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Item 7.2 - 3312 Community Workforce Agreements 2STAFF REPORT CITY COUNCIL DATE: July 21, 2020 TO: Honorable Mayor and City Councilmembers FROM: Linda Smith, City Manager SUBJECT: Review of Community Workforce Agreements: Themes, Data, and Proposed Negotiation Terms Prepared by: John Bakker, City Attorney & John Stefanski, Assistant to the City Manager EXECUTIVE SUMMARY: The City Council will review and discuss the report and provide direction on whether to initiate negotiations with the Building and Construction Trades Council of Alameda County for a Community Workforce Agreement on City construction and other public works projects. Community Workforce Agreements are agreements between a city and local labor organizations that address issues related to a specific construction project or a class of construction projects. STAFF RECOMMENDATION: Receive the report and provide feedback and direction, if any, on initiating negotiations with the Building and Construction Trades Council of Alameda County for a Community Workforce Agreement and the proposed negotiation terms outlined in the report. FINANCIAL IMPACT: There is no financial impact associated with this report, as it is informational only. DESCRIPTION: Background In 2019 the Building and Construction Trades Council of Alameda County (BTC) approached the City about potentially negotiating a Community Workforce Agreement (CWA) for Capital Improvement Projects. Staff presented a report (Attachment 1) introducing the concepts and key provisions of Community Workforce Agreements on December 3, 2019 to initiate a City Council discussion on the topic. Following that presentation, the City Council directed Staff to undertake additional research including interviewing other agencies that have experience negotiating and administering CWAs. This staff report details the findings from that research and outlines potential terms and conditions to be negotiated in a local CWA, should that be the direction of the City Council. Further data is provided related to the status of vendors used on C ity projects Page 1 of 9 Page 2 of 9 in the past. Report on Agency Outreach After the December 2019 City Council meeting, Staff conducted a series of meetings with various agencies in the East Bay that employ some form of a CWA. As of the writing of this staff report, staff has met with the following agencies: • City of Berkeley (January 17, 2020) • City of Hayward (January 22, 2020) • Lowe Consulting Group (January 24, 2020) • Port of Oakland (February 14, 2020) • East Bay Municipal Utility District (February 21, 2020) Conversations with these entities allowed Staff to develop five common, key themes that arise in the negotiation and administration of CWAs. These themes include the following: 1. Each agency witnessed an increase in project costs following the CWA, at least some of which could be directly attributed to the CWA. 2. The Bay Area’s tight construction labor market means union hiring halls are nearly empty, resulting in project delays from contractors constrained by core worker requirements and an inability to fill positions. 3. Local hire provisions in CWAs have not met agency goals for a variety of reasons. However, CWA provisions requiring the use of local apprenticeship programs (and certain categories of apprentices) have the potential to develop a much-needed pipeline of skilled labor to support the Bay Area’s continued growth and meet local job-creation goals. 4. Administrative burdens of CWAs impact agencies and contractors, particularly smaller contractor firms. 5. Equity issues exist regarding union fringe-benefit contribution requirements by non-union contractors and employees. The sections below discuss these themes in depth and provide Staff’s recommended terms and conditions to be included in a CWA should the Council wish to pursue such an agreement. Theme 1: Each agency witnessed an increase in project costs after the CWA, at least some of which is likely related to the CWA. The December 2019 Staff Report (Attachment 1) on CWAs discusses how various studies have found that project costs under a CWA increase up to 18% above engineer’s estimates. Each of the agencies Staff spoke with ha s witnessed an increase in project costs. Various causes were suggested by each entity. Outreach subjects generally acknowledged that, while CWAs likely impact construction costs, the extent to which the agreements did so is not entirely clear, given the increasing costs of construction and busy construction industry in the years following the adoption of their CWAs. Berkeley and Hayward both speculated that bid amounts increased due to fewer contractors bidding on CWA projects. Hayward noted a Page 3 of 9 circumstance in which it received two bids from a bidder when one failed to comply with the CWA requirements. The resulting bid with the CWA requirements was 18% or $850,000 above the bid without the CWA. Hayward also noted that some contractors that had previously bid on their projects no longer do so. East Bay MUD, during its due diligence, found both union and non-union contractors commenting that CWAs increase costs by reducing the pool of contractors willing to bid. The outreach subjects more readily acknowledged direct cost increases associated with CWA compliance. Berkeley estimates that administrative costs from the CWA amount to around 0.5% of the total project cost. Berkeley and Hayward both believe that the contractor-side administrative burdens of the CWA hindered smaller contractors and companies, resulting in those contractors not bidding on projects as they had in the past. Lowe Consulting Group indicated that agencies can expect that the internal administrative burdens will increase proportionally with the number of community benefit requirements they place in the agreements. Potential Term and Condition To address concerns with cost increases arising from a CWA, the City Council may, if it pursues a CWA, direct Staff to negotiate for provisions that allow the waiver or partial waiver of CWA provisions if a project does not receive a set minimum number of bids , or if all bids exceed a given percentage over the engineer’s estimate. Sta ff has been advised that private parties have secured such provisions. Theme 2: The Bay Area’s tight labor market means union hiring halls are nearly empty, resulting in project delays because contractors are unable to fill positions. The fundamental term in CWAs is the requirement to use union job referral systems for much of the labor required on the project. The various trade