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San Diego now faces legal uncertainty about whether Prop. A’s approval will leave the city ineligible for millions in state construction grants.
Contractors and anti-labor forces notched another victory Tuesday in a years-long battle against union-friendly deals called project labor agreements.
Voter approval of San Diego’s Proposition A, which was winning late Tuesday with 58 percent of the vote, marks the fourth loss by organized labor in a series of heated elections since 2009. This time, labor dumped more than $1.3 million on the contest but still failed to corral enough voters.
Prop. A bans the city from requiring the agreements on construction projects unless required by state or federal laws. Voters have approved similar bans for Chula Vista, Oceanside and San Diego County’s government.
All four battles stem from a 2009 decision by the San Diego Unified School District to use an agreement for a $2.1 billion bond to repair schools. The deal basically guaranteed that organized labor would collect a chunk of business from the school repairs. Contractors had to use workers from union hiring halls and the unions collected a fee for each hire.
The agreement also allowed the school district to take more control over who would work on the projects and how they would be compensated. It set requirements for a local workforce, fringe benefits and resolving contract disputes.
Nonunion contractors argue the arrangement is unfair to them, and hurts their ability to win contracts in a competitive bid. Unions argue the deal makes the bidding process fairer by requiring contractors to provide workers with the same wages and benefits.
Though the city of San Diego has never signed agreements like the school district, nonunion contractors set out to prevent it from ever happening. With big civic proposals discussed for the near future — like a Convention Center expansion and a new Chargers stadium — contractors wanted to remove the agreements as an option.
The actual cost of using project labor agreements is widely debated. Studies have shown the additional requirements set by government can increase construction costs. But other studies refute those findings or argue the additional costs are worthwhile in the long-run.
In exchange for better compensation, organized labor normally agrees to prevent any work stoppages. Some government officials argue paying a little more to reduce the risk of strikes is a good deal in the end because delays can spike costs dramatically.
Aside from the ban, Prop. A also requires the city to post additional information about government contracts online. City budget officials estimate the new requirements will cost nearly $1 million upfront and $450,000 each year thereafter.
The major question now is how the ban will impact city coffers in the long-term. Months before the election, state lawmakers approved two pieces of legislation aimed at financially penalizing cities with bans like Prop. A.
The state laws basically said cities with bans would be ineligible for state construction grants. In the past two years, San Diego has received more than $200 million in state construction grants, according to city budget officials.
The city’s new downtown library, for example, is partially funded by a $20 million state grant.
If state officials follow through on their warnings and halt funding to San Diego, the battle over project labor agreements may well head to the courts. The initiative’s proponents, rallied behind the Associated Builders and Contractors, argue the proposal contains a loophole to avoid the state penalties.
The City Attorney’s Office, which would defend the initiative in court, hasn’t weighed on whether such a loophole exists or whether San Diego will lose state funding. In materials mailed to voters before the election, the office only said the financial impact of the state laws was unclear.
Prop. A and similar election battles in the region have gained national attention, because both sides want to see whether San Diego’s strategies may work in other towns. The agreements’ foes have found success at the ballot while proponents have instead turned to legislators.
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