Nov. 7 2012 09:50 AM

Come Jan. 1, San Diego will find out if funding-loss warnings were true

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Illustration by Adam Vieyra

In June, San Diego voters approved Prop. A, despite warnings that doing so would make the city ineligible for tens of millions of dollars in state loans and grants. Since then, there's been almost no discussion on what happens if those warnings prove true. 

The state law that cuts San Diego off takes effect on Jan. 1, 2013. Meanwhile, the city continues to submit applications for state assistance—for $31.1 million in low-interest loans from the Clean Water State Revolving Fund (CWSRF) program and for a $264,000 grant from Caltrans last month alone. 

Chris Stevens, a supervisor with the CWSRF, which provides local governments with low-interest loans for wastewater, sewer and water-reclamation projects, told CityBeat that his department is working to process the city's applications—San Diego's got $74 million-worth pending, he said—but some, perhaps all, won't make the deadline. 

"We've had a number of discussions with the city, and after Jan. 1, we won't be able to execute any agreements to finance any of their projects," Stevens said. 

Those projects include replacement of an aging drinking-water pipeline under University Avenue and needed upgrades to the city's wastewater-treatment plant.

Pitched to voters as a way to level the playing field between union and non-union contractors, Prop. A was part of a larger, statewide push by Associated Builders and Contractors (ABC), a staunchly anti-union national trade group, to put an end to project-labor agreements (PLAs). PLAs are prehire work agreements for large projects—like hospitals, stadiums and water-treatment plants—that are considered union-friendly because unions do the negotiating for the folks who'll be employed under the contract.

Even though the San Diego City Council's never required a PLA on a project, Prop. A's proponents described it as a preemptive measure. Campaign spokesperson Eric Christen told KPBS in May that Prop. A would keep the City Council from "even having the opportunity" to consider a PLA.

This didn't sit well with the Democrat-controlled California Legislature, which had watched PLA bans get enacted by a number of local governments, including Oceanside and Chula Vista. Just weeks before the June election, the Legislature passed SB 829, which said that any local government that bans PLAs would be ineligible for state construction grants and loans. To put this into perspective, San Diego received $36 million in state funding in 2010 and $158 million in 2011, according to the city's Independent Budget Analyst.

Assemblymember Brian Jones, whose district includes a portion of San Diego, argued that the Legislature was "usurping the will of the voters."

Toni Atkins, an Assembly member and former San Diego City Council member, countered that it's PLA bans that usurp local control.

"I want my community to have those options," Atkins argued at a hearing on SB 829. "You can use PLAs, or you don't have to use PLAs. That, to me, is a pretty simple statement."

SB 829 passed easily and was signed by Gov. Jerry Brown on April 27.

Leading up to the June election, Prop. A's supporters pointed to language in the bill that, they argued, protected it from SB 829: Prop. A would be moot if a PLA were required as a condition of the receipt of federal or state funds. But the City Attorney's analysis of the bill questioned whether that exception would hold up.

"As of the deadline for publication, it is unclear whether the proposition, if approved, would affect future state funding of City construction projects," the analysis said. "It will be up to the California Attorney General, and possibly the courts, to determine whether state funding will be affected for City construction projects."

A spokesperson for the Attorney General's office said that, so far, no such determination's been made.

But to state Controller John Chiang, the law's impact seemed clear enough. A mailer sent out the first week in May by the campaign opposing Prop. A included this warning from Chiang—if the measure passed, "San Diego will no longer be eligible to receive state grants for local construction projects." And on May 29, Fitch Ratings issued a press release stating that "if state funding ceases due to possible voter approval of a ban on project labor agreements, [it] could place downward pressure on the city's bond ratings."

In the run-up to the June election, San Diego City Attorney Jan Goldsmith declined to comment on whether he'd challenge SB 829 should Prop. A pass; Goldsmith's spokesperson didn't respond to CityBeat's questions for this story by press time. Neither did a number of elected officials CityBeat contacted to ask whether they'd been told how the city plans to handle a pending cutoff from state funds.

In an email, City Councilmember Todd Gloria said he believed Prop. A had been discussed only in closed session—the venue where the council discusses potential litigation—"so I can't comment on it," he added.

A spokesperson for the city's publicutilities department said everything's been "business as usual," but, according to minutes from a September meeting of the Independent Rates Oversight Committee, the board that advises the mayor and City Council on public-utilities matters, Jeanne Cole, a public-utilities program manager, told the committee that the city will "most likely be impacted by Prop. A."


Email kellyd@sdcitybeat.com or follow her on Twitter at @citybeatkelly.

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