HomeMy WebLinkAboutItem 6d. Community Workforce Agreement Phase 2 Data Analysis, Outreach, and Draft Policy Development Item 6d
Department: Public Works
Cost Center: 5001
For Agenda of: 4/19/2022
Placement: Business
Estimated Time: 60 Minutes
FROM: Matt Horn, Public Works Director
Prepared By: Brian Nelson, Deputy Director of Public Works and City Engineer
SUBJECT: COMMUNITY WORKFORCE AGREEMENT: PHASE 2 DATA ANALYSIS,
OUTREACH, AND DRAFT POLICY DEVELOPMENT
RECOMMENDATION
Authorize staff to negotiate a Community Workforce Agreement with the Tri-Counties
Building and Construction Trades Council to include the Cultural Arts District Parking
Structure (vertical construction component only), Prado Road Interchange, and Public
Safety Center projects, including a 60% local worker participation goal and excluding
prevailing wage services provided through professional services agreements.
REPORT-IN-BRIEF
The 2021-23 Financial Plan includes the Major City Goal (MCG) of Economic Recovery,
Resiliency & Fiscal Sustainability. The MCG intends to implement a strategic approach
focused on economic resiliency by supporting a thriving local economy in addition to
practicing fiscal responsibility, paying down unfunded pension liabilities, and investing in
critical infrastructure.
One of the work programs included in the Financial Plan to advance this MCG (Item 1.1f)1
is establishment of an internal working group to research and develop various methods
to support the participation of local contractors, local vendors, and local labor in public
projects through workforce agreements, local purchasing requirements, and alternative
project delivery methods. This report focuses on the evaluation and potential policy
framework for a community workforce agreement (CWA).
1 MCG Item 1.1f: "Hire a consultant, support legal review, and establish an internal working group and hire
a consultant to research methods to support local contractors, local vendors, and labor through workforce
agreements, local purchasing requirements, alternative project delivery methods, and other options to
support local businesses and employees. The Community Services Group will be leading this effort".
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Item 6d
CWAs are “pre-hire” collective bargaining agreements between a project owner (City),
contractors that perform the project work and building and construction trade unions. A
CWA establishes standard terms and conditions of employment for workers on a qualified
construction project, including work conditions, hiring procedures, wages and benefits,
management rights, dispute resolution procedures, and procedures to prevent work
stoppages. In addition, CWAs often include provisions to promote participation in covered
projects by targeted workers and demographics, including local residents, apprentices,
historically underutilized or underrepresented residents or groups, and veterans. In the
context of furthering the MCG, Council has provided input to staff that a top priority
objective of any City CWA should be local worker participation requirements and
enhancement of employment of local residents on City public projects, without
compromising quality and expertise on City projects.
Following a Council Study Session held in September 2021, staff performed extensive
stakeholder outreach and analyzed actual local hiring totals for the City’s Capital
Improvement Program (CIP) projects to determine historical local worker participation.
The stakeholder outreach process, historical CIP project review, and the resulting staff
recommendation are informed by these efforts and are detailed in the body of this report.
DISCUSSION
1. Background
1.1. Workforce Agreement Task in Major City Goal
With the adoption of the 2021 -23 Financial Plan, Council established a Major City Goal
(MCG) of Economic Recovery, Resiliency, and Fiscal Sustainability. To help achieve this
goal, Council outlined a specific task to research methods to support the participation of
local contractors, local vendors, and local labor in public projects through workforce
agreements, local purchasing requirements, and alternative project delivery methods.
This work effort has been broken into three general phases:
Phase 1 (complete). Council Study Session to provide input and guidance on the
work effort and develop a project plan based on Council feedback. The Study
Session was held in September 2021.
Phase 2 (current phase). As framed by input and guidance from the phase one
Study Session, develop a policy framework for Community Workforce Agreements
(CWAs), alternative project delivery, and local purchasing. Within this policy
framework, identify CWA negotiating objectives for C ouncil consideration.
Phase 3. Council consideration of programs and policies , and direction for
implementation of the same.
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Item 6d
Based on direction received from Council in the phase one Study Session, this report
focuses on the evaluation and potential policy framework for CWAs; local purchasing is
part of an item being brought forward by the Finance Department and scheduled for the
May 17th Council meeting. Alternative project delivery methods are currently under
evaluation as part of the implementation of the Management Partners CIP Process
Improvement study.
1.2. Definition and Purpose of a CWA
CWAs, sometimes referred to as Project Labor Agreements, or Project Stabilization
Agreements, are "pre-hire" collective bargaining agreements between a project owner,
contractors and building and construction trade unions. A CWA establishes standard
terms and conditions of employment for a qualified construction project, including work
conditions, hiring procedures, wages and benefits, management rights, dispute resolution
procedures, and procedures to prevent work stoppages. In addition, CWAs often include
provisions to promote participation in covered projects by targeted workers and
demographics, including local residents, apprentices, historically underutilized or
underrepresented residents or groups, and veterans. CWAs can apply to a single project,
projects with budgets over a specified threshold, different types of projects, or all projects
undertaken by a project owner. CWAs must be included in the bid documents for covered
projects, and the provisions apply to the prime contractor and subcontractors of every
tier.
1.3. City Experience with a CWA
The City previously negotiated and entered into a CWA with the Tri-Counties Building and
Construction Trades Council (Trades Council) for the SLO Water Plus Project (i.e., WRRF
Upgrade) in December 2018, completed in advance of project bidding, with the primary
objective defined by the Council of maximizing the employment of local residents. This
was the first such agreement the City has approved. The agreement included a local
worker participation goal of 30%.
By February 2022, approximately 79% of all labor hours (141,200 hours) on the SLO
Water Plus Project (WRRF) have been performed by workers residing in San Luis Obispo,
Santa Barbara, Monterey, and Ventura Counties (defined in the CWA as "local workers"),
representing a significant reinvestment of construction funds into the local economy.
Table 1 presents the labor hours worked by residents of each tier on the SLO Water Plus
Project.
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Item 6d
Table 1. SLO Water Plus Project Labor Hours by Tier
No. Tier Description Labor Hours % of Total Labor
Hours
1 1 City of San Luis Obispo 7,551 6%
2 2 San Luis Obispo County 65,042 46%
3 3 Monterey and Santa Barbara Counties 39,341 28%
4 4 Ventura County 46 <1%
5 N/A Non-Local 29,263 21%
6 TOTAL 141,243 100%
1.4. CWA Alignment with Major City Goal
The City's ongoing Capital Improvement Program (CIP) includes numerous construction
projects that will provide the infrastructure required for economic vitality, neighborhood
wellness, housing, transportation, sustainability, active and passive recreation, public
safety, cleanliness, and other basic amenities. In November 2020, voters approved a
1.5% local sales tax (Measure G-20) that replaced the previous 0.5% local sales tax. The
increased revenue from passage of Measure G-20 added about $15 million to the annual
General Fund capital budget, allowing for a more expansive Capital Improvement Plan.
The public projects included in the City's CIP present an opportunity to continue
enhancing the employment of local residents by negotiating a CWA with the Trades
Council that includes a local worker participation goal. Key considerations regarding
potential CWA implementation for the City’s CIP projects are described in Attachment A.
1.5. Council Study Session Feedback
A Study Session was held in September 2021 to present strategies identified by staff to
support the local economy and to receive feedback from Council on the work program.
The Study Session included a guided discussion with a series of questions intended to
determine Council’s preferred strategies and implementation priorities, and to inform the
subsequent phases of the work program. The following feedback/direction was provided
to staff during the Study Session:
1. Council supported analysis and implementation of the draft strategies as separate
work efforts.
2. Council confirmed that its primary objective in considering implementation of a
more broadly applicable CWA is to prioritize employment of local workers.
3. Council recommended using the SLO Water Plus CWA as a model for a future
CWA.
4. Council recommended the CWA evaluation include consideration of appropriate
cost thresholds and types of projects for inclusion in the CWA.
5. Council identified additional stakeholders to be included in the stakeholder
outreach effort.
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Item 6d
Additional feedback from individual Councilmembers regarding the potential inclusion of
participation goals for women, veterans, underserved populations, and Cuesta graduates
was also provided. This CWA evaluation is focused on the employment of local workers
and analysis of additional targeted worker demographics can be evaluated as a separate
work effort upon direction from Council.
At the conclusion of the Study Session, staff outlined the plan for Phase 2 of the work
program including stakeholder outreach and a review of the City’s past and curr ent CIP
to inform policy recommendations for consideration by Council.
2. Stakeholder Outreach
Following the phase one Study Session, staff began the stakeholder outreach process.
A Stakeholder Outreach Plan was prepared consistent with the City’s Public Engagement
and Noticing (PEN) Manual. The Stakeholder Summary presented in Table 2 below was
prepared as a part of the Stakeholder Outreach Plan and was used to guide the
stakeholder outreach effort.
Table 2. Stakeholder Summary
No. Stakeholder Communication Objective
1 SLO Chamber of Commerce Inform and Consult
2 Downtown SLO Inform
3 Public Works Contractors Inform and Consult
4 Local Consultants Inform and Consult
5 SLO County Builders Exchange Inform and Consult
6 Tri-Counties Building and Construction Trades
Council
Inform, Consult,
Collaborate
7 Central Coast Labor Council Inform
8 Cuesta College Inform
9 Hancock College Inform
10 Cal Poly Inform
An informational document with responses to frequently asked questions (FAQ) was
developed by staff and shared with each stakeholder to provide background on CWAs
and the relationship between CWAs and the MCG. This FAQ document in included with
the report as Attachment B. The following sections provide additional detail on the
outreach efforts for each stakeholder group.
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Item 6d
2.1. Local Business Associations
Downtown SLO and SLO Chamber of Commerce
Downtown SLO and the SLO Chamber of Commerce were identified as potential
stakeholders because they represent the interests of many local busines ses. Downtown
SLO and the SLO Chamber of Commerce were briefed by staff and provided with a copy
of the FAQ document for additional information.
SLO County Builders Exchange
The SLO County Builders Exchange (Builders Exchange) is a non-profit contractors
association whose membership includes over 500 contractors, subcontractors, and
suppliers in the local construction industry. The Builders Exchange provides numerous
services to its membership, including distribution of public and private bid opportunities
and training for construction-related topics such as prevailing wage requirements, public
works bidding requirements, and safety certifications.
Staff met with the Builders Exchange Executive Director and several Officers to inform
the organization of the City’s CWA evaluation effort and to solicit the group’s feedback.
The Builders Exchange expressed opposition to implementation of a CWA citing the
following concerns: 1) limitations on ability to utilize core workforce, 2) qualificati ons of
union referrals, 3) implementation costs, 4) reduced efficiency, 5) loss of worker
contributions to union pension programs, 6) reduced competition, 7) lack of local union
workers required to meet local worker participation goals, 8) increased risk of work
stoppages and strikes, and 9) reduced opportunities for local contractors to participate.
2.2. Public Works Contractors
Public works contractors were identified as a key stakeholder group as implementation of
a CWA will significantly change the requirements for bid award and employment of craft
labor on City projects, which directly impacts the employers (i.e., construction contractors)
who provide craft labor to the City. Staff prepared a list of questions that were posed to
contractors via video conference and phone survey. The survey included a series of
simple questions intended to facilitate aggregation and reporting of responses along with
open-ended questions that provided respondents an opportunity to provide additional
feedback. The questions were crafted to determine how implementation of a CWA would
affect respondents’ future pursuit of City public projects.
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Item 6d
To identify a representative group of contractors to engage, staff tabulated information for
all public projects with bid closing dates between January 2018 and September 2021.
The low bidders were identified and a group of contractors who were awarded different
project types (e.g., street improvements, buildings and structures, bridges, wet utilities,
etc.) and sizes (e.g., $1-$250K, $250K-$1M, and $1M-$5M) were selected. Sixteen
contractors were contacted and twelve participated in the survey. One respondent (Cal
Portland) was not initially identified as a potential survey participant, but contacted Public
Works staff after learning of the City’s CWA evaluation efforts from colleagues. Survey
respondents represent 51% of low bidders for all public projects awarded between
January 2018 and September 2021 (78 total projects). Table 3 presents the contractors
who participated in the survey and the number of City projects constructed by each from
January 2018 to September 2021.
Table 3. Public Works Contractors Surveyed by Staff
No. Name Number of City Projects
1 Souza Corporation 11
2 R. Burke Corporation 9
3 Specialty Construction 4
4 Toste Construction, Inc. 3
5 Lee Wilson Electric 3
6 VSS International 3
7 Papich Construction 2
8 Smith MEP 2
9 Taylor Jane 1
10 Cushman Contracting Corporation 1
11 MGE Underground 1
12 Cal Portland 0
13 TOTAL 40
Questions posed to the public works contractor stakeholder group are presented below
along with a summary of the feedback received. The first several questions were included
to determine each respondent’s familiarity with CWAs along with their labor contract
signatory status. As described in Attachment A, CWAs affect non-union contractors more
than union contractors. Establishing whether the respondents were current signatories to
a union agreement helped staff gauge responses to subsequent questions in the survey.
Questions 1-3 are presented in Table 4 below along with the responses received.
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Item 6d
Table 4. Public Works Contractor Survey Responses
No. Question Yes No
1 Are you familiar with CWAs and the associated requirements? 83% 17%
2 Have you ever worked under a CWA? 42% 58%
3 Are you a union signatory contractor? 58% 42%
The remaining survey questions and responses are described in greater detail in the
following sections.
Question 4: Would you be more likely, less likely, or as likely to bid City projects if
subject to a CWA?
This question was included in the survey to determine if contractors who have historically
bid on City projects would be more, less or equally likely to bid on future City projects if
subject to the requirements of a CWA. The responses to this question are presented in
Figure 1 below.
Figure 1. Likelihood of Surveyed Contractors to Bid CWA-Covered Projects
The respondent who indicated its company would be more likely to bid noted that a CWA
would deter inexperienced contractors from bidding. The respondent noted that in
general, contractors who aren’t experienced with public works construction can underbid
projects because they don’t understand the complexity of prevailing wage and public
contract code requirements, which decreases experienced contractors’ chances of being
the lowest responsive bidder.
As Likely
33%
More Likely
8%
Less Likely
59%
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Item 6d
Respondents who indicated they would be less likely to bid CWA-covered projects
expressed concern with 1) limitations to employing their core workforce, 2) lack of
certifications for union-referred workers required for performance of the work (e.g.,
hazardous materials transportation), 3) impacts to employer provided healthcare and
pension benefits for employees, 4) jurisdictional issues, and 5) reduced efficiency.
Concerns raised by multiple respondents are discussed at the end of this section of the
report.
Respondents who indicated they would be as likely to bid CWA-covered projects noted
CWAs are consistent with their current business practices. These respondents were all
union-signatory contractors.
Question 5: Would a CWA increase, decrease, or not affect your bid price?
