The $77.8 million upgrade and expansion of San Diego's Miramar Water Treatment Plan is now expected to become a more expensive project since the city council voted to make it a prevailing wage job.
The council approved the project 8-2, with Councilman Jim Madaffer and Mayor Dick Murphy in opposition, citing concerns with project costs.
The project was also passed despite a city staff recommendation that the city approve the project without prevailing wage because of the expected higher cost.
With prevailing wage, the job may require the additional staff for the project, increasing costs as much as $640,000, while the cost of the entire project may increase between $7 million and $12 million, according to the city manager's staff report.
The contract is part of a $125 million upgrade to expand the current service capacity of 140 million gallons per day (MGD) to 215 MGD, upgrading the treatment process, and meeting new national drinking water standards.
Members of the construction industry were in attendance to promote prevailing wage in order to level the playing field for local contractors to compete with out of town companies that can under-bid because of lower labor costs, according to Andrew Berg, director of local government relations for the San Diego National Electrical Contractors Association.
Frequently, companies from nearby California towns will bid lower on a project because costs of living are less than in San Diego, resulting in lower costs for projects, Berg said at the council meeting.
Prevailing wage also had the support of the Executive Committee of the San Diego Associated General Contractors and the Local 230 Plumbers and Pipefitters Union.
The city claimed it was not responsible for paying prevailing wage because money for the project was raised through bonds and the increase of water rates throughout San Diego, according to Leslie Devaney, executive assistant city attorney for San Diego.
The city contends that prevailing wage law is not applicable to this job because state and federal funds are not being used to fund the construction, she said.
According to Nico Ferraro, business manager for the Local 230, water from the treatment plant will be sold to municipalities outside the city of San Diego, making it a state issue and requiring prevailing wage.
Ferraro also pointed out at the meeting that the renovation of the facility is being completed to comply with state water regulations and is subject to inspections and oversight from state agencies, which should qualify it as a prevailing wage job.
If passed as a non-prevailing wage job, the union will most likely file a lawsuit against the city that "will result in costly delays to the project," he said at the meeting.
Opponents of prevailing wage claimed that the costs of the project would jump and give more money to construction workers that are sufficiently paid, many with overtime benefits and pensions, said George Hawkins, executive vice president for the San Diego Associated Builders and Contractors, at the meeting.
Hawkins pointed out that smaller companies may have to add management to staff in order to comply with often hefty administrative paperwork required in prevailing wage jobs.
He also stated that the city may face a lawsuit from the ABC if prevailing wage on the job is passed.
There are industry concerns that taking the project prevailing wage would stop young subcontractor companies from bidding on the project, according to Lisza Pontes, executive director of the San Diego Associated Subcontractors Association, which is taking a neutral stance on the issue.
"An established small business will continue to bid because they know how to deal with prevailing wage issue," Pontes said. "The emerging contractors are less willing to jump into that because there are administrative duties that come along with the job and if they don't have the experience it is something that has to be learned."
Since 1980 the city policy has been against paying prevailing wages. The vote suspends the policy only on the Miramar Water Treatment Plan contract.
Source: San Diego Daily Transcript
