Pay to PLA?

Whether you are trying to build a light-rail system, or a school, or a sports arena, big public works projects can be staggeringly complicated.

Add in the labor issues that come with involving so many skilled construction workers, and their unions with their desire to make sure their members are safe and well-compensated, and it’s not unusual to experience delays and cost overruns.

One tool local governments may use to keep things running smoothly is called a project labor agreement—which is supposed to help avoid labor issues upfront.

“What you are getting is labor peace,” said Rob Kerth, who serves on the board of directors for SMUD.

But critics say these PLAs unfairly block nonunion construction companies from bidding for big public projects, and that hurts competition and costs taxpayers money.

“Unless you’re hard-core and think everybody should be in a union, you’re not in favor of PLAs,” said Kevin Dayton, with Associated Builders and Contractors, which represents nonunion construction contractors.

Dayton has made a full-time job of fighting to eliminate PLAs in California. And he’s helping lead an effort to qualify two ballot measures in the city and the county of Sacramento that would ban PLAs for all large public works projects—including things like schools, sewers and even a proposed NBA basketball arena.

But opponents say banning PLAs will actually lead to more delays and cost overruns on big projects, and will undermine local wages and benefits.

The proposed ballot measures are on the streets now with paid signature gatherers—paid by ABC and the Western Electrical Contractors Association.

They have to obtain about 40,000 signatures to qualify the measure for the ballot in Sacramento County in June 2012. They are also trying to qualify a similar measure for the city of Sacramento’s ballot. So far they’ve raised about $250,000, according to Dayton, and plan to raise $1.5 million or more, depending on how much money the unions raise to defeat the measure.

Voters in San Diego County, Chula Vista and Oceanside have already approved measures banning project labor agreements. Elected officials in the city of Fresno and in Orange, Stanislaus and Placer counties have also passed ordinances prohibiting the deals.

ABC was involved in each of those battles. A win in Sacramento would be a big one for the cause—being a major urban area and the state capital.

Government officials who spoke to SN&R say PLAs can be useful tools for large, complicated public works projects that go on for many months or years. Especially projects where many unions are involved.

Nothing in a PLA requires a contract to go to a union company. And the pay for workers is already governed by “prevailing wage” rules which guarantee that union and nonunion workers alike are treated equally when the government is footing the bill for a construction project.

But PLAs typically do require that contractors hire from the local union hiring hall, and also that the contractors pay into a benefits trust fund, usually operated by the local labor council. PLAs often include “local hiring” provisions and requirements for apprenticeship opportunities, too.

That hiring hall provision may be no problem for general contractors who don’t keep a lot of workers on the payroll.

But a PLA may mean that a contractor can only bring a few of their own workers to the job, and will have to pick the rest from the union hall. And, for companies that already provide health insurance, the benefits requirement can be onerous as well.

“A typical PLA eliminates our ability to use our own workforce. And we end up having to pay double benefits,” said Greg Anderson, with Rex Moore Electrical Contractors and Engineers, a nonunion contractor. His firm is well-known in the region, but it won’t bid on projects that include PLAs. He says his company can’t compete.

Of course, any PLA can be negotiated to include or not include any specific provisions. “But the building trades are not interested in PLAs that don’t include these requirements,” said Anderson.

Anderson says Rex Moore will likely help fund the anti-PLA ballot measures. ABC and Dayton have been warring with the unions for years. He says unions use campaign donations and threats of lawsuits to make local government officials accept PLAs.

“That’s because it’s much easier to go to the government and force the contractors to sign a project labor agreement than it is to go workers and convince them to join the union.”

The unions counter that ABC’s effort is aimed at destroying unions and weakening wages and labor regulations that protect workers.

So how well do these PLAs work in the real world? Do they really soak taxpayers?

In 1998, Regional Transit signed a PLA for the first phase of its extension of the light-rail South Line. The agreement involved more than dozen local labor groups, including plumbers and electricians and ironworkers.

The reason for the PLA was to avoid strikes and pickets and jurisdictional issues that can crop up on large projects, and also to ensure a supply of qualified labor and clear job-safety rules.

“Labor unrest on any major project can cause difficulties delivering the project on time,” said Mike Wiley, executive director of Regional Transit. “Our belief is that project labor agreements allow us to keep that project on schedule and avoid delays and higher costs.”

There were “minor labor disputes,” but these were resolved by the PLA. And the project was completed “on time, on budget, with no labor unrest and no delays.” Wiley added that he was aware of “no loss of competition,” due to the provisions of the PLA.

Flash forward a few years. In 2001, President George W. Bush came into office and issued an executive order prohibiting PLAs and on projects that include federal money—which would certainly affect light rail.

So, RT did not have the option to use a PLA when it came time for the Folsom Light Rail Extension, which it completed in 2006.

There were labor issues on that job, too, and that project was delayed and did go over budget. But RT’s analysis concluded there was “no evidence” that the overruns were due to a lack of a PLA.

For the most part, there’s also not a lot of evidence that PLAs cost more. One recent study from National University suggests that school construction projects cost 13 to 15 percent because of project labor agreements.

But the unions have their own stack of anecdotal evidence they say shows projects without PLAs are more likely to go over budget.

Still, it just makes intuitive sense to many people that more competition is better. “I think you always get the best project at the lowest cost when you have more competition,” said Renee Taylor, who is president of the board of directors for SMUD.

Taylor is careful to say that’s her own opinion, and not those of the board. In fact, she was the lone vote (on a board of seven) against going ahead with construction of SMUD’s new $100 million East Campus-Operations Center on Bradshaw Road. She opposed the project because it includes a PLA.

Her fellow board member Kerth, who also served for a decade on the Sacramento City Council, isn’t so sure. He says PLAs aren’t good or bad. They’re just tools, like a hammer or screwdriver.

“It’s just one of the tools that government and electeds have to get things done. People should ask themselves, do we want to make it easier or harder to get things done?”

He added that it’s better for elected officials to decide whether a PLA is appropriate on a project-by-project basis.

“I certainly don’t think it’s something that should be decided at the ballot box.”

And in the end, the fight over project labor agreements may have more to do with the combatants than with taxpayers.

“This is just the latest battleground in 100 years of fighting between union and nonunion shops,” said Kerth.