The state’s lawsuit – filed in Orange County Superior Court by Attorney General Xavier Becerra on Jan. 25 at Newsom’s behest – is the first to be filed under a 2017 law that allows the state to pursue legal action against local governments that don’t comply with their housing requirements.

The state wants to compel Huntington Beach to build 533 low-income housing units by Dec. 31, 2021, to meet its state quota. The city has only approved about 100 such units, according to the Southern California News Group.

City attorney sees H.B. singled out for its politics

Huntington Beach City Attorney Michael Gates maintains that as a charter city, his city should be able to set its own housing policies. He also hinted that there were political motives driving the actions of Democrats Newsom and Becerra. “It is noteworthy that Sacramento is suing only the city of Huntington Beach, while over 50 other cities in California have not yet met” their targets, he wrote in a statement. Huntington Beach has been a Republican redoubt for decades.

But state officials said they were motivated by Huntington Beach’s bad faith. Not only did the city refuse to provide a housing plan in compliance with state rules, in 2015, the City Council revised zoning rules to reduce by 2,400 the number of homes allowed in a neighborhood on the eastern edge of the city near Interstate 405.

While the state’s suit got far more attention, Huntington Beach’s suit – filed Jan. 17 in Orange County Superior Court – also involves high stakes. The city is targeting Senate Bill 35, the high-profile 2017 state law crafted by state Sen. Scott Wiener, D-San Francisco, that limits the ability of local governments to block housing projects that meet certain conditions, such as using union labor and including a portion of affordable units.

“It’s one thing to have more basic housing laws come out of Sacramento; it’s another to have Sacramento try to micromanage cities’ zoning and attempt to approve development projects in spite of the city,” Gates told the San Francisco Chronicle. “It’s really nothing more than the city trying to maintain its local control.”

Can charter cities defy state’s housing edicts?

Wiener blasted Huntington Beach in a statement given to his hometown paper. “Huntington Beach’s dismissive approach to housing – claiming there is no problem and that the state should just mind its own business – is Exhibit A for why we have a crisis in this state.”

When SB35 was discussed in 2017, there is no indication from a Nexis news search that Wiener or any lawmaker saw charter cities as being exempt from the bill’s requirements.

But lawyers for the League of California Cities have used language similar to that in Huntington Beach’s lawsuit to assert that there are limits to state power over charter cities. “The benefit of becoming a charter city is that charter cities have supreme authority over ‘municipal affairs,’” states the league’s legal primer on the topic. “In other words, a charter city’s law concerning a municipal affair will trump a state law governing the same topic.”

About one-quarter of California’s 478 cities have charter status. If Huntington Beach wins its challenge to SB35, general law cities that want to regain greater control over local planning could craft proposed charters and ask their voters to approve them under a process laid out in the state Constitution.

On July 2, 2012, the California Supreme Court ruled that the state’s charter cities are not required to pay prevailing wages under state law for local public works projects that are funded by local funds.  In State Building and Construction Trades Council of California, AFL-CIO v. City of Vista, the court made clear that charter cities in California have the autonomy to decide individually whether to pay prevailing wages for local construction projects. This decision may tempt cities not organized as charter cities to change their legal status, as the city of Vista did in this case, in order to avoid the prevailing wage law.

That led the unions to induce the Legislature to pass a variant on this bill that banned charter cities from using state funds for public works projects unless they paid prevailing wages — and the tweaked version on Wednesday was upheld by a San Diego court. This is from the U-T San Diego:

An attempt by several cities to overturn a state law that forces them to choose between paying generally higher or “prevailing” wages on most public works projects or lose state construction dollars has been turned aside in a tentative court ruling.

San Diego County Superior Court Judge Joel Wohlfeil rejected arguments from the cities of Oceanside, Vista, Carlsbad and El Cajon [and El Centro and Fresno] that the requirement violates the state constitution. …

Wohlfeil wasn’t swayed in his tentative decision, ruling the law “appears to legitimately influence local governance by attaching conditions on the receipt of discretionary state funding.” He also said pursuing state policy objectives through financial incentives is generally constitutional.

