Community and Economic Development Committee
July 23, 2024
AGENDA REPORT
TO: Jestin D. Johnson FROM: Emylene Aspilla
City Administrator Director, Department of
Workplace and Employment
Standards (DWES)
SUBJECT: SUPPLEMENTAL – Potential Labor
Standards Expansion For New
Construction Measure U
Affordable Housing Funding
DATE: July 18, 2024
City Administrator Approval Date:
RECOMMENDATION
Receive A Report And Recommendation On Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding As Follows: (A) Receive Presentation On The Stakeholder Engagement Related To A Potential Expanded Labor Standards Policy; (B) Provide Recommendation To Staff On Specific Components Of A Potential Expanded Labor Standards Policy By Conducting A Study Session
REASON FOR SUPPLEMENTAL
The Community and Economic Development (“CED”) Committee (“Committee”) held a Study Session on Potential Labor Standards Expansion on June 11, 2024 and requested staff to engage with specific community stakeholders and provide data and more information on new construction affordable housing development on these dimensions:
1) Applying the Alameda County Measure A1 (“MA1”) Project Labor Agreement (“PLA”) as a model for an Oakland PLA
2) Labor Standards and PLAs in other jurisdictions on affordable housing 3) Local efforts to increase/retain African American apprentices and workers and related data available
4) Formal research related to the impact of PLAs on affordable housing new construction
This Supplemental Report provides details on the additional information requested.
Jestin Johnson (Jul 19, 2024 07:08 PDT)
Jul 19, 2024
Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 2
Community and Economic Development Committee
July 23,2024
1. Applying the Alameda County Measure A1 (“MA1”) Project Labor Agreement (“PLA”) as a model for an Oakland PLA
The Committee requested information on whether Measure A1 (“MA1”) could be a model for an Oakland Project Labor Agreement (“PLA”), the status of the MA1 projects, and the impact of MA1 labor standards on project goals. PLAs are typically negotiated agreements between stakeholders and affected parties. MA1 was negotiated for Alameda County priorities and market conditions. Oakland’s stakeholders may have different priorities and operate under different market conditions.
Measure A1 Labor Standards and Business Inclusion Requirements
In 2016, Alameda County voters approved the Measure A1 General Obligation Bond to raise $580 million for affordable housing in the county. The MA1 Implementation Policies require a set of labor standard and business inclusions be implemented on all funded projects. For new construction projects with 80 or more units, a Project Labor Agreement is required that is compliant with specified terms in the Implementation Policies. The Implementation Policies also expected the Non-Profit Housing Association of Northern California (“NPH”) and the Trades to negotiate a compliant template PLA within 90 days after the adoption of the policies so that developers could elect to use the pre-approved template PLA or negotiate an alternate compliant PLA for covered projects.
Below in Table 1 is a high-level summary of the major terms and conditions required by the MA1 Labor and Contract Compliance policies adopted by the Alameda County Board of Supervisors. The geographic requirement for “local” for MA1 is Alameda County.
Table 1.
Labor Standards
• Prevailing
Wage
All projects must pay prevailing wage.
• Local and
Targeted Hire
County residents must work 30% of all hours funded by MA1. Targeted Disadvantaged Workers must work 5% of hours.
Business Inclusion
• Local
Participation
Twenty-five percent (25%) of the MA1 contract must be paid to county- based businesses.
• Small
Business
Twenty percent (20%) of Measure A1 contract must be paid certified small county-based businesses.
• Reporting Minority-owned businesses (MBE) and woman-owned businesses (WBE) participation must be tracked and reported.
Project Labor Agreement (80 or more units)
• No Strike/No
Lockout
The PLA will contain guarantees against work stoppages, strikes, lock- outs, and similar disruptions on the Covered Project.
Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 3
Community and Economic Development Committee
July 23,2024
• Participation
by Non-Union
Contractors
All qualified contractors, both union and non-union, will be allowed to bid on and be awarded work on the Covered Projects without regard to whether they are otherwise parties to collective bargaining agreements. • Rule of Three If the general contractor receives bids from subcontractors that result in the Covered Project exceeding the 125% Tax Credit Allocation Committee (“TCAC”) 9% cost basis limit, then, for those subcontracts with fewer than three “Qualified Contractor” bidders the Trades will be granted a ten-day “re- bid” period to identify and encourage additional bidders on those subcontracts. If, after the re-bid period there are still fewer than three bidders for those subcontracts, then the general contractor may re-bid those subcontracts without PLA coverage (i.e., not Covered Work). The term “Qualified Contractor” means a licensed, financially qualified contractor with experience in the type of work required and that is capable of meeting the job schedule, has submitted a commercially reasonable bid, is bondable, carries appropriate insurance, including Workers’ Compensation insurance (or participates in a State recognized Workers’ Compensation Alternative Dispute Resolution (“ADR”) Program), and is otherwise capable of satisfying all requirements of the bid specifications. Developer and Trades can negotiate a different cost control approach in a specific case. • Non-union
contractors:
ability to use
“core workers”
Non-union contractors must make first hires from the union hall; then can retain a “Core Worker” (registered with the hall); additional hires shall alternate 1:1 until a maximum of five (5) Core Workers have been hired; all future hires are from the hiring hall. A Core Worker is defined as an employee who was on active payroll for 60 out of the prior 140 days, and possesses all required credentials and licenses and the skill to safely perform the work.
