Proponents of a proposed $447 million new “entertainment and sports center” in downtown Sacramento for the Kings professional basketball team claim the arena itself would generate over 4,000 full-time jobs, including employees hired temporarily for construction, employees for operations of the arena, and other outside service jobs related to arena events and activities. Proponents also claim that 11,700 total jobs would be created through construction and permanent employment at ancillary downtown development around the arena.
Unions want to represent every one of those workers who are not legitimately classified as management. Their plan is not to attain control of these jobs through merit or through selling the benefits of unionism to workers, but through backroom deals. These deals include an already-implemented Project Labor Agreement, a proposed Community Benefit Agreement, and other side agreements for employee retention and employer neutrality in organizing campaigns.
This is Part One, explaining the background of how construction trade unions have already obtained a monopoly on the construction workforce for the arena itself. Part Two will explain the union plot to monopolize the service jobs at the arena. Part Three will address the construction and permanent jobs at the ancillary development around the arena.
Construction of the Arena
Project Labor Agreement Long Expected
As far back as October 2003, Sacramento construction trade union officials were alluding to their desire for a Project Labor Agreement on a possible new Kings basketball arena. Groups such as the Coalition for Fair Employment in Construction, Associated Builders and Contractors, and the Western Electrical Contractors Association began efforts to try to preserve fair and open competition.
For union leaders, it would be a matter of pride to declare this high-profile project as built exclusively by union workers. In addition, the sheer size of the project would pour large amounts of money into union political operations via dues and employer payments to labor-management cooperation committees. It would help all unions in the region to accelerate the political conversion of Sacramento’s suburbs from Republican federal, state, and local representation to union-backed Democrat representation.
For more detail on this early stage of the fight for fair and open competition on a new Sacramento Kings arena, see The Union Quest for a Project Labor Agreement on a New Sacramento Kings Basketball Arena: Part One – 2006
An Attempt to Prohibit Project Labor Agreements in the City of Sacramento Fails
In 2011, a coalition of construction associations, taxpayer groups, and other business interests collected signatures on petitions for ballot measures to prohibit the County of Sacramento and the City of Sacramento from entering into contracts that required construction companies to sign Project Labor Agreements as a condition of work. Local governments throughout the state were adopting these “Fair and Open Competition” policies through voter initiatives or elected boards.
Unions responded with a massive radio advertising campaign to scare people into not signing petitions, along with relentless in-person harassment of signature gatherers and other antics to interfere with the campaign. Then they shoved a last-minute gut-and-amend bill through the California legislature (Senate Bill 922) that nullified all Fair and Open Competition charter provisions and ordinances for counties and general law cities. It also cut off state funding to charter cities that had such policies. Because Sacramento was a charter city, the Fair and Open Competition – Sacramento campaign continued to collect signatures for the city ordinance. It submitted petitions with a total number of signatures well over the amount needed, but the measure failed to qualify in January 2012 because an astonishing number of the signatures were not valid. Union leaders gloated.
The Way Is Clear for a Project Labor Agreement
With voters no longer a threat to the union goal to impose a Project Labor Agreement, plots could proceed. A March 2012 resolution for an arena deal with potential team owners (which subsequently derailed) had an unannounced and unexpected provision for a Project Labor Agreement and Community Benefit Agreement tacked on the end through a city councilmember’s amendment, with no opportunity for public comment. See Out of Nowhere: Project Labor Agreement and Community Benefit Agreement Tacked on End of Motion for New Sacramento Kings Basketball Arena.
A “Request For Proposal For Lead Contractor” issued on June 21, 2013 by a new set of team owners informed prospective respondents that “The Contractor shall also meet and negotiate with local labor regarding a possible Project Labor Agreement for the ESC,” that is, the “entertainment and sports center.” In addition, respondents are asked to “Please describe your experience, if any, with labor on construction projects in northern California including, without limitation, negotiations with labor and the results, the size of the project, and project labor agreements.”
Announcement of a Backroom Union Deal
On September 4, 2013, a public relations firm hired by the Sacramento Kings (Mercury Public Affairs) informed local news media with only a few hours notice about a press conference to announce a special deal with the Sacramento-Sierra’s Building and Construction Trades Council. This deal was the long-anticipated Project Labor Agreement.The press conference featured Sacramento Mayor Kevin Johnson, top union officials, and top Kings team officials. Their consultants were even successful in “working on getting a few women there.” But also in attendance at the press conference were uninvited protesters from local non-union construction companies.
These opponents of the backroom union deal spoiled the visual impact by holding signs and banners on the balconies overlooking the atrium where the press conference was held. At the end of the official press conference, protesters then held their own impromptu press conference (using their opponents’ unsecured audio equipment) to condemn the Project Labor Agreement and call for the arena to be built instead in the suburbs, away from union influence and backroom deals. This high-profile celebration of union political power turned into a debacle.
Following the press conference, non-union contractors circulated a memo entitled “Eight Steps to Possibly Alleviate Taxpayer and Contractor Outrage about the Backroom Deal for a Project Labor Agreement on Construction of the Sacramento Kings Arena.” Neither the Kings nor the City of Sacramento responded.
Motivation for the Backroom Union Deal
Although no one directly involved in the proposal, negotiation, or execution of the Project Labor Agreement has explicitly admitted it in public, most informed observers claim the union deal was mainly intended to neutralize the threat of construction unions exploiting the California Environmental Quality Act (CEQA) to delay permitting for the arena through comments, appeals, and lawsuits. Political and business leaders recognized that construction trade unions in Sacramento routinely engage in “greenmail” to hold up projects until the developer provides economic concessions (usually a Project Labor Agreement). Some recent examples within the City of Sacramento included the Railyards project and the Greenbriar and Delta Shores developments.