But as I pointed out in a U-T San Diego editorial …

Wohlfeil cited the law’s purported objective — “the statewide concern of creating and maintaining a skilled construction work force” — but not the real one: helping unions.

The cities are expected to appeal if Wohlfeil doesn’t change his mind before issuing a final decision.

So much for spirit of CA Constitution

While I have blamed the unions and the Legislature in this post, it’s worth noting this never would have happened had Gov. Jerry Brown not signed the two bills into law.

It’s impossible to look at the intent of the charter city provision in the California Constitution and think these two bills bullying charter cities honor the spirit of the provision’s goal of local autonomy.

Who knows this? Yale Law School graduate Edmund G. Brown Jr.

Overtime for nannies and domestic workers

The “Domestic Workers Bill of Rights,” Assembly Bill 241, by Assemblyman Tom Ammiano, D-San Francisco, “would specially regulate the wages, hours, and working conditions of domestic work employees,” according to the bill’s language. And it would “include childcare providers, caregivers of people with disabilities, sick, convalescing, or elderly persons, house cleaners, housekeepers, maids, and other household occupations.”

It also would mandate pay for “travel time spent by a personal attendant” and regulate “accommodations for a domestic work employee who is required to sleep in a private household.”

In 2010, the State Legislature passed a Resolution for a Domestic Workers Bill of Rights, which spawned a study by UCLA on the issue. What was promised in the Legislature as just a resolution recognizing this group of the workforce morphed into AB241.

According to Ammiano:

“The campaign to adopt a California Domestic Worker Bill of Rights attempts to address one core principle: domestic workers deserve equal treatment under the law. Unfortunately, California suffers from a unique and confounding contradiction: Domestic workers who care for property such as landscaping or housekeeping are generally entitled to overtime. Those domestic workers who care for children, the infirm, the elderly, and those with disabilities do not.”

The California Chamber of Commerce explained its opposition:

“The wage-and-hour burden that AB241 creates on individual homeowners as well as third-party employers is significant, and unprecedented. …

“Failure to comply invokes costly statutory penalties and litigation, including an employee’s right to attorneys’ fees. The detrimental impact of this potential liability will either discourage the employment of ‘domestic work employees,’ thereby increasing the unemployment rate in California; or force such homeowners and ‘third-party employers’ into the underground economy.”

Expanding the prevailing wage

Senate Bill 7 is by state Senate President pro Tem Darrell Steinberg, D-Sacramento. It expands the prevailing wage law to the projects of charter cities. According to the California Department of Industrial Relations, the “prevailing wage” is determined by several factors in each sector, but is heavily dependent on wages from union contracts.

Before SB7, state law already mandated that the prevailing wage be paid by “general law” cities, which have less autonomy than the state’s 121 charter cities. (Charter cities tend to be larger, such as Los Angeles and Anaheim.)

The California Constitution guarantees California’s charter cities broad authority over their municipal actions, including setting prevailing wage laws. According to the state Senate floor analysis of SB7, several court cases have upheld the charter cities’ rights in this matter. That’s why SB7 does not outright order charter cities to pay the prevailing wage. Instead, it withholds state funds from charter cities that refuse to pay the prevailing wage.

According to an analysis by the Haight Brown & Bonesteel law firm, “The fight about SB7 will likely now turn to the courts given the constitutional ramifications of the legislation.”

If SB7 remains the law, charter cities might have to forego important infrastructure projects because of higher costs. The League of California Cities had asked Governor Brown to veto the bill, noting that “using political leverage to punish those exercising rights provided by the Constitution is unjust.”

The bill was sponsored by the powerful State Building and Construction Trades Council, AFL-CIO, which would benefit from SB7’s punishment of construction firms using non-union labor. SBCTC President Robbie Hunter explained why he thought the bill was needed:

“Low-ball contractors have used charter cities as a loophole to get around the state policy of requiring prevailing wage on public works projects. SB7 makes it clear that such tactics are not in the best interest of California, and cities who permit these substandard wages on their projects won’t be rewarded with state funds.”

