeks to ensure timely and quality delivery of critical local construction projects, and clarifies the City’s expectations for applicants, owners and developers working on certain types of construction projects. Specifically, the City expects the applicants, owners and developers to negotiate in good faith a PSA with the BTC.
As recommended by staff, and supported by the BTC, the types of projects where a PSA is to be negotiated include:
• Parcels Owned or Leased by the City - A construction project on a parcel owned by the City and leased to a tenant where either:
o The City’s Qualified Shell Improvement (QSI) credit exceeds $5,000,000; the initial term of the lease is at least seven years; and the tenant is a for-profit entity; or
o The City’s QSI exceeds $7,500,000; the initial term of the lease is at least seven years; and the tenant is a not-for-profit entity.
• Certain Affordable Housing Projects - An affordable housing construction project on a parcel owned by the City or conveyed to a non-profit affordable housing developer by the City, where the project satisfies the criteria set in the Alameda County Measure A1 Housing Bond Implementation policies, including the threshold number of units requiring the use of a project labor agreement.
• Projects Involving Certain Agreements - A construction project that includes a parcel sold or conveyed by the City where the City and the applicant, owner or developer are entering into a DA, DDA or other agreement required by the DA or DDA and the estimated total project cost exceeds $5,000,000.
• Other - A construction project that does not fit into the aforementioned categories and that is receiving either a direct contribution of funds from the City or a credit or other non-monetary subsidy from the City, which exceeds $5,000,000.
PSAs negotiated for projects meeting the threshold requirements described above would apply to all work covered under the Master Labor Agreements of the craft unions affiliated with BTC and a PSA will apply for the duration of construction work on the project. As recommended in the resolution, a PSA would not be required for on-going operations and maintenance work and the City Council may, by majority vote, suspend these requirements, for a construction project or part of a construction project involving specific portions or types of work, should the City Council determine such action is warranted.
ALTERNATIVES
• Approve the staff recommendation requiring that a PSA be negotiated in good faith for certain construction projects, including construction associated with certain leases, as described in this report and the attached resolution.
• Recommend different criteria to trigger the requirement to negotiate a PSA in good faith, including but not limited to monetary thresholds for funding or credit, type of projects or duration of a lease term; or
• Elect not to move forward with a requirement to negotiate in good faith a PSA for certain projects at this time.
FINANCIAL IMPACT
There is no direct impact to the City’s budget to adopt the resolution requiring good faith negotiations for a PSA for certain construction projects. While there is anecdotal data regarding the increased construction costs for projects subject to PSAs, there are other public policy goals that are achieved by requiring good faith negotiations to secure a PSA for certain projects. These include ensuring that proprietary City projects are completed timely with no labor disruptions.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is consistent with the Alameda Municipal Code and other applicable policy documents.
ENVIRONMENTAL REVIEW
This action is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines section 15601(b)(3), which is known as the “General Rule” exemption and is used where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment.
CLIMATE IMPACTS
There are no identifiable climate impacts or climate action opportunities associated with the subject of this report.
RECOMMENDATION
Adopt a Resolution to have a policy requiring the negotiation of a Project Stabilization Agreement for certain construction projects.
CITY MANAGER RECOMMENDATION
I want to ensure clarity that this is not a PSA for a specific construction project. Rather this PSA by policy clearly communicates to potential developers of City land and facilities what the expectations are of the City when a DDA or DA is negotiated. It also provides an out provision in the event that in good faith a PSA has been attempted to be negotiated but for a variety of reasons can’t be reached.
Respectfully submitted,
Gerry Beaudin, Assistant City Manager
Financial Impact section reviewed,
Annie To, Finance Director
cc: Eric Levitt, City Manager