Community and Economic Development Committee
November 19, 2024
AGENDA REPORT
TO: Jestin D. Johnson FROM: Emily Weinstein
City Administrator Director, Housing and
Community Development
SUBJECT: SUPPLEMENTAL RE: Ordinance to
Establish Construction Workforce
Related Reporting Standards
DATE: November 6, 2024
City Administrator Approval Date:
RECOMMENDATION
That The City Council Accept A Supplemental Report Regarding A Proposed Ordinance Adding Chapter 15.80 To The Oakland Municipal Code To Establish Construction Workforce Related Reporting Requirements For Developments With At Least 100 Residential Units Or 100,000 Square Feet Of New Floor Area; And Making Appropriate California Environmental Quality Act Findings
REASON FOR SUPPLEMENTAL
At the July 9, 2024 Community and Economic Development Committee meeting, staff were directed to prepare a supplemental report on the proposed ordinance adding Chapter 15.80 to the Oakland Municipal Code (OMC) to better assess the challenges associated with implementing this proposed ordinance. To advance the intention of the ordinance while easing the implementation process, staff are proposing an amended version of the ordinance that changes the enforcement mechanism and delineates the areas of responsibility between the Planning and Building Department (PBD) and the Department of Workplace and Employment Standards (DWES). These changes will ensure that implementation of reporting standards does not lead to de-prioritization of any other legal obligations or Council-directed priorities.
Amendments also reduce risk to the City’s approved Housing Element.
Under the proposed amended ordinance, the workforce reporting requirements will be implemented as a two-stage process. The first phase of implementation will be pursued by staff directly after the adoption of this ordinance. In this phase, all new projects that meet the size thresholds will be required to submit a form as part of the permitting process in which the developer furnishes data on their projected construction workforce and contractor utilization.
Developers for these projects will also be required to submit a report with similar information after construction is completed, with failure to comply resulting in a fine. In the second phase, Jestin Johnson (Nov 7, 2024 15:25 PST)
Nov 7, 2024
Jestin Johnson, City Administrator
Subject: SUPPLEMENTAL- Ordinance to Establish Construction Workforce Related Reporting Standards
Date: November 6, 2024 Page 2
Community and Economic Development Committee
November 19, 2024
which is contingent on a funding allocation to provide DWES with capacity to collect, review, and publish the relevant information, developers will be required to submit certified payroll on a regular basis and submit a final report on project completion. The penalty for failure to comply with these requirements will change in the proposed amended ordinance from the denial of Certificate of Occupancy to the assessment of civil penalties. The penalties would be paid by the developer to the City of Oakland (City) for failure to comply with the submittal provisions of the ordinance. Such penalties have been effective in enforcing compliance with other city programs.
EXPLANATION FOR PROPOSED AMENDMENTS
Assessment of the Originally Proposed Ordinance
As originally drafted, the proposed ordinance would assign responsibility for collecting workforce information reports to PBD. This would be a change in the scope of PBD’s responsibilities. PBD has historically not been involved with monitoring or certifying compliance with workforce or business utilization. Responsibility for monitoring and enforcing workforce standards and business utilization currently rests with the Department of Workplace and Employment Standards. The originally proposed ordinance would condition the issuance of a certificate of occupancy or temporary certificate of occupancy on the submission of a comprehensive report on workforce information as specified in the ordinance. The originally proposed ordinance indicates that the developer must also supply adequate supporting documentation to verify the information in the report. However, since PBD does not currently have any staff with the necessary expertise to evaluate such reports for accuracy or completeness, PBD would currently be unable to perform this duty.
On September 5, 2024, City staff met with the State’s Housing and Community Development staff to determine if the workforce reporting standards ordinance is a potential constraint on development that would need to be studied before enactment. In this conversation, and in a subsequent conversation on October 18, 2024, the State expressed concerned that the linking of Certificate of Occupancy issuance to compliance with this reporting mandate could pose a barrier to development. If the City moved forward with using Certificate of Occupancy as the enforcement lever, the State said that the City should do a study to assess potential impacts on housing construction and any associated impacts on the adopted 2023 Housing Element.
Such a review would likely require outreach to developers and/or economic modeling conducted by the City’s economic consultants. Conducting the study would take time, especially since City staff and economic consultants are currently at capacity with several other items that are expected to go to City Council (Council) or Planning Commission within the next 12 months.
These items include the Short Term Rental Ordinance and the phase-2 update of objective design standards.
