California lawmakers strike last-minute deal with labor to build housing in commercial areas

California lawmakers looking to make it easier to build housing in commercial areas may have reached a hard-fought agreement with labor unions that gives two bills a path to legislative approval.

Assemblywoman Buffy Wicks, D-Oakland, and Sen. Anna Caballero, D-Merced, have been negotiating with carpenter and trades unions over legislation that would allow housing construction in non-residential areas in exchange for paying workers prevailing wage or requiring union labor.

Senate Majority Leader Mike McGuire, D-Healdsburg, has been meeting with all the parties to help with negotiations.

Now, in the last few days of the legislative session, it seems that the lawmakers reached a deal with labor that is contingent on their two bills moving forward. Assembly Speaker Anthony Rendon, D-Lakewood, and Senate President Pro Tem Toni Atkins, D-San Diego, announced the agreement in a celebratory Thursday news release.

With a few legislative hurdles left to clear, Wicks and Caballero are confident their bills can make it across the finish line.

“I think you have kind of two vehicles to build, two options that both houses are supporting, that I think members are going to rally around that will go to the governor’s desk and hopefully be signed into law,” Wicks said. “(They) will then be tools for out into the world and out into the marketplace to be used accordingly.”

Complementary housing bills

Wicks and Caballero have been working on their two housing bills all year. Caballero’s measure has been in the works for more than a year, after it initially died in the Assembly committee process last year.

She said it took Wicks becoming chair of the Assembly Housing and Community Development Committee to bring them together to craft their two bills.

Wicks’ measure, Assembly Bill 2011, would allow housing in areas zoned for office, retail and parking “by right,” meaning local governments have limited opportunities to object to projects.

In order to qualify, developers would commit to building a certain number of affordable units and to paying workers prevailing wage. For projects with 50 or more units, they would need to hire workers from an apprenticeship program and provide health benefits.

Caballero’s measure, Senate Bill 6, would also allow development in commercial areas, but it would be discretionary, meaning it would be subject to greater local government oversight.

Her bill would target market rate housing, and it would require the first two construction bids to come from “skilled and trained” workers, who are typically union members. If skilled and trained workers aren’t available, developers still need to pay prevailing wage.

Wicks sees the two bills as complementary opportunities. Her measure would give affordable housing developers a quick local approval process. Caballero’s bill “represents a really exciting opportunity for market rate developers,” Wicks said.

“What they get for the bill, if they use this bill, is to get conversion from commercial real estate to residential,” she said. “Which is important, and they don’t have to do any affordability requirements. They don’t have the by-right provisions in the same way we do. But they also don’t have the affordability requirements.”

Last-minute negotiations

Carpenters’ unions have backed Wicks’ bill since she introduced it in the spring. However, the powerful trades unions, which represent workers involved in nearly all other aspects of construction, opposed it.

The Trades have wanted more requirements around hiring union members. Caballero’s bill includes that promise, while Wicks’ bill retained most of its original language around labor.

Caballero said the two-bid process for hiring skilled and trained labor — with the provision allowing for situations in which union workers may not be available — was an important element of the final negotiations.

“That was a big concession,” Caballero said. “It helped to allay some of the concerns that were raised about skilled and trained.”

Caballero also noted that in removing affordability requirements from her bill, developers could have more flexibility to build different types of housing, such as for-sale units. Even so, when Caballero removed the need for affordable units, she still included a provision stipulating that developers must comply with local inclusionary housing rules.

Erin Lehane, legislative director for the State Building and Construction Trades Council of California, did not endorse AB 2011 on Thursday and would not comment on it.

“Our efforts right now are moving SB 6 through these final votes and to the governor’s desk,” she said.

Lehane did say she was pleased to see guarantees of better pay baked into both measures.

“Both both bills have a prevailing wage requirements and that in and of itself is a huge step forward,” she said. “Because we have been, for years, fighting with low wage developers that have really been underpaying construction workers in residential. So that’s a huge step forward.”

Caballero said the down-to-the-wire negotiations produced an agreement in which “not everybody is happy, but everybody gets something.”

She called even a neutral stance from the Trades “a victory.”

“In other words, no one’s going in to say, ‘I’m going to kill your bill,’” Caballero said.

This story was originally published August 26, 2022 at 5:00 AM with the headline "California lawmakers strike last-minute deal with labor to build housing in commercial areas."