This question was included in the survey to determine how a CWA would affect bid
pricing for future City projects. While qualitative, responses to this question provide
some indication of how bid prices would be affected if a CWA were implemented. The
responses to this question are presented in Figure 2 below.
Figure 2. Potential Impact of CWA on Contractor Bid Price
Respondents who indicated a CWA would increase their bid price noted the following: 1)
presumed decrease in competitive bids, 2) increased administrative requirements, 3)
penalties for non-compliance with targeted worker participation goals, 4) double payment
of benefits, 5) increased risk, 6) union dues, 7) reduced efficiency, 8) decreased quality,
9) impacts to safety program, and 10) unfunded union pension liability. Concerns raised
by multiple respondents are discussed at the end of this section of the report.
No Change
25%
Increase
67%
Decrease
8%
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Item 6d
The respondent who indicated a CWA would reduce their bid price noted that they would
be more competitive on a CWA-covered project. Respondents who indicated a CWA
would not impact their bid price noted the following: 1) prevailing wage rates are the
same on all public projects, regardless of union affiliation; 2) CWAs are consistent with
current bidding and employment practices for union signatory contractors.
Question 6: What percentage of your craft workers are 1) City of San Luis Obispo
residents, 2) San Luis Obispo County residents, 3) Santa Barbara or Monterey
County residents, 4) Ventura County residents, and 5) residents of other areas?
As previously noted, the SLO Water Plus CWA defines “local workers” as residents of the
City of San Luis Obispo or San Luis Obispo, Monterey, Santa Barbara, and Ventura
Counties. The intent of this question was to determine where craft worker employees of
contractors who have historically constructed City projects reside. Of the surveyed
contractors, an average of 89% of their craft workers are local workers as defined in the
SLO Water Plus CWA. Responses to this question have been averaged and are
presented in Figure 3 below.
Figure 3. Location of Contractor Craft Workforce
Question 7: In your opinion, does a CWA benefit the covered project?
The intent of this question was to determine if respondents were generally supportive of
CWA implementation and to provide an opportunity to share additional feedback. Four
of the 12 respondents, or 33%, believed CWAs benefit covered projects. Respondents
who believe CWAs are beneficial noted the following: 1) increased participation by local
workers, 2) skilled workforce from union trades, 3) increased employment opportunities
for union workers who have dedicated their careers to the construction trades, 4) union
benefits, and 5) increased quality of work.
City of SLO
4%
SLO County
60%
SB/Monterey
County
23%
Ventura
County
2%Non-Local
11%
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Item 6d
Respondents who believed CWAs do not benefit covered projects expressed the
following concerns: 1) lack of provisions to consider participation by local vendors and
materials suppliers; 2) reduced efficiency, productivity, quality, and safety from core
workforce limitations; 3) reduced competition; 4) increased project cost; 5) fewer bidding
opportunities for non-union contractors; 6) local workers are already being employed
without a CWA; 7) absence of local contractors for specialty work; 8) unfair advantage to
union contractors; 9) increased administrative burden; 10) reduced employment of local
workers; 11) fewer union workers available for union contractors if workers dispatched to
non-union contractors on covered projects; 12) lack of local subcontractors who would be
willing to sign CWA; and 13) concern with ability to end union affiliation after single project
agreement. Key concerns shared by multiple respondents are discussed in the following
section.
Public Works Contractor Outreach Summary
Contract or opinions regarding CWA implementation were mixed, and not clearly divided
based on union affiliation. While 58% of respondents were union signatorie s, only 33%
believed CWAs benefit covered projects, 58% would be less likely to bid CWA-covered
projects, and 67% indicated CWAs would increase their bid price. Issues raised by
contractors during the outreach process are discussed in greater detail below.
Core Workers
Attachment A includes detailed information on CWA hiring procedures, core worker
limitations, and a comparison of impacts to union and non -union contractors. In short,
construction unions are designated as the exclusive source of craft lab or on CWA-
covered projects. This requirement does not impact union contractors, because they only
employ union members and rely on union hiring halls to refer workers to their projects
when needed. Non-union contractors are limited in their ability to em ploy their regular
workforce on CWA-covered projects. CWAs limit the number of existing employees who
meet the negotiated qualification requirements, or “core workers”, non-union contractors
can employ on a project (typically three to six) and require all other workers be referred
from union hiring hall out of work lists.
Several contractors who participated in the survey noted that limitations on core worker
employment would reduce efficiency, increase risk, and reduce quality. These concerns
are related to the integration of union-referred workers, with whom the contractor has no
previous work history, into the contractor’s long-standing workforce. According to several
respondents, efficiency is impacted when workers don’t have prior experience with the
specific work being performed by the contractor or with the unique ways in which the
contractor typically performs its work. Replacing a contractor’s long-standing,
experienced employees with workers who have never worked for the contractor increases
risk and can potentially impact quality and safety.
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Item 6d
One respondent who performs pavement rehabilitation work throughout the Western
United States noted that six of the nine workers it typically employs in its paving crew are
required to hold a commercial driver license with a hazardous materials endorsement,
which requires a federal background check. They expressed concerns that truck drivers
with these classifications are difficult to find and might not be available through the union
referral system. CWAs typically allow unions 48 hours to dispatch workers to employers
when requested, after which the employer can hire workers from another source if the
union is unable to refer workers. The paving contractor noted that this waiting period can
impact project schedules and create logistical challenges when trying to fill open positions
if the union referral system is unable to dispatch certified workers.
Benefits
CWAs require that all contractors, regardless of their union affiliation, pay fringe benefit
contributions to union trust funds on behalf of their employees working on the CWA
project. Attachment A includes additional information regarding benefits on CWA-
covered projects. Several non-union contractors expressed concern with the union trust
fund contribution requirement for pension benefits. Union pension plans require a
minimum vesting period (typically 10,000 hours or five years) before participants can
redeem retirement benefits. Non-union craft workers might not work sufficient hours on
a CWA-covered project to become vested in a union pension fund, es pecially for shorter
duration projects or for contractors who perform limited scope on covered projects. This
would result in a significant loss of income for the employee who doesn’t become vested,
as the pension fringe benefit can be between 8% and 20% of the employee’s total hourly
rate, depending on the worker classification (e.g., laborer, cement mason, carpenter,
etc.). Attachment C provides additional information on prevailing wages and fringe
benefits for a select group of construction craft worker classifications. Several surveyed
contractors stated they would continue providing a retirement benefit to their employees
in addition to making union trust fund contributions to mitigate the pension vesting issue,
resulting in additional cost to the employer and likely to be passed on to the City.
Respondents also voiced concern with the union trust fund contribution requirement for
medical benefits. These contractors currently provide medical benefits to their employees
and requiring their workers to change healthcare plans can result in coverage gaps,
changes to in-network providers, and changes to covered prescriptions. For contractors
with limited scope/short duration work on CWA-covered projects, employees would
potentially be required to exit their employer’s medical plan, join the union plan, then exit
the union plan and re-join the employer’s plan at the conclusion of the CWA-covered
work. Respondents noted that this transition is difficult for employees and their families,
and several contractors stated they would continue providing a medical benefit to their
employees in addition to making union trust fund contributions to address this issue,
resulting in additional cost to the employer and likely to be passed on to the City.
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Item 6d
2.3. Local Consultants
CWA provisions apply to all employers providing prevailing wage labor on covered
projects, including consulting firms. The City has traditionally employed consultants
through professional services agreements to provide construction inspection, surveying,
and materials testing services. Construction inspection, surveying, and field materials
testing are work classifications covered by the state prevailing wage determinations and
would be subject to the requirements of a CWA.
Like the public works contractor outreach described in the preceding section, staff
prepared a list of questions that were posed to consultants via video conference and
phone survey. The survey included a series of simple questions intended to facilitate
aggregation and reporting of responses along with open-ended questions that provided
respondents an opportunity to provide additional feedback. The questions were crafted
to determine how implementation of a CWA would affect respondents’ future pursuit of
City projects.
Seven of the ten consultants who provide on-call soils and materials testing, construction
management, and land surveying services to the Public Works Department were
contacted. All seven firms who were contacted by staff participated in the survey. Table
5 lists the firms who participated in the survey with staff.
Table 5. Local Consultants Surveyed by Staff
No. Firm Name Services Provided
1 Cannon Construction Management/Surveying
2 Earth Systems Pacific Soils and Materials Testing
3 Filippin Engineering Construction Management
4 GeoSolutions Soils and Materials Testing
5 Kitchell CEM, Inc. Construction Management
6 MNS Engineers, Inc. Construction Management
7 Wallace Group Construction Management/Surveying
Questions posed to the local consultant stakeholder group are presented below along
with a summary of the feedback received. The first several questions were included to
determine each respondent’s familiarity with CWAs along with their union signatory
status. Questions 1-3 are presented in Table 6 below along with the responses received.
Table 6. Local Consultant Survey Responses
No. Question Yes No
1 Are you familiar with CWAs and the associated requirements? 71% 29%
2 Have you ever worked under a CWA? 43% 57%
3 Are you a union signatory contractor? 0% 100%
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Item 6d
The remaining survey questions and responses are described in greater detail in the
following sections.
Question 4: Would you be more likely, less likely, or as likely to provide
professional services on City projects if subject to a CWA?
This question was included to determine if consultants who have historically provided
prevailing wage services on City projects under professional services agreements would
be more, less, or equally likely to participate in future City projects if subject to the terms
and conditions of a CWA. The responses to this question are presented in Figure 4 below.
Figure 4. Likelihood of Surveyed Consultants to Participate in CWA-Covered Projects
The respondent who indicated its company would be as likely to participate in CWA -
covered projects noted their standard practice of subcontracting all prevailing wage
services. The respondent noted that if it was unable to find a subcontractor willing to sign
on to the CWA or if they were required to self -perform prevailing wage services, they
would be less likely to participate.
As Likely
14%
More Likely
0%
Less Likely
86%
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Item 6d
Respondents who indicated they would be less likely to participate in CWA-covered
projects noted the following concerns: 1) increased risk and professional liability exposure
by employing union referrals with no existing relationship to employer and unfamiliarity
with employer-specific work practices; 2) increased costs associated with reduced
efficiency, increased oversight, CWA administrative requirements, and potential for
duplication of employer paid benefits costs resulting from payment of employee fringe
benefits to union trust; 3) staff attrition by employees who do not want to be affiliated with
unions; 4) significant learning curve associated with compliance with union requirements;
and 5) limitations on employees who can be dispatched to covered projects (i.e., only
employees who have registered with union can be dispatched). Several respondents who
indicated they would be less likely to participate on CWA-covered projects further clarified
they would not participate in City projects if subject to the requirements of a CWA.
Question 5: Would a CWA increase, decrease, or not affect the cost of your
services?
This question was included in the survey to determine how a CWA would affect the cost
of soils and material testing, construction inspection, and surveying on future City
projects. It is noted that the response to this question is qualitative and does not reflect
the extent to which pricing for professional services would be affected. The responses
to this question are presented in Figure 5 below.
Figure 5. Potential Impact of CWA on Cost of Professional Services
No Change
29%
Increase
71%
Decrease
0%
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Item 6d
Respondents who indicated a CWA would not affect their cost of service noted that
prevailing wage requirements are the same on all public projects, regardless of whether
a CWA is in place. Respondents who indicated a CWA would increase the cost of their
services noted the following concerns: 1) increased administrative costs, 2) increased
insurance costs, 3) increased exposure to professional liability claims, 4) double payment
of benefits, 5) time associated with verifying work performed by union referrals, 6)
overhead costs of union enrollment and union dues, and 7) four-hour minimum shift
required by union master labor agreements regardless of time spent on site.
Question 6: What percentage of your prevailing wage employees are 1) City of San
Luis Obispo residents, 2) San Luis Obispo County residents, 3) Santa Barbara or
Monterey County residents, 4) Ventura County residents, and 5) residents of other
areas?
The intent of this question was to determine where prevailing wage employees of
consultants who have historically participated in City projects reside. Of the surveyed
consultants, an average of 93% of prevailing wage employees met the criteria of local
workers as defined in the SLO Water Plus CWA. Responses to this question have been
averaged and are presented in Figure 6 below.
Figure 6. Location of Consultant Prevailing Wage Workforce
Question 7: In your opinion, does a CWA benefit the covered project?
The intent of this question was to determine if respondents were generally supportive of
CWA implementation and to provide an opportunity to share additional feedback. Two of
the seven respondents, or 29%, believed CWAs provided benefits to the construction
craft workers on covered projects, but not to professional service providers.
City of SLO
21%
SLO County
65%
SB/Monterey
County
6%
Ventura
County
1%
Non-Local
7%
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Item 6d
Five of the seven respondents, or 71%, believed CWAs did not benefit covered projects.
Feedback supporting this position included the following: 1) construction unions are the
only beneficiaries, 2) increased cost, 3) increased risk, 4) not appropriate for the local
market, 5) adversely impacts ability for local businesses to participate in covered projects,
6) counter to the City’s goal of helping local businesses, 7) inherent conflict of interest
with unions representing both quality assurance/quality control staff (e.g., inspection,
materials testing, soil testing, surveying) and craft workers performing the work, 8) risk of
decreased quality, 9) reduced opportunities for non -union companies to participate, 10)
majority of local contractors and consultants are non-union, and 11) risk of preferring
employment of workers from out of the immediate area (i.e., City and County of San Luis
Obispo) even though technically considered “local” by CWA. Key concerns from this
stakeholder group are discussed in the next section.
Local Consultant Outreach Summary
Most of the surveyed consultants (86%) stated they would be less likely, or unwilling, to
provide services on City projects if CWA requirements apply to their prevailing wage staff.
Issues raised by consulting firms during the outreach pr ocess are discussed in greater
detail below.
Core Workers
Surveyed consultants voiced concern with limitations on their ability to utilize their core
workforce on CWA-covered projects, similar to the concerns raised by contractors.
Construction management firms noted their prevailing wage inspection staff have specific
experience and skillsets that allow them to successfully perform their field duties.
Respondents believe inspectors referred by the union hiring hall are unlikely to have the
same qualifications and experience, which they believe increases the employer’s risk.
Respondents conveyed that this increased risk would require additional oversight by
professional/salaried staff and might require redundant inspection positions, according to
respondents.
Consulting firms who provide prevailing wage surveying services to the City emphasized
the importance of team dynamics in the efficient and accurate performance of their work.
Typical survey crews are small (two to four employees), and respondents believe
introducing new workers (i.e., union referrals) into a survey crew would potentially reduce
efficiency and require additional oversight to verify the accuracy of the work products.
Page 1109 of 1192
Item 6d
Benefits
Surveyed consultants voiced similar concerns as contractors regarding the requirement
to pay fringe benefits to union trusts for their employees on CWA -covered projects.
