Nonunion contractors are once again frozen out as the city of L.A.’s Public Works Department has renewed its project labor agreement with the Los Angeles and Orange County Building and Construction Trades Council for five years.

Public Works has a catalog of 116 eligible products worth a cumulative $1.7 billion, so this is a huge deal.

Under a project labor agreement, or PLA, all contractors must abide by union rules and pay into a benefits fund jointly operated with the building trades union. PLAs have been spreading throughout the region over the last 15 years, from the Los Angeles Unified School District to major port construction projects and various city public works departments.

At the city of L.A.’s Public Works Department, the first PLA came 16 years ago on a major sewer project and soon spread to most of the department’s projects. The most recent renewal took two months to negotiate before it was signed Dec. 14, according to Board of Public Works President Kevin James.

These agreements are popular with government agencies for several reasons: provisions banning strikes or work slowdowns, local hiring requirements that allow politicians to say they are boosting work opportunities for their constituents and the likelihood of more generous union support for local elected officials come election time.

But the spread of PLAs – especially huge deals such as this one – has meant pain for nonunion contractors, according to John Loudon, executive director of the California Construction Advancement Group in San Diego, a coalition of nonunion contractors dedicated to fighting the spread of PLAs.

A particular sticking point for nonunion contractors: If they already have private health insurance for their employees, they end up double-paying benefits if they participate in a project that’s part of one of these agreements.

“Nonunion contractors are moving out of the lucrative public works sector and doing smaller private jobs, which is much tougher,” Loudon said. “Some of the bigger contractors are subcontracting out the front-line work and restricting themselves to supervisory roles. And some are casting their eyes to greener pastures, like Nevada, which recently banned PLAs.”

Loudon said that even when nonunion contractors do win contracts on PLA projects, they encounter more administrative problems than their union counterparts.

As for the renewal of the city of L.A.’s Public Works PLA, Loudon said it’s disappointing for his member contractors, but not surprising.

“The Los Angeles/Orange County Building and Construction Trades Council has significant political power in the city of Los Angeles. Arguments about bid competition and fiscal responsibility carry little weight there,” he said.

New Job Committee

Following in the footsteps of the city of Los Angeles, Los Angeles County supervisors last week called for the creation of an economic development committee that would coordinate job and business development efforts among numerous county agencies ranging from the county real estate office to the Public Works Department.

The supervisors approved the motion by board Chair Hilda Solis to form the committee, which would include appointees from all five supervisors and numerous department heads.

“If we want more jobs that pay fair wages, then we all have to make concerted efforts to encourage more economic development,” Solis said upon introducing her motion last week.

Last year, the Los Angeles City Council formed an ad hoc committee on job creation; a move that came in response to a report critical of the city’s job creation efforts.

As the county board considered Solis’ motion, it also heard from the Los Angeles County Economic Development Corp., which presented a five-year economic development strategy for the county. Among other things, that strategy calls for moves to promote industries that export products and services abroad, make government agencies more business friendly and remove barriers to major infrastructure projects.

Mileage Money Down

There’s good news for employers and not-so-good news for employees who drive on the job. The Internal Revenue Service last month released its 2016 suggested mileage reimbursement rates. Thanks to lower gas prices, those rates have gone down.

Specifically, the main reimbursement rate for business travel is now 54 cents a mile, down from 57.5 cents a mile last year. The medical and goods movement reimbursement rate also fell 4 cents to 19 cents a mile.

The mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. Of course, the biggest variable is fuel prices and those moved dramatically lower in most of the country. According to the Automobile Association of America, the annual average pump price nationwide last year was $2.40 a gallon, down from $3.34 in 2014. Gas prices also fell in California, but not as much, due in part to the explosion at the ExxonMobil refinery in Torrance.

The IRS reimbursement rates are merely suggestions for businesses that reimburse workers for driving on the job, though most companies tend to follow the guidelines.

Staff reporter Howard Fine can be reached at [email protected] or (323) 549-5225, ext. 227.