Los Angeles Signs Labor Deal Covering $1.5B in Port Projects

Los Angeles Mayor Antonio Villaraigosa signed a five-year labor agreement on Tuesday that will cover more than $1.5 billion in planned Port of Los Angeles construction projects.

Approved by the port governing board in March and the City Council in May, the agreement sets guidelines on the types of workers that must be hired by contractors for all capital projects at the port. The terms cover about 95 percent of the port's projected capital projects outlays for the next five years.

"This project labor agreement gives thousands of our local workers in some of the most economically disadvantaged communities the jobs and job training opportunities they need to get back on their feet," Villaraigosa said.

The projected port projects are expected to require a total of more than 6,000 workers through 2016. Under the terms of the agreement struck with the trades council: 30 percent of the jobs must go to local port-area residents; 10 percent must go to "at-risk" workers, such as unemployed or workers with criminal records; and, at least 20 percent must go toward union apprentices.

Supporters have argued that such labor agreements assure union workers for projects while reducing work stoppages and strikes during construction.

Opponents of similar labor agreements have said they drive up costs and shut out small contractors who cannot afford to provide labor from outside their own firms.

I don’t know that you can get an easy breakdown of the funding. I know I created a spread sheet back in 2007 showing source of funds and posted it - but I can’t find it now. While that was pre-stimulus, it did include funds that were to be provided by “federal” sources (as well as public-private partnerships - the Buffet equation). I was able to locate this (summary) explanation of the $107 billion in Transportation funds that I mentioned above (which was also part of a larger $222 Billion “infrastructure” plan):

http://www.dot.ca.gov/docs/strategicgrowth.pdf

“Investments for the Future
The SGP [Strategic Growth Plan] calls for investing $107 billion in transportation infrastructure during the next decade. Funding includes $47 billion in existing transportation funding sources such as the gas tax, sales tax on gasoline, and federal funds. A total of $40.1 billion in new funding is proposed from other fund sources and leveraging existing funds to attract increased federal, private, and local funding. The remaining $19.9 billion of need will come from General Obligation (GO) bonds.”

A much more detailed version can be found here:
http://www.dof.ca.gov/capital_outlay/reports/documents/Infra-Plan-08-w.pdf

There is also a bunch of stuff posted here on FR. Some keywords to get you there:
http://www.freerepublic.com/tag/strategicgrowthplan/index
http://www.freerepublic.com/tag/calbondage/index
http://www.freerepublic.com/tag/bigbangbonds/index

Eva – sorry for the delayed response. I got busy this weekend and didn't have any time to look in detail. I found a bunch of things but not sure what kind of thing you want. If you can explain (in general) your interest, maybe I can sift out the good stuff. It might also be easier to email you the info (a spreadsheet or two or three). Let me know.

Here is one breakdown of the $40 billion worth of bonds that went on the ballot. Each of these tie to different legislative bill that have the details of the projects. I do have a spreadsheet with some of the detail but requires explanation. Anyway, freepmail me and I'll follow up with more

Bonds—all November 2006 ballot (54 votes)

SB 1266 / SB 86—Transportation $19.9725 billion
SB 1689 / SB 364—Housing 2.850 billion
AB 140 / SB 87—Flood protection 4.090 billion
AB 127 / SB 79--Education Bond 10.416 billion
Total $37.3285 billion

Appropriation bill (54 votes)
AB 142 / SB 524—$500 million (General Fund) for pay-as-you-go levee repair

Policy bills (41 votes)
AB 143 / SB 59—Design-build
AB 1039 / SB 677—Environmental streamlining
AB 1467 / SB 797—Public-private partnerships

AB 127 / SB 79
Education bond: $10.416 billion

K-12 facilities: $7.329 billion
o $1.9 billion for new construction
o $3.3 billion for rehabilitation and modernization
o ($200 million for small high schools—included in new construction and modernization above)
o $1 billion for hyper-dense overcrowded schools
o $500 million for career technical education facilities
o $500 million for charter schools
o $100 million for “green” schools
o $29 million for joint use facilities

Higher education: $3.087 billion
o $1.580 billion for UC and CSU
o $1.5 billion for community colleges

SB 1266 / SB 86
Transportation & air quality bond: $19.925 billion

Mobility, transit, congestion relief: $17.250 billion
o $4.5 for high priority corridor improvements
o $1 billion for State Highway 99 Enhancement Plan
o $2 billion for trade infrastructure
o $2 billion STIP augmentation
o $4 billion for rail, bus, transit improvements
o $750 million for SHOPP and ITS
o $1 billion for State-Local Partnership Program
o $2 billion for local streets and roads

Safety, security, disaster preparedness: $1.525 billion
o $1 billion for transit safety and disaster response (new program)
o $100 million for Port Security Program
o $125 million for local bridge seismic retrofit
o $250 million for grade separations.