• Wages and
Benefits funds
All contractors working under the PLA will pay into benefits funds as set forth in applicable Master Agreements, and pay wages consistent with the applicable Master Agreement.
• New
Apprentices
One new apprentice shall be hired for each $5 million in Covered Project cost.
• Process for
compliance
with Targeted
Hire
Requirements
When a public entity or jurisdiction providing funding for the Covered Project (“Funding Jurisdiction”) imposes a local/targeted hiring requirement as a condition of
funding, contractors may comply with any other recruitment or hiring procedures required by any Funding Jurisdiction. Unions agree to refer local/targeted workers to contractors on a priority basis as needed for contractors to satisfy the requirement; and if the hiring halls do not have local/targeted workers available, they will allow contractors to obtain those workers from other non-union sources.
• Compliance
with
Small/Local
Business
Entity
(“S/LBE”)
If, after the Developer receives bids from subcontractors, there is not sufficient S/LBE participation to achieve S/LBE requirements imposed on the Covered Project by Funding Jurisdictions while not exceeding 125% of the TCAC 9% cost basis limit, and the Developer (or prime contractor) has identified an S/LBE contractor who would have bid under different PLA terms, then the parties obligation to meet and confer is Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 4
Community and Economic Development Committee
July 23,2024
Contracting
Requirements
triggered (with opportunity for discussion of terms for re-bid). At the end of a ten-day meet and confer period, one or more subcontracts may be re-bid competitively if necessary to meet the S/LBE participation requirement, either with agreed-to revised terms or without application of the PLA requirements to the subcontract in question.
• Assignment of
work
Jurisdictional assignments will be based on the Trades’ system. • Off-site work Off-site manufacture of modular housing or structural components will not covered work under the PLA; off-site manufacture of sheet metal and plumbing components will be covered work within PLA if such work is covered by Sheet Metal or U.A. Master Agreements.
• Dispute
Resolution
A binding dispute resolution procedure shall apply for alleged violations of the PLA that allows for resolution of grievances through unanimous agreement of Developer and Trades or, if no unanimous agreement, through arbitration. PLA lists five arbitrators empowered to resolve grievances; parties strike names on an alternate basis. A separate binding dispute resolution procedure shall apply to jurisdictional disputes and to no-strike/no-lockout disputes.
• Sole
Proprietors
A Sole Proprietor self-performing work shall not be required to use a worker from the union hiring hall. However, if during the term of the PLA, the Sole Proprietor later hires employees, the Sole Proprietor will be treated as a Core Worker and any subsequent employee(s) will be dispatched from the hiring hall. Sole Proprietors in the trucking industry will be treated as Core Workers, but must nevertheless be dispatched from the hiring hall and will be exempt from trust fund obligations, but must pay representational fees. "Sole Proprietor" means a licensed contractor with no employees and exempted by the California Contractor's State License Board from the requirement to obtain and maintain workers' compensation insurance.
• Project
Management
Developer and prime contractor, through the bid documents, may establish a uniform work schedule across crafts of up to 8 hours per day, with consistent start and stop times. Overtime for hours performed within that schedule shall be paid if required by applicable prevailing wage laws.
• Taxpayer
Protection
Provisions
The PLA will contain all of the taxpayer protection provisions listed in Public Contract Code section 2500(a), including prohibiting discrimination based on race, national origin, religion, sexual orientation, political affiliation, or membership in a labor organization in hiring or dispatching workers for the Covered Project and an agreed-upon protocol concerning drug testing for workers who will be employed on the Covered Project.
Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 5
Community and Economic Development Committee
July 23,2024
Progress on Goal Attainment of MA1 Labor and Contract Compliance Program
According to the Alameda County Community Development Agency “Report #6 on the Measure A1 Labor Compliance Program for Affordable Housing Projects (2023 Calendar Year Update),” as of December 31, 2023, the County committed funds to 55 MA1 projects comprising 4,179 units of housing. This exceeded the goal of 3,800 new affordable housing units. The projects had 36% of construction labor hours performed by county residents, exceeding the goal of 30%.
County residents performed more than 50% of all apprentice hours and more than 30% of journey person hours. (See Report #6 in Attachment B.)
According to Report “#5 Update on the Measure A1 Labor Compliance Program for Affordable Housing Projects,” through February 28, 2023, 28 projects were completed, and all the workforce and business goals were exceeded: (See Report #5 in the Attachment B.)
Table 2. Measure A1: Workforce and Business Goals (Report #5) The majority of MA1 completed projects through February 28, 2023 did not have a PLA; Two (2) of the 28 projects had a PLA, with one of these projects being located in Oakland, and the other project located in the City of Berkeley. These two projects also exceeded the workforce and business goals.
Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 6
Community and Economic Development Committee
July 23,2024
Table 3. PLA Project Completed Summary (Report #5)
As of February 28, 2023, Alameda County estimated that only 11 of the 52 projects (21%) were subject to a PLA. The majority of MA1 Projects do not require a PLA. Due to the high degree of variation of the projects with PLAs, Alameda County reports that they are “unable to draw any conclusions regarding the Project Labor Agreement.” Below is a side-by-side comparison of the goal attainment on all completed projects without a PLA versus the two completed projects with a PLA.
