Committee OKs prevailing wage ordinance

Proposal goes to City Council July 30

SAN DIEGO - A proposal to require contractors on most city of San Diego public works and maintenance projects to pay prevailing wages to employees got a go-ahead Wednesday from the City Council's Rules and Economic Development Committee.

The proposed ordinance passed on a 3-2 vote, with committee Chairwoman Sherri Lightner and David Alvarez and Marti Emerald in favor. Kevin Faulconer and Mark Kersey cast the dissenting votes after expressing concerns that higher project costs could slow the city's progress in addressing a backlog of infrastructure projects.

Currently, the city sets pay for contractors working on water and sewer projects valued at more than $10 million or large city projects that are partially funded with state or federal dollars.

The proposal that will be forwarded to the full City Council, likely on July 30, will be on public works and maintenance projects valued over $25,000, in conformance with state labor law.

"The city is going to ideally, hopefully, do great things over the next several years building the infrastructure," said Richard Barerra, the new head of the San Diego and Imperial Counties Labor Council. "The question is,
are we going to build our middle class while we build our infrastructure."

Supporters of the proposal say the pay boost will help workers economically in a city with a high cost of living while ensuring construction quality, without dramatic increases in overall project costs.

Tom Lemmon of the San Diego County Building and Construction Trades Council said costs will be held down because the pool of bidders will increase. He said 500 to 1,000 contractors won't bid on city work now because they pay prevailing wages and don't want to be undercut by companies that give less money to employees.

Nelson Hernandez, the city's assistant chief operating officer, said in a memo that the benefits of requiring prevailing wages include improving local construction careers, ensuring that contracts compete on an even playing field and building projects with a skilled labor force.

Hernandez said it was hard to gauge the effect of the proposed wage requirements on the cost of projects to taxpayers. Contractors with relatively even labor costs, he said, would compete based on costs in areas such as design and engineering.

The city's Independent Budget Analyst estimated in a report that total project costs would rise 5-10 percent, which would mean an additional $13-$26 million spent on projects planned for the fiscal year beginning July 1.

The higher costs could mean fewer projects could be funded, according to the report. However, the IBA noted "worthy social and economic policy objectives" attached to prevailing wage laws.

Faulconer and Kersey said the impact of requiring prevailing wages would be the city "going backwards" on infrastructure by funding fewer projects, which is not what residents want.

Kersey also expressed concerns about the ability of small businesses, which receive 10-15 percent of city public works contracts, to compete. Many of them are minority-owned, he said.

Faulconer invited Hernandez to produce information that disputes the IBA's conclusions.

Of 113 contracts for capital projects to be awarded the current fiscal year, prevailing wage laws are expected to be applied to 20 of them, according to Hernandez.

Prevailing wages are determined by collective bargaining between unions and employers, he said, adding that the state Department of Industrial Relations does an annual survey of pay rates.

As a charter city, San Diego is not required to specify prevailing wages on municipal construction contracts. A bill being considered in the Legislature, however, would end the exemption for charter cities.

Lawyers for the city have expressed the opinion that the state bill, if passed, would ultimately be found unconstitutional.

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