This is a two part article due to breaking news: There appears to be a very fast number of actions from the High-Speed Rail Authority Management in order to secure the sale of more than $8.5 billion in bonds which includes federal grant funds which will be reimbursed later if the work is completed in 2017. There are two meetings March 18th, the Treasury Meeting that will vote to issue the bonds and a High-Speed Rail Meeting held earlier in the day.
The request for bond funds appear to be happening without completion of requirements in AB3034 to name a few such as environmental work completion and unless it is disclosed at this meeting, there is an absence of a public independent financial analysis that indicates that the contruction can be completed as proposed. That would really difficult to achieve since the first small segment of the Initial Contruction Segment has not been awarded yet. Though it says the treasury meeting was noticed March 8th, no one saw it.
See the agenda: http://www.treasurer.ca.gov/financial/2013/20130318/1a.pdf
Here is where it will be held: State Treasurer’s Office 915 Capitol Mall, Room 587 Sacramento, California March 18, 2013, 2:00 PM (or upon adjournment of the High-Speed Rail Authority meeting, whichever is late) If you can attend great, if you can't, letters would be appreciated.
That same day at the strange time of 11 am. a High-Speed Rail Meeting will be held in split and remote locations- one in RWC, one in Sacramento, coincidentally at the Treasurers Office, one in Fresno and one in Costa Mesa to have the board approve this action and others. It will be difficult to attend the Treasury Meeting if you're going to one of the remote locations but perhaps that's the point.
Part 2- You're hiring who?While we were all busy with the holidays, Tim Sheehan from the Fresno Bee was one of the first writers in December 2012, who reported that the High-Speed Rail Authority told the construction bidders if they were selected, the board expected them to hire people from economically disadvantaged communities, or workers who themselves are disadvantaged by virtue of being in one of the following categories: Homeless, Veterans, Single parent who has custody of a child, those on public assistance, those lacking a high-school diploma, those with a criminal records and those chronically unemployment, In addition, apprentices in union programs with fewer than 15% of the necessary hours to graduate from a trade program will be considered as well. http://news.fresnobeehive.com/archives/748
There’s been a strong reaction by the press to this development. The Modesto Bee wrote an editorial about the newest hiring protocol. In short, they didn’t like it. http://www.modbee.com/2013/03/05/2607274/high-speed-rail-hiring-policy.html
The Modesto Bee then published a guest opinion by Jeff Morales, CEO of the High-Speed Rail Authority, in which he defends the actions the board took. He says in the article that “The development of a Community Benefits Agreement is one step in that process, and is virtually identical to agreements used successfully throughout California on major infrastructure programs. Under the agreement, construction contractors will be required to adhere to the National Targeted Hiring Initiative, which says 30 percent of the work will go to targeted workers and 10 percent will be done by disadvantaged workers”. Read more here: http://www.modbee.com/2013/03/11/2616505/high-speed-rail-will-create-jobs.html#storylink=cpy
Martin Engel, a political writer who has been following the high-speed rail project for nearly 10 years, wrote a rather naughty but humorous piece responding to CEO Morales on this very subject:
“Boy, it's a good thing that no professional job skills are required to build a high-speed train system. What the hell? Anybody can build a high-speed train. What could possibly be so difficult? Homeless, uneducated, disabled, illiterate, criminally insane, those on life-support, ANYBODY can put a train together. It's like assembling Lego blocks, only bigger.
They're going to hire "moms, dads, neighbors," grandma and grandpa, the family dog, and Billy the village idiot. It's as American as apple pie. And it will be fun. There'll be singing and dancing, pig calling, and everyone will get a chance to swing a hammer to drive in a rail spike, just like in the good old days.
Nobody will have to be a "custodial single parent" any longer. We'll put them to work since they have so much free time, and put all their kids to work also, instead of letting them waste time in school. (Background music softly playing, "America the Beautiful")
Well, I'm convinced. Aren't you? Thanks, Jeff [Morales]”
Issues with Local Hiring Schemes:
Seriously, the Authority made a policy decision to target to hire the economically and other wise disadvantaged to be hired but this is not restricted to zip codes in the central valley because of legal concerns. In addition since the state is accepting federal grants, federal money is open for national competition. http://nawb.org/nawb/forum2012/documents/workshops/Fighting%20for%20Local%20Hires-NAWB%202012%20Presentation.pdf
For more understanding of this issue see the constitutional issues that could deter local hire mandates. See this memo from the San Diego city attorney, declaring hiring preferences problematic and this memo to the City of Fresno
So after all this bluster about the central valley unemployment rate, they may not in fact, get the volume of jobs expected or needed. Another interesting point is if special expertise is required, “Travelers,” union workers coming in from outside the immediate area could be used. While they are ranked lower than other workers in priority of who gets the jobs, if there sufficient proof of the requisite experience for a higher classification presented at the time of initial dispatch, and then they would move up in preference.
