CC 2013-05-14_08.g. Letter Opposing Senate Bill 7' MANAGER,,/
DATE: MAY 14, 2013
RECOMMENDATION:
It is recommended the City Council approve, and authorize the Mayor to send, a letter
on behalf of the City in opposition to Senate Bill 7 (SB7).
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
If adopted, SB 7 would eliminate potential savings from establishing the City's own
purchasing and contracting policies if it were to become a charter city.
BACKGROUND:
On February 19, 2013, California State Senate Majority Leader Darrell Steinberg and
Senator Anthony Cannella issued a press release announcing the introduction of
Senate Bill 7. The bill would impose a financial disincentive on charter cities that
establish their own policies concerning government- mandated construction wage rates.
SB 7 would restrict a charter city to only be eligible to use state funds for construction
projects if the city has a policy requiring contractors on all its municipal projects to
comply with the State's prevailing wage requirements.
Under this bill, a charter city would be ineligible to receive State funding if either the city
has a charter provision or ordinance that excuses contractors from complying with the
prevailing wage law on any projects or the city has awarded public works contracts
without including the specifications required by the prevailing wage law within the
current calendar year or prior two calendar years. Should the bill pass, its requirements
would apply to contracts from January 1, 2014 onward. The only exception to this bill
applies to contracts under $25,000 for construction work or under $15,000 for
maintenance, installation, alteration and repair work.
The City Charter Committee has met twice. The next meeting will be on Monday, May
13th, when all interested parties have been offered the opportunity to make up to a ten
Item 8.g. - Page 1
CITY COUNCIL
CONSIDERATION OF LETTER OPPOSING SENATE BILL 7
MAY 14, 2013
PAGE 2 OF
minute presentation to the Committee. The purpose of these presentations is to ensure
the Committee has an opportunity to hear all viewpoints prior to beginning their
deliberations.
ANALYSIS OF ISSUES:
SB 7 has been opposed by the League of California Cities. Normally, staff does not
seek Council authorization for letters regarding legislation in which the League of
California Cities has taken a formal position. However, staff felt it would be appropriate
to seek prior authorization on a letter regarding this bill given the status of the City
Charter Advisory Committee effort.
The City Council has not yet determined whether to pursue a City Charter ballot
measure or to attempt to exempt the City from prevailing wage requirements, but SB 7
would eliminate the ability before it is even decided. It is an issue of local control
because it would preclude the City from having the ability to pursue establishing its own
policies and positions regarding prevailing wage requirements under a city charter.
Most disturbing about the bill is that it is clearly an attempt to circumvent the State
Supreme Court's decision and "home rule" doctrine as established in the State
Constitution. In the recent decision in State Building and Constructions Trades Councils
of California, AFL — CIO v. City of Vista, the Court held that locally funded public works
projects performed by charter cities are municipal affairs under the California
Constitution and, as a result, the wages paid to workers on charter city projects are not
subject to California's prevailing wage law
ALTERNATIVES:
The following alternatives are provided for the Council's consideration:
1. Approve a letter in opposition to SB 7;
2. Modify and approve a letter in opposition to SB 7;
3. Do not approve a letter in opposition to SB 7;
4. Approve a position in support of SB 7; or
5. Provide staff with other direction
ADVANTAGES:
Failure of SB 7 would allow the City to decide whether or not to keep the State's
prevailing wage law if it pursues a City Charter. Being able to exclude prevailing wage
requirements would give the City more control over its finances, which is a major
incentive behind becoming a charter city. Restricting the city charter document,
especially while it is in the process of being drafted, causes unnecessary constraints on
the City Charter Advisory Committee as it decides the best option for Arroyo Grande.
Most importantly, approving staff's recommendation will support the League of
California Cities' position to oppose State infringements upon local control and home
rule.
Item 8.g. - Page 2
CITY COUNCIL
CONSIDERATION OF LETTER OPPOSING ... 2, BILL 7777
MAY 14, 2013
PAGE 3 OF 3
DISADVANTAGES:
The objectives of SB 7 according to Senator Steinberg are to increase middle -class
jobs, sustain a skilled workforce, and ensure cost efficient and high quality public works
projects.
ENVIRONMENTAL REVIEW:
No environmental review is required for this item.
PUBLIC NOTIFICATION AND COMMENTS:
The Agenda was posted in front of City Hall on Thursday, May 9, 2013. The Agenda
and report were posted on the City's website on Friday, May 10, 2013. No public
comments were received.
Attachments:
1. Proposed Letter
Item 8.g. - Page 3
��Cor �
May 14, 2013
The Honorable Darrell Steinberg
Senate President Pro Tern
State Capitol, Room 205
Sacramento, CA 95814
Attachment 1
Phone: 805
47r- .
FAX: (805) 473-0386
www.affoyogonde.org
RE: Opposition to SIB 7 (Steinberg) Charter Cities: Unlawful Conditions on State Funding
Dear Senator Steinberg:
On behalf of the City of Arroyo Grande, I regret to inform you of our opposition to SB 7 (Steinberg),
which would prohibit a charter city from receiving or using State funding or financial assistance for a
construction project if the city has a charter provision or ordinance that authorizes a contractor to not
comply with State prevailing wage requirements on local construction projects. This measure
violates the fundamental principle of local control and the constitutional limits of state authority over
charter cities, as recently held by the Court in the Vista decision.' This measure conflicts with Vista
by attempting to leverage a different outcome than the Court's ruling by withholding vital state
construction funds, derived from all of California's taxpayers, from charter cities that fail to adopt
prevailing wage requirements for projects built with local funds. Such a condition is unlawful
because the State is seeking to leverage outcomes it lacks the legal authority to compel.
While Arroyo Grande is a general law city, we oppose this measure for its intrusion into local
authority, as well as the effort to undercut the flexibility provided by the Constitution to charter cities.
Our City Council has appointed a citizen advisory committee to develop recommendations regarding
whether to pursue a ballot measure to become a charter city. This bill would circumvent the ability of
our citizens to determine through a vote whether they want to exercise "home rule" rights granted
through the State constitution.
This bill would establish a disturbing precedent for State micromanaging of charter city laws and
policies by the tactic of withholding state funds as political leverage to attempt to force changes to
city charters and ordinances. For these reasons, the City of Arroyo Grande opposes this legislation.
Thank you for the consideration of our position.
Sincerely,
Tony Ferrara
Mayor
1 The California Supreme Court upheld that (1) the construction of a city- operated facility for the benefit of the city's inhabitants with
city funds is "quintessentially a municipal affair," and (2) the state cannot require a charter city to exercise its purchasing power
based upon "some indirect effect [of the charter city's purchasing power] on the regional and state economies." State Building and
Construction Trades Council of California, AFL -CIO v. City of Vista (2012) 54 Cal. 4' 547.
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Item 8.g. - Page 4
Cc:
Senator Ted Lieu, Chair, Senate Committee on Labor and Industrial Relations
(Committee Fax: Attn. Alma Perez @ 916- 327 -5703)
Gareth Elliott, Legislative Affairs Secretary, Office of Governor Jerry Brown
City's Senator and Assembly Member
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