HomeMy WebLinkAbout2014-11-04; City Council; 21778; Introduce Ordinance to Repeal Code Section 3.28.130 Payment of Prevailing WageCITY OF CARLSBAD - AGENDA BILL
AB# 21,778
DATE:11/4/2014
DEPT. CITY ATTY
INTRODUCE AN ORDINANCE TO REPEAL CARLSBAD
MUNICIPAL CODE SECTION 3.28.130 REGARDING THE
PAYMENT OF PREVAILING WAGES
DEPT. DIRECTOR
CITY ATTY ..MX CITY MGR.
RECOMMENDED ACTION:
Introduce Ordinance CS- 08-265 repealing Carlsbad Municipal Code Section 3.28.130 regarding
prevailing wages.
ITEM EXPLANATION:
Section 404 of the Carlsbad Charter granted the city council the power to establish rules and regulations
regarding compensation paid for public works projects. The city council subsequently passed Carlsbad
Municipal Code Section 3.28.130, which exempts public works contracts from prevailing wage law when
the projects are a municipal affair.
The state recently added section 1782 to the Labor Code. It states that any charter city that has a charter
provision or ordinance that authorizes a contractor to not pay prevailing wages shall not receive or use
state funding or financial assistance for construction projects. It becomes effective January 1, 2015. The
law also applies to any entity controlled by the charter city, which could include the Carlsbad Municipal
Water District (CMWD).
A coalition of five charter cities, including Carlsbad, recently challenged this law. The court heid that the
law did not interfere with a charter city's right to govern its municipal affairs. The matter is on appeal but
will most likely not be resolved by the end of the year.
Staff recommends that the ordinance be repealed pending the outcome of the court challenge so as not
to jeopardize the city and CMWD's ability to receive state funding.
FISCAL IMPACT:
The new law states "State funding or financial assistance includes direct state funding, state loans and
loan guarantees, state tax credits, and any other type of state financial support for a construction
project. State funding or financial assistance does not include revenues that charter cities are entitled to
receive without conditions under the California Constitution." The state has not yet issued any guidance
as to how this is to be interpreted. The Department of Labor has opined that any source of funding
received from outside the city triggers the requirement of the payment of prevailing wages. Gas Tax
funds are a state excise tax and may be at risk. There is also some concern about Transnet funding.
DEPARTMENT CONTACT: Ron Kemp 760-434-2891 ronald.kemp@carlsbadca.gov
FOR CLERK USE.
COUNCIL ACTION: APPROVED
DENIED
CONTINUED •
WITHDRAWN •
AMENDED •
CONTINUED TO DATE SPECIFIC • .
CONTINUED TO DATE UNKNOWN •
RETURNED TO STAFF •
OTHER-SEE MINUTES •
REPORT RECEIVED •
The city currently receives $2.8 million in Gas Tax revenue and $3.3 million in Transnet Local Funding.
CMWD is seeking a $28.1 million loan for the recycled water program and a grant of $4 million under
Proposition 84.
The expense resulting from paying prevailing wages on the current program of projects is uncertain.
When the prevailing wage ordinance was passed, staff estimated a 20% savings on labor costs and an
overall savings of 7% on public works projects. Applying this percentage to the identified projects in the
Capital Improvement Program results in a savings of $16.7 million over a fifteen year horizon. This is
somewhat speculative as contractors often pay prevailing wages anyway and some of the projects may
not be built. The revenue calculation is more measurable. Finance forecasts receiving almost $103
million from Transnet and Gas Tax revenues over the 15-year horizon of the CIP.
ENVIRONMENTAL IMPACT:
This action does not constitute a project as defined under CEQA (California Environmental Quality Act)
pursuant to Public Resources Code Section 21065 in that the proposed ordinance would not cause any
direct physical change in the environment.
EXHIBITS:
1. Ordinance No. CS-CS-265 repealing Section 3.28.130 of the Carlsbad Municipal Code, regarding the
payment of prevailing wages.
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ORDINANCE NO. CS-265
AN ORDINANGE OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, AMENDING TITLE 3, CHAPTER 3.28 OF
THE CARLSBAD MUNICIPAL CODE BY DELETING SECTION 3.28.130
IN ITS ENTIRETY
WHEREAS, the State of California has passed Labor Code Section 1782, which
prohibits charter cities from receiving state funding or assistance for construction projects if
the charter city has an ordinance that authorizes contractors to not pay prevailing wages on
construction projects; and
WHEREAS, Carlsbad Municipal Code Section 3.28.130 exempts public works
contracts from prevailing wage law when the projects are a municipal affair; and,
WHEREAS, the City of Carlsbad desires to continue to receive state funding or
assistance for construction projects.
NOW, THEREFORE, the City Council ofthe City of Carlsbad ordains as follows
that:
1. The above recitations are true and correct.
2. Carlsbad Municipal Code Title 3, Chapter 3.28 is amended by repealing Section
3.28.130 in its entirety.
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EFFECTIVE DATE: This ordinance shall be effective January 1, 2015; and the City
Clerk shall certify to the adoption of this ordinance and cause the full text of the ordinance or a
summary of the ordinance prepared by the City Attorney to be published at least once in a
newspaper of general circulation in the City of Carlsbad within fifteen days after its adoption.
INTRODUCED AND FIRST READ at a regular meeting ofthe Carlsbad City Council on
the 4th day of November 2014, and thereafter.
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the
City of Carlsbad on the day of , 2014, by the following vote to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
APPROVED AS TO FORM AND LEGALITY
CELIA A. BREWER, City Attorney
MATT HALL, Mayor
ATTEST:
BARBARA ENGLESON, City Clerk
(SEAL)