Air quality: $1.2 billion
o $1 billion for port air quality
o $200 million for school bus retrofit and replacement

SB 1689 / SB 364
Housing and land use bond: $2.85 billion

Affordable housing: $1.50 billion
o $345 million for multifamily housing
o $300 million for Cal Home homeownership program
o $200 million for CHADAP downpayment assistance program
o $195 million for supportive housing
o $135 million for farm worker housing
o $125 million for the Building Equity and Growth in Neighborhoods (BEGIN) Program
o $100 million for affordable housing innovation
o $50 million for homeless youth housing
o $50 million for domestic violence shelters

Infill incentives: $850 million (up to $200 million available for urban parks)

Housing-related parks in urban, suburban, and rural areas: $200 million

Transit oriented development: $300 million

AB 140 / SB 87
Flood protection bond: $4.090 billion

$3 billion for levee inspection, repair, flood control improvements, and delta levee protection
$500 million for flood control subventions
$290 million for flood corridors, bypasses, and flood plain mapping
$300 million for storm flood management

Hey - no problem. It wasn’t that much work. I just couldn’t remember where I might have filed that stuff on my computer. It’s been a few years. Anyway, I’ll try to answer some of your questions.

From the State/voter perspective, here is a good primer on bonds.
http://www.lao.ca.gov/2006/infrastructure/infrastructure_010306.html

It was prepared by the State Legislative Analyst’s Office and sent out with the voter pamphlet when the infrastructure bonds went on the ballot. It outlines some of the various methods for financing infrastructure (e.g. revenue bonds, general obligation bonds) and discusses how the bonds get paid off. In the case of revenue bonds, voter approval is not required. They will be paid by revenue dedicated for that purpose (e.g. gas taxes for highways, water fees for a treatment plant, etc). The bonds that Schwarzenegger pushed on the ballot were general obligation bonds, meaning that they would be paid out of the general fund. Interest on those bonds is now a HUGE portion of the state’s annual expenditures, contributing to the deficit.

That primer was a good start in educating the populace. Unfortunately, I doubt very many people read it. There is no “truth in advertising” when it comes to politics and lots of voters are lazy and/or stupid. When politicians sell their bond proposals, they characterize bond money as basically free. “We can accomplish all of this without raising taxes” Schwarzenegger repeated over and over. Voters bought that line and passed the infrastructure bonds.

Now, from an investor’s standpoint, here is a good overview on bonds:

http://www.investopedia.com/university/bonds/bonds1.asp#axzz1SC2zRPYu

Basically, when the state issues bonds it is just issuing a big giant IOU. The state wants cash and investors have it. If you invest in these state issued bonds, you (the lender) are in essence loaning money to the state (borrower) and in return you get interest on your money. The state will use those funds for some purpose (e.g. to build a dam). The bond buyer/lender (you) have no ownership rights to that dam. So, investors don’t much care about the details of what infrastructure was to be built. They care only about how they will be repaid, if there is a risk of default, what the interest rate is, etc.

So, the people who invested in the bonds weren’t interested in detailed building plans. But voters were interested. The promotion of these bonds had a little bit for everybody and promised to fix all ills (slightly exaggerated, but you get the idea.) If campaigning in L.A., say that you will reduce congestion on the busiest freeway in the area. If in Sacramento, mention the Sacramento freeway. The law itself specified a list of *possible* infrastructure plans but did not guarantee they would be built. Voters are such suckers. (You had to dig real deep into the fine print, and programs cited only by reference to some other law, to see the massive amount of dollars going to hiking trails, bike paths, homeless shelters and a long list of things that wouldn’t qualify as “infrastructure” in any normal world).

But the state bonds discussed above were just one (very large) source of funding for Arnie’s $222 billion plan. It assumed use of existing gas tax revenue, sales tax revenue, local government funding (county/city tax revenue or bond issues), federal funding, and “private sources”. Those private sources involved “public private partnerships” (PPP) and required a separate law be passed to authorize it. It is included in my long list, above (toward the top). This would include things like toll roads where a private interest offers upfront cash in exchange for the right to build/operate/maintain/administer the road for a period of time. Those rights would also include the authority to establish tolls and charge users whatever they see fit. While toll roads are not new, this PPP arrangement for roads is a relatively new phenomena.

If you have specific questions from those links, or what I wrote above, or you have some burning questions about something I didn’t address, ask away. It may take a day or two or three to respond - but I will get to it.

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