SR-12-16-2014-7B - 604-002 / 703-007City Council Meeting: December 16, 2014
Agenda Item:
To: Mayor and City Council
From: Martin Pastucha, Director of Public Works
Subject: Conformance of Prevailing Wage and Apprenticeship Ordinance with SB 7
Recommended Action
Staff recommends that the City Council approve on first reading the attached ordinance
revising certain provisions of Chapter 7.28 of the Santa Monica Municipal Code to
ensure full consistency with the requirements of Senate Bill No. 7 governing wages
paid on locally- funded public works contracts.
Executive Summary
As a result of the passage of Senate Bill No. 7 ( "SB 7 ") in 2013, effective January 1,
2015, a charter city may not receive or use state funding or financial assistance for a
construction project if the city has a charter provision or ordinance authorizing
contractors' noncompliance with the State's prevailing wage and apprenticeship
provisions on any public works contract, even if the contract is funded solely with local
funds. This bill has been codified as Labor Code section 1782.
The City's prevailing wage and apprenticeship ordinance, codified as Chapter 7.28 of
the Santa Monica Municipal Code ( "SMMC "), currently requires the payment of
prevailing wages and compliance with apprenticeship requirements for projects that
receive federal, state or local assistance or are built on land leased by the City to private
parties; however, the ordinance allows certain exemptions for local projects that fall
below minimal thresholds (based upon the amount of assistance or size of the project)
and authorizes the City Manager to exempt projects if the City Manager finds that the
payment of prevailing wages results in a lack of bids, increases project costs above 20
percent, or makes a project financially infeasible to develop.
While the California Labor Code also allows certain exemptions to payment of prevailing
wages and imposition of apprenticeship requirements, the exemptions in SMMC
Chapter 7.28 do not exactly match the exemption criteria or minimum thresholds under
the Labor Code. Therefore, after consultation with the City Attorney's Office, staff now
recommends amending Chapter 7.28 to more closely align the City's prevailing wage
and apprenticeship ordinance with the Labor Code.
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Discussion
The California Labor Code requires that, except as specified, not less than the general
prevailing rate of per diem wages, determined by the Director of Industrial Relations, be
paid to workers employed on public works projects. Existing law defines "public works"
to include, among other things, construction, alteration, demolition, installation, or repair
work done under contract and paid for, in whole or in part, out of public funds, which
may include both direct financial and indirect financial assistance. SB 7 requires
compliance with the Labor Code except for projects of $25,000 or less when the project
is for construction work, or projects of $15,000 or less when the project is for alteration,
demolition, repair, or maintenance work.
A 2012 California Supreme Court decision (State Bldg. & Constr. Trades Council v. City
of Vista (2012) 54 Cal, 0 547) held that a charter city may exempt itself from the state's
prevailing wage requirements on locally funded projects because the wage levels of
contract workers constructing locally funded public works are a "municipal affair." SB 7
was passed by the State legislature to mitigate the effects of this judicial decision.
Unlike other charter cities, the City has not exempted itself from State prevailing wage
requirements. Furthermore, the City stands to benefit in the future from State funding
for several of its projects. Therefore, staff recommends the proposed clean up changes
to Chapter 7.28 of the SMMC to more closely align the City's prevailing wage and
apprenticeship ordinance with the State Labor Code and thereby protect the City's
ability to obtain state funding for public work projects.
In summary, the proposed clean -up changes consist of:
• including a definition "public works" that matches the definition of "public works"
in the Labor Code;
• substituting the minimum exemption thresholds to match the minimum exemption
thresholds in the Labor Code; and
• eliminating the City Manager's authority to exempt certain projects based upon
currently authorized findings of feasibility
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Financial Impacts & Budget Actions
Staff is conducting an analysis of the potential financial impacts for the implementation
of the State's prevailing wage and apprenticeship provisions for public works contracts
including repair and maintenance projects greater than $15,000 and new construction
projects greater than $25,000. Staff will return to Council if specific budget actions are
required in the future.