Consultants noted 1) possible lapses in health insurance coverage when moving between
employer and union-provided plans, 2) inability to work sufficient hours to vest in union
pension programs resulting in certain payments made to the union, with no benefit
realized by employees and 3) the likelihood that employers would need to effectively
double-pay benefits to reduce impacts to their staff , adding employer paid benefit costs
to the costs of service. Attachment C includes a summary of prevailing wages for
construction inspectors and land surveyors, including the fringe benefits th at would be
paid to the union trust on behalf of the employee on CWA-covered projects.
Respondents also highlighted the intermittent nature of the prevailing wage services they
provide on public projects, and the resulting complications for the provision of benefits to
employees. For example, the City routinely requests special inspection or soils testing at
discrete hold points as detailed in the construction specifications (e.g., structural welding,
soil compaction testing, etc.). The on -call service provider dispatches an inspector to
perform the required inspection, which typically only requires four to eight hours out of a
40-hour work week. Several respondents noted that the limited time spent on a CWA -
covered project in a typical work week would necessitate the double-payment of benefits,
as employees would not qualify for union benefits when not working full time on the CWA-
covered project.
2.4. Higher Education
Cal Poly, Cuesta College, and Allan Hancock College were identified by City Council as
potential stakeholders to be included in the outreach effort. Each organization was
contacted and invited to participate in a discussion with staff to explore the poten tial
alignment between CWAs and university programs/initiatives. Feedback was not
provided as part of the initial outreach effort, but additional outreach can be performed if
Council decides to move forward with CWA implementation.
2.5. Construction Trades Organizations
The Tri-Counties Building and Construction Trades Council (Trades Council) is a principal
stakeholder for this project as the primary negotiating party with the City for the CWA.
Staff met with Trades Council representatives following the September 2021 Study
Session to discuss the Trades Council’s objectives, review direction provided by Council
during the Study Session, and to discuss next steps. A draft CWA was transmitted by the
Trades Council in February 2022, with suggested modifications, for review by City staff.
Consistent with Council’s feedback, the draft CWA is based on the SLO Water Plus CWA,
with several changes based on outreach and data analysis and to be discussed with the
Trades Council if Council directs staff to proceed with negotiations on final terms.
Page 1110 of 1192
Item 6d
The Central Coast Labor Council (Labor Council) was identified as a potential stakeholder
by City Council during the phase one Study Session. Staff met with the Executive Director
of the Labor Council and discussed the City’s CWA evaluation effort. The Executive
Director indicated that the Labor Council would likely be more engaged with elected
officials to generate support for a CWA if negotiations proceed.
2.6. Outreach Summary
A broad range of stakeholders were engaged durin g the outreach process, including
those who will be most directly impacted by the implementation of a CWA (i.e., contractors
and consultants). The outreach process helped identify many important considerations
that have informed the recommendations presen ted later in this report.
3. Historical CIP Analysis
An analysis of past CIP projects was performed to identify the location of bidders who
have historically bid on City projects and to determine the types of projects for which a
CWA would be most effective in increasing employment of local workers. Fourteen public
projects of varying types and costs completed between January 2018 and September
2021 were selected for review. Table 7 lists the projects included in this analysis along
with project cost, project asset type, the prime contractor, and location of the prime
contractor.
Table 7. CIP Projects Selected for Review
No. Project Name Project
Cost
Project
Asset Type
Project
Type
Prime
Contractor
Location
of Prime
Contractor
1 City Facility
HVAC
≤ $250K Asset
Maintenance
or
Replacement
Buildings
and
Structures
Smith MEP Santa
Maria
2 Meadow Park
Pathway
Maintenance
≤ $250K Asset
Maintenance
or
Replacement
Bicycle
Paths
Souza
Construction
San Luis
Obispo
3 Mission Plaza
Railing 2021
≤ $250K Asset
Maintenance
or
Replacement
Parks and
Recreation
Taylor Jane
Construction
LP
Nipomo
4 Swim Center
Bath House
Roof Repair
≤ $250K Asset
Maintenance
or
Replacement
Buildings
and
Structures
American
Foam Experts
Herald
5 Wash Water
Supply Tank
No. 2
≤ $250K Asset
Maintenance
or
Replacement
Wet Utilities Paso Robles
Tank, Inc
Hemet
Page 1111 of 1192
Item 6d
No. Project Name Project
Cost
Project
Asset Type
Project
Type
Prime
Contractor
Location
of Prime
Contractor
6 Bullock CMP $250K -
$1M
Asset
Maintenance
or
Replacement
Wet Utilities Souza
Construction
San Luis
Obispo
7 Islay Park
Playground
$250K -
$1M
Asset
Maintenance
or
Replacement
Parks and
Recreation
RE Schultz Orange
8 Sinsheimer
Irrigation and
Stadium
Drainage
$250K -
$1M
Asset
Maintenance
or
Replacement
Parks and
Recreation
Empire
Landscaping
Inc
Davis
9 Concrete
Streets
$250K -
$1M
Asset
Maintenance
or
Replacement
Street
Improvemen
ts
R. Burke
Corporation
San Luis
Obispo
10 Anholm Phase
1A
$250K -
$1M
New Asset Street
Improvemen
ts
Lee Wilson
Electric
Arroyo
Grande
11 South Hills
Radio Site
Upgrades
$250K -
$1M
New Asset Buildings
and
Structures
Specialty
Construction
San Luis
Obispo
12 Casa Stenner
Murray
Waterline
Project
$1M -
$5M
Asset
Maintenance
or
Replacement
Wet Utilities S Chavez
Construction
San Luis
Obispo
13 RRST Taft to
Pepper
$1M -
$5M
New Asset Bicycle
Paths
Souza
Construction
San Luis
Obispo
14 South Broad
Street
Pavement
Improvements
$1M -
$5M
Asset
Maintenance
or
Replacement
Street
Improvemen
ts
Papich
Construction
Company
Arroyo
Grande
The location of craft workers who worked on the selected projects was determined by
reviewing certified payroll reports (CPRs). CPRs list the hours worked by each employee
during the reporting period (typically one week), along with the zip code of the wo rker’s
residence. Once the CPR data was compiled, local worker participation was analyzed
based on project type, project size, and the location of the prime contractor. Local
workers were defined as residents of the city of San Luis Obispo or San Luis Ob ispo,
Santa Barbara, Monterey, and Ventura Counties, consistent with the SLO Water Plus
CWA.
Page 1112 of 1192
Item 6d
3.1. Local Worker Participation by Project Asset Type
CIP projects in the City budget are categorized by project asset type and are identified as
either 1) New Assets or 2) Asset Maintenance and Replacements. New Assets are the
construction and/or installation of new capital facilities or assets such as roads, water
treatment equipment, new water or sewer pipelines, or new buildings and facilities. Asset
Maintenance and Replacements are the repair, replacement, or rehabilitation of existing
capital assets. Examples of Asset Maintenance and Replacement projects include street
resurfacing, playground equipment replacement, and pipeline rehabilitation. Of the 14
projects listed in Table 7, 11 are Asset Maintenance or Replacement and three are New
Asset project asset types.
The projects in Table 7 were grouped by project asset type to compare local worker
participation percentages. The results of this analysis are presented in Table 8.
Table 8. Local Worker Participation by Project Asset Type
No. Project Asset Type
Local
Worker
Hours
Total Labor
Hours
Local Worker
Participation
1 New Assets 12,134 12,762 88%
2 Asset Maintenance or
Replacement 21,310 24,343 95%
3 TOTAL 33,444 37,105 90%
The data shows that 88% of all labor hours on New Asset projects were performed by
local workers and 95% of all labor hours on Asset Maintenance or Replacement projects
were performed by local workers.
Further analysis was performed on Asset Maintenance or Replacement projects as this
project asset type comprises a significant portion of the CIP budget. Bidder location data
was compiled for all 68 Asset Maintenance and Replacement projects with bid closing
dates between January 2018 and September 2021. Figure 7 presents the location of the
low bidders for these projects.
Page 1113 of 1192
Item 6d
Figure 7. Bidder Location for Asset Maintenance and Replacement Project Asset Type
As the figure illustrates, 79% of the low bidders for the City’s Asset Maintenance and
Replacement projects are located in the City of San Luis Obispo or San Luis Obispo,
Santa Barbara, and Ventura Counties. Contractors based in the City were awarded 50%
of the Asset Maintenance and Replacement projects for which bidder information was
compiled. This finding is noteworthy, as it shows that contractors based in the City are
constructing most of the City’s Asset Maintenance and Replacement projects.
In summary, local contractors constructed most of the Asset Maintenance and
Replacement projects in the January 2018 to September 2021 review period, with 50%
of all projects constructed by contractors based in the City. Of the 11 Asset Maintenance
and Replacement projects reviewed in detail by staff, 95% of all labor hours were
performed by local workers. This analysis indicates local contractors are primarily
employing local workers, a finding that is supported by additional data presented later in
the report.
City of San
Luis Obispo
50%
County of San
Luis Obispo
19%
Santa Barbara
County
9%
Ventura
County
1%
Other
21%
Page 1114 of 1192
Item 6d
3.2. Local Worker Participation by Project Type
The selected projects were grouped by type to determine average local worker
participation percentages. The results of this analysis are presented in Table 9.
Table 9. Local Worker Participation by Project Type
No. Project Type
Local
Worker
Hours
Total Labor
Hours
Local Worker
Participation
1 Buildings & Structures 1,024 1,337 84%
2 Bicycle Paths 9,802 10,183 96%
3 Parks and Recreation 1,166 3,619 32%
4 Wet Utilities 12,890 13,156 98%
5 Street Improvements 6,755 6,765 99%
6 TOTAL 33,444 37,105 90%
In general, the local worker participation percentages were high for all project types with
the exception of Parks and Recreation projects. Local worker participation percentages
were lower for this group because two of the three projects included were awarded to
non-local contractors (i.e., contractors not based in San Luis Obispo, Monterey, Santa
Barbara, or Ventura Counties).
Of the Parks and Recreation projects analyzed (See Table 7), 78% (7 out of 9) of bidding
contractors were local, with a non-local contractor being the low bid on only the
Sinsheimer Irrigation and Stadium Drainage Project. The low bid contractor on Islay Hill
Park Playground was local, however, was found to have submitted a non -responsive bid2,
resulting in the project being awarded to the second-low bidder, who was non-local. If the
awarded contractors were local, it is likely the local worker participation percentage would
have been largely consistent with the other project types in Table 9.
In total, the local worker participation for all projects reviewed was 90%.
2 To be considered responsive, a bid must comply in material respects with the invitation for bids. On Islay Park
Playground, the low bid contractor was deemed non -responsive because they failed meet the minimum
qualifications, including recent park construction experience with a city, county, state, or federal agency.
Page 1115 of 1192
Item 6d
3.3. Local Worker Participation by Project Cost
The selected projects were grouped by size to determine average local worker
participation percentages. The results of this analysis are presented in Table 10.
Table 10. Local Worker Participation by Project Cost
No. Project Cost Local Worker
Hours
Total Labor
Hours
Local Worker
Participation
1 ≤ $250K 2,909 3,448 84%
2 $250K - $1M 7,216 9,917 73%
3 $1M - $5M 23,319 23,741 98%
4 TOTAL 33,444 37,105 90%
Local worker participation percentages were high for each project cost category, with an
average of 90% for all projects analyzed. Local worker participation percentages were
lower for the $250K - $1M cost category because this category included the two P arks
and Recreation projects constructed by non-local contractors described in the preceding
section.
3.4. Large Project Comparison
Staff reviewed and compiled CPR data for the Los Osos Valley Road Overpass Project
(LOVR Project) for comparison with the SLO W ater Plus Project. Like the SLO Water
Plus Project, the LOVR Project is a large project (i.e., cost >$15M) constructed by a non -
local contractor, however, the LOVR Project was constructed without a CWA in place.
Table 11 presents local worker participation data for the LOVR and SLO Water Plus
Projects.
Table 11. LOVR Project and SLO Water Plus Local Worker Participation
No. Project Local Worker
Hours
Total Labor
Hours
Local Worker
Participation
1 LOVR Project 41,190 59,985 69%
2 SLO Water Plus* 111,980 141,243 79%
*SLO Water Plus labor hours reported through February 2022.
The data shows that most of the labor hours on the LOVR Project were performed by
local workers, and local worker participation was significantly higher than the 30% goal
typically set forth in a CWA.
Page 1116 of 1192
Item 6d
3.5. Local Worker Participation by Prime Contractor Location
A list of all contractors who were awarded public projects between January 2018 and
September 2021 was tabulated to determine the contractor’s location. Of the 78 projects
awarded during this period, approximately 70% were awarded to local contractors (i.e.,
contractors based in San Luis Obispo, Monterey, Santa Barbara, or Ventura Counties).
The results of this analysis are presented in Figure 8.
Figure 8. Location of Prime Contractor for Past City Projects
To determine if local contractors typically utilize local workers, the selected CIP projects
listed in Table 7 were grouped by prime contractor location and the local worker hours
were tabulated. The results of this analysis are presented in Table 12.
Table 12. Local Worker Participation by Prime Contractor Location
No. Prime Contractor
Location
Local Worker
Hours
Total Labor
Hours
Local Worker
Participation
1 Local 33,021 33,690 98%
2 Non-Local 423 3,415 12%
3 TOTAL/AVERAGE 33,444 37,105 76%
The data confirms that most of the labor hours on projects constructed by local prime
contractors were performed by local workers. In addition, the local hours presented in
Table 12 are inclusive of subcontractor labor hours which indicates local contractors are
also utilizing the services of local subcontractors.
City of San
Luis Obispo
49%
County of San
Luis Obispo
22%
Santa Barbara
County
8%
Ventura
County
1%
Other
20%
Page 1117 of 1192
Item 6d
3.6. Summary and Discussion
The historical CIP analysis indicates local workers are performing most of the work on
City public projects, regardless of project type or size. The one exception to this finding
is for Parks and Recreation projects, where local workers performed 32% of the total labor
hours for the selected projects. As previously noted, reduced local worker participation
for this project type is attributed to the location of the prime contractors for the selected
projects, two of which were non-local. Although local worker participation was lower for
the selected Parks and Recreation projects, it was higher than the local worker
participation goal typically set forth in CWAs (30%).
The analysis also indicates local contractors primarily employ local workers. Of the 14
past CIP projects reviewed, ten were constructed by local contractors and 98% of all labor
hours were performed by local workers. Local workers only performed 12% of all work
hours on the four CIP projects constructed by non-local contractors. Analysis of the LOVR
Project – the second largest CIP project in City history – indicates 69% of all labor hours
were performed by local workers. This finding is noteworthy as the LOVR Project was a
large, multi-year project constructed by a non-local contractor without a CWA in place.
