REPORT TO THE CITY COUNCIL DATE: November 6, 2014 FROM: STEVE BRANDAU, Council President District 2 SUBJECT ..title BILL - (For Introduction) - Amending Section 4-401 of the Fresno Municipal Code and repealing Sections 4-402, 4-403 and 4-404 of the Fresno Municipal Code relating to prevailing wages for public works ..body RECOMMENDATION Staff recommends that City Council approve the amending Section 4-401 of the Fresno Municipal Code ("FMC") and repealing Sections 4-402, 4-403 and 4-404 of the FMC relating to prevailing wages for public works. The recommended action will allow the City to remain eligible to receive state grant and loan funding and other financial assistance for public utilities and public works capital projects after December 31, 2014. EXECUTIVE SUMMARY The proposed ordinance repeals Sections 4-402, 4-403 and 4-404 relating to the determination of prevailing wages, reference to prevailing wages in notice of contract and exemption from payment of prevailing wages, and amends FMC section 4-401 to state the City shall pay prevailing wage consistent with Labor Code Sections 1770 et seq.. The proposed ordinance is intended to comply with state law so that the City will remain eligible for state grant and loan funding and other financial assistance for public utilities, public works, or public transportation related capital projects after December 31, 2014. BACKGROUND General-law cities are required to follow state law and pay prevailing wages for public works projects; however charter cities have "home rule" governing powers that enable them to decide whether prevailing wage is required if the project is financed solely out of local revenues. Fresno is one of ten charter cities with a "partial exemption" to state prevailing wage requirements, and there are 41 charter cities with full exemption. Senate Bill 7 ("SB 7") adds Labor Code section 1782, which prevents a city from receiving state funding or financial assistance if it has awarded a public works contract that does not comply with state prevailing wage requirements in the current year or previous two years. Even in the absence of awarding such a contract, the new law precludes a city from receiving such funding if the city has a charter provision or ordinance that would authorize a contractor to not comply with the prevailing wage requirements on any public works contract. At present, Fresno's prevailing wage exceptions are set forth in Article 4 of the FMC, and unless modified by Council, would preclude the City from receiving state construction funds. On February 20, 2014, a lawsuit was filed challenging the constitutionality of the SB 7, and the trial court found SB 7 to be constitutional. The trial court decision will be appealed. The proposed ordinance includes language that if SB 7 is invalidated, the FMC sections amended by the ordinance will be reinstated to read as they did prior to the passage of this ordinance. ENVIRONMENTAL FINDINGS This is not a "project" for the purposes of CEQA pursuant to CEQA Guidelines, section 15378(b)(5), as it is an administrative activity that will not result in direct or indirect physical changes to the environment. LOCAL PREFERENCE Local preference was not considered because this ordinance does not include a bid or award of a construction or services contract. FISCAL IMPACT There will be a significant fiscal impact to the City if the State deems that the City is ineligible to receive state grants, loans, and other financial assistance for public utilities, public works, or public transportation capital projects. Attachment: Ordinance