Table 4. Completed Projects with and without a PLA
Goals
28 Completed
Projects
(No PLA)
2 Completed
Projects with a
PLA
Local Hire (30%) 41% 41%
Equity Priority Worker Hire (5%) 12% 17%
Local Contracting (25% of MA1 investment) 582% 285%
Small Local Contracting (20% of MA1 investment) 191% 81%
While Local Hire participation is identical on projects with or without a PLA, Equity Priority Hire is higher on projects with a PLA. In terms of local and small local business contracting, projects without a PLA have higher local and small local business participation.
At this time, given the small number of projects, it is not possible to conclude what the underlying reasons might be for these differences for projects with and without a PLA, or if these differences are actually meaningful and not due to unique project level factors.
Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 7
Community and Economic Development Committee
July 23,2024
Race and Ethnicity of Workers and Business Owners on MA1 Projects
The table below shows the percentage of MA1 new affordable housing development workforce by race and ethnicity for 20 completed projects compared to the percentage of the full County labor market and then the County construction labor market.
Table 5. Workforce by Ethnicity for Completed Projects
The County has not yet published race and ethnicity information for Business Owners on MA1 projects.
Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 8
Community and Economic Development Committee
July 23,2024
City of Oakland MA1 Projects
A total of 14 new construction projects received funding from Measure A1. The 14 new construction projects listed below received funding from both Alameda County’s Measure A1 and the City of Oakland:
Table 6. MA1 Projects in the City of Oakland
Project Name Total
Project
Units
Affordable
Units
A1 Funding
Committed
Fruitvale Transit Village II-B (Casa Suenos) 181 169 $16,227,175 Brooklyn Basin: Project 3 (Foon Lok West) 130 129 $9,698,000 Aurora Apartments (aka MacArthur Apartments) 44 43 $6,447,872 Coliseum Place 59 58 $9,775,050
Monarch Homes (aka 3268 San Pablo) 51 50 $7,180,000
Nova Apartments (aka Oak Hill) 57 56 $13,766,776
Redwood Hill Townhomes 28 27 $825,000
Estrella Vista - 3706 San Pablo, Olympia
Place
74 33 $2,101,139
Camino 23 37 36 $4,336,725
Casa Arabella* 94 92 $6,350,000
Coliseum Connections** 110 55 $2,500,000
West Grand & Brush 59 58 $7,289,799
7th & Campbell 79 78 $12,688,996
Ancora Place 77 77 $5,370,606
*Casa Arabella was given an emergency A1 allocation and was therefore exempt from the PLA requirement.
**Coliseum Connections was a half affordable, half market rate project. As the PLA only counted affordable units towards the 80-unit threshold, the Measure A1 PLA did not apply.
Of these 14 projects, 11 projects were below the 80-unit threshold at which the Measure A1 PLA applied. One of the three projects was exempt from the PLA provision as it had received an emergency Measure A1 allocation. One project, Fruitvale Transit Village II-B (Casa Suenos), was located on land previously owned by the Bay Area Rapid Transit District (BART) and therefore was subject to a PLA per BART’s requirement. Only one City of Oakland MA1 Project, Brooklyn Basin: Project 3 (Foon Lok West), was subject to the MA1 PLA.
Labor Standards and Business Inclusion Participation on City of Oakland MA1 Projects
The Department of Workplace and Employment Standards (“DWES”) enforces City contractor Labor Standards and Local/Small Local Business Enterprise (“L/SBLE”) minimum participation.
Contractors are required to submit records that DWES uses to assess compliance with prevailing wage, local employment, apprentices, and local and small local business participation. Workers and business owners may indicate their race and ethnicity and gender identity, but they are not required to do so.
Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 9
Community and Economic Development Committee
July 23,2024
DWES noted in the May 30, 2024 Agenda Report that the department has never published reports or evaluations. The department still does not have the capacity or resources to produce full analyses. The analysis of the incomplete data presented here are based on the best data available. It should be noted that while contractors submit some records electronically into systems such as LCP Tracker for certified payroll reports, for the most part, contractors send DWES files in PDF, Word, and Excel format. These files are not in a readable data format and need to be manually entered into a data system and formatted to be analyzed and aggregated – this process is highly susceptible to error. New positions budgeted for the FY 2024-25 will help address these gaps and challenges.
The data used in this section were collected during the process of enforcing business inclusion and labor standards for 14 new construction projects. The data sets used, including specific project data, as well on details on challenges with data appear in Attachment A. The projects are categorized into the following groups:
Table 7. Oakland MA 1 Projects by Completion Status and use of PLA Completed Projects
(No PLA)
Under Construction
(No PLA)
Completed
Projects
with PLA
1. 7th & Campbell*
2. Ancora Place
3. Aurora Apartments (aka
MacArthur Apartments
4. Camino 23
5. Casa Arabella
6. Coliseum Connection**
7. Coliseum Place
8. Estrella Vista (3706 San
Pablo, Olympia Place)
9. Monarch Homes (3268
San Pablo)
10. Nova Apartments (aka
Oak Hill)
11. Redwood Hill
Townhomes
1. West Grand & Brush 1. Brooklyn Basin:
Project 3 (Foon
Lok West)-
Measure A1 PLA
2. Fruitvale Transit
Village II-B
(Casa Suenos) -
BART PLA
*7th and Campbell is not fully completed, but it is included in this category as it is nearing completion.
**No L/SLBE Compliance files were available for Coliseum Connection; the payroll records are also under-reported/incomplete.
Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 10
Community and Economic Development Committee
July 23,2024
Labor Standards Requirements and Worker Demographics
The City of Oakland requires 50% of work hours be performed by Oakland residents, and 15% participation by City of Oakland apprentices. Contractors may receive waivers and exemptions depending on the scope of work and availability of workers. Additionally, if requirements are not met on the project, they are able to get credit from other projects in the City of Oakland. Based on data entered by contractors into LCP Tracker, a total of 12,786 workers (duplicated across contractors and projects) worked 1,864,226 hours on the 14 projects.
Of these totals:
• Hispanic workers were most represented (55%), followed by White workers (15%), followed by African American workers (4%), and Asian workers at 3%. 23% of workers were “not-specified” or were noted as “other.”
• Female workers represented 2% of all workers.
• City of Oakland Workers worked 39% of all hours worked on the projects, with City of Oakland Apprentices working 12% of all hours worked on the project – these percentages are fairly consistent across all projects.
Male
98%
Female
2%
Gender - All Workers
Figure 2: Oakland MA1: Gender
Hispanic
55%
African
American
4%
Native
0%
Asian
3%
Caucasian
15%
Not
Specified/
Other
23%
Race & Ethnicity - All
Workers
Figure 1. Oakland MA1: Race and Ethnicity
Non-
Apprentice
Hours
88%
Oakland
Apprentice …
Oakland Apprentice Hours
Worked
Figure 4. Oakland MA1 Apprentice Hours
Non-
Oakland
Hours
61%
Oakland
Hours
39%
Oakland Hours Worked
Figure 3. Oakland MA1 Hours Worked
Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 11
Community and Economic Development Committee
July 23,2024
Race and ethnicity differences emerge across the different categories when looking specifically at the demographics of the 2,630 City of Oakland workers:
• The number of African American workers more than doubles from 4% to 10% for completed projects without a PLA, it is 11% for the one project still under construction without a PLA, and for the one project with the MA1 PLA. • For the project with the BART PLA requirement, the percentage of African American workers more than triples at 14%.
Gender differences also emerge across all categories of City of Oakland workers:
• The number of women across all categories of projects minimally doubles.
Figure 5. Oakland MA1: Workers by Race and Ethnicity
Figure 6. Oakland MA1: Workers by Gender
Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 12
Community and Economic Development Committee
July 23,2024
In terms of hours worked by City of Oakland workers and apprentice hours, differences emerge for projects with PLAs:
• Both projects with a PLA have a higher number of overall and apprentice hours worked by City of Oakland workers.
While we have (incomplete) data on gender, race, and apprenticeship, we have yet to analyze the relationships between these metrics (e.g., breaking down apprentice hours worked by gender or ethnicity).
At this time, given the small number of projects, it is also not possible to conclude what the underlying reasons might be for these differences for City of Oakland workers across both projects with and without a PLA.
Figure 8: Oakland MA1: Hours by Project Type and Apprentice vs. Non-Apprentice Figure 7. Oakland MA1: Hours by Project Type (PLA, Completed with No PLA, and Under Construction) Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 13
Community and Economic Development Committee
July 23,2024
Business Inclusion: Race and Ethnicity and Local Firms
This report focuses on the proposed participation at the time of the compliance analysis, not the final participation after the project is completed. DWES staff were able to find a sufficient number and quality of files for 13 of the 14 projects to analyze proposed participation but files for actual amount contractors received by closeout were too incomplete to analyze. Key findings are highlighted below. For the project-level data, see Attachment A Table “Proposed Contracts by Completion Status, Use of PLA, and Contractors’ Race and Ethnicity” and “Compliance with Local/Small Local Business Participation by Project.”
Analysis of Race and Ethnicity in Proposed Contracts
Most contractors in the set of 13 projects did not specify their race or ethnicity. The prime contractor or general contractor submitted the list of proposed contractors on a form called the “Schedule R.” They may collect the voluntary self-reported information about the contractors’ race and ethnicity but are not required to provide the data in order to meet the minimum required percentage of local and small local business participation.
Given the project-specific nature of negotiations of PLAs, City staff caution against drawing broader conclusions about from the summary of data reported for this set of 13 projects. The 13 general contractors filing the reports collected race and ethnicity for 152 contractors and represents just under half the contract dollars.
• The 13 of 14 projects with reported data had a total of 595 proposed contracts valued at $518.7 million.
• A majority had no specified race
or ethnicity. 443 contracts (74% of
the total contracts) did not specify
the race or ethnicity of the
contractor. Their contracts had a
proposed value of $270.1 million
(52% of the total dollars). Their race
and ethnicity may or may not mirror
the distribution of contracts or
contract dollars found in the smaller
set of 152 contractors who
disclosed their race and ethnicity.
Figure 9. Oakland MA1: Percent of Proposed Contract Dollars by Race and Ethnicity
Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 14
Community and Economic Development Committee
July 23,2024
The following comparisons of projects and contracts by race and/or ethnicity rely on this set of 152 contracts with disclosed race and ethnicity. This limited reported data may not be indicative of the projects as a whole.
• White contractors and BIPOC contractors had similar numbers of proposed contracts. White contractors had 74 proposed contracts (12%) while the combined total for BIPOC contractors (African American, Hispanic, or Asian/Pacific Islander) was 78 contracts (13%).
• The contract dollars that went to White contractors was about four times that of combined BIPOC total. The proposed value for White contractors was $201 million (39%) while the combined total proposed value for BIPOC contractors was $47 million (9.1%).