unions ’ signatories operate “hiring halls” which refer workers to employers/contractors. Some CWAs include “Core Worker” provisions which authorize employers to use a specified number of their own core employees for project work instead of hiring pursuant to hiring hall policies. This usually takes place with the hiring hall dispatching successively from the hall list first and then from the core employee list up to a fixed number of core employees. Both Berkeley and Hayward shared experiences where their contractors were unable to secure necessary labor needed to complete a project on time. Core worker provisions limiting the number of an employer’s/contractor’s own staff and limited availability in local hiring halls adversely affected jobsite staffing and progress of work on the Hayward Public Library, a project that was delayed over 600 days, partially due to this issue according to Hayward officials. The COVID-19 Pandemic and its economic ramifications may have an impact on this theme, resulting in more available workers to fill positions. However, Staff does not have adequate data to make any further claims on the magnitude or existence of such impacts. Even if the concern is diminished in the short term, it is likely to arise again in the future. Page 4 of 9 Potential Term and Condition To address issues around worker availability at hiring halls and the potential for project delays, the City Council may, if it pursues a CWA, direct Staff to seek a provision that allows contractors to bypass core worker provisions if they are unable to fill a role from the hiring hall within a specified amount of time. Theme 3: Local hire provisions in CWAs have not met agency goals for a variety of reasons. However, CWA provisions requiring the use of local apprenticeship programs (and certain categories of apprentices) have the potential to develop a much -needed pipeline of skilled labor to support the Bay Area’s ongoing growth and meet local job - creation goals. In exchange for establishing CWAs, agencies will request that the building trades give preference to local residents when referring workers to the contractor/employer and create new apprenticeship positions for residents. The building trades do not typically pursue these additional terms out of their own volition. In a CWA, local hire goals typically take the form of a set percentage of total craft hours worked by local residents for which contractors will have to make a good faith effort at achieving. Berkeley, with a local hire goal of 30% of total craft hours on a craft by craft basis, has only had 66 residents hired under the local hire provision of their CWAs since 2011. Hayward only met 4.3% of its 30% local hire goal on their PLA for their $60 million Library project and those workers were only carpenters and laborers. There are a few examples where local hire targets were met or exceeded. The $484 million BART Oakland Airport Connector exceeded its local hire goals for local area residents (Alameda, Contra Costa, San Francisco, and San Mateo Counties) as well as for the project’s local impact area (City of Oakland). The Alameda County General Services Agency exceeded its local hire goal of 40% on the $147 million East County Hall of Justice Project. There are a number of functional difficulties with the local hire provisions of these agreements, the first of which is that the agreements are not structured in a way to effectively satisfy local hire goals. As the City of Berkeley and City of Hayward’s staff shared, contractors cannot simply call a union hiring hall and request a local resident for a job. Contractors must hire through the hall’s “out of work list” to select an indivi dual worker. Berkeley was unsure about the viability of success for local hire provisions and whether residents were savvy enough to connect to the jobs. Success towards the goals is largely contingent on the commitment of the contractor. In Berkeley’s experience, there are contractors who make a concerted effort to connect with and hire local residents while others make a minimum “good faith” effort to satisfy the requirements of the CWA. In the instances where a contractor has had success with local h ire goals, there were existing partnerships in advance of the project. For the Oakland Airport Connector, BART and their selected contractor partnered with community groups in advance of the project to connect and direct local residents to the upcoming job s. The ability of an agency to select a committed contractor, however, is not always attainable due to lowest bid selection requirements. Page 5 of 9 Furthermore, the economic dynamics of the Bay Area may hinder the availability of a local workforce. As the Lowe Consulting Group shared anecdotally, the workers for most jobs are coming from outside Alameda County from places in the Central Valley. Information regarding the local union workforce is unavailable, therefore there is no reliable data on which to base a local hire goal. Each of the agencies’ staff interviewed selected a local hire percentage not based on data but rather what was proposed by the BTC. The lack of available labor data therefore sets up potentially unrealistic goals and performance expectations for both parties in the CWA. A working group of staff throughout Alameda County are researching CWAs to identify ways to make them more effective for all parties. This includes studying the local labor market to determine appropriate local hire goals. The group has partnered with the San Francisco Foundation and will be issuing a white paper on their findings later this year. It is important to note that agencies do not need a CWA to set local hire goals. Prior to its initial CWA, Berkeley had a good faith “First Source policy” for Berkeley residents on capital projects. East Bay MUD employs a similar “Contract Equity Program” which includes good faith local hire goals amongst other considerations for small business, women, and minority owned business enterprises. Potential Term and Condition (1) For a City CWA, Staff has insufficient labor data to recommend a local hire goal. Given the lack of policy success of such provisions, the City Council may wish to direct Staff not to seek a local hire provision if it pursues a CWA. The Bay Area’s market requires more skilled labor across all trades. The local apprenticeship requirements of CWAs present an opportunity to connect local residents seeking career paths to careers in the building trades and meet this market need. State law already requires, subject to certain exceptions, all public works contractors and