Morro Bay Council says ‘no’ to union labor contract on sewer project. This is why

Morro Bay is moving forward with its massive $124 million wastewater treatment and water reclamation project — with plans to break ground this fall — but it won’t be inking a local union labor agreement.

At a hotly debated meeting held Tuesday, attended by about 100 people with around 25 public speakers, the Morro Bay City Council decided against a project labor agreement that would have guaranteed contracts with local trade union groups for a $30 million labor portion of the project.

A union agreement would have applied to work on the project’s pipelines and lift stations that move wastewater from lower to higher elevation, as well as wells to inject the purified water into the groundwater aquifer in the Chorro Valley for eventual potable reuse.

The council voted unanimously against a union-related labor agreement, with two council members saying they would have supported it. But it was clear the majority was leaning against the idea.

Council members still would like to hire locally, however, without requiring union involvement, through preference language in the project bidding process and construction contract.

“The biggest complaint we’ve received is that this project costs too much,” City Council member Marlys McPherson said. “And because it’s unclear how much extra, it was important to work to hire locally but also to keep costs down.”

sewer site map
Morro Bay’s new wastewater treatment and water recycling facility will cost an estimated $124 million at its new site at the intersection of South Bay Boulevard and Highway 1. Source: City of Morro Bay

How much extra would a project labor agreement cost?

Morro Bay’s staff report estimated requiring union labor would cost an additional $45,000 to $90,000, costs related to negotiation and compliance expenses, with some uncertainty around project labor expenses.

A project labor agreement, also called a community workforce agreement, is a pre-hire collective bargaining agreement involving one or multiple labor organizations.

The city of San Luis Obispo is using a project labor agreement for its planned $140 million wastewater treatment upgrade, set to begin construction in September.

The $70 million bid on the wastewater treatment and water reclamation facility already has been awarded to construction firm Filanc and design company Black and Veatch — and that part of the project doesn’t involve a union-related labor agreement.

The construction work on the facility will start in September or October, said Scott Collins, Morro Bay’s city manager. A job fair will be set up with opportunities for local workers to apply, though no timeline has been set up, Collins said.

As for the pipelines, lift station and injection wells, McPherson said she didn’t want to exclude local workers who aren’t in unions and create political divide over an infrastructure project that for years has been the source of bitter community controversy.

Many project opponents have decried the estimated $124 million total cost, which has increased monthly water and sewer costs to $191 per month for average water users in single family homes, up from $150 per month earlier this summer.

“I doubt very much we could find enough (local union laborers) who could do these local projects,” McPherson said. “And some contractors told us they wouldn’t bid on the project if a project labor agreement were passed. The lower the number of bids, you know the cost will go up.”

2 council members support union labor agreement

But council members Dawn Addis and Robert “Red” Davis would have voted in favor of a community workforce agreement, but it was clear the majority of the council wouldn’t have supported it.

Addis said that, as city housing costs go up and homeless populations grow, she felt a union labor agreement would have been the best way to ensure local labor. She added a “no” vote wouldn’t have made a difference.

Sewer (2)
This site off Highway 1 near South Bay Boulevard has been chosen for the new location of the Morro Bay wastewater treatment plant. David Middlecamp dmiddlecamp@thetribunenews.com

“I couldn’t get the workforce agreement and I knew that,” Addis told The Tribune. “A ‘no’ vote wasn’t going to get a workforce agreement and I wanted to move things forward.”

“They cited cost, but I did the math on the cost and the increase was less than a tenth of 1 percent,” Addis added. “The studies show there’s no definitive evidence hiring union labor would increase the cost, and it could actually decrease the cost by making it a smoother project.”

Morro Bay residents feel impact of rate increase

Morro Bay has a median income of $51,000 and a limited number of head of household jobs, a city staff report stated.

A $41 per surcharge was a flat rate increase for all homes in the city, regardless of single family or multi-family unit types.

Collins said a low interest state loan the city is applying for could help reduce rates further.

The city manager added the City Council is asking staff to review how renters may take advantage of a low income utility discount program, which offers lower monthly rates to those who qualify based on income status.

The program currently applies to ratepayers directly responsible for paying the utility bills. But tenants who may have seen their monthly rents go up to cover the increased costs aren’t currently eligible for the program.

“No doubt about it, people are feeling the weight of the price,” Collins said. “We want to work to find a way so that more people can participate in the program.”

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Nick Wilson covers the city of San Luis Obispo and has been a reporter at The Tribune in San Luis Obispo since 2004. He also writes regularly about K-12 education, Cal Poly, Morro Bay and Los Osos. He is a graduate of UC Santa Barbara and UC Berkeley and is originally from Ojai.