For Clients & Friends of The Gualco Group, Inc.
IN THIS ISSUE – “No End in Sight…”
CALIFORNIA ECONOMY
- Going Up: State’s Income Tax Revenue & Building
- Legislature Considers 3 Dozen Gig Economy Law Revisions
WATER
- After Driest February Ever… “No End in Sight”
- It’s Like Trying to Mix California & Water…
- Nevada Water Agency May Pay for SoCal Recycling
- Federal Dam Regulators Order Santa Clara Reservoir Drained
- Labor Dispute Derails Large Water Reuse Project
FOR THE WEEK ENDING FEB. 28, 2020
Capital News & Notes (CN&N) harvests California legislative and regulatory insights from dozens of media and official sources for the past week, tailored to your business and advocacy interests. Please feel free to forward.
Stay current daily! For our focused updates via Twitter: @jrgualco / @robertjgore / @gualcogroup
READ ALL ABOUT IT!!
Going Up: State’s Income Tax Revenue & Building
Dept. of Finance monthly report
JOBS
- California’s unemployment rate remained at its record low of 3.9 percent for the third straight month in December 2019. The U.S. unemployment rate also remained at its five-decade low of 3.5 percent in December 2019 before rising to 3.6 percent in January 2020. The number of unemployed Californians fell for a ninth consecutive month in December 2019 to 757,700 persons—the lowest level since August 1989—despite a 34-percent larger labor force.
- The state gained 12,600 nonfarm jobs in December 2019, with a monthly average of 25,900 for the year. On a year-over-year basis, December nonfarm payrolls grew by 1.8 percent in California, exceeding the nation’s growth rate of 1.4 percent. Six of the eleven major industry sectors in the state added jobs in December 2019, including professional and business services (6,500), educational and health services (5,200), other services (4,200), government (3,400), construction (900), and mining and logging (200). The sectors that lost the most jobs were information (-3,900) and leisure and hospitality (-2,400). Other sectors that lost jobs were financial activities (-700), manufacturing (-600), and trade, transportation, and utilities (-200).
BUILDING ACTIVITY
- A seasonally adjusted annualized rate of 118,000 housing units were authorized by building permits in California in December 2019, up 0.8 percent from November and up 17.5 percent from December 2018. The December 2019 permits comprised of 66,000 for single-family units and 52,000 for multifamily units. A total of 111,000 housing units were authorized in 2019 compared to 118,000 in 2018, a decline of 5.8 percent. Nonresidential building valuation totaled $31 billion in December 2019, up 8.6 percent from November and up 11 percent from December 2018. However, total nonresidential valuation in 2019 was 6.7 percent lower than in 2018.
REAL ESTATE
- Sales of existing single-family homes in California totaled 398,880 units in December 2019 on a seasonally adjusted annualized basis, down 1 percent from the prior month, and up 7.4 percent from the previous year. For 2019 as a whole, statewide home sales were down 1.2 percent from 2018. The statewide median home price was $615,090 in December 2019, up 4.3 percent from the prior month and up 10.3 percent from the previous year—the first double-digit price increase since May 2014. For 2019 as a whole, the statewide median home price was $592,450—4 percent higher than in 2018. Preliminary General Fund agency cash receipts for the first seven months of the fiscal year are $1.066 billion above the 2020-21 Governor’s Budget forecast of $81.614 billion. Cash receipts for January were $1.017 billion above the 2020-21 Governor’s Budget forecast of $19.832 billion.
TAXES
- Personal income tax cash receipts for the first seven months of the year are $1.408 billion above forecast. Personal income tax cash receipts to the General Fund were $1.176 billion above the January’s forecast of $16.511 billion. Withholding receipts were $499 million above the estimate of $7.012 billion. Other receipts were $669 million above the forecast of $10.419 billion. Refunds issued in January were $29 million below the expected $624 million. Proposition 63 requires that 1.76 percent of total monthly personal income tax collections be transferred to the Mental Health Services Fund (MHSF). The amount transferred to the MHSF in January was $21 million above the forecast of $296 million. Sales and use tax cash receipts for the first seven months of the fiscal year are $59 million below forecast. Cash receipts for January were $59 million below the month’s forecast of $2.407 billion. January receipts include the final payment for fourth quarter sales, which was due on January 31.
- Corporation tax cash receipts for the first seven months of the fiscal year were $30 million below forecast. Cash receipts for January were $5 million below the month’s forecast of $568 million. Estimated payments were $78 million below the forecast of $465 million, and other payments were equal to the $238 million forecast. Total refunds for the month were $73 million lower than the forecast of $135 million.
