August 2, 2023
To: Mayor John McCann (via electronic submittal)
Councilmember Carolina Chavez
Councilmember Jose Preciado
Councilmember Alonso Gonzalez
Councilmember Andrea Cardenas
Subject: August 8, 2023 Contractor Transparency Ordinance and Project Labor Agreements
Dear Honorable Members of the City of Chula Vista City Council:
The housing crisis in our region is threat ening the health, safety and well -being of all San Diego residents. The only solution to the housing crisis is to build more homes. The City’s current proposal s related to a Contractor Transparency Ordinance and Project Labor Agreements (PLA) will collapse the housing market in Chula Vista. The BIA opposes all aspects of the proposal being presented to City Council on August 8, 2023, for the following reasons:
1. Inadequate Stakeholder Engagement: On May 9 , 2023 the City Council approved a motion to “ Formally engage in the process of developing a citywide Project Labor Agreement (PLA) with input from the San Diego Building and Construction Trades Council.” Limiting public participation to one stakeholder group is in direct conflict with the City’s Justice, Equity, Diversity and Inclusion Efforts. Our organization is deeply confused why traditional stakeholder engagement would not apply to this policy proposal. The City of Chula Vista has 9,056 registered In -City businesses, 90% of which are 10 or fewer employees. 2,535 of these local businesses hold Women-Owned, Minority-Owned, Veteran- Owned or Disabled -Owned certifications(source). These small and emerging business are the ones that will be hurt most by the PLA proposal and Contractor Transparency Ordinance. These are the organizations that should be offered the opportunity to provide stakeholder input. The motion made on May 9 begs the questions – Do policy makers in Chula Vista truly want to have a robust discussion about what would best serve the residents of Chula Vista? Do the elected officials with the City of Chula Vista work for the citizens in the City, or do they work exclusively for the San Diego Building and Construction Trades Council?
2. Economic Analysis: The City must conduct an economic analysis related to their PLA proposal to identify if the costs related to implementing these policies outweigh the benefits and if implementation of such policies will halt the development of homes in the City . It is well known that PLAs significantly increase project costs and result in fewer overall housing units. Specifically, PLA can add approximately $43,000 per housing unit to projects covered by the agreement — a 14.5 percent increase in construction cos ts(6). In California, the average development cost for a unit of affordable housing ranges from $400,000 to $700,000, or 15 to 50 percent higher than the average development costs for a unit of affordable housing in other parts of the nation (7). If we acknowledge we have a housing crisis, any costs added to the production of housing should not be considered, at all. Likewise, evaluating what it would cost a General Contractor to submit the required information for the Contractor Transparency Ordinance nee ds to be understood. The economic impacts of the Contractor Transparency Ordinance and the Project Labor Agreements must be evaluated before both proposals are implemented.
3. Precedent Setting and Infeasible Requirements: The requirements outlined in the proposed Contractor Transparency Ordinance far exceed those adopted by any surrounding jurisdiction. The proposed wording is infeasible to comply with.
Creating a regulatory framework that increases construction risk in the City to a level beyond any surrounding jurisdiction will result in a significant reduction in residential development within the City. Specifically,
• The proposed wording within Section 2.71.050 puts a significant disadvantage on Chula Vista’s small, local contractors that work in th e development industry. There is no clear path to resolution or implementation in this section. Proposing policies that greatly increase risk for companies to do business in the City will result in businesses leaving the City. • State and federal law and re gulatory entities exist to monitor enforcement actions related to labor law violations. When the government fails to do their job, developers should not be required to do it for them. The reporting requirements identified in Section 2.71.040(B)(2)(e) tasks private companies with implementing the responsibilities of government entities. This requirement must be removed from the ordinance.
The housing crisis in our region is much larger than anyone has acknowledged.
Any addition of regulatory policy that is not based on market economics and transparent stakeholder engagement will exacerbate the housing crisis. In 2022, 14,592 San Diegan’s identified as homeless .(1) 303,656 San Diego households are currently on a waiting list for housing assistance services .(2) The median listing home price in San Diego in June 2023 was $1 million .(3) The median income in the City of Chula Vista is $92,913.(4) In order to qualify for a mortgage for a million dollar home , a person would need to make between $195,000 and $210,00 0 annually or $16,300 per month .(5) San Diego’s lack of existing homes has caused rental and sale costs to skyrocket to a level completely unaffordable to most Chula Vista residents.
The housing crisis is urgent and is affecting every community and every income level in our region. We must increase the housing supply to meet the housing demand of the people. There is no other solution but to unwind the regulatory process that has created a structure where i t is nearly infeasible for developers to gain enti tlements and break ground on new residential construction. We need new homes built quickly, in every community and of every type – subsidized, market rate, rentals, owner, single family and multi - family. We cannot add additional regulations that will furth er collapse the market. Please vote no on this proposal.
Sincerely,
Hannah Gbeh
Vice President of Government Affairs
Building Industry Association of San Diego County
[email protected]
Sources:
1. 2-1-1 San Diego Client Profile Report CY 2022.
https://211sandiego.org/wp-content/uploads/2023/03/2-1-1-San-Diego- Client-Profile-Report-All-Clients-CY2022-2023-02-24.pdf
2. San Diego Housing Commission. Annual Report for Fiscal Year 2022. https://www.hud.gov/sites/dfiles/PIH/documents/SanDiegoFY22Report. pdf
3. Realtor.com. https://www.realtor.com/realestateandhomes-search/San- Diego_CA/overview Chula Vista Diego. 2022.
https://www.census.gov/quickfacts/fact/table/chulavistacitycalifornia,san diegocitycalifornia,US/PST045222
4. Fortune.com. https://fortune.com/recommends/mortgages/how-much- salary-to-buy-1-million-home/
5. Fiscal Year 2024. Elev Chula Vista. Office of Economic Development Work Plan. https://www.canva.com/design/DAFioHzMCM8/-
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g/view?utm_content=DAFioHzMCM8&utm_campaign=designshare&ut m_medium=link&utm_source=publishsharelink#1
6. The Effects of Project Labor Agreements on the Production of Affordable Housing.
https://www.rand.org/pubs/research_reports/RRA1362-1.html
7. California 100. Housing and Community Development in California.
Housing-and-Community-Development-FOT-REPORT-Single-pages- FINAL.pdf (california100.org)