sub-contractors to employ one hour of apprentice work for every five hours performed by a journeyman on a craft by craft basis. In addition to this, most CWAs will require one new apprentice for every $5M in project valuation and one for every $1M in project valuation thereafter. This structure does not address some issues that Lowe Consulting has found in their administration of CWAs. For example, the language above sets the rate in which new apprentices are hired, but there are no thresholds on the length in time apprentices should be retained after they are hired. Any apprentice language should include a minimum number of hours apprentices have to work to ensure they can gain that experience and grow in the profession. For example, the $232 million AC Transit Bus Rapid Transit project required one new apprentice for every 20,000 labor hours for a minimum of 1,000 labor hours. Ensuring the success of apprenticeship programs should go beyond setting minimums of hours to work. The apprenticeship pipeline should begin recruiting outside of existing pre-apprenticeship programs and through social service programs, youth organizations, and grassroots outreach to veterans, minorities and other disadvantaged individuals. For example, in Berkeley the carpenters’ union was able to partner with Berkeley High Page 6 of 9 School to develop a curriculum for a carpentry program which then prepares students for pre-apprenticeship programs. The outreach agencies are closer in proximity to several pre -apprenticeship programs such as RichmondBUILD Academy, Rising Sun Center for Opportunity (Oakland), Cypress Mandela (Oakland), and the Laney College Carpentry Program (Oakland). According to the BTC, there are currently no Multi-Craft Core Curriculum (MC3) certified pre-apprenticeship programs located within the Tri-Valley, but the area is served by those existing programs. Potential Term and Condition (2) A successful long-term apprenticeship program requires setting an apprenticeship target with a minimum number of hours worked. Furthermore, any City CWA should include a requirement for the BTC to develop, for approval by the City, an educational outreach program that details how the trades will work with the school district and larger community to recruit residents for pre-apprenticeship programs. Theme 4: Administrative burdens of CWAs impact agencies and contractors, particularly smaller contractor firms. Staff’s research confirmed that administering CWAs requires dedicated staff, both for administering agencies and for contractor firms. All of the agencies interviewed for this report had at least one full-time equivalent administering the agreement. In addition to this staffing, agencies may hire a third-party administrator (TPA), like Lowe Consulting Group, to support implementation. TPAs can handle the on -boarding and support of contractors as well as the tracking and monitoring of community benefit goals like local hire and apprenticeship. In the absence of this, an agency can assume these responsibilities. Berkeley designates additional staff to administer the agreement which includes the aforementioned tasks as well as field interviews with apprentices to ensure contractors are abiding by the terms of the agreement. The Port of Oakland had, at one time, included a provision to exempt smaller businesses from the requirements of CWAs but found that firms abused the provision and that over time most contractors (including smaller contractors) eventually became union shops. As mentioned in Theme 1, for smaller contractors, the administrative burdens of these agreements can dissuade them from bidding altogether. Berkeley shared an experience of an immigrant-owned electrician firm that consisted of two brothers who did not bid on a project because they could not handle the administrative burden. Furthermore, for a two-person firm, the core worker provision meant the one brother would not work on the given job. Hayward shared similar experiences where smaller firms were unable to absorb the administrative burden of CWAs. Lowe Consulting corroborated these stories as well but mentioned that smaller contractors unionizing due to CWAs is becoming more common. Potential Term and Condition Staff recommends that any CWA include a carve out for small businesses, releasing them of the requirements of the CWA to ensure the agreement promotes rather than precludes smaller contractors from bidding and receiving work. Page 7 of 9 Theme 5: Equity issues remain regarding union fringe-benefit contribution requirements by non-union contractors and employees. One component of CWAs is the requirement of contractor employers to pay various per - worker-hour contributions required under the unions’ c ollectively bargained agreements, whether employees are union or non-union. Non-union worker payments to the union benefit trust funds may not materialize for workers as actualized benefits due to vesting period thresholds and a lack of benefit portability . For a non-union worker to receive these benefits, they would have to quit their employer and find union work. Hence non - union contractor employers make payments to their existing retirement and health care programs as well as the contributions required b y the CWA. This is referred to as the payment of “double benefits,” and it places non-union contractors at a financial disadvantage when it comes to submitting bids as those costs become incorporated into increased project costs. The outreach agencies acknowledged this complication, but none had reached a solution to remedy the inequity between union and non -union contractor employers. Potential Term and Condition The most direct way to remedy the inequity would be to exclude any requirements on non-union contractors to pay for health and welfare benefits to union trust funds exclusively. Staff recommends an approach in which non -union contractors have the option to pay into the union trust funds or contribute to the contractor’s own benefit plans so long as those benefits are equal or greater than the applicable prevailing wage. Analysis on the City’s Union and Non-Union Vendors Following the December 3, 2019 City Council presentation, Staff worked with the Associated General Contractors of California to identify the City’s current and past vendors on CIP projects that were signatories to collective bargaining agreements. In addition, Staff contacted other firms to confirm their signatory status. The analysis below reflects the use of union, non -union, and partial union/non-union vendors used for CIP projects from Fiscal Years 2016 -2020 