Prevailing Wage Bill’s Fate Awaited

Gov. Gray Davis has until midnight Sunday to sign or veto a bill that would require higher wages for construction workers at certain government-supported projects, a change championed by labor but opposed by housing advocates who say it would greatly drive up the cost of building homes.

The bill by Sen. Richard Alarcon (D-Sylmar) is among nearly 200 that awaited the governor’s signature Thursday. Senate Bill 975 would expand the types of construction projects at which workers must receive the prevailing wage, a higher rate of pay that is often equal to union wages.

“This protects their ability to be paid the wage rate that exists in the community,” said Bob Balgenorth, president of State Building and Construction Trades Council, based in Sacramento.

The union leader said higher wages would also ensure that the projects meet a high standard of quality and enable construction workers to afford homes.

But opponents said the bill would hike the cost of building affordable housing, lead to a loss of jobs and push home ownership further out of the reach of the state’s low- and moderate-income residents.

“We’re hurting the people that we’re trying to help,” said Jeff Lee, president of the Lee Group, a Marina del Rey-based for-profit builder of affordable housing.

In effect, the bill creates unlikely foes in two groups that are normally allied politically: trade union workers and advocates of affordable housing.

The measure closes a loophole in the law by more clearly defining which projects receive “public funds,” and therefore are legally required to pay workers the prevailing wage. Under the bill, any project receiving other forms of government assistance--such as fee waivers, property tax deferrals, density bonuses and rental subsidies--would be defined as “publicly funded.” That broad definition could affect scores of construction projects.

Until now, the definition of “public funds” and the imposition of the prevailing wage law had been interpreted in myriad ways, Balgenorth said. Some municipalities skirted the law entirely, he said.

“Agencies over the years have tried to get around paying prevailing wage by having private developers build a park and then donate it,” he said. “The reality is they built it for the [public] district.”

That avoidance is unfair to workers and leads to other problems, Balgenorth said.

“Because you have untrained workers, you also encounter a lot more accidents and injuries,” he said. “So the quality suffers, the worker suffers, and the community suffers.”

By the State Building and Construction Trades Council’s estimate, the bill would increase housing costs by 1% to 2%. The council’s figures are drastically different from those of affordable-housing advocates and builders, who say the costs will increase by as much as 30%.

“It’ll have a depressing effect on the ability to develop affordable housing as well as commercial development that uses public subsidies,” said Robert Wiener of the California Coalition for Rural Housing.

Throughout the state, housing advocates and builders have sent letters to the governor urging him to veto the bill, which was approved by the state Senate last month.

It contains an exemption for some forms of affordable housing, but advocates say virtually all publicly subsidized developments would be affected. And many of those who benefit from low-cost housing are working people who earn even less than construction workers.

“By imposing prevailing-wage requirements on the housing facilities which serve these working families, and thus reducing the supply of that housing and facilities by one-fifth, the Legislature would be truly robbing many Peters to pay a few relatively well-off Pauls,” wrote G. Allan Kingston, whose Culver City-based Century Housing has helped develop more than 8,000 units of affordable housing.

Marina del Rey-based builder Lee said many of the 1,000 units of affordable housing he has been able to build over the last six years would not have been possible under the new law because of the high cost that would be imposed.

The list of opponents includes 31 cities and the Los Angeles County Community Development Commission, which argues that the bill would jeopardize local projects.

If passed, the bill would add $80 million to the price tag of the commission’s affordable housing that is under some phase of construction, said Calvin Naito, public information officer for the panel.

The governor’s press deputy said Davis has not indicated his position on the bill, which arrived on his desk in mid-September.