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Construction Groups Mull Opposing Hotel-Tax Hike

San Diego’s Associated General Contractors chapter and the Coalition for Fair Employment in Construction fear that a hotel-tax measure includes a backdoor attempt to allow a controversial project labor agreement – and that could spell trouble for the tourism and labor coalition behind the measure.

Longtime hotel industry leader, Mike McDowell speaks at the launch of a campaign to expand the Convention Center and fund homeless services with a hotel-tax increase. / Photo by Lisa Halverstadt

Two lobbying groups hostile to union-friendly construction agreements are seizing on language in a hotel-tax hike and Convention Center-expansion proposal, claiming backers may be quietly paving the way for a controversial deal.

A coalition of labor unions and pro-business groups earlier this month unveiled a citizens’ initiative that would increase hotel taxes to expand the Convention and pay for homelessness programs and road repairs. The initiative cites legislation pushed by Assemblyman Todd Gloria allowing city officials to pursue a contracting method, known as “construction manager at risk,” that they believe could shave at least $25 million off the tab to expand the Convention Center.

But leaders of San Diego’s Associated General Contractors chapter and the Coalition for Fair Employment in Construction fear language included in both the initiative and the Gloria bill, which was signed into law last fall, eases the path for a project labor agreement.

A project labor agreement is a contract in which a labor union guarantees a construction effort will have the workers it needs, in exchange for contractors hiring workers through the union and paying into union benefit systems.

Now construction groups are weighing their options on a tax increase measure that could be imperiled by any well-funded opposition.

“There’s a chance that we could oppose this,” said Brad Barnum, the local AGC’s executive vice president.

Barnum and Eric Christen of the Coalition for Fair Employment in Construction are scrutinizing initiative language that references a contracting method that allows the city to hire a contractor to execute the project and hold it to a guaranteed cost.

They worry it could act as a backdoor to a labor deal and could prevent their members from getting a fair shot at Convention Center work while leading to more out-of-town contractors getting those jobs.

Christen’s group is set to meet Thursday to discuss whether to oppose the measure. He was a key champion behind Proposition A, a successful 2012 ballot initiative that banned government-mandated project labor agreements.

Spokespeople for Gloria, Mayor Kevin Faulconer and the coalition behind the hotel-tax proposal say the construction groups’ worries are unwarranted and that the measure wouldn’t run afoul of Prop. A.

All say that neither the state legislation nor the hotel-tax proposal mandate a project labor agreement. They say they intended to control cost overruns, not facilitate controversial labor agreements.

Christina Di Leva Chadwick, a spokeswoman for Mayor Kevin Faulconer’s office, said mayoral staffers requested help from Gloria over the summer when they realized they’d need state legislation to clarify that the city could use the construction manager at risk method for future projects. They saw it as a helpful tool for both the Convention Center expansion and a series of major water purification projects.

Gloria, a former City Councilman and longtime Convention Center expansion backer, soon worked with Assemblywoman Anna Caballero of Central California to amend a bill she already had in the works for counties statewide.

The new law gives the city the ability to use the approach for projects with a sticker price of over $25 million if it commits to using a “skilled and trained workforce” or if the city or its construction manager enters into a project labor agreement.

The references to a “skilled and trained workforce” and a project labor agreement concerned Barnum and Christen.

Similar language has been included in multiple pieces of state legislation. It’s generally meant that workers have graduated from training or apprenticeship programs certified by the state. This language usually benefits union contractors, who tend to have more established training programs.

For that reason, Christen reads the language as favoring union workers and hampering non-union contractors.

“It’s just an implicit form of exclusion,” Christen said.

Charles Black, an attorney who once worked on waterfront Convention Center expansion plans who now works for a hotel developer who wants to build on the same waterfront site, agrees.

He believes the project labor and skilled workforce requirements can only be met by union contractors.

“I view this as being a very complex way to conceal the fact that non-union workers are going to be excluded from this project,” Black said.

Gloria, Faulconer and the labor and business coalition backing the initiative are adamant that’s not true. They say the city or contractors can meet the skilled and trained workforce requirement with union or non-union labor.

And Faulconer, who directs the city officials who’d be working to facilitate Convention Center construction agreements, said he won’t support a city-brokered project labor agreement.

“Mayor Faulconer has a long-standing tradition of opposing government-mandated PLAs,” Chadwick wrote in a statement. “That position has not changed.”

That’s not to say union leaders aren’t hoping for a project labor agreement.

Tom Lemmon, business manager of San Diego County Building and Construction Trades Council, acknowledged he’d like to ink an agreement for work on a potential Convention Center project – and that the new law and initiative language could be helpful.

After all, Lemmon said, he believes Building Trade workers are most qualified.

“Obviously, we like the language because it provides (for) a skilled and trained workforce and we’re very comfortable that we can meet those requirements,” Lemmon said. “I also believe that other organizations will be able to also, just not as easily.”

If the Convention Center project moves forward, Lemmon said he expects the eventual contractor for the project will approach his union. But Lemmon, whose union played a leading role in negotiating the tax initiative, emphasized his lack of involvement in the Gloria legislation.

Nick Serrano, a Gloria spokesman, confirmed Faulconer’s office pushed the contracting language for San Diego. He also said verbiage on labor standards was modeled after language elsewhere in the bill.

Yet Barnum and Christen are skeptical of how the process went down. They raised flags years ago when past Convention Center project contractor Clark/Hunt reached an unconsummated agreement with labor months after Prop. A passed, an effort they saw as a way to evade the 2012 initiative. Barnum’s group also campaigned against a failed 2016 Grossmont-Cuyamaca Community College District bond after the board approved a project labor agreement for other construction projects.

Now the construction groups are concerned about the Convention Center expansion measure.

“I can’t say we oppose or support it yet because of this language,” Barnum said.

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