Prepared by: Erika Bustamante, Principal Administrative Analyst
roved:
,� V Martin a ucha
bb Director of Public Works
Attachments:
A — Ordinance
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Forwarded to Council:
Rod Gould v
City Manager
City Council Meeting December 16, 2014 Santa Monica, California
ORDINANCE NUMBER (CCS)
(City Council Series)
AN ORDINANCE OF THE CITY COUNCIL OF THE
CITY OF SANTA MONICA REVISING CERTAIN PROVISIONS
OF CHAPTER 7.28 OF THE SANTA MONICA MUNICIPAL CODE
WHEREAS, pursuant to Senate Bill No. 7 (Stats. 2013, chapter 794)( "SB 7 "),
effective January 1, 2014, a charter city is prohibited from receiving or using state
funding or financial assistance for a construction project if the city has a charter
provision or ordinance that authorizes contractor non - compliance with the State's
prevailing wage provisions on any public works contract, even if the contract is funded
solely with local funds, subject only to limited exemptions; and
WHEREAS, SB 7 has been codified as Labor Code section 1782; and
WHEREAS, SB 7 exempts projects of twenty -five thousand dollars ($25,000) or
less when the project is for new construction, or projects of fifteen thousand dollars
($15,000) or less when the project is for alteration, demolition, repair or maintenance
work; and
WHEREAS, the City's prevailing wage ordinance, codified as Chapter 7.28 of the
Santa Monica Municipal Code ( "Chapter 7.28 "), exempts payment of prevailing wages
for (i) rehabilitation projects that cost less than $250,000, excluding soft costs, or 20
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housing units, and (ii) new construction projects that cost less than $1,000,000,
excluding soft costs, or 20 housing units; and
WHEREAS, the City Council desires to amend Chapter 7.28 to match the lower
exemption thresholds in Labor Code section 1782, which apply to new construction
projects of twenty -five thousand dollars ($25,000) or less and projects of fifteen
thousand dollars ($15,000) or less for alterations, demolition, repair or maintenance.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA
DOES HEREBY ORDAIN AS FOLLOWS:
SECTION 1. Chapter 7.28 of Santa Monica Municipal Code is hereby amended,
as follows:
7.28.010 Name, Ppurpose and Sscope.
This Chapter shall be called the "Prevailing Wage and Apprenticeship Law ". It is
intended to establish project size and financing cost thresholds which will trigger
requirements for payment of prevailing wages and /or participation in apprenticeship
programs for public works senstrustien projects receiving Federal, State or City financial
assistance, or projects located on land leased by the City of Santa Monica to private
parties.
7.28.020 Definitions.
The following words and phrases as used in this Chapter shall have the following
meanings:
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(a) Prevailing Wages.
(1) For Public works censtrustien projects receiving federal financial
assistance, the minimum wages established pursuant to Federal law for each
construction trade or craft.
(2) For public works senstrustiGR projects receiving only State or City
financial assistance,
patties, the minimum wages as determined by the Director of the California Department
of Industrial Relations for each construction, craft, classification or type of worker
needed to execute the public works senstrtastien contract.
(3) For purposes herein "public works" has the same meaning as set
forth in California Labor Code section 1720(a) as amended from time to time.
(4) For purposes herein "paid for in whole or in part with public funds"
has the same meaning as set forth in California Labor Code section 1720(b), as
amended from time to time.
(b) Apprenticeship Program Requirements. Contractor compliance with the
following California Labor Code requirements concerning apprenticeable construction
crafts or trades:
(1) Certification of approval from the joint apprenticeship committee or
committees nearest the site of the project for the employment and training of
apprentices for each craft or trade as required by California Labor Code Section 1777.5.