and includes only the labor and construction costs of the projects. It excludes purchases of physical assets and equipment such as playgrounds, traffic signals, public ar t, and payments to other governmental and utility agencies (e.g. Alameda County, MTC, PGE, etc.). This analysis reveals that most awarded projects were completed by union or contractor teams that included both union and non-union subcontractors. Table 1 below provides a further breakdown: Page 8 of 9 Table 1: Breakdown by Project (FY16-20) Breakdown by Projects1 Count Percentage Awarded Value Percentage Union 18 62% $30,265,403 51% Non-Union 5 17% $2,546,130 4% Partial Union/Non-Union 6 21% $26,164,606 45% Total 29 100% $ 58,976,139 100% Analyzing this further, the City overwhelmingly utilizes union contractors for capital projects as Table 2 describes below: Table 2: Breakdown by Vendor (FY16-20) Breakdown by Vendor Count Percentage Awarded Value Percentage Union 16 62% $52,087,859 88% Non-Union 10 38% $6,888,280 12% Total 26 100% $58,976,139 100% It should be noted that the total dollar figure amounts may not represent the entire awarded contract amount. Some projects may have been multi-year projects that began prior to Fiscal Year 2015-16, in which case the funds in previous years would not be captured. In other cases, a current project may not have encumbrances entered into the City’s financial system. Next Steps Staff is seeking feedback and direction on CWAs, particularly the following: 1. Does the City Council wish to direct staff to initiate negotiations with the BTC? If so, then: 2. What community benefits (Local Hire, Apprenticeships, etc.) would the City Council want to obtain from a CWA? 3. Does the City Council have feedback on the potential terms and conditions included in this Staff Report? Are there other terms or conditions the City Council would like to see incorporated? STRATEGIC PLAN INITIATIVE: None. 1 Staff was unable to confirm the status of the vendor used on the Mape Memorial Park Playground Replacement Project and therefore did not include them in this analysis. Page 9 of 9 NOTICING REQUIREMENTS/PUBLIC OUTREACH: Staff notified interested parties from the December 3, 2019 City Council Presentation on Community Workforce Agreements and Concepts of this Agenda item. ATTACHMENTS: 1. December 3, 2019 Staff Report on Community Workforce Agreements Page 1 of 8 STAFF REPORT CITY COUNCIL DATE: December 3, 2019 TO: Honorable Mayor and City Councilmembers FROM: Christopher L. Foss, City Manager SUBJECT: Introduction to Community Workforce Agreements and Concepts Prepared by: John Bakker, City Attorney & John Stefanski, Assistant to the City Manager EXECUTIVE SUMMARY: The City Council will discuss and provide direction on establishing Community Workforce Agreements on City construction and other public works projects. Community Workforce Agreements are agreements between a city and local labor organizations that address issues related to a specific construction project or a class of construction projects. STAFF RECOMMENDATION: Receive the report and provide direction, if any, on potential Community Workforce Agreements on City public works projects. FINANCIAL IMPACT: There is no financial impact associated with this report, as it is informational only. DESCRIPTION: Overview of Community Workforce Agreements Community Workforce Agreements (CWA) are binding, pre-hire agreements requiring the use of organized labor (unions) on public works projects. They are akin to Project Labor Agreements, which apply such pre-hire requirements to either a specific project or a class of projects. Community Workforce Agreements typically apply to a broader class of a jurisdiction’s public works projects and include provisions, such as local hire, designated to benefit the community. Beyond those community benefits, CWA’s include labor peace provisions that prohibit strikes, work slowdowns, stoppages, and lockouts. The key CWA terms and conditions that are negotiated between municipalities and unions are: 1. Duration of the CWA 8.2 Packet Pg. 304 Page 2 of 8 a. How long are the provisions of the agreement in effect? 2. Project coverage a. Are all projects subject to the agreement? b. If not, how does the agreement define what projects are subject to the agreement? 3. Local hire a. Does the City want to require local hire? b. If so, i. what geographic region would be considered “local”? ii. what percentage target for local hire would be applied? 4. Apprenticeship a. what percentage target would be applied to work performed by apprentices? In preparation of this item, Staff met with a variety of interest groups to obtain their views on CWA’s advantages and disadvantages to the City. Specifically, the City met with: - Alameda County Building Trades Council (BTC). BTC is a “a coalition of 28 affiliated unions representing workers in various construction trades.” (www.btcalameda.org.) - Associated Builders and Contractors, Inc., Northern California Chapter (ABC). ABC serves “contractors, subcontractors, suppliers and associates of all trades who want to conduct business in an unrestricted market regardless of labor affiliation.” (www.abcnorcal.org.) - Associated General Contractors of California (AGC). AGC represents “the full spectrum of the construction industry.” (www.agc-ca.org.) - United Contractors (UCON). UCON “is the leading union-affiliated contractors trade association in the state of California, representing heavy civil engineering companies of all sizes.” (www.unitedcontractors.org.) There are several cities, school districts, and other governmental entities within Alameda County that employ some form of a CWA or similar agreement. They include, among others: - City of Alameda - County of Alameda: General Services Agency - City of Berkeley - City of Hayward - Hayward Unified School District - Port of Oakland - City of San Leandro - San Leandro Unified School District This staff report discusses key CWA terms and compares how they are addressed in the CWAs of other cities in Alameda County. 