• African American contractors received 48 contracts with a proposed value of $21 million (4.0% of total value).
• Hispanic contractors received 29 contracts with a proposed value of $26 million (5%)
• An Asian/Pacific Islander contractor received 1 contract with a proposed value of $319,000 (0.1%).
Projects with Project Labor Agreement (PLA)
Two of the 13 Oakland projects with reported data were subject to PLAs, a BART PLA and the MA1 PLA. The PLAs were negotiated for priorities relevant to the stakeholders for BART and Alameda County. Given the project-specific nature of negotiations of PLAs, City staff caution against drawing broader conclusions about from the summary of data reported from these two projects with two PLAs.
The two projects with PLAs had a total of 105 proposed contracts and $168 million of proposed value. The ten completed projects without a PLA had 442 proposed contracts and $315 million of proposed value. One project without a PLA, West Grand and Brush, is under construction. It Figure 10. Oakland MA1: Proposed Contract Dollars by Race and Ethnicity
Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 15
Community and Economic Development Committee
July 23,2024
is reported separately from the set of completed projects without a PLA because its proposed contracts and amounts may change.
• No specified contractor race is higher in projects with a PLA than completed projects without a PLA.
o Projects with PLA: 86 contracts (82% of contracts); $92.8 million (55% of dollars) o Completed without a PLA: 315 contracts (71% of contracts); $153.8 million (49% of dollars)
• The BIPOC share of contracts and contract dollars is lower in the combined total for the two projects with PLAs than the total for the 10 projects without a PLA. The two projects with PLAs had a lower percentage of contracts and contract dollars awarded to BIPOC contractors than the completed projects without PLAs. We do not know whether the percentage is lower due to voluntary non-disclosure of race and ethnicity.
o Projects with PLAs: 6
contracts (6% of contracts);
$8.6 million (5% of dollars)
o Completed without PLA: 69
contracts (16% of contracts);
$38.0 million (12% of dollars)
o African American and
Hispanic contractors received
a larger share of contracts in
completed projects without
PLAs and the projects with
PLAs.
o Asian/Pacific Islander
contractors received nearly
zero contracts and contract
dollars in PLA and non-PLA
projects.
• The White share of contracts and contract dollars is about the same. The two projects with PLAs had about the same share of contracts and contract dollars awarded to White contractors as the completed projects without PLAs:
o Projects with PLAs: 13 contracts (12% of contracts); $66.9 million (40% of dollars)
o Completed without a PLA: 58 contracts (13% of contracts); $122.8 million (39% of dollars)
Figure 11. Oakland MA1: Contract Dollars by Race
and Ethnicity and Project Type
Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 16
Community and Economic Development Committee
July 23,2024
The two projects with PLAs had different agreements and different demographics. Brooklyn Basin: Project 3 (Foon Lok West) was subject to the Measure A1 PLA. Casa Suenos (Fruitvale Transit Village IIB) was subject to a Bay Area Rapid Transit (BART) PLA.
• Brooklyn Basin: Project 3 (Foon Lok West) had about the same share of BIPOC proposed contracting (11%) as the completed projects with no PLAs (12%). o African American contractors received a lower share in this project (2%) than in their overall share of completed projects with no PLAs (6%). Most of the completed projects without PLAs (6 of them) had a higher share of proposed dollars going to African American contractors than Foon Lok West, while four had a lower share.
o Hispanic contractors received a larger share (9%) than their share of the completed projects with no PLA (6%). Three of the completed projects without PLAs had a higher share of proposed dollars going to Hispanic contractors than Foon Lok West, while six had a lower share.
o Asian/Pacific Islander
contractors did not receive
any contracts in Foon Lok
West.
• Fruitvale Transit Village II-B (Casa
Suenos) had nearly zero BIPOC
contractors.
o One African American
contractor received a contract
valued at $151,000.
o No Hispanic or Asian/Pacific
Islander contractors received
contracts.
Analysis of Local/ Participation in the Proposed Contracts
DWES conducts an Availability Analysis to determine the minimum local and small local business participation required. This occurs before the developer selects the general contractor.
The minimum participation is the standard used to determine compliance with Local and Small Local business participation.
All proposed projects must pass the compliance analysis in order to proceed. DWES found files to analyze for 13 of the 14 projects. All 13 projects either had an issue of incomplete files or inaccurately calculated measures. DWES Compliance Officers receive nearly all the files used in the compliance analyses as email attachments. They report their determinations as memoranda, stored as PDF files. The results are not entered into a data system.
Figure 12. Oakland MA1: Projects Type and Race Ethnicity (detailed)
Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 17
Community and Economic Development Committee
July 23,2024
For this report, DWES read these files to find the percentages of local and small local business credited for compliance and their share of participation in the project. Many files could not be found in time for this report. When compliance files were incomplete or the calculations were inaccurate, DWES calculated the percentages for the projects for this report.
The table in the Attachment A, “Compliance with Local/Small Local Business Participation by Project” contains project-level summaries and include the original and revised measures.
Stakeholder Comments on MA1
The Building and Construction Trades Council of Alameda County (“BTCA”) and the Construction Trades Workforce Initiative (“CTWI”), the Workforce Development Non-profit partner of BTCA, continue to advocate for a PLA requirement on Measure U new construction projects. BTCA/CTWI recommends that the City of Oakland adopt MA1’s framework for a PLA, but also recommends that the threshold for the number of units requiring a PLA be lowered down to 40 from 80, in alignment with proposed SB 735 Legislation. BTCA has shared that the sign-off for each new MA1 Project PLA takes one week. They propose taking the framework from the existing MA1 PLA, and amending it for Measure U – they anticipate that this process would take one month.