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(2) Contribution of an amount established by the joint apprenticeship
committee or committees for each trade in question either to (i) a recognized trade-
specific training or apprenticeship program sponsored by each union for the
administration of such apprenticeship programs, or (ii) the California Apprenticeship
Council or any successor agency thereto.
(c) Q a Ong— ublic Works ConGtruGftrt Project. Any Public works
rehabilitation or nPIAF RGtFU^+ project within the City which fulfills both the following
requirements:
(1) Is paid for in whole or in part with public funds °pr. °'.the
or is a privately funded project located on
land leased by the City to private parties. and
(2) Satisfies the minimum thresholds for project size or cost
established in this Chapter. Qualify' i9— Public works seRstrustion project does not
include projects undertaken by any public agency other than the City as defined herein.
(d) City. The use of the term City herein shall include only the City of Santa
Monica, and its Redeve,GpmentAgeaoy, Housing Authority and Parking Authority.
7.28.030 Applicability of PPrevailing wage Ryequirements.
Prevailing wages shall be paid by contractors on of the#eNew+ng qualify p- Lbl!c
works senstrustie projects as follows:
G!
(a) Public works projects
subject to sen t eapplicable Federal or State prevailing wage requirements in
accordance with the sources of funding provided for such projects.
(b) Public housing projects constructed pursuant to the Federal Housing Act
of 1937 shall comply with applicable Federal prevailing wage requirements.
(c) Housing projects financed in whole or part by either Federal Housing and
Urban Ddevelopment and/or State Housing and Community Development financial
assistance shall comply with the applicable Federal or State prevailing wage
requirements in accordance with the requirements of the sources of funding provided for
such projects.
(d) Qualify' 4g- Public works nonstrustisn projects paid for in whole or in part
out of public funds solely from the City shall be
subject to seroplY With State prevailing wage requirements if the following minimum
thresholds are satisfied:
(1) The public works contract is for construction work over twenty -five
thousand dollars ($25,000-00) or unless and to the extent that said threshold amount is
increased in the California Labor Code. Per a rehabilitation pFojpGt, either a minim"
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public
threshold maintenance work over fifteen thousand dollars ($15,000) or unless and to the exten
that said amount is increased in the California Labor Code. FGr a Re
III units GF M7R6MURI
(e) Qualifying- Privately fundednenstuntk) projects on land leased by the
City to private parties, which are not public works projects de not reneive any `ireG
fiRaPA'al assistance fFom the Gity, State or , shall be subject to
payment of prevailing wages if the lease is executed after the effective date of this
Chapter and if the following minimum thresholds are satisfied:
(1) For a rehabilitation project, either a minimum project size of 20
housing units or a minimum total construction contract cost of $250,000.00, exclusive of
expenses associated with site acquisition, architectural and other pre- construction
development costs, financing charges, bonding and insurance requirements, and fees,
permits or licenses required in connection with the project.
(2) For a new construction project, either a minimum project size of 20
housing units or a minimum total construction contract cost of $1,000,000.00, exclusive
of expenses associated with site acquisition, architectural and other pre- construction
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development costs, financing charges, bonding and insurance requirements and fees,
permits or licenses required in connection with the project.
Contractors shall comply with the apprenticeship program requirements in
connection with the following qualifying- public works sertstrustiGR projects:
(a) Public works projects as defined in the r lif ' aber G" shall comply
with one of the apprenticeship program requirements set forth in Section 7.28.020(b) of
this Chapter.
(b) Public housing projects financed in whole or in part by Federal financial
assistance shall comply with the sponsorship of training or apprenticeship programs as
required by applicable Federal law.
(c) Housing projects financed in whole or in part by either Federal Housing
and Urban Development and /or State Housing and Community Development financial
assistance shall comply with the applicable Federal or State threshold requirements for
sponsorship of or contribution to training or apprenticeship programs.
