Ask Lookout: What is Watsonville’s project labor agreement that has trade unions up in arms?

The City of Watsonville will sit down with the Monterey/Santa Cruz Building and Construction Trades Council next week in hopes of finding common ground on the rules that govern wages, benefits and working hours for workers on city construction projects. 

Non-union contractors say the arrangement, known as a project labor agreement (PLA), is too constraining, so they don’t bid on city projects, while the trades council argues it doesn’t affect the number of bids the city receives. Caught in between are city councilmembers who want to get the best bang for the taxpayers’ money on necessary infrastructure projects like sewers, bridges and roadwork. 

Public Works Director Courtney Lindberg told elected officials earlier this month that the PLA limits the number of competitive bids the city receives from contractors, particularly for water and sewage projects. A city staff report said some projects aren’t attracting any bids at all or getting bids priced way out of the city’s budget. 

The city and the trades council have been negotiating the terms of the agreement for at least two years. They have reached common ground on some changes, according to Casey Van Den Heuvel, a representative of the Monterey/Santa Cruz Building and Construction Trades Council. 

These changes include letting PLAs expire after three years, which would mean they would have to be renegotiated. The current agreement was approved in 2014 without an expiration date and has not been updated since. Meanwhile, city leader say the cost of construction and wages have gone up. So the city and trade unions also agreed to raise the threshold for the cost of a project governed by the PLA from $600,000 to $1.5 million. 

However, despite what Lindberg described as an “ongoing discussion” with the trades council, there’s no agreement on a city proposal to exempt wastewater projects from the PLA. According to city spokesperson Michelle Pulido, the city wants the agreement waived for these types of projects because it wants to hire crews that specialize in wastewater projects.

“We’re dealing with a high-level type of work on a wastewater treatment plant. That’s not something that we’re going to take a risk and hire someone who doesn’t have experience doing that,” Pulido said. Watsonville’s water treatment plant provides service to 60,000 people.

The city has waived the PLA for some projects, said Pulido. The Lee Road Trail Project, a bicycle and pedestrian path and bridge over the Struve Slough currently in the works, went to bid without the PLA because the project is federally funded. If the project had gone to bid under the agreement, it would have triggered a 12-month federal review process — a delay that could’ve caused the city to lose funding for the project, she said. 

Other projects for which the city didn’t get any competitive bids required officials to request an exemption letter from the trades council before sending a project out for bids for a second time. 

The trades council is asking the city to create a joint administrative council made up of city staff and trade union representatives to resolve disputes and hold contractors accountable when they don’t follow the PLA’s rules.

“A PLA in its core ensures contractors compete on skill and not exploitation because a non-union contractor can still bid on a PLA contract,” Van Den Heuvel said. “They just now have to make sure that they’re actually paying their workers correctly.” 

Watsonville elected officials pushed back against the idea, saying it might extend the bidding process longer than needed because city staff would have to call for proposals again to replace a contractor. 

Van Den Heuvel argued that the agreement isn’t to blame for the lack of competitive bids, pointing instead to the strict timeline contractors have to submit a bid. The standard bidding period in California is between 40 and 60 days, whereas in Watsonville, contractors have just 25 to 30 days to submit proposals. 

The city’s contractor requirements for projects are modeled after rules used by state transit agency Caltrans, which require bidders to have completed at least seven projects of a similar nature.

Additionally, on most city projects, engineers will have only 60% of the project’s plans completed, which leads bidders to overestimate costs out of caution, and to avoid going over their own budgets and protect their profits, Van Den Heuvel said. 

“It’s not favorable for contractors,” Van Den Heuvel said. “If you want me to give you the best price, you’ve got to give me time, and you’ve got to give me good plans.” 

In contrast, Eric Christen, executive director for the Coalition for Fair Employment in Construction, a nonprofit business coalition that advocates against contracting rules that advantage unions, told Lookout that he believes PLAs are meant to “exclude contractors that unions don’t like,” which means non-union contractors.

Contractors have to weigh many factors when they consider bidding on city projects because of the PLA rules, and there are several that might lead them to think twice before submitting a proposal, or push the total cost higher than city staff want to pay, according to Christen. 

“We want the taxpayers in Watsonville to be able to get more bang for their buck. And a PLA makes it harder to do that,” he said. 

For example, Watsonville’s current PLA says that if contractors are awarded a bid by the city, they must hire only union workers for that project. PLAs in other jurisdictions have allowed for non-union contractors to use up to five of their own employees. But non-union contractors don’t know the capabilities or skill sets of unionized workers as well as those of their own employees, he said. 

Another provision in the Watsonville agreement says that when contractors use their own workers, they still have to pay into union health, welfare and pension plans, in addition to whatever benefits they already offer their employees, Christen said. He said it isn’t fair that pension contributions go to union workers instead of the non-union workers who actually worked on the project.

Van Den Heuvel disagrees. When non-union employees work on a project under a PLA, they don’t have to pay union dues, he said. Money paid into a union pension can also be rolled over into another investment option where non-union workers can access the funds. 

Earlier this month, nearly 150 trade workers filled the city council chambers to plead with elected officials not to rescind the city’s project labor agreement. 

Many of the construction workers at the Oct. 14 city council meeting credited the PLA with increasing job opportunities for local plumbers, electricians, sheet metal workers and creating a pipeline to the trades since the agreement requires contractors to hire union trade workers, who usually start off as apprentices. 

The Watsonville City Council is scheduled to continue its discussion with the trade group on Nov. 5. 

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