Legislature Considers 3 Dozen Gig Economy Law Revisions
Sacramento Bee
The California Legislature is considering nearly three dozen bills to clean up or repeal the landmark gig economy law signed by Gov. Gavin Newsom just months ago.
Assembly Bill 5 limits employers’ ability to label employees as independent contractors, and requires businesses to give benefits like sick pay and overtime to workers.
Newsom signed the high-profile legislation in September, granting what proponents say is much-needed relief to low-wage workers who take on more than one job to manage an increasingly expensive California. Others have criticized the requirement for stripping people of workplace and scheduling flexibility.
Tech giants Uber, Lyft and DoorDash are trying to overturn it with a $90 million ballot initiative. Others, including the California Trucking Association, are fighting the law in court.
Democrats say the law needs fine-tuning; Republicans want to overhaul it.
Proposals from Republicans include exemptions for a slew of workers like youth sports umpires, pharmacists, loggers and journalists. Democrats are advocating for money to help businesses comply with the new regulations.
Here’s a look at what legislators are considering.
Assemblywoman and AB 5 author Lorena Gonzalez, D-San Diego, said she’s heard countless stories of people who’ve benefited from the law. But Gonzalez said she always planned to incorporate feedback after AB 5 passed for clean up efforts.
Gonzalez is asking Newsom to consider a one-time tax relief that would help independent contractors who want to continue working for themselves acquire a legal status as a limited liability company, which would make it easier for them to maintain contracts and operate under the new law. She’s asking the state to waiver temporarily an $800 fee.
“We know many of California’s independent contractors who operate as actual small businesses are making a good faith effort to comply with AB 5 and formalize themselves and their business licenses,” Gonzalez said in a statement. “This one-time relief will help these business owners with the transition to becoming LLCs.”
Newsom wants to allocate more than $20 million to help enforce the law through the state budget, and Gonzalez also asked for the same amount to help non-profit arts programs that are making a “good-faith effort” to comply with AB 5.
Gonzalez introduced a bill to carry the amendments, including a relaxing of restrictions for freelance journalists, and she said she planned to “address the unique situation regarding musicians” in March revisions. She also introduced a bill to help the beauty industry, including manicurists, barbers and cosmetologists.
“I do believe in AB 5 and will fight any attempts to repeal it. I will fight Uber’s attempt to exempt themselves through initiative. But, I thought I had been clear that I was taking meetings, listening and going to make clarifications. I guess that got lost,” Gonzalez wrote on Twitter on Feb. 6.
A crew of Republicans are leading the effort to chip away at AB 5, which they’ve called an “anti-worker law” that’s “decimated” industries.
Senate Republican Leader Shannon Grove thinks minor changes to AB 5 are inadequate. She’s proposing a “repeal and replace option.”
Grove introduced Senate Bill 806 as a “much more expansive test” to classify independent contractors as employees.
“Independent contractors are being hurt by this anti-worker law and some have lost their ability to earn a living. This disastrous law must be repealed and replaced so Californians can once again have flexibility in the freelance economy,” Grove said in a statement.
Assemblyman Kevin Kiley, R-Rocklin, also announced legislation to “nullify” AB 5. His proposal would prevent new laws from blocking flexible work schedules and would revert California’s labor law back to include a pre-AB 5 test to label workers.
“Even before Assembly Bill 5, California’s laws were more hostile to workers than any state in the nation,” Kiley said, “with arbitrary restrictions on vocational freedom and working conditions.”
Repealing AB 5 is unlikely, as is replacing it. But Republicans also wrote a bundle of bills that attempt to carve out exemptions for certain industries.
The proposals cover referees, musicians, newspaper carriers, loggers, ride share drivers, physical therapists, and franchisers. Most bills carry a companion measure in the opposite house.
“Californians providing for their families or earning extra cash shouldn’t be put in the middle of a union fight in the State Capitol,” said Sen. John Moorlach, R-Costa Mesa, after he introduced a bill to exempt ridesharing companies from AB 5. “The gig economy is an embodiment of the free-market and does not need to be over-regulated by Sacramento politicians.”
Republicans also wrote legislation to exempt small businesses and geologists. They want facilities that contract with companies that employ health care workers like podiatrists, surgeons and dentists to also be spared from AB 5. Marriage counselors could also be cleared.
Democrats hold supermajorities in both houses of the Legislature, leaving little chance that the Republican proposals would pass.
Sen. Cathleen Galgiani, a moderate Democrat from Stockton, isn’t trying to repeal or exempt professions from the law. She wants a “third classification of workers” instead. Galgiani voted for AB 5.