Prevailing wage in private businesses

SB54 is by Sen. Loni Hancock, D-Berkeley. It expands the payment of prevailing wages to privately financed refinery construction projects. “We have people dying in the refineries,” said Hancock at a September hearing. “We need a skilled work force, they need to be trained in a state-accredited program.”

Catherine Reheis-Boyd, president of the Western States Petroleum Association, explained industry opposition:

“Despite a strong and vocal opposition from oil industry workers, small businesses, labor, safety officials, and regional newspapers, California Governor Jerry Brown yesterday [Oct. 13, 2013] signed into law SB54. The bill requires refiners to pay prevailing wages to contract workers and restricts their ability to hire qualified employees to a limited pool of applicants.”

Assemblyman Tim Donnelly, R-Twin Peaks, said at the September hearing.

“This bill is going to make it harder to build another refinery in California. We need at least two more. If we want to lower gas prices for the average hard-working Californian, we need to get off the backs of those who are refining the fuels that operate the vast majority of vehicles in this state. This is the government coming in and interfering in the name of safety in a private contract. We need to make it easier for those who are willing to go through the inordinate amount of regulation we already have on them to put a refinery in to refine the special fuels we use in California. We need more refineries. This is not going to add refineries.”

Hancock’s response to these objections, according to the state Senate floor analysis of SB54:

“[T]he author’s office states that ensuring that outside contractors that work at chemical refineries have properly trained workers through approved apprenticeship programs will reduce public health and safety risks. The author’s office states that outside contractors at these facilities should be using a qualified workforce, not unskilled, low-wage workers hired off the street or brought in from other states to save money.”

New whistle-blower protections

SB496 is by Sen. Rod Wright, D-Los Angeles. Starting Jan. 1, employers will be prohibited from engaging in anticipatory retaliation, or taking action against an employee based on the belief he or she might report suspected illegal activity. The new law also expands employee whistleblower protections to prohibit retaliation by any person acting on behalf of the employer.

And it protects employees who disclose, or may disclose, information regarding alleged violations “to a person with authority over the employee or another employee who has authority to investigate, discover or correct the violation.” The bill was passed unopposed in both the state Senate and the Assembly.

Explained attorney Laura Reathaford, writing for the Society of Human Resource Management:

“Because a violation of California’s general whistle-blower statute can have serious consequences for employers — not the least of which are civil penalties of up to $10,000 per violation — California employers would be well advised to update their whistle-blower protection policies to reflect the changes effected by SB496 and to train managers and supervisors about the new retaliation provisions applicable to their conduct. Of particular concern to employers should be the fact that they can now be found liable for ‘anticipatory retaliation’ if they, or any person acting on their behalf, take adverse action against an employee based on the mere belief that the employee has disclosed or might disclose information about a reasonably-believed violation of federal, state, or local law.”

The bill was a classic special interest sponsored bill, sponsored by the State Building and Construction Trades Council, AFL-CIO.

What does SB 7 do?

SB 7 compels charter cities to require prevailing wages on local projects they construct with local funds by withholding all state contracting funds from non-compliant cities. The result could mean that local governments simply forgo important infrastructure projects because they cannot afford to fund them.

SB 7, however, is arguably unconstitutional. In 2012, the California Supreme court confirmed, in State Building and Construction Trades Council of California AFL-CIO vs. City of Vista, that California charter cities would be able to maintain the autonomy to decide whether to pay prevailing wages for local construction projects. It was a step in the direction of the free market for local governments.

What is going on in California if the Legislature and governor ignore the constitution?

According to Russell Johnson, Associated Building and Contractors, Inc., the California Supreme Court decision meant that charter cities can operate as they see fit. “The Court said, 'Autonomy with regard to the expenditure of public funds lies at the heart of what it means to be an independent governmental entity.’ We can think of nothing that is of greater municipal concern than how a city’s tax dollars will be spent; nor anything which could be of less interest to taxpayers of other jurisdictions,” Johnson told me in June.

