Construction Industry Force Account Council

Promoting Transparency Through Public Agency Compliance

Whack-A-Mole in Cal State Housing Projects

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Do any of you remember the penny arcade game called Whack-A-Mole? 

It’s a real simple game—you have a rubber mallet and you have to hit the “mole” when it pops up out of a hole—with the only problem being that there are lots of holes and the moles travel unseen underground, popping up when you least expect them.

In many ways, it’s a lot like trying to do battle with public entities that are constantly trying to evade the requirements of the Public Contract Code (PCC), California Uniform Construction Cost Accounting Act (CUCCAA) and prevailing wage laws. In recent years we have been challenged by local school districts using a twisted public/private concept called “lease-leaseback,” which led to concerns about corruption and collusion in the selection of contractors in addition to the all the other issues with public construction.

The latest “mole” is the interesting case of California state universities using a private contracting firm to build student housing a few blocks from the campus with only a “possibility” of later acquiring the housing units for “a public purpose.”

Pretty slick, right? The university can claim that it does not own the new housing unit and thus it does not fall under the PCC, CUCCAA, Department of Industrial Relations public works registration or prevailing wage. Because the contractor does not have to play the game under the rules binding California’s public works contractors, nor, in this case even competitively bid the work, they can claim to save the university money while making a better profit margin.

We came across this scheme wrapped around one of these off-campus housing projects in Arcata, home to Cal State Humboldt. CIFAC has been actively working with officials to stop their approval of the construction activities until they meet the laws for public works in California, along with the Humboldt and Del Norte Central Labor Council, AFL CIO and other concerned citizens.

As part of our research on this issue, we found that the contractor on the Humboldt State project has several similar jobs either completed or lined up including:

  • Promontory, 176 apartments, CSU Monterey Bay
  • The Vista, 180 units/660 beds, CSU, Stanislaus
  • The Crossings, 225 units/750 beds, CSU Sacramento
  • The Post on Nord, 173 units/625 beds, CSU Chico
  • The Village 240 units/800 beds, Cal State
  • The Graduate, 260 units/1,039 beds, San Jose State University

On their website, the contractor, which does multi-family residential construction in Texas and Washington also, says it entered this market in 2012 and “is already a preferred provider among California universities.”

Where We Are Now

After six public hearings on the plan, the Arcata City Council found itself deadlocked on the issue and when it came out with a tie vote on August 29th, the matter was declared defeated. Several Council members agreed with CIFAC, that this appeared to be a University project that should be bid with state wages paid.

We are not opposed to the construction of more off-campus housing to support our state universities, just the projects that blatantly attempt an end-run around the laws that protect the public, the contractors and even the agencies involved.

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By Dave A. Thomas, President, CIFAC. – As CIFAC’s President, I saw 2017 as a year of change, progress and success. Turning work around, building our team

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