8.2 Packet Pg. 305 Page 3 of 8 Use of Union Job Referral Systems for Craft Labor The fundamental term in both CWAs and project labor agreements is the requirement to use union job referral systems for much of the labor required on the project. The various trade union signatories operate “hiring halls,” and the hiring halls refer workers to the employers/contractors. The terms of employment for those hired from a union’s hir ing hall are established by the then-existing collectively bargained Master Agreements between the trade union and union -affiliated contractors. Federal labor law requires unions to operate hiring halls on a non-discriminatory basis. The CWAs with the four cities in Alameda County all contain the same basic language requiring contractor/employers preforming work on a covered project to use applicable signatory unions’ job referral systems for craft labor on the project. The agreements all exempt from this requirement supervisors above general foreman. Some CWAs contain provisions authorizing employers to use a specified number of their core employees for project work instead of hiring pursuant to hiring hall policies. Specifically, the provisions indicate that the unions will recognize the “core employees” as defined and that the hiring hall will dispatch successively from the hall list and then from the core employee list up to a fixed number of core employees. The Alameda CWA does not have a core employee requirement. The Berkeley, Hayward, and San Leandro CWAs all include core employee provisions allowing up to 5 core employees. The Berkeley (2015) CWA limits core employees to Berkeley residents. The San Leandro CWA applies only to San Leandro cont ractor/employers and limits core employees to San Leandro residents. Hayward’s CWA does not limit the residency of the core employees. In addition, the four cities’ CWAs all require the contractor employers to pay various per-worker-hour contributions required under the unions’ collective agreements, whether employees are core employees or not. These job referral provisions do not prevent non-union contractors from bidding on City projects subject to CWAs, but they may dissuade such contractors from biddi ng on City projects. Under the terms of the CWA, a non -union contractor can, like a union contractor, hire project labor from the hiring hall. So, nothing prevents non -union contractors from bidding. Representatives for non -union contractors, however, assert that job-referral provisions dissuade them from bidding, and thereby tend to increase their project costs, for two basic reasons. First, they cannot operate in their businesses in the same manner that they usually do using their core employees. And, sec ond, even if they can use their core employees, their labor costs increase because they must continue to make fringe-benefit contributions to their existing retirement and health programs and also make the contributions required by the CWA. ABC and AGC both are generally opposed to CWAs, primarily due to the job referral provisions. They assert that CWAs tend to increase costs, for the reasons outlined above. In addition, they indicate that the costs of compliance tend to eliminate smaller operations from the pool of bidders. Although remaining opposed to CWAs, ABC recommends “inclusive” CWA provisions, such as broader provisions allowing for the use of core workers. 8.2 Packet Pg. 306 Page 4 of 8 Duration of Agreement The duration of each of the four cities’ CWAs is three years. Berkeley and San Leandro both chose to extend the original terms of their agreements by one year. Berkeley’s extension was to allow more time to review the effectiveness of the CWA and evaluate outcomes, especially in terms of jobs for Berkeley residents. According to representatives from the BTC, there has not been an instance where a CWA was not either extended or renewed at the end of a term. Project Coverage CWAs can be applied to projects by using a set cost threshold on all public works contracts or setting CWA eligibility by certain categories of projects (e.g. paving projects, vertical construction, etc.). Negotiations around designating categories of applicable projects can be cumbersome and time intensive. Comparable cities in Alameda County all utilize a project cost threshold: Table 2: Cost Thresholds City Cost Thresholds Alameda (2016) $1,000,000 Berkeley (2011) $1,000,000 Berkeley (2015) $500,000 Hayward (2017) $1,000,000 San Leandro (2015) $1,000,000 Agreement Mechanics and Performance Measures In exchange for establishing CWAs, many cities request that the building trades give preference to local residents when referring workers to the contractor/employer and create new apprenticeship positions for residents. The building trades do not typically pursue these additional terms out of their own volition. The City effort required to audit performance may be cumbersome, time and resource intensive. Local Hire Because they are primarily driven by the City’s desires, provisions vary greatly among the four cities in Alameda County in regard to what defines “local” and what targets contractors are required to achieve: Table 3: Local Hire Provisions City Target “Local” Definition Alameda (2016) 25% of total craft hours on a craft by craft basis. City of Alameda residents first priority and Alameda County residents second. Hours of local residents that are graduates of Alameda Unified School District count double. Berkeley (2011) 30% of total craft Berkeley residents. If unavailable, then 8.2 Packet Pg. 307 Page 5 of 8 hours on a craft by craft basis. East Bay Green Corridor residents (Albany, Alameda, El Cerrito, Emeryville, Richmond, Oakland, and San Leandro) followed by Alameda County residents. Berkeley (2015) 20% of total craft hours on a craft by craft basis. Berkeley residents. Hayward (2017) 30% of total craft hours on a craft by craft basis. Hayward residents, Hayward Unified School District graduates. San Leandro (2015) 30% of total craft hours on a craft by craft basis San Leandro residents. If unavailable, then Alameda County residents. Local hire provisions should be realistic. However, data on local hire performance in Berkeley, Hayward and San Leandro show that local hire targets have yet to be met. A 2015 Berkeley staff report indicates that the City ’s 2011 CWA yielded 22 local hires out of 1,791 workers (1%), despite its 30% of craft hours goal. Berkeley subsequently reduced the goals for local hire and shifted its focus more on the hiring of new apprentices, as is discussed in the next subsection. Local hiring on Hayward’s Library project was 7% local hire, well below the 30% target in the project’s CWA. Three of San Leandro’s completed projects subject to their CWA had local hire rates ranging from 4.9% to 8.3%, significantly below their 30% goal. UCON holds the position that local hire language should not be included in PLAs as they place a preference of a worker’s zip code over a worker’s experience and qualifications. They also contend that local hire requirements will be difficult to meet if local pre-apprenticeship systems to develop local skilled and qualified workers is inadequate. UCON