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HomeMy WebLinkAbout03 - Prevailing Wage LawTO: FROM: PREPARED BY PHONE: TITLE: CITY OF NEWPORT BEACH City Council Staff Report September 23, 2014 Agenda Item No. 3 HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL Dave Kiff, City Manager— (949) 644 -3002, dkiff @newportbeachca.gov Dave Kiff, City Manager (949) 644 -3131 Adoption of Ordinance No. 2014 -15 Relating to Prevailing Wage Law for Locally - Funded Public Works Projects ABSTRACT: On September 9, 2014, the City Council conducted first reading of Ordinance No. 2014 -15 relating to Prevailing Wage Law for Locally- Funded Public Works Projects. The City Council passed Ordinance No. 2014 -15 to second reading at the September 23, 2014 meeting. RECOMMENDATION: Conduct second reading and adopt Ordinance No. 2014 -15, An Ordinance of the City Council of the City of Newport Beach, California, Repealing Resolution No. 2013 -6 and Expressing Intent to Comply with Senate Bill No. 7 Relating to Prevailing Wage Law for Locally- Funded Public Works Projects. FUNDING REQUIREMENTS: Not applicable. DISCUSSION: On September 9, 2014, after a noticed public hearing, the City Council introduced and passed to a second reading Ordinance No. 2014 -15, repealing Resolution No. 2013 -6 and Expressing Intent to Comply with Senate Bill No. 7 Relating to Prevailing Wage Law for Locally- Funded Public Works Projects. ENVIRONMENTAL REVIEW: City staff recommends the City Council find the approval of the attached ordinance is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. Alternatively, City staff recommends the City Council find the approval of the attached ordinance is not a project under CEQA Regulation Section 15061(b)(3) because it has no potential for causing a significant effect on the environment. 3 -1 NOTICING: This agenda item has been noticed according to the Brown Act (at least 72 hours in advance of the meeting at which the City Council considers the item). ATTACHMENTS: Description Attachment A - Ordinance No. 2014 -15 Attachment B - September 9 City Council Staff Report 3 -2 ATTACHMENT A ORDINANCE NO. 2014- AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA REPEALING RESOLUTION NO. 2013 -6 AND EXPRESSING INTENT TO COMPLY WITH CALIFORNIA SENATE BILL NO. 7 RELATING TO PREVAILING WAGE LAW FOR LOCALLY - FUNDED PUBLIC WORKS PROJECTS RECITALS WHEREAS, the State prevailing wage law requires contractors on public works projects to be paid the general prevailing rate of per diem wages for work of a similar character in the locality in which the work is performed; WHEREAS, under California Constitution, Article XI, Section 5, the laws of charter cities supersede State law with respect to municipal affairs of the city; WHEREAS, the City of Newport Beach ( "City ") is a charter city duly organized and validly existing under the laws of the State of California, and thus the City may exempt itself from prevailing wage requirements; WHEREAS, on January 22, 2013, the City Council adopted Resolution No. 2013 -6, which exempted locally- funded public works projects from prevailing wage; WHEREAS, California Senate Bill No. 7 ( "SB 7 "), approved October 13, 2013, provides that the State has limited financial resources and resolves only to extend financial assistance to construction projects of those charter cities that require compliance with the prevailing wage law on all their municipal construction projects; WHEREAS, nearly all of California's 121 charter cities, including Newport Beach, have joined a legal action to challenge SB 7's applicability to charter cities; and WHEREAS, notwithstanding the City's Constitutional right to exempt locally- funded projects from prevailing wage, the City finds its financial interests are best served, for now, by compliance with California's prevailing wage law as delineated in California SB 7. NOW, THEREFORE, the City Council of the City of Newport Beach ordains as follows: Section 1: Resolution No. 2013 -6 is hereby repealed and of no further effect. Section 2: The City will comply with California's prevailing wage law to continue to receive State funding for construction projects pursuant to SB 7. Section 3: The provisions of this ordinance do not restrict the City from receiving or using State funding or financial assistance awarded prior to January 1, 2015, or from receiving or using State funding or financial assistance to complete a contract awarded 1 3 -3 prior to January 1, 2015. Further, this ordinance does not disqualify or amend any contracts awarded prior to January 1, 2015. Section 4: If SB 7 is, for any reason, held to be invalid or inapplicable to charter cities by any court of competent jurisdiction or is otherwise repealed, this ordinance, shall automatically sunset and be of no further effect and immediately thereafter, Resolution No. 2013 -6 shall again take effect without further action by the City Council. Section 5: The recitals provided in this ordinance are true and correct and are incorporated into the substantive portion of this ordinance. Section 6: If any section, subsection, sentence, clause or phrase of this ordinance is, for any reason, held to be invalid or unconstitutional, such decision shall not affect the validity or constitutionality of the remaining portions of this ordinance. The City Council hereby declares that it would have passed this ordinance, and each section, subsection, sentence, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared unconstitutional. Section 