Negotiations for the template MA1 PLA provisions took 18 months between Affordable Housing Developers, BTCA, and Minority Contractor representatives. Negotiations resulted in language that allows for exempting local, and small local contractors from requirements if they are needed for local and small local business requirements for the agreement, pursuant to the established policies for MA1. MA1 policies also included a provision to address Affordable Housing Developers’ concerns about not exceeding state allocated costs, including a mechanism where cost issues can be addressed – developers can request to exclude certain components from the PLA to bring costs down – BTCA reports that to date, no contractors have reached out to express concerns about costs. Developers have shared that the proposed process for this provision is convoluted and time-consuming and as a result, impractical to use with compacted bidding timelines. When affordable housing projects receive tax credit financing, there is a legal requirement to begin construction within 180 days or to return the tax credits. This requires an extremely compacted bidding process.
At the June 11, 2024 CED Study Session, BTCA noted that the MA1 PLA is “not perfect,” and that there are improvements that can be made; they welcome working with stakeholders to discuss improvements. Affordable Housing Developers and Minority Contractors agree that the MA1 PLA provisions are “not perfect,” and that further examination of some of the core provisions are necessary. Additionally, because the 18 months of negotiations were focused on Alameda County-specific provisions, stakeholders feel that it is not appropriate to assume that the terms that were negotiated for Alameda County projects will work for City of Oakland projects, given the different economics of City projects and the availability/ demographics of City of Oakland workers and businesses. Stakeholders expressed specific concerns with provisions related to executing specialty work, utilization of core workers, and confusion on how to comply with both apprenticeship and local and small local business participation requirements given the conflicting definitions and requirements of MA1 standards and the City of Oakland’s requirements.
Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 18
Community and Economic Development Committee
July 23,2024
At this time, no Affordable Housing Developers are in favor of a PLA for Measure U new construction projects. Affordable Housing Developers are particularly concerned about escalating costs, and not only about how increased costs will result in a decrease in the number of units that can be funded by Measure U funding, but also about how City of Oakland projects will likely be less competitive for state funding/tax credits due to higher costs-per-unit than other projects competing for funding. Stakeholders estimate that a PLA requirement could result in approximately 10%-40% fewer units. These estimates are in line with the Department of Housing and Community Development’s (“HCD”) estimates that a PLA requirement for affordable housing would result in approximately 40% fewer units of newly developed affordable housing.
NAMC submitted comment noting, “No PLA - It would be detrimental to nonunion minority firms that are already on life support.” Numerous small businesses cited the various administrative burdens on PLAs that act as a deterrent for bidding.
As noted in the May 30, 2024 Agenda Report, many of the comments regarding PLAs repeat the same issues raised in the Community Workforce Agreement (“CWA”) negotiations, and provide a glimpse into the challenges that may arise if a PLA requirement were proposed for Measure U funding, particularly if stakeholders are not given the opportunity to negotiate specific terms as they were given for MA1 and for the City’s CWA. As noted in the December 22, 2022 Memo to City Council titled, “Status Update on Community Workforce Agreement” (See Attachment A), despite numerous negotiation meetings, the City’s Negotiating Team and BTCA were not able to reach an agreement on terms, and negotiations were halted.
Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 19
Community and Economic Development Committee
July 23,2024
2. Labor Standards and PLAs in other jurisdictions on affordable housing
Council members requested information about the use of PLAs in other jurisdictions. In the June 6, 2024 Supplemental Report, HCD provided the following information. There have been no additional PLAs identified since then.
PLAs are not typically required for affordable housing in California. On a statewide level, the Health & Safety Code § 50675.4 generally requires prevailing wages for State-funded projects.
However, State law does not require PLAs in affordable housing. Below are select geographies (cities and counties) and their PLA requirements as related to affordable housing:
• San Francisco has a citywide PLA that does not cover affordable housing. • San Diego is currently in the process of developing a citywide PLA with an unknown final scope.
• Sacramento and San Jose do not reference requiring PLAs in their affordable housing underwriting policies, and staff are awaiting confirmation that no other policy triggers a PLA requirement for affordable housing in those communities. • Alameda County instituted a requirement that Measure A1-funded projects over 80 units are subject to a PLA, but projects funded by non-A1 sources are outside the scope of the PLA.
• The most prominent example of a city applying a PLA mandate to affordable housing was the City of Los Angeles’ with certain Measure HHH-funded projects. These requirements typically kicked in for Measure HHH-funded projects of 65 units or more. • Projects funded by Los Angeles’ recently passed Measure ULA will also require PLAs.
Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 20
Community and Economic Development Committee
July 23,2024
3. Local efforts increase/retain African American apprentices and workers and related data available
Council requested information on local efforts to increase and retain African American apprentices and data on diversity in construction apprenticeships and unions.
