Thursday, August 2, 2007
With its arts district and “affordable by design” housing, East Garrison was supposed to be the exception to Monterey County’s approve-and-then-get-sued approach to land use. But the County and East Garrison’s developers will eventually see their day in court for trying to skirt Fort Ord’s preailing wage requirement.
A coalition of local unions recently added the County, East Garrison Partners and the developer of Marina Heights as defendants to their lawsuit that seeks higher wages for Fort Ord construction workers. East Garrison Partners has committed to paying “prevailing wage,” the fair public works wage determined by the state based on region and job classification. But the company says it is only required to do so on the ongoing “horizontal” construction – like roads and sewers. The developers don’t want to pay a set wage for the project’s 1,400 homes.
It appears East Garrison Partners has taken some pointers from the developers of The Dunes, formerly called University Village, a shopping center and housing development near Highway 1.
Marina Community Partners (MCP) has argued that prevailing wage doesn’t apply when they sell land to a “third party” like Target or to the hotel developers. The unions originally sued Target, MCP and the Marina Redevelopment Agency for not requiring prevailing wage on their construction bid. (Target has since agreed to pay fair wages.)
Since East Garrison Partners plans to sell the home lots to different homebuilders, they could be trying to use the same loophole. According to the Reuse Valuation for the project, Lyon East Garrison Company and Woodman Development Company – the two firms that make up the partnership – will sell a “large portion” of the lots to themselves and then build the homes.
Without consideration for loans, the sale of the lots and other developable parcels is expected to generate more than $176 million in profit, the valuation says. Under a profit-sharing agreement, the county Redevelopment Agency and FORA would split $37 million and the $1.5 million initial land payment. The valuation assumed that all of the construction would be prevailing wage. If East Garrison Partners gets around the wage requirement, it will mean more money for them.
But if that happens, says Ron Chesshire, president of Monterey-Santa Cruz County Building and Construction Trades Council, construction workers won’t have enough cash to buy a home for themselves. “You talk about affordable housing out there,” Chesshire says, “well hey, how about paying some wages so workers can afford to buy the housing?”
County lawyers say the developer has to pay prevailing wage wherever state law or the Fort Ord Reuse Authority’s Master Resolution requires it. State labor law mandates prevailing wage on construction that is paid for by public funds. “It’s not whether we want or don’t want prevailing wage,” says County Counsel Charles McKee. “It’s about whether the law requires East Garrison to do it.”
East Garrison and the county are waiting on a determination from the state Department of Industrial Relations to see where prevailing wage is necessary. Even if the state determines that prevailing wage isn’t required for East Garrison homes, the developer is still bound by FORA’s Master Resolution. But it remains to be seen whether the resolution will hold up in court.