(d) Qualify' - Public works ssnstrustiGn projects paid for in whole or in part
out of public funds solely from the City shall adhere
to the apprenticeship program requirements set forth in Section 7.28.020(b) of this
Chapter if the following minimum thresholds are satisfied:
IM
(1) The public works contract is for construction work over twenty five
thousand dollars ($25,000.00) or unless and to the extent that said threshold amount is
increased in the California Labor Code.
(2) The public works contract is for alteration demolition, repair, or
maintenance work over fifteen thousand dollars ($15,000) or unless and to the extent
that said threshold amount is increased in the California Labor Code. For a new
(e) Qua&b ing— Privately funded censtrustien projects on land leased by the
City to private parties, which are not public works proiects rlire
�
shall be subject to the
apprenticeship program
requirements stated
in this
Chapter
if the lease is executed
after the effective date
of this Chapter and
if the
following
minimum thresholds are
satisfied:
(1) For a rehabilitation project, either a minimum project size of 20
housing units or a minimum total construction contract cost of $250,000.00, exclusive of
expenses associated with site acquisition, architectural and other pre- construction
development costs, financing charges, bonding and insurance requirements, and fees,
permits or licenses required in connection with the project.
(2) For a new construction project, either a minimum project size of 20
housing units or a minimum total construction contract cost of $1,000,000.00, exclusive
of expenses associated with site acquisition, architectural and other preconstruction
development costs, financing charges, bonding and insurance requirements and fees,
permits or licenses required in connection with the projects.
7.28.050 Adjustment to Ddollar Aamount Tthresholds.
Commencing on July 1, 1988, and on each July 1 thereafter, any dollar amount
threshold set forth in Sections 7 28 030(e) and 7.28.040(e) of this Chapter shall be
adjusted upward or downward by the percentage change in the Consumer Price Index
for the previous calendar year. For purposes of this Chapter, the Consumer Price Index
shall mean the index for Urban Wage Earners and Clerical Workers for the Los
Angeles /Long Beach statistical area, as published by the United States Department of
Labor, Bureau of Labor Statistics, or any successor agency.
7.28.060 Procedures for Ddetermination of Aapplicability of Rfequirements
or Eexemption Ttherefrom.
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(a) The City Manager shall develop appropriate procedures for the review and
determination of the applicability of this Chapter's requirements to the particular
projects.
(b) The City Manager may exempt any privately funded project on land leased
by the City to private parties which is not a public works project, a— paftisular-- prsjest
from the requirements of this Chapter upon satisfactory evidence that either:
(1) The project developer has not been able to obtain bids from
responsible contractors.
(2) Compliance with the requirements of this Chapter would increase
the construction costs of the qualifying project by more than twenty percent (20 %) over
and above the normal and reasonable costs of at least three (3) other comparable
projects such that the project would be financially infeasible to develop.
The determination of whether a particular project is exempt from the
requirements of this Chapter shall be in the sole discretion of the City Manager.
SECTION 2. Any provision of the Santa Monica Municipal Code or appendices
thereto inconsistent with the provisions of this Ordinance, to the extent of such
inconsistencies and no further, is hereby repealed or modified to that extent necessary
to effect the provisions of this Ordinance.
SECTION 3. If any section, subsection, sentence, clause, or phrase of this
Ordinance is for any reason held to be invalid or unconstitutional by a decision of any
court of competent jurisdiction, such decision shall not affect the validity of the
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remaining portions of this Ordinance. The City Council hereby declares that it would
have passed this Ordinance and each and every section, subsection, sentence, clause,
or phrase not declared invalid or unconstitutional without regard to whether any portion
of the ordinance would be subsequently declared invalid or unconstitutional.
SECTION 4. The Mayor shall sign and the City Clerk shall attest to the passage
of this Ordinance. The City Clerk shall cause the same to be published once in the
official newspaper within 15 days after its adoption. This Ordinance shall become
effective 30 days from its adoption.
APPROVED AS TO FORM:
Wq,AhjJ,iw'd IAr
MARSHA JOB S MOOT IE
City ttorney`
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