City of Oakland Investments in Construction Workforce Development
The City of Oakland recognizes the importance of investing in construction workforce development. Below summarizes the City of Oakland’s construction-related training and pre- apprenticeship investments in Oakland community-based organizations the past three years given funding constraints:
Table 8. Training Programs and City Funding
Organization Amount
Cypress Mandela $75,000
Rising Sun $34,940
Youth Employment Partnership $1,017,432
DWES and the Economic and Workforce Development Department (“EWDD”) have not historically collaborated on building the construction workforce pipeline, but DWES and EWDD are committed to working together to create construction job forecasts for City-funded projects to help inform labor needs, and to more proactively and deliberately advance construction careers as a reliable career pathway.
CTWI/BTCA Initiatives
CTWI/BTCA reported that they will submit a letter to CED detailing their efforts to increase and retain the number of black participants participating in pre-apprenticeship/apprenticeship programs. Below summarizes the efforts that CTWI/BTCA shared at the June 11 CED Study regarding their efforts:
• Helped job seekers by distributing over $2.5M to Oakland-based MC3 programs, Cypress Mandela, and Rising Sun since 2018.
• Launched 3 new MC3 programs at County Juvenile Hall, Castlemont High School, and Laney College next Spring.
• Established Oakland Construction Test Preparation Program to help job seekers pass the union entrance exam.
• Distributed over 50 childcare stipends, ranging from $5k-10K each, for pre-apprentices and apprentices.
• Provided free technical assistance for minority and non-union contractors working under PLAs.
• Revised apprenticeship hiring policies to expedite the entry for M3C graduates, including bypassing the exam for electricians.
• Did an analysis of DAS data for 20 years – trades have done much better in the recruitment, primarily w/ the support of Cypress Mandela and Rising Sun. Have not done as well w/ retention – currently partnering w/ a group called Ramp on a Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 21
Community and Economic Development Committee
July 23,2024
mentorship program, funded through a congressional earmark from Congresswoman Lee – would like to build up Ramp’s capacity to do mentorship.
Alameda County Recommendations
In the May 15, 2023 Memo, "Program Evaluation and Recommendation for the MA1 Pilot Labor and Contract Compliance Program," (See Report #4 in Attachment B), Alameda County articulates various challenges to hiring local and disadvantaged residents in the construction industry. They detail 4 Key Areas for Improvement:
1. Worker Referral System
2. Employment Pipeline
3. Community Based Organizations: Workforce Development Partners
4. Data Collection and Reporting
The recommendations focus on operational and programmatic investments to maximize the inclusion of local disadvantaged workers and businesses in the construction industry, including expanding job training programs targeting underrepresented groups, and ensuring clear employment pipelines for graduates. Many of the recommendations highlight potential efforts for City and County Workforce Development Boards. The report does not offer any recommendations for PLAs.
Data Available on Apprentices
The U.S. Department of Labor maintains an Apprentices by State dashboard. The source is the Registered Apprenticeship Partners Information Database System (RAPIDS). The data are updated quarterly and is presently current through June 4, 2024.
The dashboard can be filtered to provide the number of apprentices by state and county but not city. Additional filters and breakdowns include: gender, race, ethnicity, age cohort, disability, veteran status, education, industry, occupation, and union status.
The data includes apprentices in many industries and occupations. To find construction and craft apprentices, the data can be filtered by Industry to construction or by occupation to find craft (e.g. carpenter, electrician, plumber, etc.).
The charts in this section are screenshots from the dashboard.
Alameda County has a total of 1,139 active apprentices who reside in the county and work in the construction industry. The average hourly wage (mean) was $24.29 and the median was $23.65. The most recent peak was in FY 2020 with 1,547 apprentices]
Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 22
Community and Economic Development Committee
July 23,2024
Union vs. Non-Union: 94% of active apprentices were union, while 6% were non-union.
Union construction apprentices had a higher average wage than non-union. The average hourly wage (mean) for union was $25.78 and the median was $24.02. The average hourly wage (mean) for non-union was $17.13 and the median was $14.00.
Figure 14. Alameda County: Union vs. Non-Union Apprentices
Figure 13. Alameda County: Active Apprentices in Construction, FY 2014- FY 2024 Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 23
Community and Economic Development Committee
July 23,2024
Union Apprentices (total: 1,075 active)
Figure 15. Alameda County: Union Apprentices, FY 2014 – FY 2024
Non-Union (total: 64 active)
Figure 16. Alameda County: Non-Union Apprentices, FY 2014- FY 2024
Ethnicity: Union vs. Non-union
Union: Most participants (64%; 688 active) identified as Hispanic or Latino.
Figure 17. Alameda County: Union Apprentices by Ethnicity
Non-Union: Most participants (83%; 53 active) identified as Hispanic or Latino.
Figure 18. Alameda County: Non-Union Apprentices by Ethnicity
Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 24
Community and Economic Development Committee
July 23,2024
Race: Union vs. Non-Union
Most participants, union and non-union (53% and 55%, respectively), did not identify their race.
Union: 12% (124 active) identified as Black or African American. 27% (295 active) identified as White.
Figure 19. Alameda County: Union Apprentices by Race
Non-Union: 3% (2 active) identified as Black or African American. 36% (23 active) identified as White.
Figure 20. Alameda County: Non-Union Apprentices by Race
Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 25
Community and Economic Development Committee
July 23,2024
Data Available on Race and Ethnicity and Union Status
The Economic Policy Institute (EPI), a non-profit research organization, analyzed racial diversity in the New York City construction industry and compared union and non-union employment using existing survey data without collecting new data. The methodology and sources used represent an alternative for meeting Council’s interest in understanding the local construction labor market including the differences in union and non-union employment without requiring new submissions of data from employers.
