Agran Labors to Increase Great Park Construction Costs

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

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)

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.”

In October 2004, the OCGPC Board of Directors prepared to select a contractor to demolish the runways at the former El Toro Marine Corps base and recycle the concrete.

That same month, a lawyer representing the Southern California Labor/Management Operating Engineers Contract Compliance Committee of Pasadena submitted a request for determination to the California Department of Industrial Relations (DIR) asking the agency rule the runway demolition project was not exempt from prevailing wage.

The Irvine Tattler obtained from the DIR via Public Records Act letters sent by the union lawyer and Irvine's city attorney. Click Here to read the documents.

The union lawyer argued that Irvine could not claim the prevailing wage because “this project is not strictly a municipal affair” as required by law. Because the city had formed a separate non-profit corporation and described it as the “Orange County Great Park project for the benefit of the residents of the City of Irvine, residents of Orange County, and others,” the project was regional in nature and therefore not exempt.

Irvine's city attorney at the time, Joel Kuperberg, wrote that “the City has consistently exempted from prevailing wage requirements those City public works contracts that relate to projects within the realm of the City's municipal affairs and do not involve federal or state funding — including a number of municipal park projects similar to, albeit smaller in scale than, the municipal park and open space areas to be developed as the Great Park Project.”

Kuperberg wrote that the OCGPC “serves as a 'support organization' whose sole purpose is to support the City's efforts to develop and operate the Great Park.” He later wrote on April 13, 2005, “The 'Orange County Great Park' is simply a very large municipal park, which will be owned by the City and operated by the City (or the Corporation on behalf of the City.)” Kuperberg wrote in that same letter, “No federal, state, regional or Irvine general fund monies will be used for the construction of the public infrastructure or municipal park improvements that comprise the Orange County Great Park; the project will be entirely internally funded by Lennar, through no-cost dedications of land, the provision of cash paid to the City in the form of Development Agreement fees, and land-secured financings.”

Kuperberg's April 2005 letter was the last correspondence on file with the DIR until January 2008, when the union lawyer notified the DIR that his clients were withdrawing their request for a ruling. “This request is being made solely because our present understanding of the fax is such that the demolition of the runways and the balance of the project seems to be stalled and may not go forward for quite some period of time.”

The Los Angeles Times reported on February 4, 2008 that the Colorado team hired to demolish the runways had left because developer Lennar had not funded the project as required by its agreement with the City of Irvine.

Mark Wachal, Recycled Materials’ senior project manager for the Great Park, said the company completed about 2% of the runway demolition in December 2006 but had not done much since. Work was delayed by permit requirements and an inability to secure a long-term contract with Lennar.

“We kept thinking the beginning of the project was just around the corner, the next two weeks, the next two weeks, and finally we just had to give up on it,” Wachal said. “When they’re ready to start working again, we hope they call us.”

According to Dean Fryer, Director of Communications for the DIR, his agency never ruled on the union request because Irvine never actually began the runway demolition, hence the debate was all hypothetical.

Although no action is forthcoming from the DIR, and the union's attorney withdrew the complaint six months ago, Agran falsely claimed during the June 24 City Council meeting that an adverse ruling was imminent.

I believe this is the time when we ought to move off of the thin ice on which we're now skating legally, and move off of the thin ice on which we're now skating as a matter of policy.

Agran also contradicted the arguments made by his own city attorney in 2004-2005:

This is a project of, I would say, not just local significance, and not just regional significance, but this is a project of statewide significance, subject to the prevailing wage laws of the State of California. Again, that's my view, a court may make such a determination at a future time if we don't take this action tonight.

Agran and Union “Influence Peddling”

While the Agran-led majorities on the City Council and the OCGPC Board directed the city attorney to argue against the prevailing wage at the Great Park, Agran was courting union support by telling them he supported prevailing wage at the Great Park.

Chris Mears was a long-time Agran ally who was elected to the City Council with Agran in 2000. He publicly renounced Agran in August 2004 after Agran's campaign manager and fundraiser Ed Dornan was linked to an attempt by Agran to award a no-bid contract to a utility company that had retained Dornan as a lobbyist.

Mears, who at the time was also chair of the OCGPC Board, sent a letter in October 2004 to the community at large endorsing Agran's opponents in the upcoming election. Mears wrote, “Influence peddlers have secured a beachhead at City Hall through their relationship with, and support of, Larry Agran and Beth Krom.”

Mears cited the prevailing wage matter as one issue that led to his renouncing Agran:

One of the more outrageous personal attacks against me was launched just days ago by political activist Frank Barbaro. The genesis of the attack, financed by Larry's political machine, was my refusal to go along with lobbyist Barbaro's union clients. He approached me to support prevailing wage union contracts for the Great Park and I refused. To go along with the Barbaro/Agran union plan would transfer $90 million dollars available for sports parks and other amenities for union wages. I refused... hence the attack.

Frank did get one thing right: I'm angry as hell, along with every other Irvine resident who learns the truth about the fleecing of City Hall. I'm angry at people like Larry and Beth and Ed and Frank and anyone else who seeks to subvert the public interest with influence peddling. I'm angry at Larry and Beth and Ed and Frank and their minions who seek to personally and politically assassinate the character of anyone who disagrees with them, let alone those of us who have gone public with the truth about their influence buying and selling in our city. And I'm angry, too, at their continual lying to the public about what they know to be true.

Five union representatives addressed the City Council on June 24 supporting Agran's proposal — which was curious considering the City Council agenda for the meeting listed no staff report or any information about the agenda item other than this brief description:

Discuss and, as appropriate, provide direction concerning the applicability of prevailing wage regulations to Public Works contracts for the Orange County Great Park.

One might think their appearance was orchestrated by someone.

The prevailing wage issue is scheduled to return to the City Council for a vote on July 22. Changing current City policy will require council action to amend the 1998 ordinance.