advocates instead for policies that require Workforce Development Plans, created by the Unions, contractors/employers, and the City. These plans would be developed at the onset of a project and would detail the procurement of specified and qualified personnel, and would address gaps in expectations regarding local hire targets, actual capacity to hit those targets, and any penalties or liabilities for not hi tting those targets. Further information on this can be found in Attachment 1. Apprentices California Labor Code Section 1777.5 requires, subject to certain exceptions, all public works contractors and sub-contractors to employ one hour of apprentice work for every five hours performed by a journeyman on a craft by craft basis. Public works contractors needing apprentices can have them “dispatched” from an apprenticeship program. In Alameda County, there exist both joint labor-management apprenticeship programs (operated by employers in conjunction with trade unions) and at least one unilateral apprenticeship program (operated by ABC Norcal). The four cities’ CWAs all require the use of a joint labor/management apprenticeship program. This prevents contractors from using the ABC Norcal apprenticeship program, which ABC asserts will tend to reduce the number of bidders and thereby increase 8.2 Packet Pg. 308 Page 6 of 8 costs. ABC and AGC oppose provisions requiring the use of only joint/labor management apprenticeship programs. In addition, the four cities’ CWAs require contractors to meet or exceed these requirements by placing local residents into apprenticeships. Comparable cities in Alameda County have set the following apprenticeship targets. Table 4: Apprenticeship Provisions City Target Alameda (2016) - Goal of 15% of all apprentice hours worked by residents of the Alameda Point Collaborative (APC), a supportive housing community for formerly homeless individuals. Berkeley (2011) - One Berkeley resident for first $1M of bid amount and one additional resident for every $5M thereafter. Berkeley (2015) - Contractors required to hire one new apprentice Berkeley resident for every CWA project. Hayward (2017) - One Hayward resident for first $1M of construction costs and one additional resident for every $5M thereafter. - Maximum assignment of two new apprentices per craft. - Minimum of 50% of apprentice hours must be worked by Hayward new apprentice. San Leandro (2015) - One San Leandro resident for first $1M of bid amount and one additional resident for every $5M thereafter. - 10% of apprentice hours on CWA covered projects. Provision of Opportunities to Veterans The four cities’ CWAs include a special provision in their Agreement by which all parties agreed to utilize the Center for Military Recruitment, Assessment and Veteran’s Employment’s “Helmets to Hardhats” program to serve as a resource to connect veterans with apprenticeship and employment opportunities on covered projects. Accountability and Audit Joint Administrative Committees (JAC) The four cities’ CWAs include provisions establishing a Joint Administrative Committee (JAC). JACs include representatives from the City and representatives from the BTC to oversee the implementation of the CWA. JACs are re sponsible for monitoring local hire and apprentice provisions and can assist in soliciting bids as well as references on qualified bidders. JACs may create subcommittees to address any grievances or disputes over the interpretation or application of the CWA. Staffing/Consulting Requirements As mentioned earlier, CWAs do require additional resources to implement and monitor the agreement over various projects. Both the City of Berkeley and the City of Hayward have full time equivalent positions dedicated t o administering the agreement for all projects. By dedicating a staff member to this role, both cities contend that it provides for the consistent application of the CWA across projects and alleviates the additional 8.2 Packet Pg. 309 Page 7 of 8 administrative burden off project managers. Staff has not yet evaluated the potential costs of monitoring but believes that the costs could be substantial. The City could contract with one or more labor compliance consulting firms to perform the necessary monitoring. However, Staff believes that regardless of contracting for agreement compliance, there will be a need for an additional full -time employee as well as increased legal costs. Again, these internal costs could be substantial, well beyond $200,000 annually. Accountability Measures The City of Hayward included a provision in which if a contractor fails to meet the Local Hire Goals or demonstrate a good faith effort, the City will retain 10% of the contract amount until the goal is remedied. Local Context To provide relative context of cost thresholds, Attachment 2 provides an overview of the City’s 2018-2023 Capital Improvement Projects by total cost. Attachment 3 breaks down CIP project budgets from FY2021 through Future projects. The total remaining CIP projects (FY2021 onwards) are budgeted at $176,428,350 with 50% of the projects costing $3,275,000 or more. 17 of these 23 projects, valued at $175,027,485, would be subject to a CWA with a $1,000,000 threshold. Policy Discussion The benefits of CWAs are often contested as their impacts on project cost and performance metrics are difficult to determine. Various studies have found that costs increase with a CWA anywhere from 0% and 18% above engineer’s estimates. Based on this, the upward limit of estimated cost increases could be a s much as $31,504,947 or the roughly the cost of the Emerald Glen Recreation and Aquatic Complex (Phase 2) project, Tassajara Road Realignment and Widening project, and Wallis Ranch Community Park (Phase 1) project combined. It is important to note, that with or without a CWA, all contractors are required to pay at least prevailing wage on all public works projects. So, the wages on public works projects are similar whether the contractor is union or non-union or the project is or is not subject to a CWA. Unions contend that CWAs add no additional cost and provide for smoother project delivery due to labor peace. If there are any increases, unions contend, they are likely due to administrative burdens from performance measure provisions (local hire and apprenticeship) that are requested not by the unions themselves but rather cities. Non-union contractors and associated groups argue that cost increases arise from a lack of bid competition. These groups state that while they have the right to bid on the project, if selected they would have to abide by the terms of the CWA which deters some contractors from bidding in the first place. Similarly, they assert that smaller non - union operations will forgo bidding altogether because compliance with the CWA is c ost prohibitive. 