Irvine Tattler

Councilman's Proposal Could
Increase Construction Costs 10%-20%

Larry Agran wants to mandate prevailing wages at the Great Park, which could increase construction costs 10% to 30%.
(Photo Source: City of Irvine)

By Stephen C. Smith
Irvine Tattler Publisher
Posted July 5, 2008

With the remaining Great Park revenue reserves slowly draining away and not enough money to build the long-promised Sports Park, City Councilman and Great Park Chairman Larry Agran has come up with an idea.

He wants to mandate that Irvine pay prevailing union wages on Great Park construction projects even though it might cost the city 10% to 20% more in labor expenses.

Agran proposed during the June 24 City Council that Irvine pay prevailing wage, in spite of a state law exempting charter cities such as Irvine if the project is a “local concern” funded without state or federal grants, or with redevelopment agency money.

A city staff report obtained by the Irvine Tattler stated that “prevailing wages may increase labor rates by 10% - 20% ... If prevailing wage requirements were imposed on improvements constructed between now and 2010 that would otherwise qualify for the prevailing wage exemption, the estimated labor costs could increase from $39.8 million to between $43.8 million and $47.8 million, or $4 to $8 million, based on the availability of funds to construct improvements at the Great Park.”

If Agran gets his way, it would be a reversal of the position taken by Irvine since 2004, when City Council and Orange County Great Park Corporation (OCGPC) majorities led by Agran argued against paying prevailing wage at the Great Park.

“A Very Large Municipal Park”

The history of prevailing wage exemption in Irvine can be traced to 1998, when an earlier City Council approved an ordinance exempting Irvine from prevailing wage when legal. A January 1998 staff report stated, “Depending upon market conditions and the amount of labor involved in a particular maintenance contract, an exemption from the prevailing wage may save the City money. Potential savings could be as much as 10%. This is based on informal data collected in 1995 from landscape contractors whose contract work is very labor intensive. Most contracts would likely result in something less than a 10% savings.”

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City Council Dips into Reserves to Balance Budget

By Stephen C. Smith
Irvine Tattler Publisher
Posted June 23, 2008

The Irvine City Council unanimously adopted its 2008-2009 fiscal year budget on June 10, but that's where the unanimity ended.

The three-member council majority — Mayor Beth Krom, and Councilmen Larry Agran and Sukhee Kang — argued that no consideration of fiscal restraint was necessary, even though expenditures are projected to exceed revenues by $7.8 million. They supported dipping into the Contingency Reserve, a fund created for natural disasters and severe economic downturns, to help balance the budget.

Councilman Steven Choi and Councilwoman Christina Shea, the two-member council minority, expressed concern that expenditure reductions were not considered, as required by economic policies enacted by a prior City Council in 1987.

“It's a matter of philosophy,” Choi said during deliberations. “We can try to maintain current service levels without any tightening of our belts, even though we do have at this time sufficient contingency funds. It would have been to me more ideal if the budget could have been designed to have the best cuts without too much noticeable sacrifices in critical service areas. I don't hear any such effort at all. We're simply dipping into the contingency fund, hoping that as the years go by the economy will recover pretty soon.”

Choi cited the 1987 policy which stated, “The City will pay for all current year expenditures with current year revenues.”

“That is the principle that our prior Council members have set up,” Choi said. He noted the “luxury” of the contingency fund currently having about $24 million before using it to balance the proposed budget, calling that achievement “admirable,” but compared Irvine's deficit spending to the State of California's current budget crisis. “Everyone wants to keep on spending,” he said, “and nobody wants to cut. Expend, expend, expend — without regard of the ability to secure enough revenue.”