"Staggering" Cost of New High School in California: Project Labor Agreement Blamed
UPDATE – July 29, 2015: According to a Facebook post of the Ventura County Star “VCS School Watch,” “about 140 workers are on site six days a week, preparing the $78.2 million Rancho Campana High School for its opening Sept. 2.” And according to a July 29, 2015 Ventura County Star article (“Frantic Pace Kept to Open Rancho Campana High“), “Assistant Superintendent Steve Dickinson said the total cost of the school will be $78.2 million, up from a projected $76.8 million earlier this year. He said most of the increase in cost is due to a decision to install pavers on the campus grounds instead of just concrete.”
These numbers are far higher than the “staggering cost” reported below.
Sometimes you can predict the future.
In the fall of 2013, business and taxpayer organizations warned the elected board of the Oxnard Union High School District in Ventura County (north of Los Angeles, on the coast) that it would endure reduced bid competition and higher construction costs if it required companies to sign a Project Labor Agreement with the Tri-County Building and Construction Trades Council as a condition of working on the Rancho Campana High School construction project.
The union-backed proposal abruptly emerged at the board’s October 9 meeting and consumed the board and district administrators for more than two months.
In 2004, voters had approved Measure H, authorizing the district to borrow $135 million via bond sales for construction of two new schools and modernization of existing schools. Ten years later, the district was ready to use Measure H bond proceeds to build the new Rancho Campana High School at an estimated construction cost of $42-45 million.
On October 23, the school district awarded a lease-leaseback contract for construction to the local construction company S.C. Anderson. This contractor then waited to see if a divided board would mandate a union Project Labor Agreement in its bid documents.
At their November 20, 2013 public meeting, board members bickered with district administrators and among themselves over language to be included in the Project Labor Agreement. They scheduled a special board meeting for Monday, November 25 at 5:00 p.m. to approve a final negotiated version of a Project Labor Agreement. Staff was told to clear their schedules to meet with union officials and representatives of the lease-leaseback contractor until a deal was reached.
Union political pressure made the deal inevitable. At its November 25 meeting, the board voted 3-2 to tentatively approve a Project Labor Agreement. On December 9, the district’s Citizens Bond Oversight Committee voted 4-1 to recommend that the board reject the final Project Labor Agreement because of the likelihood of increased costs and other reasons. But on December 18, the board again voted 3-2 for the final Project Labor Agreement. Subcontractors then submitted bids to S.C. Anderson for 49 packages by the January 30, 2014 deadline.
When the board considered the Project Labor Agreement at meetings in the fall of 2013, the meeting room was packed – overflowing with union officials and activists. But only a handful of ordinary citizens were at the February 12, 2014 board meeting to see the results.
Staff presented a preliminary Guaranteed Maximum Price of $58,285,794, about 30% higher than the $45 million at the high range of the estimate.
One school board member called it a “staggering amount” and a “setback” for the school district. Staff for the district’s construction management firm identified four factors in a written report (and identified an additional factor at the board meeting) that likely contributed to the price far above the estimate.
The “biggest factor” cited was the government-mandated Project Labor Agreement. Local subcontractors told district staff and the lease-leaseback contractor that they declined to bid because of the district’s Project Labor Agreement mandate. Staff also insinuated that subcontractors for some trades became aware of the lack of bid competition and inflated their bid amounts. (Go to 1:15:30 of the board meeting video to hear these remarks.)
Most damaging was the electrical package, the most expensive of the 49 packages. There were three bids very close to each other, but those three bids were double the original estimate. Is it any surprise that the International Brotherhood of Electrical Workers (IBEW) aggressively lobbies elected officials at California local governments to mandate Project Labor Agreements?
This result is consistent with the results of a comprehensive economic study (Measuring the Cost of Project Labor Agreements on School Construction in California) published in July 2011 by the National University System Institute for Policy Research in San Diego. It concluded that the cost of California school construction under Project Labor Agreements is 13 to 15 percent higher than when school districts do not mandate Project Labor Agreements. Union leaders and their academic sycophants continually try to undermine the credibility of this study, but anecdotal evidence continually confirms that the study is accurate.
Project Labor Agreements cut bid competition and raise construction costs, for the benefit of unions at the expense of taxpayers. You can predict the future.
Sources
Minutes of November 20, 2013 board meeting
Minutes of November 25, 2013 special board meeting
Minutes of December 9, 2013 board meeting (includes Oversight Committee recommendation against the Project Labor Agreement)
Consideration of Approval of Final Project Stabilization Agreement for Rancho Campana High School Construction Project (Staff Report and Proposed Project Labor Agreement for December 18, 2013 board meeting)
Minutes of December 18, 2013 board meeting
Video of February 12, 2014 board meeting
Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.