On June 25, the San Jose City Council voted to require contractors to pay workers a prevailing wage on projects that get a subsidy from the city, according to www.mercurynews.com.
The new ordinance includes various exceptions. Prevailing wages will not have to be paid on some affordable housing projects; when the city reduces or eliminates a fee for all projects within a certain land-use category, such as residential; and when construction of the project likely would not happen without a subsidy. However, it could apply to numerous commercial and market-rate residential developments in the city. The ordinance also does not include some factors labor unions and others support, such as local hiring requirements, which will be brought before the council in August.
Labor unions have pushed for strong prevailing wage requirements and are concerned regarding the city’s method of approaching the issue.
There currently are some incentives for builders of downtown high-rises, and the city is reviewing the possibility of extending those incentives in August. However, unions are concerned about the high-rise exemption being approved before the council can put an ordinance in place that includes a prevailing wage and local hiring guidelines, as well as guidelines for apprentice programs and hiring disadvantaged workers.
Unions and several council members also raised concerns regarding how a required study would be conducted to determine whether an extension of the high-rise incentives would count as a subsidy. In April, the city and labor leaders agreed they would work off an approved list of consultants to handle the study, but the city had an existing contract with a firm and planned to use it. Those defending the choice said reworking the consulting process could significantly delay matters and jeopardize thousands of units of housing, with high-rise developers relying on fee waivers.
In an unusual move, business groups such as the Silicon Valley Organization backed the prevailing wage vote as a necessary precursor to securing fee waivers for downtown development.
The council ultimately approved a compromise suggested by Mayor Sam Liccardo to choose a consultant who can study the financial feasibility of housing developments quickly from a list submitted by South Bay Labor Council head Ben Field in the short-term; after four months, a more robust request for proposals can go out that also fits the April agreement.