Senate Bill 1039 would task the Legislature with developing a “modern policy framework” for independent contractors. This classification would guarantee “basic rights and protections” like minimum wage and insurance for people who get hurt on the job.
“While AB 5 rightfully sought to rectify the harm of misclassified workers, it did so in the confines of an outdated, binary system, and has resulted in the loss of work opportunities for millions of Californians due to the overclassification of workers as employees,” said Jeremy Gottschalk, executive director of the Marketplace Industry Association, the bill’s sponsor.
Labor groups have already discredited the proposal as a threat to workers’ rights. The California Labor Federation said in a Feb. 19 letter that SB 1039 fails to consider workers who have no ability to choose independent contracting over employment.
“It is a sub-standard category of worker who can be exploited without recourse and subjected to employer control without safeguards,” the federation wrote. “If a new legal category of worker is created that is cheaper, has fewer rights, and can be more easily abused, no worker is safe.”
https://www.sacbee.com/news/politics-government/capitol-alert/article239822623.html\
After Driest February Ever…“No End in Sight”
San Jose Mercury
The driest February in 156 years is coming to a close — with no end in sight to the unusually parched, hot weather — and nearly a quarter of California is now under drought conditions, federal officials announced Thursday.
If this week ends without a drop of rain, as is forecast, it will be the first time since 1864 — when the Civil War was raging and covered wagons roamed the American West — that San Francisco had no measurable rain in February, normally one of the wettest months of the year.
And the news in the Sierra Nevada is just as grim. On Thursday, the snowpack, the source of one-third of California’s water supply, was 46% of its historical average, down from 92% on New Year’s Day, with no precipitation falling this month over key Sierra Nevada watersheds for the first time since records began in 1921.
When will it really rain next? Not until mid-March at the earliest, forecasters say.
With only about a month left in California’s winter weather season, the likelihood that the state will end its rainy season in April with below-normal rain and snow conditions is nearly certain, experts say, raising concerns about fire danger this summer.
“We’ll most likely end this water year below average,” said Sean de Guzman, chief of snow surveys and water supply forecasting for the state Department of Water Resources. “We just don’t know how far.”
Altogether, 23.3% of the state is in “moderate drought” — up from 9.5% last week, according to the U.S. Drought Monitor, a weekly report issued by the National Oceanic and Atmospheric Administration, the U.S. Department of Agriculture and the University of Nebraska-Lincoln.
That’s the most of any week in 13 months. Another 46.4% of California is now classified as “abnormally dry.”
Sunny, dry weather, with temperatures in the 60s and 70s, is forecast for at least another week across Northern California. Apart from a slight chance of sprinkles on Sunday, the next time significant showers are possible in the Bay Area is between Monday, March 9, and Wednesday, March 11, when the long-range forecast shows a 40% chance in San Jose, Oakland and San Francisco, according to the National Weather Service.
The culprit for the dry weather? A large ridge of high pressure air, similar to the one that created much of the state’s 2012-2017 drought, that has set up off the West Coast and deflected storms to Washington state, southern Canada and Mexico that otherwise were on target to hit California.
“California and parts of the Southwest dried out while the Northwest observed surplus precipitation,” wrote David Miskus, a NOAA meteorologist who issued this week’s Drought Monitor report.
“During the past 60-days, less than 25% of normal precipitation had fallen on much of California and western Nevada,” he added, “creating deficits exceeding a foot in parts of the Sierra Nevada, and 4 to 8 inches along the coast.”
It’s Like Trying to Mix California & Water…
CalMatters commentary
California’s decades-old conflict over distribution of water among farmers, urban users and environmental enhancement bears an uncanny resemblance to the decades of sectarian struggles in the Middle East — minus the bloodshed.
In both arenas, periodic efforts are made to forge enduring peace agreements, but just when they seem to be bearing fruit, they are undermined by some new flareup.
Gov. Gavin Newsom has been trying to finalize what predecessor Jerry Brown began, a series of so-called “voluntary agreements” that would shift water from San Joaquin Valley farmers to bolster flows through the environmentally fragile Sacramento-San Joaquin Delta. They are “so-called” because agricultural water districts were willing to entertain such deals only because the state Water Resources Control Board was poised to unilaterally impose curbs on farmers’ supplies.
However, the state is not the only major power in water wars. Much of California’s agricultural water is supplied by the federal government, mostly through its Central Valley Project, and when Donald Trump became president, he promised farmers he’d protect their interests.
Last week, Trump went to Bakersfield to personally declare he’s making good on that promise. His Bureau of Reclamation finalized a new operating policy that would provide more water to farmers, whose supplies had already been squeezed by a series of court orders.