4. Fiscal Analysis
The impact of CWA implementation on construction bids is difficult to quantify and beyond
the scope of this report to evaluate comprehensively. Proponents of CWAs believe that
these agreements reduce costs by improving labor reliability, increasing quality, and
preventing schedule delays. Opponents argue that CWAs increase costs by reducing
competition, increasing administration requirements, and requiring payment of fringe
benefits to union trust funds. The only way to conclusively determine the impact of CWAs
on construction bids is through a parallel bid process, whereby a pilot project would be
advertised for bids both with and without a CWA requirement. This approach has been
suggested by other agencies currently evaluating CWA implementation including Ventura
and Santa Barbara Counties, however it is unclear if such a bidding arrangement would
ultimately be acceptable to the agencies and the Trades Council.
This section of the report focuses on the costs that are more readily quantifiable including
costs to support CWA negotiation, costs to incorporate CWA requirements into the City’s
standard construction contract and standard specifications, costs to develop procedures
for CWA implementation, and costs to administer the CWA during construction. Budget
for outside legal counsel and consultant staff to support these efforts, except for CWA
administration, is included in the FY 21-23 Financial Plan.
4.1. CWA Negotiation
CWA negotiation will require participation from the Community Services Group, the City
Attorney’s office, outside legal counsel, and consultant staff. While both Council and the
Trades Council have expressed support of using the SLO Water Plus CWA as a template
for negotiations, certain provisions of the agreement will likely require additional
negotiation based on direction provided by Council.
Page 1118 of 1192
Item 6d
4.2. Development of Contract and Standard Specification Language
If implemented, CWA provisions must be developed and incorporated into the City’s
standard construction contract documents so prospective bidders and subcontractors will
be aware of their obligations regarding the agreement. Language is typically included in
the bid advertisement, bid form, agreement, and the front -end documents to detail CW A
requirements. In addition, the complete CW A is included in the contract documents as
part of the front-end documents or as an appendix. It is recommended that a specification
be developed to detail the targeted worker participation requirements, as the procedures
for meeting participation goals and reporting requirements are typically not explained in
detail in the CW A. The targeted worker specification will increase the likelihood of
meeting the participation goals set forth, increase transparency in the process, and
facilitate accountability of all parties to the agreement.
Development of CWA provisions for the City’s standard construction contract documents
will require participation from the Community Services Group, the City Attorney’s office,
outside legal counsel, and consultant staff.
4.3. CWA Procedure Development
If a CWA is implemented, procedures must be developed to facilitate uniform application
of the agreement for all covered projects so the City meets its obligations as set forth in
the CWA. Development of CWA implementation procedures will require participation
from the Community Services Group and consultant staff.
Table 13 presents the estimated costs for CWA negotiation, contract/specification
language development, and CWA procedure development.
Table 13. Estimated Cost of CWA Implementation
The total cost for CWA implementation is estimated to be between $64,000 and $115,000.
RESOURCE Low High Low High Low High
Community Services Group 6,000$ 10,000$ 5,000$ 10,000$ 8,000$ 15,000$
City Attorney 4,000$ 5,000$ 2,000$ 4,000$ -$ -$
Outside Counsel 14,000$ 28,000$ -$ -$ -$ -$
Outside Consultant 8,000$ 14,000$ 9,000$ 13,000$ 8,000$ 16,000$
SUBTOTAL 32,000$ 57,000$ 16,000$ 27,000$ 16,000$ 31,000$
TOTAL $64,000 - $115,000
Contract/Specification
DevelopmentCWA Negotiation CWA Procedure
Development
TASK
Page 1119 of 1192
Item 6d
4.4. CWA Administration
CWAs require that the project owner designate a Community Workforce Coordinator to
act as the owner’s agent and to facilitate implementation and compliance with the CWA.
The Community Workforce Coordinator can be a member of the owner’s staff, but an
outside contractor with specific experience administering CWAs is typically used. In many
cases, the Community Workforce Coordinator can also provide labor compliance
oversight, a function typically performed by City staff . It is assumed the City will hire an
outside consultant to serve as the Community Workforce Coordinator if a CWA is
implemented.
CWAs include provisions for the establishment of a Joint Administrative Committee (JAC,
Committee) comprised of representatives from the owner and representatives from the
building trades. The JAC meets regularly to discuss issues associated with the CWA
including project issues, safety concerns, contractor relations, and disputes. The
frequency of the JAC meetings is left to the discretion of the Committee, but meetings are
typically held on a quarterly basis. It is anticipated that the City’s representati ves on the
JAC will include Community Services Group staff and the City’s Community Workforce
Coordinator.
The City can require the construction contractor to retain the services of a Jobs
Coordinator to assist the contractor in meeting its obligations fo r targeted worker
participation. The Jobs Coordinator coordinates with the construction trades,
apprenticeship programs, and local workforce development agencies to identify potential
workers that meet the criteria necessary to qualify as a targeted worke r for employment
on the covered project. The Jobs Coordinator assists the contractor in the preparation of
reports including targeted worker hiring status reports and manpower utilization plans. It
is anticipated that the contractor will retain the services of an outside consultant to serve
as its Jobs Coordinator if the negotiated CWA includes participation requirements for
demographics other than local residents.
Staff contacted several consulting firms who specialize in CWA administration and labor
compliance to determine the estimated cost for CWA administration. Several factors
impact CWA administration costs including project duration, number of subcontractors,
familiarity of contractors with CWA requirements, and number of covered projects.
Estimated administrative costs range from 0.25% to 5% of total construction cost, with
lower percentages for large, multi-year projects and higher percentages for small, short
duration projects.
Page 1120 of 1192
Item 6d
For example, CWA administration costs for the $110 million SL O Water Plus Project are
approximately $312,000, or 0.3% of the total construction cost. CWA administration costs
for a 6-month, $250,000 project are estimated to be approximately $12,500, or 5% of the
total construction cost. The total cost of CWA administration will ultimately depend on the
number, size, and duration of projects covered by the agreement. Notably, much of the
administrative work is based on time; the time that the CWA coordinator will need to spend
each month reviewing CPRs, compiling local worker numbers, verifying core worker
requirements, and coordinating with the construction contractors and construction trades.
5. Recommendations and Alternatives
The extensive stakeholder outreach process provided valuable insight into the practical
considerations of CWA implementation, including potential impacts to the local
contracting and consulting community. Review of the City’s past CIP projects helped
quantify historical local worker participation and helped identify opportunities to support
local worker participation on future City projects. The stakeholder outreach process and
historical CIP review informed staff’s recommendation and the alternatives presented in
the following sections. Section 5 includes staff’s recommendation for CWA -covered
projects as well as alternatives for implementation based upon project budget thresholds.
Section 6 includes recommended exclusions based upon type of work.
Page 1121 of 1192
Item 6d
5.1. Recommendation – CWA for Legacy Projects
As funded and approved for construction, authorize staff to negotiate a Community
Workforce Agreement with the Tri-Counties Building and Construction Trades
Council to include the Cultural Arts District Parking Structure (vertical construction
component only), Prado Road Interchange, and Public Sa fety Center projects,
including a 60% local worker participation goal and excluding3 prevailing wage
services provided through professional services agreements.
Staff recommends Council consider implementing a CWA for the Cultural Arts District
Parking Structure (vertical construction and off-site improvements contract only4), Prado
Road Interchange, and Public Safety Center projects. The total construction cost of these
“legacy projects” is estimated to be approximately $153 million, or 46% of the City’s t otal
CIP budget over the next five years. These projects are large, complex, multi-year efforts
involving multiple construction trades that would realize the greatest benefit from the
uniform work conditions, dispute resolution procedures, and work stoppa ge protections
afforded by a CWA. The Cultural Arts District Parking Structure is scheduled to begin
vertical construction in Fall 2023 with a two-year construction timeframe, and both the
Prado Interchange and Public Safety Center are in preliminary desi gn stages and
scheduled to begin construction in FY25/26 with multi-year construction timeframes.
These projects are also likely to be awarded to non -local contractors, as few local
contractors have the requisite experience and bonding capacity to underta ke the work.
As noted in previous sections of the report, non-local contractors are more likely to employ
non-local workers, and a CWA could promote local worker participation on these large
City projects.
Limiting the CWA to legacy projects would reduce CWA implementation costs as
compared to a CWA that applied more broadly to City public projects. CWA
administration as a percentage of construction cost for these large budget, multi -year
projects is estimated to be less than CWA administration costs a s a percentage of
construction cost for numerous, smaller budget projects. In addition, City staff time to
implement CWA requirements on covered projects would be reduced.
3 See Section 6 for discussion of recommended exclusions. These may be considered as negotiating parameters
within each project budget threshold.
4 The Cultural Arts District Parking Structure Project is separated into three contracts: 1) Phase 1A PG&E Utility
Relocation 2) Phase 1B On-Site Demolition, Clearing, and Grading and 3) Phase 2 Vertical Structure and Offsite
Improvements. Phase 1A and 1B include work similar to asset maintenance and replacement projects (utility
relocations, demolition, grading, etc.) and are anticipated to be competitive projects for bidding amongst local
contractors utilizing local workers.
Page 1122 of 1192
Item 6d
5.2. Alternative 1 – CWA with $15 Million Threshold
Authorize Staff to negotiate a Community Workforce Agreement with the Tri -
Counties Building and Construction Trades Council to include projects with an
estimated construction cost of $15 million or greater, including a 60% local worker
participation goal and excluding5 emergency projects and prevailing wage services
provided through professional services agreements.
As an alternative, Council could consider implementing a CWA for all City projects with
an estimated construction cost of $15 million or greater. A $15 million cost threshold
would include the three legacy projects described in the preceding section and the Prado
Road Bridge and Road Widening Project (Prado Road Bridge Project). Table 14 presents
the public projects in the City’s 5-year CIP grouped by cost category.
Table 14. Public Projects in City 5-Year CIP Grouped by Cost
No. Project Cost Number of
Projects Total Budget Percent of 5-Year
CIP
1 ≤ $250K 139 $20,413,161 6%
2 $250K - $1M 54 $37,096,965 12%
3 $1M - $5M 26 $66,404,147 21%
4 $5M - $15M 2 $12,450,000 4%
5 >$15M 4 $184,061,231 57%
6 TOTAL 226 $320,425,504 100%
Staff does not recommend this alternative as including the Prado Road Bridge Project in
the CWA would likely result in reduced project participation by local contractors who have
successfully constructed similar City projects in the past, and by extension, reduce local
worker participation. Similar projects constructed by local contractors include Marsh
Street Bridge Replacement and the Orcutt Tank Farm Roundab out.
5 See Section 6 for discussion of recommended exclusions. These may be considered as negotiating parameters
within each project budget threshold.
Page 1123 of 1192
Item 6d
5.3. Alternative 2 – CWA with $5 Million Threshold
Authorize Staff to negotiate a Community Workforce Agreement with the Tri -
Counties Building and Construction Trades Council to include projects with an
estimated construction cost of $5 million or greater, including a 60% local worker
participation goal and excluding6 maintenance and rehabilitation projects,
emergency projects, and prevailing wage services provided through professional
services agreements.
Council could also consider implementing a CWA for all City projects with an estimated
construction cost of $5 million or greater. A $5 million cost threshold would include the
four projects described in the preceding sections along with the Mission Plaza Primary
Plaza Area Improvements and the WRRF and Wastewater Collections Shop Project.
Staff does not recommend this alternative due to the lack of historical local worker
participation data for projects with construction costs between $5 million and $15 million.
It is unclear if local worker participation for projects in this cost range will be low and
whether local worker participation would increase with a CWA. Average local worker
participation for projects reviewed by staff in the $1 million to $5 million cost range was
98%, and 69% of all labor hours on the $16 million LOVR Project were performed by local
workers. Staff anticipates that projects in the $5 million to $15 million cost range, including
the Prado Road Bridge Project, are likely to be bid by local contractors who have
historically used high percentages of local workers. Local contract ors are expected to be
less likely to pursue City projects if covered by a CWA.
If Council moves forward with an alternative to the staff recommendation, a $15 million
threshold (i.e., Alternative 1) would be more appropriate to help ensure local contractor
participation on City projects valued between $5 million and $15 million. At Council’s
direction, staff can track labor hours on projects with construction costs of $5 million or
more and return to Council with an analysis of local work hours a nd recommendations for
the possible expansion of CWA coverage. Such an approach would give staff the
opportunity to establish baseline local worker participation statistics and identify
opportunities to enhance local worker participation where appropriate .
6 See Section 6 for discussion of recommended exclusions. These may be considered as negotiating parameters
within each project budget threshold.
Page 1124 of 1192
Item 6d
5.4. Alternative 3 – No CWA
Direct staff not to negotiate a Community Workforce Agreement with the Tri -
Counties Building and Construction Trades Council.
Council could consider not implementing a CWA on future public projects. Staff does not
recommend this alternative as the three legacy projects recommended for inclusion in a
CWA and these projects are likely to be constructed by non-local contractors, which have
historically used more non-local workers based on staff’s review of past public projects.
A CWA could promote local worker participation on these legacy projects which comprise
46%, or $153 million, of the City’s CIP budget over the next five years.
If Council does choose this alternative, staff recommend ongoing tracking of local
contractor participation on capital projects as well as ongoing analysis of local labor usage
on awarded contracts, which would result in data collection equivalent to Section 3 of this
report. This accumulated date could be shared with Council in conjunction with Budge t
Supplement as a Key Performance Indicator.
6. Negotiating Parameters
Staff recommends Council consider the following negotiating parameters if staff is
directed to proceed with CWA implementation, regardless of the recommendation or
alternative selected.
6.1. Professional Services
Staff recommends that all prevailing wage services procured through professional
services agreements, including inspection, land surveying, and materials testing be
excluded from coverage by a CWA. As is the case with most agreements, the City must
maintain its authority over quality, budget and schedule (QA/QC) and professional
services are often the mechanism by which the City ensures that these essential key
elements are satisfied.
As such, Staff recommends that all prevailing wage services procured through
professional services agreements, including inspection, land surveying, and materials
testing be excluded from coverage by a CWA, regardless of the recommendation or
alternative selected by Council. The City has built trusted relationships with local
consulting firms who provide these services, and these partnerships are critical to the
successful delivery of the City’s CIP. Including professional services in the CWA would
impact the City’s ability to retain the most qualified fi rms to perform essential quality
assurance and quality control (QA/QC) functions on the City’s behalf, jeopardizing the
City’s ability to ensure projects have been constructed in accordance with the approved
plans and specifications.
Page 1125 of 1192
Item 6d
Local consultants contacted by staff during the stakeholder outreach process raised valid
concerns regarding CWA core worker and benefits provisions, which increase consultant
cost, risk, and professional liability exposure. If a CWA is implemented, local consultants
will be less likely to continue providing prevailing wage services to the City, which would
reduce local worker participation rather than increase it.
Exclusion of inspection and materials testing services is consistent with the previously
negotiated CWA for the SLO Water Plus Project. Staff is recommending that land
surveying also be excluded from coverage by the CWA. Like inspection and materials
testing, land surveying is a key QA/QC function that is best performed by a firm with
experienced staff procured by the City through a competitive process.