California is not a right to work state. Apparently though, non-union workers can be hired but they must pay labor dues during the time they work on the project.
Kevin Dayton, President and CEO of Labor Issues Solutions, LLC offers this about the situation.
Based on a December 6, 2012 statement made by the executive director of the HSR Authority to a Fresno Bee reporter, it seems that all five pre-qualified design-build construction consortiums have negotiated or agreed to negotiate a Project Labor Agreement with the State Building and Construction Trades Council of California (an umbrella lobbying group for construction unions) for construction trades work on the first segment of the High-Speed Rail project. In fact, a draft Project Labor Agreement is included as Addendum 8 in the High Speed Rail Authority’s bid documents for the Request for Proposal. This indicates that bidders that declare their intention to sign a Project Labor Agreement will boost their scores for “community benefit” in the somewhat-subjective best value procurement criteria.
Where this especially matters in terms of cost to taxpayers is the construction of the building structures, such as the stations in Merced and Fresno. A 2011 Study by National University System Institute for Policy Research determined that construction projects for which California school districts required contractors to sign Project Labor Agreements with unions were 13-15% higher in final cost than similar California school construction projects built under fair and open competition. This matches anecdotal evidence collected over the past 15 years on California construction projects with government-mandated Project Labor Agreements. Why are costs higher? The union provisions included in Project Labor Agreements discourage non-union contractors from bidding. As expected, the resulting reduction in bid competition results in higher costs.
The Design/Build Contracts:
What do we know about these contracts so far? Not much, the Authority has been very tight-lipped about their investigation so far.
While the bids are in for the first 29 miles of the 130 mile segment the High-Speed Rail Authority has possession of have not yet been made public. Apparently the price tag of those bids will not be reviewed until the actual content of the work is analyzed. The cost of the construction is isolated in a locked barrel, the key is held only by the contractor.
It should be this month or next when the price tags for the bids selected as operational finalists are known. This is supposed to be common practice for major projects so not to influence the rating of the actual construction bid which could be prejudiced by cost factors. The winner is not expected to be announced for months.
The Start Date Controversy:
Understand when the contract is awarded, no one starts building at the point; they have to finish the design. Some say instead of the traditional 30% design that usually is complete at the time the contracts go out to bid, the designs were less than 20%. Without all the crucial design details at the time of the bid, it surely result in change orders that can only add significant costs to the project later such as those experienced with the Bay Bridge project which will come in 12X the original cost estimates (includes capital and interest [debt service] on the bonds) revealed in a Senate examination on the use of Peer Review Groups on November 28, 2012 chaired by Senator Mark DeSaulnier, Senate Transportation Committee. These change orders and redesign of the original specs were the culprits on the Bay Bridge and it’s not over yet.
And then there is the issue of the start date, it is unclear what Jeff Morales is referring to when he says that construction will begin in the summer. http://www.youtube.com/watch?v=WWhDk04_2bU&list=UULpiKaBjaacPw7g5K1nkRXw&index=3 Which is it this summer? The end of 2013 as reported by John Popov’s changed Testimony or early 2014 as he originally predicted? The finish date is September 2017, supposedly set in concrete by Congress, but a closer look says the state has to turn in the receipts six months in advance. What will be built by the time the Federal Government claims “time’s up,” is a mystery.
In addition SB 1029, the bill that appropriated the spending of more than $6 billion dollars requires this, “Prior to awarding a contract to commence construction of the first construction segment, a report certifying that the amount awarded under the contract is within the budgeted funding and is consistent with the completion schedule deadlines set by the federal Department of Transportation.
It is crucial in order for state bonds to be sold for construction that the Federal Government must state that they believe the project will finish on time. How will they respond? And what is the minimum amount of project completed that is acceptable in order to collect 100% of the federal grant funds? Who will be left holding the bag if the federal government doesn’t fund the entire grant?