8.2 Packet Pg. 310 Page 8 of 8 Although its analysis is anecdotal, the City of Berkeley evaluated the impact of its 2011 CWA. The staff found that over the term of the initial 2011 CWA, construction labor costs for CWA covered projects were 5-10% more expensive than non-CWA projects. The report also indicates that there may be “significant construction costs increases associated with having fewer bidders interested in bidding CWA projects.” CWAs are also debated over the various requirements placed on employers and employees. As stated earlier, CWAs ensure that workers receive quality wages, benefits, and have viable career pathways. Opponents raise the concern that non -union workers on CWA projects are required to pay union dues for benefits they may never receive due to vesting period thresholds and a lack of benefit portability. In these instances, non-union contractors end up paying “double benefits” to their workers, where the non-union contractors pay the union fees for benefits and in addition pay non - union contracts same amount, so non-union workers can receive and retain the benefit. Additionally, non-union contractors are limited to using a fraction of their own staff while hiring the rest of the workers through union halls, whom they may have no prior employment history together. Next Steps Staff is requesting City Council feedback and direction on CWAs. This report is a high-level introduction into the concepts and impacts of CWAs given the shorter timeframe to bring back this discussion. If the City Council were to seriously consider the CWA concept further, Staff would recommend that City staff meet directly with the other municipalities in Alameda County to discuss the impacts to their jurisdiction. Three of these cities have agreements that are expi ring soon, and it would better inform future discussions to understand their experiences administering CWAs and how their CWAs performed with regards to local hire and apprentices. STRATEGIC PLAN INITIATIVE: None. NOTICING REQUIREMENTS/PUBLIC OUTREACH: None. ATTACHMENTS: 1. UCON Offical Position 2. 2018-2023 CIP Projects by Project Amount 3. FY2018-2023 CIP Project List: FY2021 Through Future Projects 8.2 Packet Pg. 311 PROJECT LABOR AGREEMENTS UCON Policy: Conditions for Support Position May 2019 17 Crow Canyon Court, Suite 100 | San Ramon, CA 94583 | (925) 855-7900 | Fax: (925) 855-7909 | www.unitedcontractors.org United Contractors (UCON) is an association of more than 300 union-affiliated construction firms. Union affiliation is mandatory to be eligible for membership in the organization. United Contractors has taken a formal position on Project Labor Agreements (PLAs), which is contained in this document. The position, in summary, is that United Contractors (UCON) supports the use of PLAs when the following conditions and provisions are included or addressed. UCON’s conditional support of PLAs is as follows: 1. UCON supports PLAs that reflect the exact terms and conditions, coverages, and classifications of the union Master Labor Agreements to which employers are signatory to. Conversely, United Contractors opposes PLAs which implement a different set of rules or coverages than those agreed to under the Master Labor Agreement since these were not bargained with the union employers affected. No expansion of agreements should take place without concurrence of signatory employers, as it undermines the integrity of the labor-management relationship. 2. UCON supports PLAs with jurisdictional dispute language that respects and recognizes local area practices as a primary means of determining what union coverages should apply. Contractors who have existing skilled workforces that have performed certain types of work for years or even decades should have local practices recognized as primary criteria for jurisdictional assignment. PLAs should not serve as vehicles of jurisdictional market recovery for unions that neglected their markets for decades. UCON can provide sample jurisdictional dispute language upon request. 3. UCON holds the position that community benefit / local hire language should not be included in PLAs. While we understand the value of hiring local, these provisions do not belong in a labor agreement. They should be placed in the bid specifications in their own dedicated sections. 4. Union employers should have the ability to provide input and/or negotiate PLAs. The strongest point of concern associated with PLAs for the union employer community is that it generally eliminates effective input from employers as to the content, obligations or input associated with the final document. Those that must operate under the framework of the agreement have all the risk and obligation and no input. The governing elements determining PLAs should include the union-employer relationship, not union-government institutions. 5. UCON is generally opposed to blanket city-wide or market-wide PLAs since not all projects by size and nature require a PLA, especially those of short duration and/or highly specialized work or small in dollar volume. 6. UCON strongly recommends the adoption of language within PLAs for a Workforce Development Plan. This plan would be created by the Unions in conjunction with the Employer(s), the Owner and the Compliance personnel related to the procurement of 8.2.a Packet Pg. 312 Attachment: 1. UCON Offical Position (Community Workforce Agreements) 05.2019 United Contractors - Official Position on PLAs Page 2 of 2 Rev. 5/2019 17 Crow Canyon Court, Suite 100 | San Ramon, CA 94583 | (925) 855-7900 | Fax: (925) 855-7909 | www.unitedcontractors.org specified and qualified personnel for the project. This addresses the gap that often occurs between: a) the employment or employee goals or mandates by the owner or agency b) the Union’s actual capacity to meet those project needs c) the contractor’s obligation and liability in not meeting such provisions This Workforce Development Plan (WDP) would be developed at the outset of the project and monitored on an ongoing basis to accurately assess the availability of qualified personnel, the union’s efforts to procure, and the contractor’s efforts and performance. This plan should be adaptable to the conditions and findings of the participants working on the WDP. In summary, UCON supports the use of PLAs, but reiterates the importance of implementing a policy that is fully vetted and discussed with union employers. In this endeavor, UCON seeks partnership with our signatory unions to advocate for PLAs that work for both unions and union contractors. 