The Watsonville City Council on Tuesday postponed a decision on amending the Project Labor Agreement (PLA) it has with local unions to carry out major infrastructure projects, but not before a contentious hearing where the boardrooms were packed with union members.
The issue will be brought back to the City Council on Nov. 5 during a special meeting to give city employees and union representatives time to refine the agreement.
A PLA is an agreement between the city and trade councils that sets out the conditions for workers on city construction projects.
The current PLA was last updated in 2014 and requires the city to use local union employees for projects that exceed $600,000 and involve three or more trades. There is also no expiry date.
Union officials see such agreements as, among other things, an opportunity to secure work and fair pay for their members.
However, city staff told council that the current PLA is hindering the completion of many important city projects because contractors are reluctant to submit bids given the agreement's stringent requirements.
That includes the Corralitos Creek water treatment plant project, which had an engineer's estimate of $3 million but was marred by a contractor's estimate of $5.1 million.
The Water Well No. 4 pumping station, estimated to cost $3 million, was also sidelined when it received a bid of $5.6 million, 69% above the estimate. The city received no bids for the $1.3 million Miles Lane Sewer Pump Station.
With a limited pool of contractors capable of doing the specialized water infrastructure work — coupled with a strict PLA — this drives up bid amounts and prevents the city from awarding the contracts, said Courtney Lindberg, public works director.
“I can’t do my job if no one bids on projects,” she told The Pajaronian.
Another problem, Lindberg said, is that non-union contractors who want to bid on a municipal project managed by the People's Liberation Army are forced to use union workers instead of their own and pay union dues and benefits.
“It just destroys your profit margin,” Lindberg said. “You can do it, but why would you do that? You'll lose money.”
Lindberg emphasizes that she is not anti-union and points to three of them who work with her department.
Granite Construction and Graniterock, both union shops, are doing road projects in the city, she said.
But when she started two years ago, there was a 10-year backlog of water projects, Lindberg said.
Casey Van Den Heuvel, CEO of the Monterey/Santa Cruz Building and Construction Trades Council, said the city's statement doesn't tell the whole story.
He explained that engineers' estimates are often available six months to a year before the tender process begins. This is a problem in a volatile market where prices are constantly fluctuating.
Additionally, jurisdictions often only pay engineers to design 60% of a given project. Therefore, when contractors later submit the full estimated cost for the final bid, jurisdictions are unable to afford it.
That could have devastating consequences for a project, he said, pointing to the now-canceled nature center at Ramsay Park.
According to him, the engineer's estimate for this project contained 142 clarifying questions from contractors.
“These (aspects) were all left out of the plans because they didn’t pay for fully developed plans,” he said.
This is a “perfect storm” to exceed the engineer’s estimate, Van Den Heuvel said.
City staff asked the council to repeal the PLA and raise the threshold from $600,000 to $1.5 million.
Furthermore, it would not require PLA, but would only trigger one when a particular project meets certain requirements.
The changes also included a three-year expiration date for PLAs, after which they would be renegotiated.
In addition, the proposal provides exceptions for water and wastewater treatment projects, which have different technical standards than other infrastructure projects.
A separate provision would allow the city to waive the PLA for a specific project if it prevents the completion of important projects.
Councilman Jimmy Dutra said he agreed with the changes.
“Projects in the city of Watsonville are not being completed,” he said. “My priority is the people who live in this community, and if you live in this community, you want your infrastructure updated.”
However, Councilor Ari Parker expressed concern that there would be no final PLA if the council voted to repeal the existing one.
“I don’t want to do anything with this PLA until we have a finished PLA to replace it,” she said.
Without an appropriate, mutually accessible framework, problems could last for years, she said.
“I’m not comfortable with that at all because of what we need to do to build a future for Watsonville,” she said.
Van Den Heuvel also hoped the city would agree to form a joint board of directors made up of an equal number of sales representatives and city employees to resolve disagreements with projects, a proposal Councilwoman Kristal Salcido rejected.
She explained that such a requirement would delay the process.
“We need to be able to immediately put things out to tender for where there are not enough bids,” she said.
Van Den Heuvel said he is willing to work with council members and city staff to negotiate an agreement.
“I'm prepared to craft a project labor agreement that will benefit this community, ensure that we enforce those training standards and ensure that we enforce prevailing wage laws so that they fit the region,” he said. “But I can’t do that if I’m climbing a wall and someone doesn’t want to make any changes themselves.”