“Whether a charter city pays prevailing wage with local funds is up to each city and not the Legislature,”  Johnson said.

Charter Cities

Of the 482 cities in California, 121 are charter cities; the rest are “general law cities” over which the Legislature exercises more control. But not all charter cities avail themselves of the prevailing wage exemption. There are 70 cities with no exemption, 10 cities with a partial exemption, and 41 charter cities with full exemption, according to the California Construction Compliance Group.

“In recent years, city councils have proposed charters and voters have approved charters in order to circumvent costly and unnecessary state mandates imposed by the California State Legislature on local governments,” Kevin Dayton wrote yesterday in the Flash Report. “Many of these mandates are pushed into state law by union lobbyists.”

“To stifle this little local rebellion, State Senate President pro Tem Darrell Steinberg and Republican Senator Anthony Cannella introduced a bill in 2013 sponsored by the State Building and Construction Trades Council of California,” Dayton said. “Senate Bill 7 cuts off state construction funding for charter cities that set contracting policies that deviate from state-mandated prevailing wage laws.”

“Supporters of Senate Bill 7 say it 'encourages' charter cities to abide by state prevailing wage law” Dayton said. “Others suggest that the term 'encourages' is somewhat Orwellian, as the term 'punishes' would be more accurate.”

By Katy Grimes

While reports of an improving California economy abound, many in the state aren’t buying it — particularly given how many anti-business bills are working through the Legislature.

Of particular interest is Senate Bill 7, by Senate President pro Tem Darrell Steinberg, D-Sacramento, and Sen. Anthony Cannella, R-Ceres. SB 7 would deprive charter cities of state funding and financial assistance for projects simply because some city charters do not require paying the prevailing wage.

The bill is sponsored by the State Building and Construction Trades Council, AFL-CIO.

“Continuing California’s economic growth depends on creating more middle class jobs, especially in the construction industry that was hit so hard during the Great Recession,” said Steinberg on his website. “Low wage contractors cut costs by cutting corners, but the data shows that they’re not saving public money. We can’t afford to shortchange workers and taxpayers by ignoring the economic net benefit of California’s prevailing wage law.”

What does SB 7 do?

SB 7 seeks to compel charter cities to require prevailing wages on local projects they construct with local funds by withholding all state contracting funds from non-compliant cities. The result could mean that local governments simply forgo important infrastructure projects because they cannot afford to fund them.

SB 7, however, is arguably unconstitutional. In 2012, the California Supreme court confirmed, in State Building and Construction Trades Council of California, AFL-CIO vs. City of Vista, that California charter cities would be able to maintain the autonomy to decide whether to pay prevailing wages for local construction projects. It was a step in the direction of the free market for local governments, as I wrote last September in “Push for charter cities enrages unions.”

“Whether a charter city pays prevailing wage with local funds is up to each city and not the Legislature,” said Russell Johnson, Associated Building and Contractors, Inc., California Government Affairs Director. “In this decision the court said, ‘Autonomy with regard to the expenditure of public funds lies at the heart of what it means to be an independent governmental entity.’ We can think of nothing that is of greater municipal concern than how a city’s tax dollars will be spent; nor anything which could be of less interest to taxpayers of other jurisdictions.”

According to Johnson, the ruling means charter cities now have a clear path to continue to operate as they see fit.

What is a California charter city?

In California, charter cities are under a unique protection in the State Constitution, and are allowed autonomy from the state when it comes to “municipal affairs.” This means when local dollars are used, charter cities get to make local decisions.

“In the Vista case, the California Supreme Court unambiguously upheld the right of charter cities to establish their own contracting policies for public works projects paid for with local funds,” Russell explained. “Local projects built with local funds are not subject to prevailing wage.”

The bill

Passage of SB 7 would establish a disturbing road map for future state intrusion on charter city laws and policies by withholding state funds as leverage to attempt to force changes to voter-approved city charters and ordinances.

“Cities recognize that exercising the power of a charter can free their municipal affairs from the grip of the state legislature and the special interest groups entrenched at the capitol,” Kevin Dayton, CEO of Dayton Public Policy Institute, said in a recent op ed on UnionWatch.org.

