Local-hire law supporters such as Mayor Ed Lee and the law’s author, Supervisor John Avalos, have celebrated its success, but the real test is yet to come.
San Francisco’s groundbreaking ordinance could change as a result of an ongoing review of how the requirements have impacted the construction industry during its first two years.
In the first year of the law, which applies to publicly funded construction projects, 20 percent of total work hours were required to go to San Francisco residents. In most cases, that was already occurring. But every year, the requirement increases by 5 percent until it reaches 50 percent in its seventh year. In March, the requirement hit 30 percent. For apprentices, 50 percent had to be local hires at the outset.
After a yearlong debate in 2010, the law was approved during a climate of high unemployment. The City long had a goal of hiring 50 percent local workers on public projects, but projects’ hiring was only about 20 percent local. At the time of its passage there were concerns about whether the mandates were too aggressive and whether there was an adequate number of trained San Francisco residents to meet the demand.
Avalos said the ultimate 50 percent mandate might need to be relaxed, more so for the smaller trades within the construction industry.
“There are some trades that are really small,” he said. “We’re going to look at that.” He said he is relying on the current review process to come up with recommendations before making any decisions.
Overall, Avalos said, the law has had positive results. A recent city-commissioned report found that between March 2011 and March 2012 city residents worked 34 percent of the total hours on 78 projects. The projects totaled $342.7 million, creating 286,828 hours of work for residents. The following year, for 40 projects,
32 percent of hires were locals.
Still, Michael Theriault, secretary-treasurer for the San Francisco Building and Construction Trades Council and an opponent of the law, said, “The real test is coming. The percentages are ratcheting up.”
One of the challenges, he said, is that when construction is booming, as it is now, there are only so many qualified local residents to hire. Theriault said that it takes four to five years to train apprentices properly, but you can’t simply hire more and more of them, because their training is tied to the number of jobs and workers available to train them.
Others concerns were that contractors would increase bid prices to incorporate penalties associated with not adhering to the law or stop doing business in town. But there has been no sign of cost escalation, according to mayoral spokeswoman Christine Falvey, who said Lee remains committed to the law.
A committee Lee appointed that includes department heads, union leaders and developers is reviewing the law. Recommendations for changes are expected by the end of the year and would need approval by the Board of Supervisors.