6.2. Emergency Projects
Staff recommends emergency repair projects be excluded from the scope of the
agreement if a cost threshold is established for CWA coverage. The City must preserve
its ability to procure construction services as quickly as possible in the event of an
emergency without additional administrative requirements, in accordance with the
existing emergency purchasing policy in the Financial Management Manual. The
additional time required to administer and enforce CWA requirements on emergency
projects would compromise the City’s ability to respond to emergencies as efficiently and
cost effectively as possible. Staff recommends emergency repair projects be excluded
from the scope of the agreement regardless of the construction cost threshold.
6.3. Maintenance and Repair Projects (Projects <$15 million)
Staff recommends Maintenance and Repair projects be excluded from the scope of the
agreement if a cost threshold less than $15 million is established for CWA coverage (i.e.,
Alternative 2). Contractors located in the City constructed 50% of the Maintenance and
Repair projects advertised by the City during the January 2018 to September 2021 period
reviewed by staff. Of the 11 past CIP projects reviewed in detail by staff, 95% of all labor
hours were performed by local workers. Maintenance and rehabilitation projects are
routinely constructed by local contractors using local workers and a CWA is unlikely to
increase local worker participation for these types of projects.
In addition, rehabilitation projects such as street resurfacing and wastewater collection
system lining are often performed by specialty contractors who rely heavily on their core
workforce to perform their work efficiently and effectively.
Page 1126 of 1192
Item 6d
6.4. Local Worker Participation Goal
If Council decides to implement a CWA, staff recommends a minimum local worker
participation goal of 60% be established. Review of local worker participation on a
representative sample of recent City projects indicates 90% of all labor hours were
performed by local workers. Of the cost categories reviewed, the lowest local worker
participation percentage was for projects with a cost between $250,000 and $1 million,
where 73% of all labor hours were performed by local worker s. Historical local worker
participation percentages for projects of all types and sizes is well above the 30% local
worker participation goal typically set forth in CWAs and included in the SLO Water Plus
CWA. The local worker participation goal should be established such that implementation
of a CWA supports the continued employment of local workers, consistent with historical
employment of local workers on City projects. This goal should be achievable based on
the local work hours measured for the SLO Water Plus Project and historical local worker
participation on City projects.
Previous Council or Advisory Body Action
Council adopted the FY21/23 Financial Plan at the June 1, 2021, meeting. Included within
the programs and projects identified within Major City Goal (MCG) of Economic Recovery,
Resiliency, and Fiscal Sustainability was a task/action with Strategic Approach #1.1f,
which stated:
"Hire a consultant, support legal review, and establish an internal working
group and hire a consultant to research methods to support local
contractors, local vendors, and labor through workforce agreements, local
purchasing requirements, alternative project delivery methods, and other
options to support local businesses and employees. The Community
Services Group will be leading this effort".
A Study Session was held in September 2021 to present strategies identified by staff to
support the local economy and to receive feedback from Council on the work program.
The Study Session included a guided discussion with a series of questions intended to
determine Council’s preferred strategies and implementation priorities, and to inform the
subsequent phases of the work program. Reference the Background section of the report
for additional information.
Policy Context
There are no existing policies in place for Community Workforce Agreements. The
recommendations and alternatives of this report provide a policy framework for Council
consideration.
Public Engagement
Public engagement/stakeholder outreach discussed in body of report.
Page 1127 of 1192
Item 6d
CONCURRENCE
The Administration Department, City Attorney, and Community Services Group concur
with the recommendations of this report.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act (CEQA) does not apply to the recommended
action in this report, because the action does not constitute a “Project” under CEQA
Guidelines Section 15378.
NEXT STEPS
If directed by Council, staff will initiate CWA negotiations with the Trades Council in
accordance with the negotiating parameters established by Council. The City Attorney
has retained the services of outside legal counsel to assist with negotiations. If staff and
the Trades Council are able to reach an agreement, the negotiated CWA will be provided
to Council for review and approval. If an agreement with the Trades Council cannot be
reached, staff will return to Council for further direction.
Once the CWA has been adopted, staff will procure the services of a Community
Workforce Coordinator to facilitate implementation and administration of the agreement.
Public Works staff will coordinate with the City Attorney’s office to develop constructio n
contract provisions and specifications describing CWA requirements. Public Works staff
will develop internal procedures to be used by City staff to help ensure uniform application
of CWA requirements on all covered projects.
As noted previously, use of alternative project delivery methods and local purchasing
policies can also provide the opportunity for the City to make progress on the MCG of
Economic Recovery, Resiliency & Fiscal Sustainability. Updates on both strategies are
as follows:
1. Staff is currently considering alternative project delivery methods as a part of the
broader Capital Improvement Process effort. With the exception of certain energy
saving projects, use of anything other than the design-bid-build methods requires
amendment to both the municipal code and City Charter. During the Study
Session in September 2021, the Council indicated general support for the use of
alternative project delivery methods but expressed a desire for more analysis of
the pros and cons of the alternatives. Due to the need for additional Council follow-
up and the time that it takes to prepare a successful ballot measure for Charter
amendment, staff is tentatively planning to work towards a ballot measure during
the November 2024 statewide general election to allow for the use of alternative
delivery methods, pending additional analysis and direction from Council.
2. On May 17th, the Finance Department will bring forward an item to seek Council’s
consideration of policy updates that would broaden local vendor pref erences for
City purchases.
Page 1128 of 1192
Item 6d
FISCAL IMPACT
Budgeted: Yes Budget Year: 2021-22
Funding Identified: Yes
Fiscal Analysis:
Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund $ 105,000 $ $70,000 $
Water Fund $ 26,250 22,500
Sewer Fund $ 26,250 22,500
Parking Fund $ 17,500 15,000
Total $ 175,000 $ $130,000 $
The appropriated budget for FY2021-22 allocated $175,000 in operating budget to hire
necessary consultant support for this ongoing effort, with costs proportionally shared
between the General Fund and three enterprise funds – Water, Sewer, and Parking.
Currently, $45,000 has been obligated for consultant support of this work effort including
legal services consisting of CWA contract negotiation support, with a remaining budget
of $130,000. In the near term, remaining budget may be utilized for implementation of the
Council preferred action, including work to develop procedures for implementation of
CWAs on covered projects. The costs of implementation in the long term, which include
consultant support for CWA contract oversight during project construction, would be
applied to the covered Capital Projects and be incorporated into the project construction
budget.
ALTERNATIVES
These alternatives are discussed extensively above in the body of the report.
1. Authorize Staff to negotiate a Community Workforce Agreement with the Tri-Counties
Building and Construction Trades Council to include projects with an estimated
construction cost of $15 million or greater, including a 60% local worker participation
goal and excluding emergency projects and prevailing wage services provided
through professional services agreements.
2. Authorize Staff to negotiate a Community Workforce Agreement with the Tri-Counties
Building and Construction Trades Council to include projects with an estimated
construction cost of $5 million or greater, including a 60% local worker participation
goal and excluding rehabilitation projects, emergency projects, and prevailing wage
services provided through professional services agreements.
3. Direct staff not to negotiate a Community Workforce Agreement with the Tri-Counties
Building and Construction Trades Council.
Page 1129 of 1192
Item 6d
ATTACHMENTS
A – City Capital Improvement Program CWA Evaluation
B – CWA Frequently Asked Questions Document
C – Public Works Prevailing Wage and Fringe Benefit Summary
Page 1130 of 1192
Date: March 16, 2022
To: Brian Nelson
City Engineer/Deputy Director of Public Works
919 Palm Street
San Luis Obispo, CA 93401
CC: Matt Horn, Public Works Director
Prepared by: Justin Pickard, Water Systems Consulting, Inc.
Subject: City Capital Improvement Program Community Workforce Agreement Evaluation
Introduction
The purpose of this memorandum is to review typical provisions in community workforce agreements
(CWAs) and evaluate the potential impacts of key provisions on the delivery of capital improvement
projects by the City of San Luis Obispo (City). The memorandum is not intended to be an exhaustive
review of every provision included in CWAs or to provide an opinion on the merit of a City-wide CWA.
Please note that the content of this memorandum is based largely on the previous CWA analysis
prepared by the City and WSC for the SLO Water Plus (i.e., WRRF Upgrade) Project. It has been updated
to reflect the City’s recent experiences on the SLO Water Plus Project and discussions with other public
agencies in the Central Coast who have recently evaluated or negotiated CWAs.
Background
CWAs are pre-hire collective bargaining agreements that establish standard terms and conditions that
apply to a specific construction project. CWAs are typically negotiated between the project owner and
the local building trades council or individual construction trades, although CWAs can be directly
negotiated between contractors and construction trades. The general contractor and subcontractors of
any tier must agree to be bound by the requirements of the agreement prior to performing any work on
a CWA-covered project.
Key CWA provisions include the establishment of uniform work conditions, hiring procedures, wages and
benefits, management rights, dispute resolution procedures, and procedures to prevent work
stoppages. In addition, CWAs often include provisions to promote participation in covered projects
from targeted workers and demographics including local residents, apprentices, historically
underutilized residents and businesses, at-risk persons, veterans, minority-owned businesses and
disadvantaged business enterprises.
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Page 2 of 14
It is important to note that CWAs typically only apply to the employment of workers in the construction
trades who are represented by unions, and work classifications for which prevailing wage rates have
been determined by the California Department of Industrial Relations (DIR). CWA coverage would not
extend to the provision of professional services by consultants where work classifications and prevailing
wage determinations have not been established by the DIR or to City employees.
Standard CWA Provisions
The following sections detail typical provisions included in CWAs, and potential considerations for the
City’s CIP projects regarding each provision.
Work Conditions
Uniform Work Conditions
CWAs commonly include provisions to establish uniform work conditions across each of the construction
trades providing craft labor on the covered project. Conditions typically covered include work hours,
holidays, meal periods, break periods, overtime and double-time pay, shifts, and shift differential pay.
For contractors that are signatory to the unions, the Master Labor Agreement (MLA) with each
individual trade sets forth standard work conditions. The MLA for each trade can include slightly
different provisions related to work conditions, and a CWA can serve to standardize these conditions
across all trades and simplify the management process. For example, a CWA could specify City holidays
as the non-working days to be observed on covered projects by all construction trades, rather than each
trade recognizing different holidays which could lead to inefficiencies in the delivery of the work.
Many of the work conditions typically covered in CWAs are also addressed in the California Labor Code
including shift lengths, meal and break periods, and overtime/double-time pay. In addition, the
construction contract sets forth allowable work hours and holidays observed by the project owner. In
the absence of a CWA, California Labor Code and the construction contract will establish the work
conditions for the project in question.
City CIP Project Considerations
Standard work conditions provisions in a CWA are not anticipated to provide a significant benefit on the
City’s CIP projects, as many of the provisions typically included are addressed in the California Labor
Code and the construction contract documents.
Hiring Procedures
Union Recognition
CWAs designate trade unions and the local or regional building trades council as the exclusive source of
craft labor on covered projects and the exclusive bargaining representatives for craft workers. In
addition, employers must recognize the jurisdiction and scope of work specific to each trade as
established in each MLA.
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Page 3 of 14
Referral Systems
CWAs require that established union referral systems be used exclusively to obtain craft labor on
covered projects. If a union referral system is unable to refer workers within a defined period of time
(typically 48 hours), contractors are allowed to hire employees from other sources. CWAs do not
discriminate between union and non-union workers; however, non-union workers must register with
the union hiring hall to become eligible for assignment to a covered project and must become a member
of the union while working on a CWA-covered project. Union membership may include payment of
regular union dues, although requirements for contribution of unions dues has recently changed based
on the recent Janus decision by the U.S. Supreme Court (Janus v. AFSCME, 2018).
Core Workers
CWAs limit the number of workers that non-union contractors can employ on a project without utilizing
the union hiring hall system. These employees are termed “core” workers, and typically include key
positions such as foremen. Employees must meet specific requirements to be considered a core worker
including being recently active on the contractor’s payroll (i.e., for 60 of the 100 working days
immediately prior to the award of the contract), possessing licenses required for the performance of the
project work, and having the ability to safely perform the duties and functions of the trade for which
they are providing craft labor.
Non-union contractors can hire core workers on a one-to-one ratio with employees referred by the
union hiring hall up to a maximum number of core workers. For example, the contractor can hire a
member of its core workforce first, followed by an employee referred from the union hiring hall second,
then another member of its core workforce. This process continues until the maximum number of core
workers specified in the CWA is reached. Core worker provisions do not apply to union signatory
contractors.
Union and Non-Union Contractor Comparison
For union contractors and on CWA-covered projects, MLAs clearly define the scope of work that can be
performed by each individual trade, and workers are not allowed to work outside of their
classification/jurisdiction. Non-union contractors on projects not covered by a CWA can allow their
employees to perform a wider range of tasks. For example, a non-union employee can perform
functions of multiple trades (e.g., laborer, operating engineer, cement mason), provided they are paid
the appropriate prevailing wage rate for each classification while performing the work.
Hiring procedures included in CWAs limit the ability of non-union contractors to utilize their core
workforce on covered projects. CWAs establish the maximum number of core workers that a non-union
contractor can employ on a project and require non-union contractors to use union referral systems
exclusively for obtaining craft labor. While non-union workers can register with the union and become
eligible to work on the project, they are subject to the hiring hall rules of each specific trade. Union
hiring halls maintain out-of-work lists, and members are typically dispatched to projects based on the
order in which they registered with the hiring hall (i.e., first come, first served). It is important to note
that the hiring procedures and hiring hall rules are specific to each local union.
Page 1133 of 1192
Page 4 of 14
Hiring procedures in CWAs do not significantly impact union signatory contractors. Signatory
contractors routinely use union referral systems to obtain craft labor and can request specific
employees by name, rather than requesting workers from the out-of-work list for each trade. In
addition, core worker provisions do not apply to union contractors and union contractors are able to
utilize their core workforce without limitation. Exceptions can include specific requirements in MLAs
that restrict or limit participation of “traveling” union members from their home union to the local
union at the project location.
City CIP Project Considerations
The impact of CWA hiring procedure provisions on the City’s CIP projects depends largely on whether
prospective contractors are signatory to the individual unions. Non-union contractors will be impacted
by limits placed on their ability to utilize their core workforce. Union contractors will not be significantly
impacted by the hiring procedure provisions as the procedures reflect their standard work practices.
Specialty Subcontractors
In general, CWA hiring procedures will likely impact smaller, specialty subcontractors more than the
general contractor and major subcontractors, depending on the size of the project. Specialty
subcontractors (e.g., roofers, glaziers, tile installers, sheet metal workers, etc.) typically have a smaller
role relative to the overall scope of project in question, provide fewer employees and fewer craft hours,
and are more likely to be local contractors. Non-union specialty contractors with a small workforce rely
more heavily on their core workers, and limitations on their ability to fully utilize their core workforce
will disproportionately affect their ability to effectively perform their subcontracted scope of work. In
addition, small non-union contractors often do not fully understand the CWA requirements when
submitting subcontract bids and may refuse to sign the required letter of assent before beginning work
on a CWA-covered project. This can result in cost and schedule impacts associated with subcontractor
substitutions.
