HERCULES -- The beleaguered Sycamore North/Town Centrale project faces yet another hurdle now that it is under the microscope of the state Department of Industrial Relations and a construction industry union group.

The Contra Costa Building and Construction Trades Council, in a June 13 letter to the state agency, contends that the half-finished project, started by the Hercules Redevelopment Agency in fulfillment of an affordable housing mandate and later recast as a private, market-rate apartment-and-retail complex, should fall under the state's prevailing wage rules.

The letter, authored by attorney Thomas Enslow of law firm Adams Broadwell Joseph & Cardozo of Sacramento and San Francisco, is in response to a Feb. 26 letter from UC-BNB Partners to the Department of Industrial Relations seeking a determination that Town Centrale is not a public work subject to prevailing wage requirements.

Under the California Labor Code, Section 1771, workers on large, contracted public works projects must be paid "not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work is performed." The guarantee applies to holiday and overtime work also.

"They (the developer) want to use cheap out-of-town, scab labor; that's the bottom line," Greg Feere, CEO of the Building and Construction Trades Council, said Thursday. He could not immediately estimate the potential savings to project developer UC-BNB if Town Centrale is exempted from prevailing-wage rules, but allowed that it would be "substantial."

Enslow, in his June 13 letter, cites three main reasons he thinks Town Centrale should be a prevailing-wage project:

  • The building trades council asserts the price UC-BNB Partners is supposed to pay the city -- $425,000 and a promise to finish Town Centrale as upscale apartments with some ground-floor stores and restaurants -- is less than the fair market value according to some appraisals. It is also less than several offers that the city rejected, the letter continues.

  • Some $35 million in public funds have been spent on the half-finished, four-story project. The reference is to the amount the now-defunct Hercules Redevelopment Agency invested in Sycamore North, as Town Centrale was named before UC-BNB agreed to take it over last year.

  • The developer is getting additional financial breaks from the city in the form of reduced or waived project fees, the building trades council contends.

    UC-BNB, in its Feb. 26 letter, authored by attorney Jon Welner of Jeffer Mangels Butler & Mitchell LLP of San Francisco, argued that "Town Centrale is not Sycamore North."

    "Town Centrale is a private development on a site that was purchased at FMV (fair-market value) by a new developer," Welner wrote. "The project has received no public funds. It is therefore not a public work subject to prevailing wage."

    City Manager Steve Duran, in an email Thursday, characterized "the future project" as "a 100 percent private development."

    "I see no basis for the proposed project, which is a market-rate sale with no public subsidy, being a prevailing wage job," Duran said.

    UC-BNB principal Mark Conroe did not immediately respond to an email Thursday seeking his reaction to the building trades council's letter.

    Sycamore North was conceived as a mostly low-income housing development to satisfy the affordable housing quota of the adjacent Bayside subdivision under state redevelopment rules in effect at the time; construction stalled in spring 2011. The $35 million the redevelopment agency spent on the project includes about $5.3 million in loans from the California Housing Finance Agency.

    Contact Tom Lochner at 510-262-2760 or tlochner@bayareanewsgroup.com. Follow him at twitter.com/tomlochner