BILL ANALYSIS Ó
AB 356
Page 1
ASSEMBLY THIRD READING
AB 356 (Hill)
As Amended April 25, 2011
Majority vote
BUSINESS & PROFESSIONS 5-0 LOCAL GOVERNMENT 8-0
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|Ayes:|Bill Berryhill, Allen, |Ayes:|Smyth, Alejo, Bradford, |
| |Hagman, Hill, Smyth | |Campos, Gordon, Hueso, |
| | | |Knight, Norby |
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SUMMARY : Prohibits a local agency from mandating that any portion
or percentage of work on a public works project be performed by
local residents or persons who reside within particular geographic
areas if any portion of that public works project will take place
outside the geographic boundaries of the local agency and requires
any increase in the cost of a state-funded public works project that
is attributable to a policy of hiring only local residents be funded
with local funds.
EXISTING LAW authorizes state agencies to enter into public works
projects, as defined, and imposes various requirements with respect
to the contracting and bidding process.
FISCAL EFFECT : Unknown. This bill is keyed non-fiscal.
COMMENTS :
Purpose of this bill . According to the author, "On December 14,
2010, the San Francisco Board of Supervisors passed an ordinance
establishing the 'San Francisco Local Hiring Policy for
Construction', Ýwhich] requires contractors and their subcontractors
performing public works projects for the City and County of San
Francisco worth $400,000 or more to hire local San Francisco
residents?and extends to projects at sites located up to 70 miles
beyond the jurisdictional limits of San Francisco.
"While it is understandable for San Francisco to want to increase
local jobs, favoring local workers can negatively impact neighboring
cities that are also experiencing high unemployment levels?The Bay
Area is a mobile and economically interdependent region and it does
not benefit from pitting neighboring communities against each other.
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"To create a more equitable approach AB 356 puts parameters on San
Francisco's local hire policy so that the policy does not extend
outside of the city's geographical boundaries."
Background . Prior to the enactment of the San Francisco Local
Hiring Policy for Construction (Policy), San Francisco required
contractors "to make a good faith effort?to hire qualified
individuals who are residents of the City and County of San
Francisco to comprise not less than 50% of each contractor's total
construction workforce, measured in labor work hours, and to give
special preference to minorities, women, and economically
disadvantaged individuals." However, a 2010 study by Chinese for
Affirmative Action and Brightline Defense Project found that, since
2003, the average local hire figures on city-funded construction was
less than 25% and actually dipped below 20% for 2009.
On December 14, 2010, in order "to advance the city's workforce and
community development goals, removing obstacles that may have
historically limited the full employment of local residents on the
wide array of opportunities created by public works projects,
curbing spiraling unemployment, population decline, and reduction in
the number of local businesses located in the city, eroding property
values, and depleting San Francisco's tax base," the San Francisco
Board of Supervisors passed the Policy. Effective on March 25,
2011, the Policy, among other things:
1)Applies to public work or improvement contracts with contractors
and subcontractors estimated to cost more than the threshold
amount, currently set at $400,000, constructed within 70 miles of
the jurisdictional boundary of the City and County of San
Francisco.
2)Requires an initial local hiring requirement with a mandatory
participation level of 20% of all project work hours within each
trade performed by local residents, with no less that 10% to be
performed by disadvantaged workers. Subject to periodic review,
the mandatory participation level increases annually over seven
years at increments of 5%, up to a mandatory participation level
of 50%, with no less than one-half to be performed by
disadvantaged workers.
3)Specifies that the "local" requirement shall include San Francisco
residents and workers local to the area and region where the work
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is located.
4)Specifies that for city projects constructed within 70 miles of
the jurisdictional boundary of the City and County of San
Francisco, the percentage requirements shall apply in proportion
to the city's actual cost after reimbursement from non-city
sources.
5)Authorizes the negotiation of reciprocity agreements with other
local jurisdictions that maintain local hiring programs.
6)Exempts certain projects.
Local hiring ordinances . With the goal of increasing employment
opportunities for residents, cities and counties nationwide have
established programs to encourage and, in some cases, to require
developers of construction projects to hire locally for skilled and
unskilled labor. In fact, for projects funded by federal stimulus
dollars under the American Recovery and Reinvestment Act (ARRA),
Section 1.6 of the April 3, 2009, Updated Implementing Guidance for
the ARRA contains the following guideline: "Promoting local hiring:
Departments and agencies should seek to maximize the economic
benefits of a Recovery Act-funded investment in a particular
community by supporting projects that seek to ensure that the people
who live in the local community get the job opportunities that
accompany the investment." However, most local hiring ordinances
only require a "good faith" effort to meet the goal. Many have
cited San Francisco's ordinance as the strictest in the country.
Local hiring ordinances have historically been faced with
constitutional scrutiny. The Privileges and Immunities Clause,
Article IV, Section 2, of the United States Constitution prevents a
state from discriminating against out-of-state citizens. In United
Building and Constructions Trades Council of Camden County and
Vicinity v. Mayor and Council of the City of Camden, (1984) 465 U.S.
208, the Supreme Court extended this protection to municipal
residency classifications, and, thus, there must be a "substantial
reason" for the difference in treatment.
Analysis Prepared by : Marina Wiant / B.,P. & C.P. / (916)
319-3301
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