Dayton wrote:

“A staff report about city charters to the Murrieta City Council for its October 2, 2012 meeting was blunt about the need for cities to enact charters:

“‘…a knowledgeable, involved electorate should both propel and constrain the direction of its own city. Local control has always been a paramount matter of residents, businesses and the Murrieta City Council. Yet state legislators and previous gubernatorial administrations continue to impose far greater mandates, while at the same time hindering the ability of local governments to operate successfully. With little ability to protest, local governments have watched as the state government continues to balance its budget deficits on the backs of fiscally responsible local jurisdictions…The voice of cities in Sacramento has become mute due to a combination of special interest groups, influential political campaign contributions and tone-deaf lawmakers passing unfunded mandates. This process has left cities with little ability to petition the state government…’”

Of the 482 cities in California, 121 are charter cities; the rest are “general law cities” over which the Legislature exercises more control. But not all charter cities avail themselves of the prevailing wage exemption. There are currently 70 cities with no exemption, 10 cities with a partial exemption, and 41 charter cities with full exemption, according to the California Construction Compliance Group.

“But there are aggressive opponents who regard cities’ exercise of their charter authority to be an attack on their hegemony,” Dayton said. “In 2011 and 2012, unions spent jaw-dropping amounts per voter on campaigns to convince voters to reject reasonable proposed charters.”

Charter cities and Project Labor Agreements

This isn’t the first time unions have been at the dance to crush charter city authority. The unions backed SB 922 in 2011 and SB 829 in 2012, both by former state Sen. Michael Rubio. These two laws cut off state money to charter cities that adopt policies prohibiting those cities from requiring construction contractors to sign a Project Labor Agreement with unions as a condition of work. Both bills were signed into law by Gov. Jerry Brown.

“SB 7 just adopts the same concept of overpowering charter city authority,” Dayton said.

Dayton anticipates the Democratic legislative supermajority and Brown, also a Democrat, will advance even more union-backed efforts to chip away at Article XI, Section 3 of the California Constitution, which allows cities to govern their own municipal affairs under a charter.

Dayton said, “It would be an effective way to eliminate another one of the diminishing number of checks and balances that interfere with utopian schemes planned under the benevolent and enlightened one-party state.”

Sept. 30, 2012

By Katy Grimes

SACRAMENTO — The November election is shaping up to be a biggie, and probably even a game changer. In addition to California’s tax increase ballot initiatives and the paycheck protection measure, voters in three California cities will decide whether to approve the proposed city charters.

Escondido, Costa Mesa, and Grover Beach, currently general law cities under the California Constitution, are asking voters to allow the change to charter cities.

The change from a general law city to a charter city is technical, even obscure, but very powerful. Charter cities have significantly more autonomy and flexibility than general law cities to protect taxpayer funds through more careful spending, and exemptions from state-mandated prevailing wage agreements and Project Labor Agreements.

Many Californians believe that the only for cities way to wrestle control away from powerful public employees unions is to file municipal bankruptcy. But Charter Cities are a much better way to accomplish this.

Charter Cities

“A charter needs to give a city full control of its municipal affairs, so it can implement lower taxes, reasonable regulation, fiscal responsibility, limited government, local control and more freedom from corrupt urban legislators,” according to Kevin Dayton, CEO of Dayton Public Policy Institute, an employment and labor specialist, and charter city expert.

There are 121 charter cities in California out of 482 cities. But not all charter cities avail themselves of the prevailing wage exemption. There are currently 70 cities with no exemption, 10 cities with a partial exemption and 41 charter cities with full exemption, according to the California Construction Compliance Group.

The 70 cities with no prevailing wage exemption even include many of the state’s more politically liberal cities: Alameda, Berkeley, Los Angeles, Oakland, Sacramento, Santa Barbara, Santa Cruz and Santa Monica. Included in the list are Stockton, San Bernardino and Vallejo — three of California’s cities to file for bankruptcy.

