Cost/Benefit Analysis:
Prevailing Wage and
Skilled and Trained
Workforce
City Council
July 30, 2024
COMMUNITY
DEVELOPMENT
WHY ARE WE HERE?
• Discuss Construction Workforce Programs and Policies and the potential impact and benefits on housing
development
• Receive Council’s feedback
CITY OF
BURBANK
WHY ARE WE HERE ? (Continued)
• Adopted Burbank 2021 -2029
Housing Element (27 Programs)
• Request from Labor Unions
• Costs and Benefits of Workforce
Programs
• City’s Housing Production Goals
WORKFORCE PROGRAMS & POLICIES
1. Prevailing Wage
2. Skilled and Trained Workforce (STW)
3. Apprenticeship
4. Local Hire
SUMMARY OF ANALYSIS
• There are benefits to construction workers and project completion/safety (according to the labor unions)
• There are cost impacts to private housing development:
o 1.7% – 16.4% increase in construction cost, depending on the workforce program/policy
• Findings on benefits and impacts should be considered in future updates to Density Bonus and Inclusionary
Housing Ordinances
ANALYSIS / METHODOLOGY
1. Surveyed California cities
2. Literature Review
3. Stakeholder Meeting/Interviews and Community
Outreach
4. Housing Construction Cost Models
SURVEYED CITIES’ WORKFORCE PROGRAMS
CITIES WITH
WORKFORCE
PROGRAMS/POLICIES
Berkeley
Hayward
Santa Ana
Los Angeles
Pasadena
San Francisco
EXAMPLES OF PROGRAMS/POLICIES
• Berkeley’s Hard Hats Ordinance
• City of Santa Ana’s Inclusionary Zoning Ordinance
• City of San Francisco Local Hire Policy ( CityBuild
Program)
LITERATURE REVIEW
Researched both academic and industry specific articles • Prevailing Wage/Skilled and Trained Workforce
Does impose additional cost (average 19.5% increased
hard cost)
• Apprenticeship programs
Usually linked with other workforce programs such as skilled and trained workforce .
• Local Hire policy
Could be administered by local jurisdiction or local union
STAKEHOLDER AND COMMUNITY OUTREACH
• Roundtable with Stakeholders – December 2022
• Individual Stakeholder Interviews :
o Development Community (for-profit/non -profit)
o Union Representatives
• Community Meeting – June 2024
SUMMARY: OUTREACH
DEVELOPER CONCERNS:
• Higher cost
• Competition for labor (skilled and trained workforce) • Pressure on financial feasibility of housing projects UNIONS:
• There are benefits to having construction workforce programs/policies
• Higher project quality and efficiency
• Increase safety and fewer workplace accidents
HOUSING CONSTRUCTION COST MODELS
COST
DIFFERENTIAL
PROTOTYPICAL
HOUSING
DEVELOPMENT
TYPES
INCREASE IN
HOUSING
CONSTRUCTION
COSTS
All analyzed programs increase construction costs:
• Prevailing Wage or STW cost impact – 16.4%
• Apprenticeship cost impact – 14.1%
• Local Hire cost impact : 2.0%
SUMMARY: COST MODELS
STATE LAWS – HOUSING
• SB 35 and SB 423
• AB 2011
• In the past 3 years, City has received and processed
nine (9) SB 35 applications
PROJECT SCHEDULE
Economic
Feasibility Analysis
(August 2024)
Draft IH/DB
Ordinances
(August - September
2024)
Public Hearings
and Adoption
(End of 2024 –
Beginning of 2025)
Community
Outreach
(Fall 2024)
SUMMARY OF ANALYSIS
• There are benefits to construction workers and project completion/safety (according to the labor unions)
• There are cost impacts to private housing development:
o 1.7% – 16.4% increase in construction cost, depending on the workforce program/policy
• Findings on benefits and impacts should be considered in future updates to Density Bonus and Inclusionary
Housing Ordinances
RECOMMENDATION
• Note and File
• Provide City staff with feedback
on report findings as work
progresses on updates to the
City’s Inclusionary Housing and
Density Bonus Ordinances
PROJECT PLANNER CONTACTS
• David Kim
Senior Planner, [email protected]
• Greg Mirza -Avakyan
Senior Planner, [email protected]
Community Development Dept. – Planning
818-238-5250