7: The City Council finds the introduction and adoption of this ordinance is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential to have a significant effect on the environment. Section 8: The Mayor shall sign and the City Clerk shall attest to the passage of this ordinance. The City Clerk shall cause the ordinance to be published pursuant to City Charter Section 414, and it shall be effective thirty (30) days after its adoption. This ordinance was introduced at a regular meeting of the City Council of the City of Newport Beach, held on the _ day of 2014, and adopted on the _ day of , 2014, by the following vote, to wit: AYES, COUNCILMEMBERS NOES, COUNCILMEMBERS ABSENT COUNCILMEMBERS RUSH N. HILL, II, MAYOR 2 am ATTEST: LEILANI I. BROWN, CITY CLERK APPROVED AS TO FORM: THE ORNEY'S OFFICE AARON C. HARP, CITY ATTORNEY 3 -5 TO: FROM: PREPARED BY PHONE: TITLE: ATTACHMENT B CITY OF NEWPORT BEACH City Council Staff Report September 09, 2014 Agenda Item No. 4. HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL Dave Kiff, City Manager— (949) 644 -3002, dkiff @newportbeachca.gov Dave Kiff, City Manager 949- 644 -3001 Ordinance Repealing Resolution No. 2013 -6 and Expressing Intent to Comply with California Senate Bill No. 7 Relating to Prevailing Wage Law for Locally- Funded Public Works Projects ABSTRACT: In response to the California Supreme Court's 2012 decision that affirmed charter cities are exempt from prevailing wage law, the City of Newport Beach ( "City ") adopted Resolution No. 2013 -6 excluding certain locally- funded construction projects from the payment of prevailing wage. Subsequently, the California Legislature adopted Senate Bill No. 7 ( "SB 7 "). SB 7 restricts State financial assistance to charter cities that exempt locally- funded construction projects from State prevailing wage requirements. Thus, pursuant to SB 7, the City stands to lose certain State funding unless it repeals Resolution No. 2013 -6 and adopts an ordinance expressing its intent to comply with SB 7. RECOMMENDATION: Introduce Ordinance No. 2014 -15, An Ordinance of the City Council of the City of Newport Beach, California, Repealing Resolution No. 2013 -6 and Expressing Intent to Comply with Senate Bill No. 7 Relating to Prevailing Wage Law for Locally- Funded Public Works Projects, and pass to second reading on September 23, 2014. FUNDING REQUIREMENTS: Generally, the City pays prevailing wage on almost all of its capital construction projects, including the Civic Center and Marina Park. Most purchasing agents say that there is a premium of between 15% and 20% for labor costs associated with paying prevailing wage. However, payment of prevailing wage can help assure a more quality -based final product, saving resources in the long run. The City has been more concerned about being directed to paying prevailing wage on what we consider to be routine maintenance contracts, such as restroom cleaning and landscape maintenance. Paying prevailing wage for these contracts can make these contracts' costs jump significantly, depending on the job classifications and their comparable jobs in the region. DISCUSSION: In 1931, the California Legislature enacted the State's prevailing wage law. The law requires contractors on public works projects to be paid the general prevailing rate of per diem wages for work of a similar character in the locality in which the work is performed. In 2012, the California Supreme Court upheld charter city authority to exempt locally- funded public works projects from prevailing wage (State Bldg. & Const. Trades Council of Cal., AFL -CIO v. City of Vista (2012) 54 Cal. 4th 547). 3 -6 On January 22, 2013, the City adopted Resolution No. 2013 -6 excluding the City from payment of the State's prevailing wage on certain locally- funded public works projects. Specifically, Resolution No. 2013 -6 exempts prevailing wage for public works projects, unless: (a) prevailing wage is compelled by the terms of a federal or state grant, or other funding source; (b) the public work is a matter of State -wide concern; or (c) the payment of prevailing wage is separately authorized by the City Council due to a project's complexity or nature that the public interest is served by requiring prevailing wage. In response to the California Supreme Court's holding, the California Legislature passed SB 7. With the expressed intent to retain a "skilled construction workforce," SB 7 prohibits charter cities from receiving or using State funding for locally- funded construction projects if the charter city has a resolution or ordinance exempting projects from the State prevailing wage requirements. As a result, to receive State funds for a public works contract, SB 7 requires charter cities to comply with prevailing wage law on all of its public works contracts, even those that are funded exclusively with charter city funds. Opposition to SB 7 was spearheaded by the League of California Cities. To date, nearly all of California's 121 charter cities, including Newport Beach, and a large number of regional local governmental organizations and business groups have joined a legal action to challenge SB 7's application to charter cities. Recently, a trial court ruled against the charter cities' challenge to SB 7, the parties are now deciding whether to appeal the trial court's ruling. At this time, the City believes that compliance with SB 7 is in our financial interests. At present, under SB 7, Resolution No. 2013 -6 excludes the City from