Statement of the SBCTC re: Lawsuit Challenging Senate Bill 7

February 26, 2014 - The California Legislature adopted bi-partisan legislation in 2013 to promote good jobs for Californians and to ensure the future skilled workforce for vital infrastructure projects. The utilization of  the state apprenticeship system provides opportunities for construction careers to approximately 55,000 California residents annually.  Senate Bill 7 provides charter cities with a financial incentive to follow the State’s prevailing wage law on their municipal projects by making the cities eligible for discretionary state funding for construction projects.  

The legislation rewards the majority of charter cities that choose to follow the State’s prevailing wage law and create good jobs for Californians and mandates apprenticeship.  The legislation does not require charter cities to change their policies so it is entirely consistent with the California Constitution.

It is unfortunate that a small, short-sighted group of charter cities, driven by a special interest agenda, with high unemployment and a lack of skilled jobs, have chosen to take the low road in their construction policies by providing that their contractors do not have to pay prevailing wage, nor participate in training of construction workers.   

Academic studies and public policy research confirm that the prevailing wage continues to be a useful and effective driver for economic growth and workforce training.  In charter cities with prevailing wage exemptions, new developments fail to generate local quality jobs and training opportunities.  The use of an unskilled workforce by low-road contractors leads to cost overruns due to substandard construction rather than quality workmanship with public works projects that will endure for decades, most recently evidenced by the disastrous Mitchell Park Library project in Palo Alto, that chose not to pay prevailing wage.  (See the news article below.)

Good jobs, apprenticeship training and well-built public works projects benefit all Californians.  Our Legislature acted wisely in directing discretionary State money for construction projects to the majority of charter cities that take the high road in their construction policies.

Palo Alto fires Mitchell Park Library contractor

By Jason Green

Daily News Staff Writer

Posted:   01/11/2014 12:48:44 AM PST | Updated:   about a month ago

The city of Palo Alto officially cut ties Friday with the contractor tasked with rebuilding the Mitchell Park Library and Community Center.

The decision to fire Flintco Pacific Inc. follows numerous warnings by the city about inadequate progress on the project, lack of staffing, faulty work and missed construction deadlines. It clears the way for the surety that holds the performance bond on the project to appoint a new general contractor to finish the project.

The city issued a notice of default in a letter dated Dec. 4 and gave Flintco 10 days to cure its defaults. The deadline came and went with no action on the part of Flintco, city officials said.

"The city has repeatedly notified Flintco that its progress on the project is unacceptable," City Manager James Keene said in a statement.

"We tried to keep Flintco in place as long as possible in an effort to complete the project. It is a drastic step to terminate their contract, but their repeated lack of performance and dwindling staffing has clearly demonstrated to us that they are incapable of completing the job."

City officials said they met with the contractor's surety in late December and indicated they did not believe Flintco could complete hundreds of remaining items without substantial outside assistance.

The surety was also told at the time that Flintco would be fired if it failed to submit an "adequate" staffing plan.

Public Works Director Michael Sartor said the surety has been given 60 days to bring in a new general contractor to finish the project. But the city is prepared to hire its own replacement if the surety misses the deadline.

Flintco has placed the blame for the delays on the city's architect, saying it had to submit more than 1,800 requests for information. Group 4 Architecture also issued nearly 200 supplemental instructions, according to a letter Flintco Senior Vice President John Stump sent to the city last year.

The library and community center were originally supposed to open in summer 2012. The project is the centerpiece of Measure N, a $76 million bond measure passed in 2008 to overhaul the city's library system.

Flintco agreed to do the job for roughly $24.5 million, but the cost has swelled to $28 million, Sartor said. But it's still lower than a city engineer's initial estimate of $32 million.

The city has held 10 percent of the total cost in reserve, as per industry standard, and has $1 million remaining in a 20 percent contingency fund previously authorized by the city council, Sartor said.

Those funds, as well as $1.3 million in remaining Measure N money, can be used to finish the project, Sartor said.

Provided the new general contractor staffs the project with 50 to 60 people, Mitchell Park could reopen to the public by summer, he said.

"Despite the disruption," Sartor said in a statement, "we are confident that a new general contractor will be able to finish the project faster and with better quality than if Flintco had stayed on the project."

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