The SVO Responds to Mayor Liccardo's CWA/PLA and Private Development Workforce Standards Memo

On behalf of The Silicon Valley Organization (The SVO), we are submitting this letter in response to Mayor Liccardo’s memorandum and supplemental dated March 21, 2018. By way of background, we are the Silicon Valley’s premier business advocacy organization representing 1,400+ companies that employ nearly 300,000 workers and we represent our membership as the region’s largest Chamber of Commerce.

First of all, we are grateful for Mayor Liccardo's diligent efforts in trying to come up with a compromise that potentially could bring forth solutions that are beneficial to both the labor unions and the business community in regard to private development workforce standards and community workforce agreements on public projects. The SVO staff has convened multiple meetings with our key stakeholders over the course of many months to discuss a myriad of components that are related to the aforementioned issues. We hope that you will take into consideration the recommendations below as you meet and deliberate theses critical issues at the city council meeting on April 3, 2018.

These recommendations have been vetted by our key stakeholders and we believe they will assist with keeping development sustainable in our city for many years to come

The SVO’s Recommendations:

1. Private Development Workforce Standards: In an effort to provide greater clarity and complete transparency regarding public subsidy for private development, the SVO recommends amending Exhibit A (Paragraphs A & B) with the below language.

The amended language for Paragraphs A & B will provide true confidence that future private development projects will be excluded from the Workforce Standards. Our concern is that even if a project has one or more exemption categories the possibility that some other aspect of the project that is not specifically exempted will arguably fall under the broad definition contained in Section C. The substituted language assures greater certainty by removing the opportunity to challenge and hold every private development project hostage until an issue of public subsidy is resolved, potentially costing money, time delays or the extraction of concessions to drop the challenge. The potential for this challenge can be likened to a CEQA lawsuit strategy.

2. A. Workforce standards (including prevailing wage, apprentice ratios, local and targeted hire, and monitoring and compliance provisions, all described in Paragraph D., below) shall only be mandated upon private development where there is a public subsidy (as specifically defined in Paragraph B., below) for that project AND the project is not excluded pursuant to Paragraph C, below. Such standards shall not be mandated upon private development where there is no public subsidy (as specifically defined in Paragraph B., below) OR where there is an applicable exclusion pursuant to Paragraph C, below),

3. B. A private development project shall only be subject to the workforce standards if it (1) receives a public subsidy from the city as specifically defined in this paragraph AND (2) is not excluded pursuant to Paragraph C, below. “Public subsidy” means one or more of the following and nothing other than the following:

  1. A direct contribution of publicly-owned land on which the private development will be constructed.
  2. Sale or lease of publicly-owned land to the project at a below fair market value.
  3. Waiver or reduction of a fee, as defined in the Mitigation Fee Act or the Quimby Act, where the waiver or reduction is not applied uniformly across an entire category of projects, wherein “category” is limited to five general designations: “residential,” “office,” “retail,” “research & development,” and “industrial.”

4. Waiver or reduction of a city development tax, as defined in this paragraph, where the waiver or reduction is not applied uniformly across an entire category of projects, wherein “category” is limited to five general designations: “residential,” “office,” “retail,” “research & development,” and “industrial.” “City development tax” means the Building and Structure Construction Tax, the Construction Excise Tax, or the Residential Construction Tax. D.

We recommend the following change to Exhibit A. D. Workforce Standards (4) Targeted Hiring of Disadvantaged Workers – Good Faith Effort to Hire Disadvantaged Workers for 25% of Apprentice Hours. II. Definitions: add or a NCCER certified pre-apprenticeship program.

4. Capital Bond Measure: A. In an effort to better understand the impact of this potential bond measure has on taxpayers, we would like to see a list of projects prior to making a decision. Nevertheless, we understand and support measures that consistently keep our community safe and secure so we hope that projects such as police stations, fire stations and other critical infrastructure projects would not be subject to the Project Labor Agreement.

5. Best-Value Contracting: A. Maintain the Charter provisions that mandate ‘lowest-cost bidder” but also include a stringent prequalification process in an effort to quickly eliminate applications that do not adhere to all the criteria(s) and potentially reduce unnecessary protests.

6. Community Workforce Agreements:

A. Allow the first thirty-five (35) workers employed by non-signatory Contractor/Employer to come from its own core workforce, prior to the imposition of any requirement to hiring workers from the union hall. (a) To minimize risk of malfeasance, staff may consider measures to ensure accurate designation of “core” employees, such as by requiring non-signatory subcontractors to identify their core workforce at the time of bidding. (b) “Core” employees of non-signatory employers shall not be required to pay union dues and fees.

B. Permit signatory and non-signatory Contractors/Employers to select and directly hire all supervisors above general foreman.

C. A non-signatory Contractor/Employer shall compensate any workers for benefits in excess of the basic hourly wage in accordance with the applicable prevailing wage determination established by the Department of Industrial Relations pursuant to California Labor Code and the City’s Prevailing Wage Policy. Contractor/Employer shall either: (a) Directly compensate the core worker, or (b) Contribute to Contractor/Employer’s sponsored benefit plans on behalf of the worker, or (c) Contribute to the Union’s established employee benefit plan on behalf of the worker.

D. Exempt subcontracts of $250,000 or less in value. E. Apply a $3 M threshold for applicability of CWA/PLA mandates with the incorporation of “FAIR” PLA language. F. Employment of apprentices on public works. Contractors, as defined in Section 228 to include general, prime, specialty or subcontractor, shall employ registered apprentice(s), as defined by CALIFORNIA LABOR CODE (2007) § 1777.5.

We believe these recommendations will help accomplish the Mayor and Council’s efforts to bring solutions to issues relating to private development workforce standards/community workforce agreements on public projects that will remove barriers and increase opportunities for all City of San Jose taxpayers and residents. As such, we highly recommend the Mayor and City Council adopt these recommendations as proposed by the SVO.