receiving state funding or financial assistance for City- funded construction projects. Thus, to continue to receive State funding, the City must repeal Resolution No. 2013- 6 and comply with SB 7. Nevertheless, if SB 7 is found either invalid or inapplicable to charter cities by a court or is otherwise repealed, the attached ordinance shall automatically sunset and Resolution No. 2013- 6 shall again take effect without further action by the City Council. The City typically receives State funding via gas tax apportionments, the California Library Services Act, grants to the Police Department and Fire Department for public safety programs and disaster preparedness, grants used for water quality improvement from various bond acts, and more. The City's adopted budget detail for FY 14 -15 shows about 40 -45 revenue sources that could be affected if the City were out of compliance with SB 7 - the largest being gas taxes and public safety augmentation funds. ENVIRONMENTAL REVIEW: This action is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060 (c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. NOTICING: This agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). ATTACHMENTS: Description Attachment A - Ordinance Relating to Prevailing Wage Law 3 -7 ORDINANCE NO. 2014- AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA REPEALING RESOLUTION NO. 2013 -6 AND EXPRESSING INTENT TO COMPLY WITH CALIFORNIA SENATE BILL NO. 7 RELATING TO PREVAILING WAGE LAW FOR LOCALLY - FUNDED PUBLIC WORKS PROJECTS RECITALS WHEREAS, the State prevailing wage law requires contractors on public works projects to be paid the general prevailing rate of per diem wages for work of a similar character in the locality in which the work is performed; WHEREAS, under California Constitution, Article XI, Section 5, the laws of charter cities supersede State law with respect to municipal affairs of the city; WHEREAS, the City of Newport Beach ( "City ") is a charter city duly organized and validly existing under the laws of the State of California, and thus the City may exempt itself from prevailing wage requirements; WHEREAS, on January 22, 2013, the City Council adopted Resolution No. 2013 -6, which exempted locally- funded public works projects from prevailing wage; WHEREAS, California Senate Bill No. 7 ( "SB 7 "), approved October 13, 2013, provides that the State has limited financial resources and resolves only to extend financial assistance to construction projects of those charter cities that require compliance with the prevailing wage law on all their municipal construction projects; WHEREAS, nearly all of California's 121 charter. cities, including Newport Beach, have joined a legal action to challenge SB 7's applicability to charter cities; and WHEREAS, notwithstanding the City's Constitutional right to exempt locally- funded projects from prevailing wage, the City finds its financial interests are best served, for now, by compliance with California's prevailing wage law as delineated in California SB 7. NOW, THEREFORE, the City Council of the City of Newport Beach ordains as follows: Section 1: Resolution No. 2013 -6 is hereby repealed and of no further effect. Section 2: The City will comply with California's prevailing wage law to continue to receive State funding for construction projects pursuant to SB 7. Section 3: The provisions of this ordinance do not restrict the City from receiving or using State funding or financial assistance awarded prior to January 1, 2015, or from receiving or using State funding or financial assistance to complete a contract awarded 1 M prior to January 1, 2015. Further, this ordinance does not disqualify or amend any contracts awarded prior to January 1, 2015. Section 4: If SB 7 is, for any reason, held to be invalid or inapplicable to charter cities by any court of competent jurisdiction or is otherwise repealed, this ordinance, shall automatically sunset and be of no further effect and immediately thereafter, Resolution No. 2013 -6 shall again take effect without further action by the City Council. Section 5: The recitals provided in this ordinance are true and correct and are incorporated into the substantive portion of this ordinance. Section 6: If any section, subsection, sentence, clause or phrase of this ordinance is, for any reason, held to be invalid or unconstitutional, such decision shall not affect the validity or constitutionality of the remaining portions of this ordinance. The City Council hereby declares that it would have passed this ordinance, and each section, subsection, sentence, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared unconstitutional. Section 7: The City Council finds the introduction and adoption of this ordinance is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential to have a significant effect on the environment. Section 8: The Mayor shall sign and the City Clerk shall attest to the passage of this ordinance. The City Clerk shall cause the ordinance to be published pursuant to City Charter Section 414, and it shall be effective thirty (30) days after its adoption. This ordinance was introduced at a regular meeting of the City Council of the City of Newport Beach, held on the _ day of 2014, and adopted on the _ day of , 2014, by the following vote, to wit: AYES, COUNCILMEMBERS NOES, COUNCILMEMBERS ABSENT COUNCILMEMBERS RUSH N. HILL, II, MAYOR 2 3 -9 le11 i9261li LEILANI I. BROWN, CITY CLERK APPROVED AS TO FORM: THE ORNEY'S OFFICE AARON . HARP, CITY ATTORNEY 3 -10