Careful consideration should be given to the impacts of a CWA on smaller specialty contractors if the
City decides to move forward with an agreement. Negotiations with the building trades should include a
discussion of potential exemptions from the typical CWA hiring provisions and core worker restrictions
for small and specialty subcontractors performing limited scope on the City’s CIP projects.
Construction Inspection
Construction inspectors and other personnel performing quality assurance and quality control functions
will also be impacted by the hiring procedures set forth in a CWA, as construction inspection is a
prevailing wage classification and construction inspectors are represented by the Operating Engineers
Union. Construction inspectors are typically employed by a third-party construction manager through a
professional services agreement with the City. While professional services are exempt from CWAs,
construction inspection is a prevailing wage classification, and personnel performing quality control and
quality assurance functions would be subject to the provisions of the CWA, including the hiring
procedures discussed in the preceding paragraphs.
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Page 5 of 14
An evaluation of the inspection needs for each of the City’s CIP projects and the CIP as a whole will be
important to further evaluate the impacts of a CWA on construction inspection. When inspection is to
be performed in-house by Utilities and Public Works employees, the CWA will not have an impact.
When inspection is to be performed by a third-party construction management or inspection firm
through a professional services agreement, the CWA will have a considerable impact. When soliciting
proposals for third-party construction management and inspections services, the City’s evaluation of
respondents will be partially based on the qualifications of the proposed inspection staff. Construction
inspectors must have experience commensurate with the complexity of the CIP projects for which they
are being retained to support. As providers of professional services, most construction management
firms are not signatory to construction unions and non-union firms will be subject to standard CWA
hiring procedures, including core worker provisions. These provisions will impact the construction
manager’s ability to utilize its inspection staff on the City’s projects and will require the firm to obtain a
portion of its inspection staff through the union referral system described in the preceding paragraphs.
Construction inspection is not a commodity service – inspector qualifications and specific experience
with the improvements being constructed is critical to the successful performance of the work.
Employment of union inspectors presents significant risk to the construction manager, as the inspector’s
qualifications are unknown, and the employer retains the liability for performance of the inspector’s
duties.
Specialty Inspection and Materials Testing
Construction management firms subcontract with specialty inspection and materials testing firms to
inspect portions of the work (e.g., reinforced concrete, masonry, welding, high-strength bolting, soils,
coatings, etc.) that require special certifications (e.g., International Code Council (ICC), American
Concrete Institute (ACI), Certified Welding Inspector (CWI), etc.) in accordance with the contract
documents and code requirements. The City also contracts directly with specialty inspection firms and
maintains a list of on-call providers. Specialty inspection firms also perform materials testing in off-site
laboratories. CWAs present unique challenges for specialty inspection and materials testing firms, as
the hiring provisions require employment of inspectors from the union hiring hall, who might not have
the requisite experience or certifications to perform the required inspection. Additional concerns
regarding employer liability and worker’s compensation insurance coverage present significant risk and
barriers to participation on CWA-covered projects for non-union specialty inspection and materials
testing firms.
On the SLO Water Plus Project, the only local, full-service specialty inspection and materials testing firm
expressed their unwillingness to provide services on the project if the CWA provisions extended to
construction inspection and quality assurance. If the City had not successfully negotiated the exclusion
of inspection and quality assurance from the SLO Water Plus CWA, specialty inspection and materials
testing services would likely have been required from as far away as Ventura County (the nearest union-
signatory specialty inspection and materials testing firm), resulting in significant additional cost to the
City for travel time as well as considerable logistical challenges associated with timely performance of
specialty inspections.
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Professional Land Surveying
Like construction inspection, land surveying is a prevailing wage classification and providers of
professional surveying services to the City would be subject to the provisions of the CWA including, but
not limited to, core worker limitations and payment of fringe benefits to union trust funds. Employer
concerns regarding employer liability and insurance requirements for workers referred by the union as
described in the sections above would likely also extend to professional surveying firms.
Should the City elect to move forward with a CWA, negotiations with the building trades should include
a discussion of potential exemption from the typical CWA hiring provisions and core worker restrictions
for project staff performing quality assurance work, including construction inspectors, specialty
inspectors, and materials testers.
Wages and Benefits
Wages
Wages for craft workers on public works projects are paid in accordance with applicable state and
federal prevailing wage rates. CWAs do not supersede applicable prevailing wage rates and wages paid
to craft workers are the same for CWA and non-CWA projects.
Benefits
The DIR establishes basic hourly rates and fringe benefit amounts that must be provided to the
employee by the employer. Fringe benefits include health and welfare, pension, vacation/holiday,
training, and “other” benefits. “Other” benefits include contributions to management relations boards,
industry advancement funds, and other miscellaneous initiatives specific to each trade. Non-union
contractors must provide benefits of equivalent value as the fringe benefit amounts established by the
DIR or pay fringe benefits directly to their employees as wages. Training benefits must be paid directly
to a State-approved apprenticeship program and are not paid directly to the employee as wages.
Union contractors provide fringe benefit payments on behalf of their employees directly to union trusts,
who in turn provide benefits to their members. As with non-union contractors, training benefits must
be paid directly to a State-approved apprenticeship program and are not paid directly to the union trust
fund. In addition, some union MLAs require contractor contributions to industry advancement funds
and various union trust funds. These contributions are made on a per hour basis for each employee.
Union and Non-Union Contractor Comparison
On CWA-covered projects, all contractors, regardless of union affiliation, must pay fringe benefit
contributions directly to the union trust fund for each employee for the duration of the project. Union
contractors are not affected by this requirement as it reflects their normal business practice and is in
alignment with the MLAs between the construction trades and union employers.
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The extent to which payment of fringe benefits to union trusts affects non-union contractors depends
largely on the benefits employers offer to their employees. If non-union contractors provide benefits
such as 401k plans, paid vacation, or health insurance, these benefits would no longer be provided
through the employer and would be provided through the union trust. For non-union contractors that
pay fringe benefit contributions directly to employees as wages, the contractors would begin making
these payments to the union trust on their employees’ behalf.
For non-union contractors that do not provide benefits to their employees, fringe benefits are paid in
the form of wages. Employees have the freedom to purchase their own health insurance or invest in
savings and retirement as they see fit.
Information published by the United States Department of Labor Bureau of Labor Statistics indicates
that union workers have greater participation rates in medical benefit plans than non-union workers,
79% versus 46%, respectively. In addition, union workers have greater participation rates in retirement
plans than non-union workers, 82% versus 47%, respectively (United States Department of Labor Bureau
of Labor Statistics, 2017).
City CIP Project Considerations
Union members must work a minimum number of hours to become vested in union pension programs
(typically 10,000 hours or 5 years). Non-union workers for whom fringe benefits are paid to the union
trust by their employer on City CIP projects might not work sufficient hours to become vested and may
not ultimately realize any benefit from the trust fund contributions made on their behalf. This issue may
be more pronounced for non-union specialty subcontractor employees performing limited scope on the
City’s projects (e.g., roofers, glaziers, tile installers, etc.). These employees will likely not work sufficient
hours to become vested in union trust funds because they will be performing a discrete scope of work
that will be completed in a short period of time on the project.
For non-union workers performing limited scope for a limited period of time on the City’s CIP projects,
employers may elect to continue providing their standard retirement and health benefits while also
providing fringe benefit payments directly to the union trust. Provision of benefit payments to both the
union trust and directly to the employee can result in increased costs to the employer. In addition,
employer contributions to industry advancement and various union trust funds as required by MLAs
would result in additional cost to the employer.
If the City decides to consider a CWA for all CIP projects above a specified value, negotiations with the
building trades should include a discussion of potential exemptions from the required union trust fund
benefit payments for small contractors performing limited scope on the City’s projects or for contractors
whose employees work insufficient hours to become vested in union pension programs.
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Management Rights
CWAs include provisions detailing the rights maintained by management under the agreement. CWAs
typically give management exclusive rights to plan and direct the work; hire, layoff, and promote
employees; determine the number of employees required to prosecute the work; determine means and
methods of construction; select craft foremen; and assign and schedule the work. The intent of these
provisions is to preserve the ability of management to perform key duties that are critical to the
successful performance of work under the covered project.
City CIP Project Considerations
Management rights provisions are not anticipated to impact the City’s CIP projects. These provisions are
simply intended to clearly express to signatories that contractors retain the right to manage the labor
force on a covered project as they see fit.
Work Stoppages
CWAs include provisions expressly prohibiting strikes, picketing, work stoppages, slowdowns, and
lockouts to ensure the continued performance of work and to prevent schedule delays on covered
projects, with limited exceptions. When employers and employees are unable to agree on the terms
and conditions of employment, employees may implement work stoppages such as strikes or
slowdowns and employers can implement lockouts. Work stoppages are used to compel either the
employer or the employees to agree to the terms and conditions of employment in dispute. Some
CWAs allow unions to withhold craft labor in the event a contractor is delinquent in payment of its
weekly payroll or payments to the union trust.
Work stoppages can significantly impact a construction project as they interrupt the availability of craft
labor and delay performance of the work. Union employees are prevented from striking on the basis of
economic conditions when bound by an active collective bargaining agreement and can only strike after
a good faith effort has been made at collective bargaining. Union employees are not constrained in
their ability to strike on the basis of unfair labor practices when certain conditions are met. It is beyond
the scope of this memorandum to detail the circumstances and laws surrounding employers’ and
employees’ ability to implement work stoppages.
City CIP Project Considerations
The construction trades in California have a long history of successful collective bargaining with the
construction industry. A review of work stoppage data compiled by the United States Department of
Labor Bureau of Labor Statistics did not identify any work stoppages by the construction trades in
California involving 1,000 or more workers over the last ten years (United States Department of Labor
Bureau of Labor Statistics, 2021). Work stoppages resulting from a lapse in the collective bargaining
agreements between the construction trades and the construction industry do not present a significant
risk to delivery of the City’s CIP.
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Previous public works projects constructed by the City have been picketed by the construction trades,
and in isolated incidents, workers have refused to cross picket lines. In the event of a picket at one of
the City’s construction sites, union workers might refuse to cross picket lines, impacting performance of
the work. A CWA would expressly prohibit strikes, picketing, and work stoppages and would mitigate
this concern. It is recommended that additional analysis be performed to better understand the
membership rules of each trade regarding the ability of union members to cross picket lines. This
analysis would help quantify the risk of a work slowdown resulting from a picket if a CWA is not in place
for the City’s CIP projects.
Dispute Resolution
Dispute resolution provisions are included in CWAs to establish a uniform and timely process to resolve
project issues without slowing down or stopping the work. Disputes regarding the jurisdiction of
individual trades are settled in accordance with the Plan for the Settlement of Jurisdictional Disputes in
the Construction Industry (the Plan). The Plan is a broadly recognized dispute resolution procedure
established by the AFL-CIO and construction employer associations that has been in place since 1984.
When a jurisdictional dispute between trades arises on a project covered by a CWA (e.g., laborer versus
pipefitter scope for the installation of underground pipelines), the issue is referred to the Plan for
settlement. CWAs include provisions that prohibit work slowdowns and stoppages while jurisdictional
disputes are being resolved.
CWAs also include provisions related to resolution of grievances and disputes not specifically related to
jurisdictional issues. CWAs establish a defined, step-wise process for dispute resolution that encourages
resolution of project issues on the lowest possible level. The dispute resolution process typically
culminates with arbitration if not settled at a lower level. As with jurisdictional disputes, parties to a
CWA cannot stop or slow down the work as a result of a grievance or dispute.
City CIP Project Considerations
It is difficult to evaluate the impacts of CWA dispute resolution provisions on the City’s CIP projects.
Disputes on construction projects are typically resolved informally by the general contractor and
subcontractor management teams or through the formal dispute resolution and claims process detailed
in the contract documents on non-CWA projects. Labor disputes that impact performance of the work
rarely occur on public works construction projects and are rarely elevated to the project owner.
Page 1139 of 1192
Page 10 of 14
Jurisdictional issues are more likely to arise between union contractors or on CWA-covered projects
where workers are not allowed to work outside of their classification, but where the scope of work for
multiple trades overlaps. For example, the scope of work for both laborers and pipefitters includes
installation of piping in water and wastewater treatment facilities. This overlap in scope may result in a
jurisdictional dispute depending on the amount of work in question and the willingness of the trades to
pursue resolution through the Plan. If a contractor signatory to the laborers union on a project assumes
laborers will install the mechanical piping and uses prevailing wage rates for laborers in its bid, but the
piping work is later found to be within the jurisdiction of the pipefitters at pipefitter prevailing wage
rates, the contractor would incur significant additional costs. The contractor would be required to pay
the difference in the prevailing wage rate between laborers and pipefitters for all hours worked as
restitution, and pipefitter hourly rates are approximately 30% higher than laborer hourly rates. Non-
union contractors on projects not subject to CWA agreements would not be faced with a jurisdictional
dispute and could elect to perform the work with laborers; however, the pipefitters could file a
complaint with the DIR that the workers were not being paid the appropriate prevailing wage rate,
which would be subject to an investigation by the Division of Labor Standards Enforcement.
On the SLO Water Plus Project, the prime contractor assigned the pipe installation scope of work to the
laborers in accordance with their obligations under the MLA with the laborers. The pipefitters union
claimed jurisdiction over the pipe installation scope of work and alleged the City and the contractor did
not comply with the requirements of the City’s Community Workforce Agreement. The issue was
ultimately resolved, but required significant effort from the City, its Program Manager and its
Community Workforce Coordinator.
Targeted Worker Participation
Many CWAs include provisions to increase participation in covered projects by targeted workers.
Targeted workers typically include local residents, apprentices, at-risk persons, veterans, and
disadvantaged business enterprises. CWAs establish goals for the percentage of total craft hours on the
covered project to be performed by the targeted workers. Construction contractors can be required to
retain the services of a jobs coordinator, who works with the contractor, unions, local workforce
development agencies, and apprenticeship programs to help the contractor meet the participation goals
for each demographic set forth in the agreement.
CIP Project Considerations
Targeted worker provisions can be effective in increasing participation in the WRRF Project by the
targeted demographics and developing the local workforce. The success of targeted worker
participation provisions depends on commitment to the process by all parties to the CWA through
ongoing and active management. Absent a CWA, unions are not able to prioritize dispatch of targeted
workers and must follow their normal referral procedures as defined in the MLA.