8.2.a Packet Pg. 313 Attachment: 1. UCON Offical Position (Community Workforce Agreements) ATTACHMENT 2 FY2018-2023 CIP: Total Project List by Cost Grand Total 402,193,337$ #Project #Project Description Project Total 1 ST0216 Dublin Boulevard Extension - Fallon Road to North Canyon Parkway 97,068,326$ 2 PK0105 Emerald Glen Recreation & Aquatic Complex - Phase 1 45,130,945$ 3 GI0116 Public Safety Complex - Police Services Building 23,900,000$ 4 ST0911 Dougherty Road Improvements - Sierra Lane to North City Limit 23,029,447$ 5 PK0115 Don Biddle Community Park 22,800,000$ 6 PK0414 Fallon Sports Park - Phase 2 18,083,629$ 7 Future Emerald Glen Recreation and Aquatic Center Phase 2 16,225,000$ 8 ST0117 Annual Street Resurfacing 13,973,700$ 9 ST0116 Tassajara Road Realignment and Widening - Fallon Road to North City Limit 12,500,000$ 10 ST1012 Dublin Boulevard Improvements - Sierra Court to Dublin Court 11,741,434$ 11 PK0119 Fallon Sports Park - Phase 3 10,360,000$ 12 GI0509 Maintenance Yard Facility Improvements 9,980,733$ 13 Future Dublin Heritage Park and Museums 9,550,000$ 14 ST0119 Tassajara Road Improvements - North Dublin Ranch Drive to Quarry Lane School 7,500,000$ 15 Future Iron Horse Nature Park and Open Space 6,993,000$ 16 GI0001 Cultural Arts Center 5,756,800$ 17 GI0119 Civic Center HVAC and Roof Replacement 5,200,000$ 18 GI4099 Civic Center Modification Design and Construction 4,278,291$ 19 Future Croak Neighborhood Park East 4,070,000$ 20 PK0518 Imagine Playground at Dublin Sports Grounds 4,000,000$ 21 Future Croak Neighborhood Park West 3,700,000$ 22 PK0001 Wallis Ranch Community Park - Phase 1 3,597,000$ 23 ST0713 Citywide Signal Communications Upgrade 3,177,925$ 24 ST0517 Citywide Bicycle and Pedestrian Improvements 3,175,480$ 25 Future Wallis Ranch Community Park Phase 2 2,953,000$ 26 PK0216 Sean Diamond Park 2,938,529$ 27 GI0319 Financial System Replacement 2,500,000$ 28 PK0514 Jordan Ranch Neighborhood Park 2,468,913$ 29 Future Dublin Sports Grounds-Phase 5 Renovation 2,125,000$ 30 PK0117 Clover Park & Sunrise Park 1,781,358$ 31 GI0002 Library Tenant Improvements 1,706,480$ 32 ST0118 Iron Horse Trail Bridge at Dublin Blvd 1,522,000$ 33 PK0215 Dublin Heritage Park Cemetery Improvements 1,500,000$ 34 PK0002 Jordan Ranch Neighborhood Square 1,480,000$ 35 ST0815 Amador Plaza Road Bicycle and Pedestrian Improvements 1,413,649$ 36 PK0316 Shannon Center Parking Lot Improvements 1,150,000$ 37 ST0317 Amador Valley Blvd - Wildwood Road & Stagecoach Intersections Improvements 1,088,260$ 38 PK0118 Butterfly Knoll Park 1,053,000$ 39 ST0419 Stormwater Trash Capture Device Installation 1,010,000$ Page 1 of 2 8.2.b Packet Pg. 314 Attachment: 2. 2018-2023 CIP Projects by Project Amount (Community Workforce Agreements) ATTACHMENT 1 FY2018-2023 CIP: Total Project List by Cost 40 GI0117 IT Infrastructure Improvement 900,000$ 41 ST0417 Dublin Ranch Street Light Improvements 878,380$ 42 ST1312 Storm Drain Trash Capture Project 860,001$ 43 ST0120 Dublin Boulevard Pavement Rehabilitation 737,000$ 44 PK0217 Public Art - Don Biddle Community Park 680,749$ 45 ST0217 San Ramon Road Arterial Management 667,480$ 46 ST0219 Alamo Creek Trail Repair 664,180$ 47 ST0519 Intelligent Transportation System Upgrade – Connected/Autonomous Vehicle and Safety Improvements 621,200$ 48 Future Public Art-Heritage Park and Museums 530,000$ 49 GI0219 Electric Vehicle (EV) Charging Stations 435,000$ 50 PK0415 Public Art - Emerald Glen Recreation and Aquatics Complex 432,969$ 51 PK0417 Public Art - Public Safety Complex - Police Services Building 338,300$ 52 PK0419 Public Art - Dublin Sports Grounds 336,840$ 53 PK0319 Mape Memorial Park Playground Replacement 300,000$ 54 ST0319 City Entrance Monument Signs 285,000$ 55 ST0218 San Ramon Road Landscape Renovation 239,065$ 56 ST0514 San Ramon Road Trail Lighting 173,461$ 57 PK0120 Public Art - Fallon Sports Park Phase 3 163,070$ 58 Future City Entrance Signs 160,000$ 59 ST0615 Traffic Sign Inventory and Safety Review 133,923$ 60 PK0418 Public Art - Sean Diamond Park 48,000$ 61 PK0318 Public Art - Jordan Ranch Neighborhood Park 46,980$ 62 PK0317 Public Art - Clover Park & Sunrise Park 35,600$ 63 PK0219 Public Art - Dog Park Art Replacement 26,680$ 64 PK0218 Public Art - Butterfly Knoll Park 17,560$ Page 2 of 2 8.2.b Packet Pg. 315 Attachment: 2. 2018-2023 CIP Projects by Project Amount (Community Workforce Agreements) ATTACHMENT 3 FY2018-2023 CIP Project List: FY2021 Through Future Projects #Category Project #Project Description Project Total 1 Streets ST0216 Dublin Boulevard Extension - Fallon Road to North Canyon Parkway 89,420,985$ 2 Future P-06 Emerald Glen Recreation and Aquatic Center - Phase 2 16,225,000$ 3 Streets ST0116 Tassajara Road Realignment and Widening - Fallon Road to North City Limit 10,474,901$ 4 Future P-01 Dublin Heritage Park and Museums 9,550,000$ 5 Parks PK0119 Fallon Sports Park - Phase 3 7,120,436$ 6 Streets ST0117 Annual Street Resurfacing 7,061,883$ 7 Future P-05 Iron Horse Nature Park and Open Space 6,993,000$ 8 General Improvements GI0001 Cultural Arts Center 5,756,800$ 9 Future P-04 Croak Neighborhood Park East 4,070,000$ 10 Future P-03 Croak Neighborhood Park West 3,700,000$ 11 Parks PK0001 Wallis Ranch Community Park - Phase 1 3,597,000$ 12 Future P-07 Wallis Ranch Community Park - Phase 2 2,953,000$ 13 Future P-02 Dublin Sports Grounds - Phase 5 Renovation 2,125,000$ 14 General Improvements GI0002 Library Tenant Improvements 1,706,480$ 15 General Improvements GI0119 Civic Center HVAC and Roof Replacement 1,500,000$ 16 Parks PK0002 Jordan Ranch Neighborhood Square 1,480,000$ 17 Streets ST0517 Citywide Bicycle and Pedestrian Improvements 1,293,000$ 18 Future P-08 Public Art-Heritage Park and Museums 530,000$ 19 General Improvements GI0219 Electric Vehicle (EV) Charging Stations 285,000$ 20 Parks PK0120 Public Art - Fallon Sports Park - Phase 3 160,150$ 21 Future S-01 City Entrance Signs 160,000$ 22 Streets ST0713 Citywide Signal Communications Upgrade 150,640$ 23 Streets ST0417 Dublin Ranch Street Light Improvements 115,075$ Grand Total 176,428,350$ Median Project Cost 3,275,000$ Total Eligible Cost 175,027,485$ 18%31,504,947$ 10%17,502,749$ 5%8,751,374$ Total Project Cost Increase with $1M Threshold* *Not inclusive of additional CWA related administrative costs Page 1 of 2 8.2.c Packet Pg. 316 Attachment: 3. FY2018-2023 CIP Project List: FY2021 Through Future Projects (Community Workforce Agreements)