Staff’s Proposed Amendments Identify a Phased Approach
When offering suggested amendments to the original proposed ordinance, staff sought to: A) accomplish the intention of the ordinance by collecting the desired information; B) ensure that Jestin Johnson, City Administrator
Subject: SUPPLEMENTAL- Ordinance to Establish Construction Workforce Related Reporting Standards
Date: November 6, 2024 Page 3
Community and Economic Development Committee
November 19, 2024
data collection could begin promptly; C) minimize the risk of violating the Housing Element or doing a substantial new study solely for the purpose of continued Housing Element compliance; and D) align the scope of the data collection with resources available for correct and complete implementation. In the amended draft ordinance, staff propose a two-phase program.
In the first phase, which can be implemented directly after ordinance enactment, new projects covered by this ordinance will submit a Pre-Construction Workforce Affidavit with their building permit application that provides:
• The estimated number of craftpersons from each trade to be used on the project, including entry and apprentice level workers.
• Whether (sub)contractors will participate in an apprenticeship program approved by the State of California’s Department of Industrial Relations. • Anticipated wages and benefits for all craftpersons, including whether or not the developer/(sub)contractors will pay prevailing wages and provide partially or fully employer-paid health care benefits.
• Whether craftpersons will be required to provide their own tools, and if so, which trades. • The estimated number of local residents to be hired.
• If known, the names and addresses of any (sub)contractors that will be used on the project.
Collecting projected information at the time of permit application is the model followed by San Francisco to monitor hire of local workers for privately funded projects that are not subject to San Francisco’s mandatory local hire requirements
(https://sfplanning.org/sites/default/files/forms/FirstSourceHiring_Affidavit.pdf). Under this proposal, PBD’s role in the process would be narrowed to ensuring that the form is filed and forwarded to DWES, which can be done with existing staffing.
In addition to submitting estimated workforce information and contractor information at time of permit application, projects would be required to submit a post-construction report to DWES with the same information. Failure to submit the required information within 90 days of temporary or final Certificate of Occupancy will result in a $10,000 fine.
The second phase would go into effect on October 1, 2025, provided that the Council subsequently identifies new funding for a DWES Data Analyst to implement the program and goals of the Ordinance. DWES shares the desire to assess equity issues in the make-up of construction workforce and contractor utilization. To successfully collect and report these important data, while minimizing the administrative burden to the City or new development, new projects over the size threshold would be subject to two additional requirements:
1) Projects would be required to certify information on project workforce and business participation on an ongoing basis as provided in a schedule that staff will establish after the ordinance is adopted.
2) At the end of the construction period, projects would be required to submit a report that provides:
(A) The percentage of the craftpersons who are Oakland residents, with allocations by zip code.
Jestin Johnson, City Administrator
Subject: SUPPLEMENTAL- Ordinance to Establish Construction Workforce Related Reporting Standards
Date: November 6, 2024 Page 4
Community and Economic Development Committee
November 19, 2024
(B) The number of apprentices that were employed as craftpersons for the newly constructed building, with allocations by trade.
(C) The percentage of the craftpersons that consisted of apprentices. (D) The number of craftpersons that were paid prevailing wages and received partially or fully employer-paid health care benefits.
(E) The number of craftpersons who were required to provide their own tools with allocations by trade.
(F) The demographics of the craftpersons, without personal identifying information, including race/ethnicity and gender/gender identity, if disclosed. (G) The percentage of contractors that were certified by the City under the City’s Local and Small Local Business Enterprise Program.
(H) The demographics of contractor ownership, including race/ethnicity and gender/gender identity, if disclosed.
Failure to meet the requirements in the second stage would be penalized by the application of civil penalties. These are financial penalties that are assessed by the City against the developer and escalate based on the length of non-compliance. These penalties will be scaled to serve as an effective deterrent against non-compliance without rendering a project insolvent. State Housing and Community Development Department staff have confirmed that the use of civil penalties as an enforcement mechanism is less likely to trigger concern and a request for further study on the part of the State.
Another reason staff recommend civil penalties over withholding certificate of occupancy is the small possibility that a diligent developer may fail to submit the information on time due to subcontractor failures outside of the developer’s direct control. In a worst-case scenario, delaying the issuance of a certificate of occupancy due to an unavoidable filing delay could prevent tenants from being able to move into their apartments at the date their lease is supposed to start, which could be very disruptive for these tenants. For this reason, it has been the City’s practice to only condition certificate of occupancy on requirements within the developer’s direct control.
Finally, there is also a small risk that denying a certificate of occupancy to an affordable housing project- and thereby delaying move-in- could result in a project missing a funding-related deadline for residents to move into a building (as has been mandated by past funding rounds for the State’s Homekey program). This could force a project to return funding or hurt the ability of Oakland’s affordable housing developers to qualify for future State funding opportunities. Paying civil penalties due to an unavoidable delay in submitting workforce information would instead be an effective but ultimately less disruptive strategy to ensure compliance.