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Page 11 of 14
On the SLO Water Plus Project, the local worker participation goal of 30% has consistently been
exceeded, and 79% of all craft hours performed on the project to date have been by local workers. It is
important to note that the definition of a “local worker” in the SLO Water Plus CWA is not limited to City
of San Luis Obispo residents. Residents of San Luis Obispo County, Santa Barbara County, Monterey
County and Ventura County are all considered local workers. Unions refer workers to the WRRF Project
based on a tiered system, with priority given to the lowest tier. The tiers are defined as follows: Tier 1 –
City of San Luis Obispo; Tier 2 – County of San Luis Obispo; Tier 3 – Santa Barbara and Monterey
Counties; and Tier 4 – Ventura County.
Cost
Impacts of a CWA on construction costs are difficult to quantify and are beyond the scope of this
memorandum to assess. Proponents of CWAs assert that these agreements save money while
opponents argue that CWAs increase project costs. Information regarding the arguments on both sides
of this issue is readily available through previously published articles and research. The City will need
adequate budget for CWA negotiation, contract document development, development of standard
procedures to facilitate uniform CWA application on all City projects, and budget to retain the services
of a CWA administrator to administer the CWA on behalf of the City.
SLO Water Plus Project Experience
The City entered into a CWA with the Tri Counties Building and Construction Trades Council (Trades
Council) for the SLO Water Plus Project in December 2018. A summary of key takeaways and lessons
learned from the SLO Water Plus Project to date is as follows:
The City successfully negotiated the exclusion of construction inspection and materials testing
from the scope of the CWA as described in previous sections of this memorandum. Exclusion of
construction inspection and materials testing prevented significant cost and logistical
challenges for provision of inspection services by the City’s construction manager.
The pipefitters union claimed jurisdiction over pipe installation work assigned to the laborers by
the contractor. While not elevated to a formal jurisdictional claim, resolution required
significant coordination by the City and its Community Workforce Coordinator.
The contractor informally expressed challenges with securing subcontractor bids for portions of
the work (e.g., elevators, architectural metal work and finishes, etc.) related to the Water
Resource Center (WRC), which could be attributed to the CWA. In the absence of subcontractor
bids for this work, the contractor used conservative placeholder numbers in its bid, increasing
the cost of the WRC additive alternate bid item, which ultimately exceeded the City’s available
budget.
Local worker participation through the end of February 2022 is 79% – over 2.5 times the 30%
goal set forth in the agreement.
Of the 26 contractors who have worked on the SLO Water Plus Project through February 2021,
six were non-union contractors performing relatively minor scopes of work (e.g., fencing,
asbestos abatement, welding, demolition and concrete pumping).
CWA administration services are estimated to be $312,000 (based on a 42-month construction
duration), or 0.3% of the original construction contract amount.
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Other Agency Experience
Several public agencies in the Central Coast have recently negotiated, or are in the process of
negotiating, CWAs for specific projects or for projects over a specified value. The following sections
provide some background and discussion on these CWAs based on WSC’s research and discussions with
project owners.
South San Luis Obispo County Sanitation District
The South San Luis Obispo County Sanitation District (SSLOCSD) entered into a Community Workforce
Agreement (CWA) with the Trades Council in August 2019 for their Wastewater Treatment Plant
Redundancy Project. The CWA is modeled after the City’s WRRF Project agreement, including exclusion
of inspection and quality assurance from the scope of the CWA. Inspection and quality assurance were
excluded after vocal opposition from consultants pursuing construction management services for the
project.
The District received outside funding from the USDA Rural Development Loan Program, and USDA was
reluctant to affirm compatibility of the CWA with their loan program. The District ultimately received
approval from USDA, and construction started in January 2021. Like the WRRF, pipefitters claimed
jurisdiction over the project mechanical work although the work was assigned to the laborers by the
general contractor. The dispute has been settled informally by the District and its Community
Workforce Coordinator. The District has not had any significant issues or concerns since the start of
construction, though the project is in the early stages of construction.
The Port of Hueneme
The Port of Hueneme entered into a CWA with the Trades Council in December 2018 for all projects with
estimated construction costs of $250,000 or greater. Port representatives noted that on isolated
occasions for specialized projects (e.g., dredging, waterside construction, etc.), local workers did not
have the requisite skillsets to perform the work, requiring workers from out of the area. The Port
acknowledged increased costs associated with fulfilling administrative requirements of the CWA but
noted implementation of the agreement has been straightforward and employment of local workers has
been a benefit to the neighboring communities.
The City of Santa Barbara
The City of Santa Barbara finalized a CWA with the Trades Council in July 2021 for all projects with
estimated construction costs of $5 million or greater. The City reviewed certified payroll reports from
past public works projects and discovered a relatively high participation rate from local workers on
projects with a construction cost of $5 million or more (55-60%). The City ultimately included a 50%
local worker participation goal in the final CWA.
Negotiations between the City of Santa Barbara and the Council centered around local worker
participation goals, core worker hiring procedures, the maximum number of core workers allowed,
exemption from union trust contribution requirements for local contractors, and exclusion of
construction inspection and quality assurance from the scope of the agreement.
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Page 13 of 14
Santa Barbara County
Santa Barbara County (County) has been actively negotiating a CWA with the Trades Council for the last
year. Previous negotiations between the County and the Trades Council for the Northern Branch Jail
Project in 2014 stalled when the Operating Engineers Union declined to sign the negotiated agreement.
The County chose not to finalize an agreement that did not include all of the construction trades, as the
Operating Engineers could still effect a work stoppage, which diminished the benefits of the agreement
from the County’s perspective.
The County used the City of Santa Barbara CWA as a starting point for negotiations with the Trades
Council. Current negotiations have focused on the CWA cost threshold, exemption of inspection and
materials testing from the CWA, benefits, and exclusion of MLAs from being incorporated by reference.
The Trades Council has proposed a $5 million project cost threshold consistent with the City of Santa
Barbara CWA and the County has proposed a $10 million threshold. The $10 million threshold has been
suggested to reduce impacts to local contractors who typically bid County projects while maximizing
potential CWA benefits on larger projects that are more likely to be bid by non-local contractors.
County staff is advocating for exclusion of inspection and materials testing scope from the agreement
for similar reasons as those described earlier in this report.
The County has also proposed that existing employee benefits programs provided by non-union
contractors be allowed to remain in place, rather than mandatory union trust fund contributions. The
County has taken this position to address contractor concerns with the time required to vest in union
pension programs, the disruption associated with changing health care providers from existing employer
plans to new union plans, and the risk of potential underfunded pensions and ongoing underfunded
pension liability.
County staff is advocating for removal of CWA language that incorporates MLAs from all signatory
unions by reference. The County is concerned with 1) provisions in specific MLAs that might not be
compatible with County Code (e.g., mandatory employment of persons of a certain age), 2) the burden
for non-union contractors to become familiar and comply with numerous MLAs for the trades, 3) the
fact that the County is not a party to the MLA negotiations, and 4) risk associated with MLAs expiring
during the term of the CWA, and new MLA requirements becoming effective that were not initially
known.
Recommendations
The following sections describe various issues for the City to consider when evaluating the merit of a
CWA for its CIP projects.
Alignment with Major City Goals
A CWA could be one component of a suite of solutions intended to enhance local economic vitality that
could include utilization of local vendors, amendments to the City charter to prioritize purchasing from
local businesses and alternative project delivery. While a CWA could help achieve economic vitality
goals for large projects, it might not be the most appropriate approach for smaller projects where other
tools would be more successful.
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Page 14 of 14
Review of Historical Local Worker Participation
The City should review certified payroll reports for past City CIP projects to determine historical local
worker participation percentages. A better understanding of historical local worker participation would
facilitate negotiations with the building trades and establish a baseline that could be compared to future
projects if covered by a CWA.
Agreement Provisions
The following provisions should be considered when negotiating a CWA with the local building trades:
Inspection, Materials Testing and Land Surveying – Inclusion of inspection and quality assurance
in the CWA will fundamentally change the way the City secures these services from professional
consulting firms. The City should evaluate these potential impacts to determine whether to
pursue exclusion of this scope from the CWA.
Construction Value – The cost threshold for CWA-covered projects could be tied to an index
(e.g., CPI or ENR CCI) or a percentage of the City’s Sewer Fund to account for cost variability over
time. Alternatively, the City could identify 2-3 of its largest CIP projects that are conducive to a
CWA and limit the agreement to a specific list of projects rather than a cost threshold.
Sunset Clause – The CWA should be allowed to expire within a reasonable time frame, allowing
the City to evaluate alignment of the agreement with City goals and performance of projects
completed under the CWA.
Core Workers – Increasing the number of core workers that non-union contractors can hire will
reduce barriers to entry.
Equivalent Benefits – Consideration of equivalent benefits paid by non-union contractors and
exemption from union trust funds will reduce barriers to entry for non-union contractors.
Regional Projects – The CWA should exclude projects with regional partnerships or projects
where other public agencies provide project funding. As the City considers future regional water
supply projects with multiple stakeholders, this exclusion could be important for stakeholder
alignment.
Works Cited
United States Department of Labor Bureau of Labor Statistics. (2017, July 21). Economic News Release.
Retrieved from United States Department of Labor Bureau of Labor Statistics:
www.bls.gov/news.release/ebs2.nr0.htm
United States Department of Labor Bureau of Labor Statistics. (2021, April 6). Work Stoppages.
Retrieved from United States Department of Labor Bureau of Labor Statistics:
https://www.bls.gov/web/wkstp/monthly-listing.htm
Page 1144 of 1192
Background
With the adoption of the 2021-23 Financial Plan, the Major City Goal of Economic Recovery, Resiliency & Fiscal Sustainability was formalized. The objective of this Goal is to continue supporting economic recovery for all from the COVID-19 pandemic and support a thriving local economy by supporting local businesses, arts, and culture; downtown vitality; practicing fiscal responsibility; paying down unfunded pension liabilities; and investing in critical infrastructure.
To help achieve this goal, a work program has been included in the Financial Plan which is aimed at maximizing the benefit of City expenditures to the local economy by supporting local businesses and workers. The work program will evaluate several potential alternatives including community workforce agreements, local purchasing policies, and alternative project delivery methods. This document provides background and responses to frequently asked questions regarding community workforce agreements.
Frequently Asked Questions
City of San Luis ObispoCommunity Workforce Agreements
1
What is a community workforce agreement?
A community workforce agreement, or CWA, is a collective bargaining agreement between a project owner (in this case, the City of San Luis Obispo) and construction trade unions. The agreement establishes standard terms and conditions of employment for the covered construction project(s) including work conditions, hiring procedures, wages and benefits, management rights, dispute resolution procedures, and procedures to prevent work stoppages. CWAs are also known as project labor agreements or community stabilization agreements.
How would a CWA benefit the local economy?
CWAs can be crafted to include provisions aimed at promoting participation in covered projects by targeted demographics such as local residents. Including local hiring goals in the City’s public works contracts with a CWA could increase participation in City projects by local workers, creating job opportunities and keeping construction dollars in the local economy.
What are potential disadvantages of a CWA?
CWAs designate construction unions as the sole source of labor on covered projects. Union referral of workers to employers can be a significant change to the normal business practices of non-union contractors and consultants. The City would also be required to hire a third-party CWA administrator to oversee and implement the agreement, which would increase project costs.
Page 1145 of 1192
How could the City increase participation in its public projects by local workers without a CWA?
Potential alternatives to a CWA include local hiring mandates, local worker participation goals with good faith efforts, and bonus/incentive payments for local worker participation.
Has a CWA ever been used on a City project?
A CWA with a local hiring goal of 30% is currently being used on the City’s Water Resource Recovery Facility (WRRF) Project. To date, 77% of all labor hours on the project have been performed by local workers.
How would a CWA affect my business?
If your business provides prevailing wage labor on City projects (contractors and consultants), you would be subject to the terms and conditions of the CWA including the requirement that workers be referred from the union hiring hall. Non-union employers can use their core employees (i.e., long standing workers) on a one-to-one ratio with workers referred by the union hiring hall up to a maximum number of core employees (typically 3-5). After the core employee limit is reached, all workers must be referred by the union hiring hall. In addition, employers must pay fringe benefits to the union trust fund on behalf of their employees rather than providing employer benefit packages or paying fringe benefits to employees as additional wages. If your business provides goods or professional services (non-prevailing wage), you would not be affected by a CWA.
Is there a difference in hourly pay rates on projects with CWAs?
No. California law requires that craft workers on public projects be paid prevailing wage rates established by
the California Department of Industrial Relations, regardless of whether a CWA is in place.
Do I have to become a union signatory contractor/consultant to work on
a CWA-covered project?
No. All companies, regardless of union affiliation, can work on CWA-covered projects although you must agree to the terms and conditions of the CWA prior to performing any work. You and your employees may also be required to pay dues and fees to a union while working on a CWA-covered project.
What is the schedule for the potential implementation of a CWA?
City staff are currently compiling background information and performing stakeholder outreach. A staff report detailing the findings and considerations related to CWAs will be presented to City Council in Spring 2022.
How can I provide feedback or ask additional questions?
Contact the Acting City Engineer, Brian Nelson, at bnelson@slocity.org.
2
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Community Workforce Agreement: Phase 2 Data Analysis, Outreach and Draft Policy De velopment
Attachment C – Prevailing Wage and Fringe Benefit Summary
Construction craft workers on public projects in California are paid prevailing wage rates established by the California
Department of Industrial Relations (DIR). Prevailing wage rates are comprised of a base hourly rate and fringe benefits for
health and welfare, pension, vacation and holiday, training, and “other” benefits. Prevailing wages are based on worker
classification (e.g., laborer, carpenter, cement mason, etc.) and the location where the work is being performed (e.g.,
Northern California, Southern California, etc.). Attachment A includes additional information on prevailing wage rates. The
purpose of this exhibit is to provide a breakdown of prevailing wage rates and fringe benefits along with a description of the
disposition of fringe benefits on CWA-covered projects. Table A presents a breakdown of base hourly rates and fringe
benefits for select worker classifications.
Table A. Prevailing Wages for Select Construction Craft Worker Classifications
Employers on public projects must pay their workers wages and benefits with a value equivalent to the prevailing wage rate
published by the DIR. On CWA-covered projects or for union-signatory contractors, all fringe benefits (except training) must
be paid to a union trust fund on behalf of the employee. Training fund contributions are made directly to a State -approved
apprenticeship program. Absent a CWA, employers can pay fringe benefits directly to their employees as wages, or they
can provide medical, retirement, and vacation benefits with a value equivalent to the prevailing wage rate.
