With a challenge that could force the City of Palo Alto to begin paying its contractors higher wages, labor leaders are calling for the city to scrap plans to sign a routine contract for a pump-replacement project at the Regional Water Quality Control Plant.
The case has wide-ranging implications that could increase the costs of construction and maintenance projects at some city facilities.
Juan Garza, a senior compliance officer from the Joint Electrical Industry Fund of Santa Clara County, and other labor leaders say the city should reopen the bidding process for the project, this time pledging to pay "prevailing wage," a legal rate that is set by the California Department of Industrial Relations.
The issue split the Palo Alto City Council Monday, so it will be discussed again next week when Mayor Yoriko Kishimoto returns, giving the council an uneven number of votes.
The council had been scheduled Monday to approve an $859,000 contract with Anderson Pacific Engineering Construction, Inc. The project includes replacing recycled-water pumps, installing a storage tank and adding additional pipelines.
It is needed as part of a larger, $16 million project that will add 35,000 feet of pipes along East Bayshore Road, providing additional recycled water for irrigation in parts of Mountain View, according to Assistant Public Works Director Mike Sartor. That project is scheduled for completion in December 2008.
The pump-replacement contract drew two bidders, Anderson Pacific and D.W. Nicholson Corporation, which bid $969,000.
But, as with the many other contracts it signs for work at the plant, the city wasn't planning to require Anderson Pacific to pay its contractors prevailing wages.
Prevailing wages vary by region. Locally, an underground utility pipefitter would earn about $32.80 an hour and a carpenter would make $51.80 hourly.
The issue of whether Palo Alto must abide by state prevailing-wage law is dependent on which of two types of cities it is. Palo Alto, as a "charter city," is governed by a city charter that trumps state law on certain local issues. Currently, charter cities are not required to pay prevailing wages on municipal projects, according to City Attorney Gary Baum.
But Garza says the Regional Water Quality Control Plant is not a solely "municipal" operation because it includes Los Altos, East Palo Alto, Los Altos Hills, Mountain View and Stanford University. It also discharges water to the Bay, which is a concern to residents statewide.
Baum told the council Monday the issue was a "close call."
"The current state of the law (that) this is not subject to prevailing wage could change," he said. "This is really a policy choice."
But for Garza, the case is a "slam dunk."
"If the city of Palo Alto decides to grant this contract, it is willfully deciding to violate state law."
The state's Department of Industrial Relations has already been notified and will investigate if the city proceeds, Garza said Thursday. The case could also be challenged in court, he said.
Garza, a former law enforcement officer who joined the Joint Electrical Industry Fund in December 2006, said he was not working on behalf of the second bidder, D.W. Nicholson Corporation.
"I was making efforts before I knew who the players were," he said, noting that he had been communicating with the city before the bidding process began.
He acknowledged the city has hired many contractors to work at the plant over the years.
"Just because the City of Palo Alto has never been challenged before doesn't make what they've done in the past correct," he said.
The issue divided the City Council Monday. Vice Mayor Larry Klein and council members Dena Mossar, Jack Morton and Bern Beecham would have liked to award the contract as is, without including a prevailing-wage requirement.
"This is an issue that would deserve a great deal of discussion," Klein said. "We have lots of construction contracts come before us every year. Â… I have no idea what that would do to increase our costs."
Mossar said the project needed to be completed or the city would risk losing grant funds.
Sartor and plant manager Rick Wetzel said the project would probably not be completed by its December 2008 deadline if it was rebid because work could only be conducted during rainy months because the pumps currently provide needed water to the Mountain View golf course and Greer Park.
But for council members Judy Kleinberg, Peter Drekmeier, LaDoris Cordell and John Barton, paying prevailing wages on the contract is the right thing to do, legally and ethically.
"I don't particularly like doing things under the threat of litigation," Barton said. "I think in this particular instance we'd be better off (paying prevailing wage) from a legal standpoint."
"We have, I think, a responsibility to not just provide our own residents with housing and other kinds of amenities but to ensure the people who come to work can afford to live somewhere nearby," Kleinberg said.
City Manager Frank Benest urged the council to proceed with the contract and then consider creating a prevailing-wage policy at another time.
Mayor Kishimoto was out of town for the meeting, leaving her colleagues stuck.
The council will discuss the issue again Monday, Sept. 17, after 6:30 p.m.