EPI examined union and non-union because discussions of diversity in the unionized construction sector often leave out the non-union construction sector and benchmarking both to blue-collar work outside of construction. They found that African Americans made up a larger share (21.2%) of the unionized construction sector in New York City than the non-union sector (15.8%). Wages were also higher in the unionized sector for African Americans than in the non- union sector.
They used microdata from a household survey, the U.S. Department of Labor, Bureau of Labor Statistics (BLS) Current Population Survey (CPS) and unemployment insurance data from from U.S. Census Bureau’s Quarterly Workforce Indicators (QWI) survey. The types of construction industries analyzed included building construction (residential and non-residential), heavy/civil engineering, and specialty trade contractors.
Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 26
Community and Economic Development Committee
July 23,2024
4. Formal research related to the impact of PLAs on affordable housing new construction
RAND and UC Berkeley Labor Center on Cost Impact
Council requested guidance on the different conclusions RAND and the UC Berkeley Labor Center reports drew about the cost impact of the Los Angeles Measure HHH. These reports were summarized in the previous Agenda report and the HCD memo and letters from the two authors were included in the previous Supplemental Report.
The RAND study initially found an approximately 15 percent increase to the pre-construction cost and that developers responded the trigger of 65 units by proposing smaller projects. The UC authors did not find a statistically significant relationship between post-completion project cost and PLA participation using data provided and verified by the Los Angeles Housing Authority. The RAND author reviewed the UC Berkeley Labor Center’s report and identified four data points in the dataset the UC Berkeley researchers used that he states were inaccurate.
Since then, the RAND author re-ran the UC Berkeley Labor Center analysis and replaced the four contested data points with corrected data from the developers. This new analysis found the PLA mandate for large Measure HHH-funded projects did have a statistically significant impact on project costs.
City staff obtained information from the State of California’s Debt Limit Allocation Committee (CDLAC) to confirm that the contested data points for Los Angeles projects were in line with what the RAND study author reported with post-completion data from the developers.
Given the data discrepancies noted by RAND and confirmed by City staff, Council may want to reconsider using the UC Berkeley Labor Center study in their consideration of labor standards unless the UC Berkeley study authors re-release their analysis with corrected data.
City staff also note that PLAs are negotiated agreements. Neither report attempted to predict cost impacts in other labor markets and for PLAs not yet negotiated. Local labor market conditions differ from the conditions under which Los Angeles PLA was negotiated. An Oakland PLA may require additional negotiation beyond the template MA1 agreement to account for Oakland regulatory and market conditions. Unionization in the private sector construction industry in the Bay Area (24.0% for the San Jose-San-Francisco-Oakland) is higher than Los Angeles-Long Beach area at 16.7% (CPS 2023, compiled by unionstats.com). Oakland affordable housing developers reported very high levels of union labor (85-90%). They estimated cost impacts in the range of 1-3% in letters for the previous Supplemental Report and said that even this seemingly small increase could make projects infeasible and lose the competition for funding.
Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 27
Community and Economic Development Committee
July 23,2024
SCANPH Survey on PLA Impact on Bid Responses
Following the adoption of the City of Los Angeles’ PLA requirement for Proposition HHH projects of at least 65 units, the Southern California Association of Nonprofit Housing (SCANPH) asked its members to survey their general contractors about the availability of union and non-union bids for subcontracted work on PLA-covered projects.
SCANPH’s analysis found that the number of bidders for PLA-covered projects was 20-50% lower than for non-PLA covered projects. More research is needed to understand why bid response rates were lower, but one general contractor reported that non-union contractors bid at half the rate of union contractors across the 45 trade specialties and 1,847 bid invitations in their project. This suggests that even if PLAs for affordable housing do not explicitly exclude non-union contractors, they may significantly deter participation. Reduced bid competition for affordable housing projects can increase the prices of winning bids and therefore contribute to the higher costs for PLA projects found in the 2021 RAND study.
COORDINATION
This Supplemental Report was reviewed by the Housing and Community Development Department and the Office of the City Attorney.
ACTION REQUESTED OF THE CITY COUNCIL
Staff Recommends That The City Council Receive A Report And Recommendation On Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding As Follows: (A) Receive Presentation On The Stakeholder Engagement Related To A Potential Expanded Labor Standards Policy; (B) Provide Recommendation To Staff On Specific Components Of A Potential Expanded Labor Standards Policy By Conducting A Study Session.
For questions regarding this supplemental report, please contact Emylene Aspilla, Director, Department of Workplace & Employment Standards, at [email protected].
Respectfully submitted,
Emylene Aspilla
Director, Department of Workplace and
Employment Standards
Jestin D, Johnson, City Administrator
Subject: Potential Labor Standards Expansion For New Construction Measure U Affordable Housing Funding
Date: July 18, 2024 Page 28
Community and Economic Development Committee
July 23,2024
Reviewed by:
Chris Norman
Assistant to the Director, Housing and
Community Development
Reviewed by:
Malia McPherson
Deputy City Attorney, Office of the City Attorney
Prepared by:
Juliet Huang
Assistant to the Director, Department of
Workplace and Employment Standards
Caleb Smith
Senior Policy Analyst, Housing and Community
Development
Attachments:
A: City of Oakland Data and Information
B: Alameda County Reports
C: Stakeholder Letters, Comments, and Reports