Classification
Basic
Hourly
Rate
Amount
% of
Total
Hourly
Rate
Amount
% of
Total
Hourly
Rate
Amount
% of
Total
Hourly
Rate
Amount
% of
Total
Hourly
Rate
Amount
% of
Total
Hourly
Rate
Total
Fringes
Total
Fringes as
% of Total
Hourly Rate
Total
Hourly
Rate
Carpenter 44.44$ 8.00$ 12%5.66$ 8%7.16$ 10%2.44$ 4%0.62$ 1%23.88$ 35%68.32$
Laborer - Group 1 37.43$ 8.10$ 13%10.32$ 17%4.87$ 8%0.61$ 1%0.70$ 1%24.60$ 40%62.03$
Operating Engineer - Group 1 49.65$ 11.85$ 15%13.15$ 17%3.60$ 5%0.39$ 0.5%1.05$ 1%30.04$ 38%79.69$
Construction Inspector - Group 1 50.43$ 11.85$ 15%13.15$ 16%3.60$ 4%0.39$ 0.5%1.05$ 1%30.04$ 37%80.47$
Land Surveyor - Instrumentman 51.86$ 11.85$ 14%13.15$ 16%4.65$ 6%0.15$ 0.2%1.15$ 1%30.95$ 37%82.81$
FRINGE BENEFITS
Health and Welfare Pension Vacation and
Holiday TrainingOther
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Page 2 of 2
As described in the staff report, many local contractors and consultants expressed concern that their employees would not
work enough hours on a CWA-covered project to become vested in a union pension program, and the employee pension
contributions would effectively be lost. Vesting in union pension funds typically requires five years, or 10,000 hours. Sev eral
local contractors and consultants stated they would continue providing a retirement benefit to their employees (either as
wages or a retirement account contribution) to mitigate this loss of income.
To help quantify the potential cost impact of this issue, Table B presents the pension fringe benefit contributions for select
worker classifications in a typical month (20 working days, 8 hours per day).
Table B. Example Pension Fringe Benefit Contribution Calculation
The pension fringe benefit represents a significant portion of the total compensation for construction craft workers, and the
potential loss of the pension contribution because of the union vesting requirement on CWA -covered projects would
negatively impact craft workers. In addition, potential dou ble-payment of the pension fringe benefit to mitigate the loss of
income would be a significant expense for employers.
Classification Total
Hourly Rate
Pension
Fringe
Benefit
($/hr)
Hours
Worked Total Pay Total Pension
Contribution
Carpenter 68.32$ 5.66$ 160 10,931.20$ 905.60$
Laborer - Group 1 62.03$ 10.32$ 160 9,924.80$ 1,651.20$
Operating Engineer - Group 1 79.69$ 13.15$ 160 12,750.40$ 2,104.00$
Construction Inspector - Group 1 80.47$ 13.15$ 160 12,875.20$ 2,104.00$
Land Surveyor - Instrumentman 82.81$ 13.15$ 160 13,249.60$ 2,104.00$
Page 1148 of 1192
COMMUNITY WORKFORCE AGREEMENT: PHASE 2 DATA ANALYSIS, OUTREACH, AND DRAFT POLICY DEVELOPMENTCity Council MeetingApril 19, 2022
RECOMMENDATIONAuthorize staff to negotiate a Community Workforce Agreement with the Tri-Counties Building and Construction Trades Council to include the Cultural Arts District Parking Structure (vertical construction component only), Prado Road Interchange, and Public Safety Center projects, including a 60% local worker participation goal and excluding prevailing wage services provided through professional services agreements. 2
MCG Work ProgramEconomic Recovery, Resiliency & Fiscal SustainabilityResearch methods to support local contractors, local vendors, and labor through workforce agreements, local purchasing requirements, alternative project delivery methods and other options to support local businesses and workers.3
CWA EVALUATION PROCESS Phase 3Phase 2Phase 1(September 2021)Council Study Session• Council input and guidance• Top priority local worker participation on City Projects (CWAs)• Informed development of Project PlanRecommended Policy Framework• Extensive Stakeholder Outreach• Analysis of City CIP projects to determine historic local participation• Fiscal Analysis• Staff RecommendationsCouncil Review and Adoption of Negotiated Community Workforce Agreement for covered projects4
STAKEHOLDER OUTREACH OBJECTIVESInformInform stakeholders of City efforts to advance Major City GoalEducateEducate stakeholders on CWAsFeedbackSolicit stakeholder feedbackInsightGain insight into how CWAs could affect stakeholders55
Local Business Associations• Downtown SLO• SLO Chamber of Commerce• SLO County Builders ExchangeLabor Organizations• Tri-Counties Building and Construction Trades Council• Central Coast Labor CouncilLocal Colleges• Cal Poly• Cuesta• Hancock CollegePublic Works Contractors & Local Consultants6Key Stakeholders
7Stakeholder OutreachLocal Business AssociationsDowntown SLOSLO County Builders Exchange•Staff BriefingSLO Chamber of Commerce• Staff Presentation• Staff Presentation• Concerns with impacts to membership
8Tri-Counties Building & Construction Trades Council• Chief negotiating partner• Represent 33 craft unions• Provided draft CWA• Several meetings with staffCentral Coast Labor Council• Labor advocacy group•Staff briefing• FAQ document sharedStakeholder OutreachLabor Organizations
9Potential alignment between CWA and existing programs/initiativesFAQ document sharedStakeholder OutreachLocal Colleges
10Stakeholder OutreachPublic Works Contractors• Survey performed to gather feedback• Bidder information tabulated for all projects from Jan 2018 to Sep 2021• Contractors selected who were awarded different types and sizes of projects• 16 contractors contacted, 12 participated• Respondents constructed 51% of all projects awarded during review periodNameNo. of City ProjectsSouza Corporation11R. Burke Corporation9Specialty Construction4Toste Construction, Inc.3Lee Wilson Electric3VSS International3Papich Construction2Smith MEP2Taylor Jane1Cushman Contracting Corp.1MGE Underground1Cal Portland0TOTAL40
111. Are you familiar with CWAs and the associated requirements?Yes83%No17%2. Have you ever worked under a CWA?Yes42%No58%3. Are you a union signatory contractor?Yes58%No42%Stakeholder OutreachPublic Works Contractors – Survey Responses
12Stakeholder OutreachPublic Works Contractors – Survey Responses4. Would you be more likely, less likely, or as likely to bid City projects if subject to a CWA?As Likely33%More Likely8%Less Likely59%5. Would a CWA increase, decrease, or not affect your bid price?No Change25%Increase67%Decrease8%
136. Location of craft workers.City of SLO4%SLO County60%SB/Monterey County23%Ventura County2%Non-Local11%Stakeholder OutreachPublic Works Contractors – Survey Responses7. In your opinion, does a CWA benefit the covered project?Yes33%No67%
14Stakeholder OutreachPublic Works ContractorsSummary of Survey ResultsMost respondents less likely to bid CWA-covered projectsMost respondents indicated CWA would increase bid priceMost craft worker employees are local as defined by CWAKey concerns – core worker limitations and benefits
• Survey performed to gather feedback• Public Works on-call soils and materials testing, construction management & land surveying firms • 7 consultants contacted, 7 participated15Stakeholder OutreachLocal ConsultantsFirm Name Services ProvidedCannon Construction Management/SurveyingEarth Systems Pacific Soils and Materials TestingFilippin Engineering Construction ManagementGeoSolutions Soils and Materials TestingKitchell CEM, Inc. Construction ManagementMNS Engineers, Inc. Construction ManagementWallace Group Construction Management/Surveying
161. Are you familiar with CWAs and the associated requirements?Yes71%No29%2. Have you ever worked under a CWA?Yes43%No57%3. Is your company signatory to any union?Yes 0%No100%Stakeholder OutreachLocal Consultants – Survey Responses
174. Would you be more likely, less likely, or as likely to provide professional services on City projects if subject to a CWA?As Likely14%More Likely0%Less Likely86%Stakeholder OutreachLocal Consultants – Survey Responses5. Would a CWA increase, decrease, or not affect the cost of your services?No Change29%Increase71%Decrease0%
18City of SLO21%SLO County65%SB/Monterey County6%Ventura County1%Non-Local7%Stakeholder OutreachLocal Consultants – Survey Responses6. Location of prevailing wage employees.7. In your opinion, does a CWA benefit the covered project?Yes29%No71%
19Most respondents less likely to participate in CWA-covered projectsMost respondents indicated CWA would increase cost of servicesMost prevailing wage employees are local as defined by CWAKey concerns – core worker limitations and benefitsStakeholder OutreachLocal ConsultantsSummary of Survey Results
20• Reduced efficiency and increased risk• Availability of union referrals with specific experience, qualifications & certifications• Additional oversight required to verify performance• Increased professional liability & workers compensation exposureStakeholder OutreachPublic Works Contractors & Local Consultants• Pension vesting requirements• Disruptions to medical coverage –coverage gaps, changes to in-network providers & prescription coverage• Eligibility for union plan coverage if limited hours worked• Potential double-payment of benefits to reduce impacts to staffCore Worker LimitationsCWA Benefit RequirementsKEY CONCERNS
Analysis of City Capital Projects21Determine location of contractors who have bid on past City projectsDetermine historical local worker participationDetermine types and sizes of projects that would benefit from CWA12314 projects constructed between January 2018 & September 2021 analyzed for worker participationLOVR Overpass Project evaluated for comparison with SLO Water Plus (WRRF Project)
Analysis of City Capital ProjectsLocal Worker Participation by Project Asset TypeNo. Project Asset TypeLocal Worker HoursTotal Labor HoursLocal Worker Participation1 New Assets12,13412,762 88%2Asset Maintenance or Replacement21,310 24,343 95%3 TOTAL 33,444 37,105 90%50% of Asset Maintenance or Replacement Projects constructed by contractors in City79% of Asset Maintenance or Replacement Projects constructed by local contractors22
Analysis of City Capital ProjectsLocal Worker Participation by Project Type2 of 3 Parks and Recreation Projects constructed by non-local contractorsNo. Project TypeLocal Worker HoursTotal Labor HoursLocal Worker Participation1 Buildings & Structures 1,024 1,337 84%2 Bicycle Paths 9,802 10,183 96%3 Parks and Recreation 1,166 3,619 32%4 Wet Utilities 12,890 13,156 98%5 Street Improvements 6,755 6,765 99%6 TOTAL 33,444 37,105 90%23
Analysis of City Capital ProjectsLocal Worker Participation by Project CostLocal worker participation >70% for all project cost categoriesNo. Project CostLocal Worker HoursTotal Labor HoursLocal Worker Participation1 ≤ $250K 2,909 3,448 84%2 $250K - $1M 7,216 9,917 73%3 $1M - $5M 23,319 23,741 98%4 TOTAL 33,444 37,105 90%No. Project CostLocal Worker HoursTotal Labor HoursLocal Worker Participation1 LOVR Overpass $18.5 M 41,190 59,985 69%2 SLO Water Plus $122 M 111,980 141,243 79%High local worker participation on LOVR Project without CWALarge Project Local Worker Participation24
Analysis of City Capital ProjectsLocal Worker Participation by Prime Contractor LocationLocal contractors primarily employ local workersLocal contractors utilize local subcontractors, who also employ local workersNo. Prime Contractor LocationLocal Worker HoursTotal Labor HoursLocal Worker Participation1 Local 33,021 33,690 98%2 Non-Local 423 3,415 12%3 TOTAL/AVERAGE 33,444 37,105 76%25
Local contractors build most City projects (70%)Analysis of City Capital Projects26Key Findings90% of all labor hours performed by local workersLocal contractors employ local workers (98%)High local worker participation for projects of all types* and sizes*32% local worker participation for Parks & Recreation Projects
FISCAL ANALYSISImplementation Costs27CWA NegotiationConstruction Contract & Specification DevelopmentInternal CWA Administration Procedure DevelopmentCommunity Workforce Coordinator Services
FISCAL ANALYSISImplementation CostsCOST RANGENo. Task Low High1 CWA Negotiation $32,000 $57,0002 Contract & Specification Development $16,000 $27,0003 CWA Procedure Development $16,000 $31,0004TOTAL $64,000 $115,000CWA Coordinator Costs for Staff Recommendation: $385,000 (estimated for 3 Legacy Projects)28
29POLICY RECOMMENDATIONStakeholder OutreachCIP Project ReviewFiscal Analysis
POLICY RECOMMENDATIONImplement CWA for Legacy Projects: • CWA unlikely to increase local worker participation for most City projects• Non-local contractors likely to construct legacy projects• CWA will promote local worker participation on legacy projects• Optimize implementation costs30Cultural Arts District Parking Structure*Prado Road InterchangePublic Safety Center$153 million;46% of 5-year CIP budget*Phase 2 – Vertical Structure and Offsite Improvements
ALTERNATIVE 1Authorize Staff to negotiate a Community Workforce Agreement with the Tri-Counties Building and Construction Trades Council to include projects with an estimated construction cost of $15 million or greater, including a 60% local worker participation goal and excluding emergency projects and prevailing wage services provided through professional services agreements.Not recommended by staff:• Would include Prado Road Bridge Project• Reduce local contractor participation• Reduce local worker participation31CWA with $15 Million Threshold
ALTERNATIVE 2Authorize Staff to negotiate a Community Workforce Agreement with the Tri-Counties Building and Construction Trades Council to include projects with an estimated construction cost of $5 million or greater, including a 60% local worker participation goal and excluding maintenance and rehabilitation projects, emergency projects, and prevailing wage services provided through professional services agreements.Not recommended by staff:• Lack of historical local worker participation data for $5-15 million cost category• High local worker participation for $1-5 million cost category• Staff could monitor and report local worker participation32CWA with $5 Million Threshold
ALTERNATIVE 3Direct staff not to negotiate a Community Workforce Agreement with the Tri-Counties Building and Construction Trades Council.Not recommended by staff:• Legacy projects could benefit from CWA – likely to be constructed by non-local contractors.• CWA could promote local worker participation on legacy projects• Staff could monitor and report local worker participation33No CWA
CWA NEGOTIATING OBJECTIVES34Exclude Inspection, Land Surveying & Materials Testing Services1Exclude Emergency Projects2Exclude Maintenance & Rehabilitation Projects3Include 60% Local Worker Participation Goal4
NEXT STEPS35If directed by Council, staff will negotiate CWA with Trades Council in accordance with established negotiating objectives.Staff will return to Council with CWA for review and approval if agreement reached. An agreement must be in place by August 2022 for CADPS. Staff will request further direction from Council if agreement cannot be reached.Staff will procure services of Community Workforce Coordinator to facilitate CWA implementation and administration.Public Works staff will coordinate with City Attorney’s office to develop construction contract provisions and updates to the City’s standard specifications describing CWA requirements.Public Works staff will develop internal procedures to be used by City staff to help ensure uniform application of CWA requirements on all covered projects.
RECOMMENDATIONAuthorize staff to negotiate a Community Workforce Agreement with the Tri-Counties Building and Construction Trades Council to include the Cultural Arts District Parking Structure (vertical construction component only), Prado Road Interchange, and Public Safety Center projects, including a 60% local worker participation goal and excluding prevailing wage services provided through professional services agreements 36
Questions37
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ALTERNATIVE 4Authorize staff to negotiate a Community Workforce Agreement with the Tri-Counties Building and Construction Trades Council to include the Cultural Arts District Parking Structure (vertical construction component only) and Public Safety Center projects, including a 60% local worker participation goal and excluding prevailing wage services provided through professional services agreements 39