csublede.jpgFederal Grant Would be Yanked if “Local Preferences” Included, Bids Rushed Out

The massive Central Subway project promises to bring jobs and money to Chinatown, before and after the 1.7-mile subway that will link CalTrain to Stockton Street is completed. Yet there’s no guarantee that any of those jobs are going to people who live in the neighborhood or anywhere else in San Francisco, despite tough local-hire laws slated to go into effect March 25.

The Municipal Transportation Agency claims that the city’s local-hire laws could threaten federal funding and jeopardize the entire project, a spokesman said Wednesday, even as local hire advocates call the MTA’s claims bogus.

The city’s just-passed local hire laws, which go into effect in three weeks, require that 20 percent of workers hired on projects that use city funds be San Francisco residents (that’s just in the first year; each year the figure increases by five percent to a ceiling of 50 percent by 2018).

Federal grants account for over $1 billion of the Central Subway’s $1.7 billion overall cost, but about $153 million is local, according to recent estimates, meaning the Central Subway Project would be subject to local hire restrictions.

If, that is, the transit agency waited three weeks to put the first project — the three-year, $225 million effort to dig the 1.7 mile tunnel — project out to bid, which it did not. Late Tuesday, the agency issued an Request For Proposal on its Web site, leaving local politicians and advocates questioning the MTA’s motives.

“The fact that their RFP does not mention the new local hire standards, even though we are three weeks away from implementation, makes me scratch my head and wonder if they’re following the spirit of the law,” said Supervisor John Avalos, who authored the local hire laws and suggested that the MTA rescind the bid and reissue the RFP once local hire laws are enacted.

That won’t happen, according to MTA spokesman Paul Rose, and for what he says is good reason: if the local hire rules applied, the Federal Transportation Agency could yank the $1.2 billion in promised federal cash, thereby running the risk of killing the entire project.

“The SFMTA advertised the Central Subway Tunnel contract based on a commitment it had made to the FTA that it would advertise the contract prior to the end of February 2011,” Rose wrote in an e-mail. “Failure to maintain the schedule may have an impact on federal funding.”

What’s more, Rose added, there’s language in the grant application which states “one of the conditions of the receipt and expenditure of grant funds for any particular project is that SFMTA not implement local preferences,” Rose wrote.

“A violation by SFMTA of this condition would seriously jeopardize its eligibility to receive federal funding, effectively preventing the successful completion of the project.”

Not that the MTA is unwilling to adhere to any hiring practices: bidders wishing to do the work on the Central Subway will need to submit a “Workforce Development Plan” that outlines how the bidder will comply with national, state and local equal employment rules, and federal workforce goals for women, poor people and minorities, Rose said.

Yet, advocates point out, the Oakland Airport – BART connector project received federal funding, and is subject to local hiring requirements — 25 percent by the city of Oakland, and 50 percent by BART.

In any case, there’s nothing that would prevent the MTA from voluntarily asking contractors to hire laborers who live in San Francisco, according to Joshua Arce, executive director of the Brightline Defense Project, which helped to craft the local-hire legislation.

“No one is asking MTA to delay the project, but we are asking them to voluntarily follow the City’s new local hiring law on the portion of this first contract that is funded by San Francisco taxpayers,” Arce told the Appeal.

“The next phase of Central Subway is the $168 million Union Square/Market Street Station and I think we need to see a new era of initiative and transparency at MTA before that contract goes out for bid at the end of the year.”

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  • pwr12

    The SFMTA is committed to doing everything within its power to ensure that San Francisco residents, particularly those from the impacted areas, are provided every opportunity to work on this important project. Below is a letter sent from Nathaniel Ford to Mr. Arce regarding this issue:

    Dear Mr. Arce,

    Thank you for your letter of March 2, 2011 concerning the issue of local hiring on the Central Subway Project. SFMTA is committed to doing everything within its power to ensure that San Francisco residents, particularly those from the impacted areas, are provided every opportunity to work on this important project.

    I. Tunneling Contract

    I would first like to clarify that I did not state at the meeting of the SFMTA Board that there would be a delay in advertising the tunnel contract. I also want to impress upon you that the advertisement that has since appeared was not “hastily-crafted”, nor in response to anything related to local hire issues. Rather, SFMTA is proceeding pursuant to timelines related to Federal Transit Administration (“FTA”) grant requirements.

    As you noted in your letter SFMTA has advertised the Invitation for Proposals for the tunnel contract, with no reference made to “local hiring, First Source, or any plan to advance community workforce opportunities.” Indeed all of the various regulatory requirements, including employment-related regulatory requirements, are contained in the Bid specifications.

    However, in order to clarify our commitment to San Francisco residents, please be advised that SFMTA issued a Notice to Bidders (a copy of which is attached) which states that the successful bidder, prior to commencing construction work, will be required to submit to SFMTA a Workforce Development Plan (“Plan”).

    The required Plan will detail the successful bidder’s strategy for meeting the employment-related regulatory requirements that are contained in the bid specifications, including compliance with Federal, State and Local Equal Employment Opportunity laws and regulations, the utilization of the First Source Referral Program for economically disadvantaged individuals, the Federal employment goals for minorities and women and the State requirements for hiring apprentices.

    II. Local Hiring Requirements

    The Notice to Bidders makes no reference to a local hiring requirement or to the Local Hire Ordinance (“Ordinance”). SFMTA has had discussions with FTA regarding the possibility of including local hiring provisions in Central Subway contracts, but the clear response from FTA is that such provisions would be in violation of the conditions of the grant. FTA has also made clear that its grants and applicable conditions cover projects, not individual contracts. In other words, the provisions of the Ordinance calling for segregation of grant and local funds, and applying the Ordinance to the locally-funded portion of a project, is not permissible if FTA grant funds are involved.

    I am unfamiliar with the facts concerning the Bayview Library project, cited in your letter. However, the likelihood is that the project is locally funded so that the provisions of the Ordinance apply. I must reiterate that such is not the case with any of the contracts that comprise the Central Subway Project.

    III. SFMTA’s Commitment

    Finally, let me assure you that SFMTA strongly supports the Ordinance and its purpose, and will fully enforce its requirements on our locally funded construction contracts. And even in those instances where, as with the Central Subway Project, SFMTA is prohibited from implementing local hiring provisions, our staff is committed to helping San Franciscans find work on such projects.

    As an example of our long standing commitment to San Francisco, for the several contracts that made up Phase I of the Third Street Light Rail Project, 36.1% of total workforce hours were performed by San Francisco residents. That percentage exceeds what would be required under the Ordinance. Additionally, 17.9% of total workforce hours were performed by residents from the impacted areas (zip codes 94107, 94124 and 94134). SFMTA is hopeful that similar success can be achieved with the Central Subway Project.

    I would again like to thank you for your letter, and I hope that my response has addressed your concerns.


    Nathaniel P. Ford Sr.
    Executive Director/CEO