“Defenders of the status quo prefer California’s advocates of economic and personal freedom to be apologetic, mealy-mouthed, submissive and ineffective. I noted that an ideal charter, with its ‘defiance of excessive state authority,’ would enrage numerous special interest groups,” Dayton said.

That is exactly what has happened.

Dayton said that unions have steamrolled right over smaller cities’ efforts to adopt a charter. “Union leaders get very testy when someone points out that a charter city can establish its own policies concerning government-mandated construction wage rates,” Dayton said.

“Did you know that, under certain home rule provisions in California’s state constitution, voters can exercise a greater degree of local control than that provided by the California Legislature?” the League of California Cities explained. “Becoming a charter city allows voters to determine how their city government is organized and, with respect to municipal affairs, enact legislation different than that adopted by the state.”

Labor Smackdown

A recent California Supreme Court decision will actually help taxpayers bring some balance to the extreme positions coming out of state government.

The Supreme Court upheld the right of California’s 121 charter cities to establish their own policies about government-mandated prevailing wages in municipal construction projects.

This is big, and it is a smack down to California’s arrogant labor unions.

Charter cities

California’s 121 charter cities maintain a governing system defined by the city’s own charter document rather than by the state.

The Supreme Court ruling is significant because it upheld that the state’s charter cities are not required to pay prevailing wages under state law for local public works projects that are funded by local taxpayer funds.

In State Building and Construction Trades Council of California, AFL-CIO vs. City of Vista, the court confirmed that California charter cities maintain the autonomy to be able to decide whether to pay prevailing wages for local construction projects. It’s a step in the direction of the free market.

While some of the recent California cities to file for bankruptcy, including Stockton and San Bernardino, are charter cities, being a charter city does not lead to insolvency as many in the media would have Californians believe.

Los Angeles and San Francisco are also charter cities. Plenty of California’s cities, other than charter cities, are facing financial meltdown. However, being a charter city allows flexibility.

California’s charter cities first were established in the 1870s during difficult economic times, and in response to the state meddling in city affairs. A constitutional revision granting municipalities the charter option was approved and cities revised their own charters.

The beauty of charter cities is that, when used properly, the charter allows them more flexibility to cut costs and use revenues wisely, unlike most state mandates, which always favor certain special interests. This gives a city more control in making decisions more in line with local issues and needs.

But not everyone agrees.

“With a majority of the state’s largest cities chartered and thus suffering from unchecked wages, workers are being hurt statewide,” a story in the Daily Kos reported. “The high court of California had the opportunity to right this wrong but instead sided with the cities and bucked the Building Trades Council which represents 131 local unions in California.”

To understand this thinking, it is important to read further. “Prevailing wage laws are meant to protect wages across the industry, not just for union workers or workers in a given region,” the Daily Kos writer reported. “Republicans argue that such laws are outdated, but it is difficult to argue that preventing unscrupulous contractors from underbidding on contracts only to make up the difference on the backs of workers is a concept with an expiration date.”

What is difficult is to argue that supply and demand don’t matter, or that different regions and locals don’t have differing pay scales and needs.

However, Stockton and San Bernardino were not availing themselves of the ability to not pay higher prevailing wages, whereas most charter cities seek to pay wages more in line with the local economy.

“Significant and recent developments in proposed city charters in California have been related to explicit provisions concerning the establishment of policies for government-mandated prevailing wages, prohibitions on requiring contractors to sign Project Labor Agreements with unions, and requirements for unions to get permission from city employees to deduct money from their paychecks to use for political purposes,” Dayton explained. “In addition, some charters have contained provisions meant to prevent the kind of corruption among city council members and city staff that occurred in the City of Bell in the late 2000s.”

Dayton said that voters need to seriously consider approving the charter city proposals. “If you support lower taxes, reasonable regulation, fiscal responsibility, limited government, local control and more freedom from corrupt urban legislators, vote yes on the charters. If you believe citizens are not yet giving enough of their money to the government, vote no on the charter.”

Look for Part 2 of this Charter Cities series soon.