Hayes & Cunningham, LLP

DENNIS J. HAYES JAMES J. CUNNINGHAM ADAM E. CHAIKIN RICARDO OCHOA LAUREN M. ARENS DONNA M. BUTLER AMANDA K. HANSEN MICHELLE C. HRIBAR ATTORNEYS AT LAW 3258 FOURTH AVENUE SAN DIEGO, CALIFORNIA 92103 ---------------------------------------RIVERSIDE OFFICE: 6215 RIVER CREST DRIVE, SUITE A RIVERSIDE, CALIFORNIA 92507 TELEPHONE: (619) 297-6900 TOLL FREE: (888) 695-6902 FACSIMILE: (619) 297-6901 WEBSITE: http://www.sdlaborlaw.com ADMINISTRATOR: VIRGINIA WOOD

October 3, 2011

Council President Anthony Young City of San Diego 202 C Street, 10th Floor San Diego, CA 92101 Councilmember Sherri Lightner City of San Diego 202 C Street, 10th Floor San Diego, CA 92101 Councilmember Todd Gloria City of San Diego 202 C Street, 10th Floor San Diego, CA 92101 Councilmember Carl DeMaio City of San Diego 202 C Street, 10th Floor San Diego, CA 92101

Council President Pro Tem Kevin Faulkner City of San Diego 202 C Street, 10th Floor San Diego, CA 92101 Councilmember Lorie Zapf City of San Diego 202 C Street, 10th Floor San Diego, CA 92101 Councilmember Marti Emerald City of San Diego 202 C Street, 10th Floor San Diego, CA 92101 Councilmember David Alvarez City of San Diego 202 C Street, 10th Floor San Diego, CA 92101

Re:

Effect of SB 922 on Proposed Measure to Ban PLAs in the City of San Diego

Dear Council President and Members: I have been asked by the San Diego Building and Construction Trades Council to analyze and respond to statements made in the press by proponents of the ballot measure seeking to ban Project Labor Agreements (PLAs) in the City of San Diego, in response to the Governors signing yesterday of SB 922. Specifically, I have been asked to address the accuracy of the statement by Scott Crosby, President of the Associated Builders and Contractors of San Diego, in this mornings San Diego Union-Tribune, in which he states that, under the proposed measure, PLAs would remain optional on joint city-state projects[,] and that to argue that [if the proposed measure is adopted,] all state funding would be blocked [by SB 922] is absurd. Simply put, Mr. Crosby is completely wrong SB 922 would in fact block all state funding to city public works projects if the proposed measure is adopted, for the reasons explained below.

Effect of SB 922 on Proposed PLA Ban in City of San Diego October 3, 2011 Page 2 of 3 By way of background, SB 922 provides in pertinent part that: If a charter provision, initiative, or ordinance of a charter city prohibits the governing boards consideration of a project labor agreement that includes all the taxpayer protection provisions of Section 2500 [of the Public Contract Code] for a project to be awarded to be awarded by the city, or prohibits the governing board from considering whether to allocate funds to a cityfunded project covered by such an agreement, then state funding or financial assistance shall not be used to support that project. [Public Contracts Code 2502 (emphasis supplied)].1 In other words, SB 922 cuts off state funding to any charter city in which the City Council is barred from considering whether to enter into a PLA. SB 922, however, does not require cities to enter into PLAs as a condition of receiving state funding. This distinction was highlighted by Governor Brown in his signing statement, in which he explained that contrary to what the opponents [of SB 922] claim, this bill does not require any local government to adopt a PLA. In fact, this bill preserves the right of all sides to debate what is obviously a hotly contested issue (emphasis supplied).2 Understanding this distinction is critical to unraveling the misleading spin of Mr. Crosby and the other proponents of a PLA ban in the City of San Diego. Mr. Crosbys claim that Section 2502 of SB 922 would not apply to city projects receiving state funds appears to rest on 22.4402 of the proposed measure, which states that: Except as required by state or federal law as a contracting or procurement obligation, or as a condition of the receipt of state or federal funds, the City shall not require a Contractor on a Construction Project to execute or otherwise become a party to a Project Labor Agreement as a condition of bidding, negotiating, awarding, or performing of a contract [emphasis supplied]. As should be apparent, the narrow exception in 22.4402 to the proposed measures blanket ban on PLAs applies only when a state or federal project requires that the work be performed pursuant to a PLA. SB 922, however, does not require PLAs. As such, the exception contained in 22.4402 does not apply, and the proposed measure would, in fact, prohibit the City Council from considering PLAs on city projects receiving state funds. As a consequence, if the proposed measure were to become law, Section 2502 of SB 922 would cut off any state funds to the City for public works projects, thereby costing the City hundreds of millions of dollars annually. Any ambiguity on this matter is further resolved by reviewing the legislative history of SB 922 and the reasons for its adoption. As you probably know, on November 2, 2010, Measure A passed in the County of San Diego. Measure A, like the present proposed measure, is a blanket ban on PLAs. And Measure A, like the proposed measure here, also
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For your convenience, a copy of SB 922 as adopted by the Legislature is attached to this letter. For your convenience, a copy of the Governors signing statement, dated October 2, 2011, is attached to this letter.

Effect of SB 922 on Proposed PLA Ban in City of San Diego October 3, 2011 Page 3 of 3 contains a narrow exception for projects in which a PLA is required.3 In fact, 705.4(b) of Measure A is identical to 22.4402 of the current proposed measure which should be no surprise, since its proponents were the same. When the current language of SB 922 was introduced in the Legislature, its authors made it explicit that the bills purpose was to reverse PLA bans such as Measure A. In fact, the Bill Analysis prepared on September 6, 2011 by the staff of the Assembly Committee on Business, Professions and Consumer Protection states that: According to the author, the need for this bill arises from recent campaigns to obtain blanket prohibitions on PLAs through local charter amendments, initiatives and ordinances. Several counties (Stanislaus, Orange and San Diego) have banned PLAs based on intense lobbying by non-union contractor organizations that do not want to bid on projects governed by a PLA. This bill does not mandate the use of PLAs. [Rather, t]his bill prohibits local agencies from adopting blanket prohibitions against using PLAs [and] also provides that, if a charter city has banned PLAs as described in this bill for a project to awarded by the city, state financial assistance must not be used for that project [emphasis supplied].4 In other words, when the Legislature adopted SB 922, it was aware of San Diego Countys Measure A, and of its narrow exception contained in 704.5(b), and made it clear that SB 922 nevertheless was intended to invalidate Measure A, and that Measure A could not be saved by 704.5, since this bill does not mandate the use of PLAs. As the above analysis of the text and legislative history of SB 922 should make clear, the proposed measure would ban the City from considering whether to use a PLA on city public works projects funded with state funds and, as a consequence, would result in the city being barred from receiving any state funds from public works projects. The statements to the contrary by the proponents of the proposed measure demonstrate that they either do not understand what their initiative says or they are trying once more to deceive the voters of the City of San Diego. Very truly yours,

Ricardo Ochoa Attorney at Law Enclosures: As indicated Cc: City Attorney Jan Goldsmith (with enclosures)

RO:sak
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For your convenience, a copy of the text of Measure A is attached to this letter. For your convenience, a copy of this September 6, 2011 Bill Analysis of SB 922 is attached to this letter.