TYPES OF PROJECTS AFFECTED BY PROPOSED ORDINANCE
The proposed ordinance would institute new reporting requirements for any residential project of over 100 units or any non-residential project of over 100,000 square feet. Table 1 lists recent projects that would have been subject to this ordinance.
Jestin Johnson, City Administrator
Subject: SUPPLEMENTAL- Ordinance to Establish Construction Workforce Related Reporting Standards
Date: November 6, 2024 Page 5
Community and Economic Development Committee
November 19, 2024
Table 1. Recent Large Development Projects
Address Date Issued Number of Units Brief Description
2121 WOOD ST 10/6/2022 235 Affordable housing
685 9TH ST 4/14/2023 117
Market rate housing
development
1510 WEBSTER ST 5/8/2023 236
Market rate housing
development
821 PINE ST 11/3/2023 102 Affordable housing
269 24TH ST 1/31/2024 330
Market rate housing
development
820 W MACARTHUR
BLVD 4/25/2024 166
Market rate housing
development
389 9TH AVE 5/21/2024 124 Affordable housing
233 BROADWAY 6/7/2024 130
Market rate housing
development
55 BROADWAY 6/25/2024 136
Market rate housing
development
4311 MACARTHUR
BLVD 7/17/2024 193 Affordable housing
Note: Projects listed above as market rate housing development may contain on-site inclusionary or density bonus affordable housing units. Projects listed as “affordable housing” were known to be 100% affordable at time of application or subsequently listed via a regional housing portal as 100% affordable housing. Bolded projects are city-funded, all other projects listed above did not receive City funding for their construction.
Address
Date Issued
Occupied Floor Area
(for non-Residential
project)
Brief Description
510 11TH ST
10/26/2023
233,549
Samuel Merritt University
campus
3023 SUMMIT ST
10/26/2023
170,000
Stanford Medical Sutter
Health Cancer Center
1232 HIGH ST 3/4/2024 133,854 Self-storage facility
In 2023, the 455 units listed above were over half of the 795 housing units permitted that year.
This underlines that this ordinance, if adopted, would affect a substantial portion of Oakland’s new housing production. If there are unexpected implementation costs, risks, or hassle for developers, these impacts could have an impact on future housing production.
A smaller subset of recent non-residential projects exceeded the 100,000 square foot threshold.
Due to the depressed market outlook for new office space, it seems likely that the short-term impacts of this ordinance on non-residential projects would be concentrated on industrial or specialty uses (such as the educational and health care sector uses listed above). If the ordinance carries significant unforeseen implementation costs for developers of non-residential property, there is a possibility projects may relocate to nearby communities like Emeryville.
Jestin Johnson, City Administrator
Subject: SUPPLEMENTAL- Ordinance to Establish Construction Workforce Related Reporting Standards
Date: November 6, 2024 Page 6
Community and Economic Development Committee
November 19, 2024
FISCAL IMPACT
The adoption of this ordinance would have no net fiscal impact. The work required in phase one of the implementation can be accomplished with existing staffing resources. Implementation of phase two is contingent on the addition of a new DWES Data Analyst in the 2025-27 budget, which will require a separate Council action.
PUBLIC OUTREACH / INTEREST
Staff met with the Building & Construction Trades Council of Alameda County prior to the publication of the revised draft ordinance.
COORDINATION
This report was reviewed by the Department of Workplace and Employment Standards, the Department of Planning & Building, the Budget Bureau, and the Office of the City Attorney.
ACTION REQUESTED OF THE CITY COUNCIL
Staff Recommends That City Council Accept A Supplemental Report Regarding A Proposed Ordinance Adding Chapter 15.80 To The Oakland Municipal Code To Establish Construction Workforce Related Reporting Requirements For Developments With At Least 100 Residential Units Or 100,000 Square Feet Of New Floor Area; And Making Appropriate California Environmental Quality Act Findings
Jestin Johnson, City Administrator
Subject: SUPPLEMENTAL- Ordinance to Establish Construction Workforce Related Reporting Standards
Date: November 6, 2024 Page 7
Community and Economic Development Committee
November 19, 2024
For questions regarding this report, please contact Caleb Smith, Senior Policy Analyst, at (510) 590-6275.
Respectfully submitted,
Emily Weinstein
Emily Weinstein (Nov 6, 2024 17:26 PST)
Emily Weinstein, Director, Housing and
Community Development
Reviewed by:
Emylene Aspilla, Director, Workplace and
Employment Standards
William Gilchrist, Director, Planning and
Building
Prepared by:
Caleb Smith, Senior Policy Analyst, Housing
and Community Development
ATTACHMENTS:
A: Draft Revised Ordinance
B: Draft Pre-Construction Affidavit for Construction Workforce C: Draft Post-Construction Affidavit for Construction Workforce