Once unions had control of the arena construction work, their lobbyists at the state capitol had no objections when State Senate leader Darrell Steinberg (who represents downtown Sacramento) pushed through a bill (Senate Bill 743) in the last days of the 2013 California legislative session. This bill provided special breaks under CEQA to the Kings arena to hinder the efforts of other interest groups to hold up the project with environmental objections.
Perhaps this scheme satisfied construction unions, but it did not discourage Unite Here Local No. 49 from submitting objections to the Draft Environmental Impact Report (DEIR) for the Kings Arena. Nor did SB 743 discourage community organizations from submitting objections to the DEIR with the open intent of seeking a Community Benefit Agreement for the ancillary development around the arena.
Other parties even asserted in their DEIR comments that SB 743 was unconstitutional and that the arena did not actually qualify as a project under the criteria set in SB 743. If a court later agrees with these claims, a new environmental impact report will need to be drafted, and SB 743 will ironically end up jeopardizing the project altogether.
No Public Accountability or Transparency Allowed
To this day, the Sacramento City Council has never discussed or voted on the Project Labor Agreement. Even more offensive, the Project Labor Agreement has never been released for the public to review, despite Mayor Johnson citing the agreement in his State of the City address on February 12. Tweets from the State of the City event indicated that some people misheard Mayor Johnson claim that arena construction would employ “sex-offenders,” although the Project Labor Agreement apparently includes a provision to employ “ex-offenders.”
Rumors get started when backroom deals remain a secret even as they are promoted as policy accomplishments. Why is it so important to withhold this celebrated deal on a public works project from the people who will be paying for a majority of it, plus the interest on the money borrowed through the city’s sale of revenue bonds?
In addition to being an accomplishment of the city’s chief elected executive, the mysterious Project Labor Agreement has also become relevant for litigation in the state courts involving the city. The Sacramento-Sierra’s Building and Construction Trades Council cited the Project Labor Agreement as the basis for justifying its February 14, 2014 amicus brief in defense of the city’s decision not to qualify a ballot measure requiring voter approval of public subsidies for the arena.
A request to the City of Sacramento for the Project Labor Agreement under the authority of the California Public Records Act failed to produce it.
Cost Impact Is Likely But Not Acknowledged to Date
A non-binding term-sheet between the Kings and the City of Sacramento dated March 26, 2013 provides for a $258 million subsidy for the Entertainment and Sports Center. Under state law, this subsidy means that the arena is a public works project, and contractors would be required to pay prevailing wage rates based on union labor agreements.
The Project Labor Agreement will go beyond this wage requirement to cut bid competition and raise costs even further. As an additional contractual obligation, the Project Labor Agreement will require contractors to obtain workers from unions and pay fringe benefits and other payments into union trust funds.
Various studies, anecdotes, and common sense have suggested that Project Labor Agreements raise the cost of construction projects by about 15%. The March 26, 2013 non-binding term sheet for the arena stated a total cost of $447 million. Did that amount account for the reduction in bid competition resulting from a Project Labor Agreement mandate?
An Aggressive Response from Supporters of Fair and Open Competition
In Sacramento, non-union contractors dominate electrical work on public works and commercial construction. Knowing that public opinion in the City of Sacramento is strongly against providing $258 million in public funding to billionaire team owners and professional basketball players, a group of large Sacramento-based non-union contractors provided essential funding to a new organization (Voters for a Fair Arena Deal) created to finish collecting signatures on petitions to put a measure on the June ballot to require a citizen vote to authorize any public subsidies for entertainment and sports facilities.
Residents of the City of Sacramento await a judge’s ruling on whether they will get to vote in June on this ballot measure. (See “Voter Approval for Public Funding of Professional Sports Arena Act”)
On February 26, 2014, a Sacramento County Superior Court judge agreed with the City of Sacramento and ruled that petitions for a vote on public subsidies contained too many inconsistencies and interfered with the city’s charter authority. Citizens will not have a chance to vote on the public subsidy, whether it is $258 million or some other amount in the end. See the decision in Camacho v. Concolino.
Meanwhile, the Coalition for Fair Employment in Construction is demanding that the Sacramento Kings ownership and the Sacramento-Sierra’s Building and Construction Trades Council immediately release to the public a copy of the alleged Project Labor Agreement for the proposed Kings Arena. It threatens to file a lawsuit against the City of Sacramento to get it.
Such a lawsuit could expose some embarrassing background about how and why unions obtained a monopoly on arena construction. In 2013, the Coalition for Fair Employment in Construction sued the City of San Diego to obtain the San Diego Convention Center Phase 3 Expansion Project Labor Agreement, another Project Labor Agreement negotiated and executed in a secret backroom deal. In the process, the coalition obtained the actual union deal and the complete list of political payoffs to unions from the San Diego Mayor’s office.
Measuring the Cost of Project Labor Agreements on School Construction in California – study by National University System Institute for Policy Research in San Diego – July 2011
Proposed, Non-Binding Terms of a Potential Transaction – term sheet between the City of Sacramento and an investor group in order to retain the Sacramento Kings NBA basketball franchise and to develop a new Entertainment and Sports Center (ESC) in downtown Sacramento.
The Renaissance Report – economic analysis of the impact of the new entertainment and sports center and related downtown development to Sacramento.
Coalition for Fair Employment in Construction Calls for Public Access to Backroom Union Deal Imposed on Proposed Sacramento Kings Arena – Press Release – February 19, 2014
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.