Trump told a cheering crowd that the new plan will bring “a massive amount of water for the use of California farmers and ranchers and all these communities that are suffering” and criticized state officials for allowing “millions and millions of gallons (to be) wasted and poured into the ocean.”
“Maybe we can get the governor to come along and really be friendly on this one,” Trump said — but even before the president spoke, Newsom had denounced the new federal plan and promised to fight it in the courts.
Newsom’s office said he “will file legal action in the coming days … to protect highly imperiled fish species close to extinction.” However, Newsom also sent a letter to Interior Secretary David Bernhardt saying, “We remain committed to working to resolve these remaining differences in (the) coming weeks and months.”
Bernhardt is a former lobbyist for California’s Westlands Water District, which supplies farmers on the west side of the San Joaquin Valley. He had praised the new plan as “a significant milestone in executing on President Trump’s commitment to deliver safe and reliable water for communities in California to the agricultural and environmental benefit of the entire country.”
So where does Trump’s action leave the months of negotiations on the voluntary agreements Newsom sees as a peace treaty in California’s water wars?
Up in the air.
Having Trump on their side bolsters the farmers’ complaints about being compelled to give up water to help fish migrations in the Delta while simultaneously facing new state limitations on tapping underground aquifers via wells. They are unlikely, therefore, to finalize the voluntary agreements until they see how Trump’s move plays out.
Newsom can tie up the federal policy in the courts, at least for a while. He also must contend with environmental groups that never liked the voluntary agreement approach, favoring the mandatory farm water cuts proposed by the Water Resources Control Board.
Everything probably will be on hold until the contending factions know whether Trump is re-elected in November. If he is, the farmers could play a stronger game. If he’s succeeded by a Democrat, Newsom would regain the upper hand and a Democratic president would be expected to strengthen environmentalists.
The stakes are huge for everyone involved — and for California itself.
Nevada Water Agency May Pay for SoCal Recycling
Nevada Independent
The Southern Nevada Water Authority has expressed interest in helping finance a wastewater reuse project being pursued by Southern California’s municipal wholesale water provider.
The goal: To free up Colorado River water.
The concept looks something like this. If the Metropolitan Water District of Southern California (MWD) could recycle a portion of its water, it could reduce its overall consumption of Colorado River water stored at Lake Mead. In turn, the water authority would help fund the project in exchange for additional water that MWD would be able to leave in the reservoir because of it.
Such a project is in the early stages, and it could take at least a decade to build out. Still, the water authority and MWD are actively discussing a potential partnership. John Entsminger, the water authority’s general manager, said he hoped there would be a preliminary deal next spring.
On Wednesday, the water authority presented the project to its community advisory board. Earlier this month, the potential partnership was discussed at an MWD committee meeting.
Two decades of drought have left the country’s largest reservoir near Las Vegas diminished, with the specter of climate change only adding to concerns about an arid future. Even under a climate change scenario of low streamflow on the Colorado River and population growth, the water authority has said it will not need to supplement its current water resources for decades.
Around mid-century, its projections suggest that new supplies could be necessary. One potential solution could be to increase the amount of Colorado River water that is available at Lake Mead. The deal with MWD could be one way of doing that. The two water agencies are still negotiating how much water the deal could free up. Nevada is entitled to about 300,000 acre-feet of the Colorado River, a small portion compared to other states (an acre-foot is equal to the amount of water that can fill one acre of land up to one foot). Last year, it consumed about 234,000 acre-feet.
“We’ve had a long-term partnership with Southern Nevada,” said Bill Hasencamp, who manages MWD’s Colorado River supply.
If the project moves forward, it would cost about $3.4 billion, recycling water for about $1,800 per acre-foot, Hasencamp said. It has not yet been determined what Nevada’s financial contribution would be. The project would still need to be approved by both the water district’s full board the MWD board.
The project is similar to other water-swapping proposals. Minute 323, a binational agreement between the United States and Mexico, tasked a working group with studying desalination plants. New supplies would allow Colorado River users to more easily exchange water at Lake Mead.
Federal Dam Regulators Order Santa Clara Reservoir Drained
San Jose Mercury
In a dramatic decision that could significantly impact Silicon Valley’s water supply, federal dam regulators have ordered Anderson Reservoir, the largest reservoir in Santa Clara County, to be completely drained starting Oct. 1.
The 240-foot earthen dam, built in 1950 and located east of Highway 101 between Morgan Hill and San Jose, poses too great of a risk of collapse during a major earthquake, the Federal Energy Regulatory Commission, which regulates dams, has concluded.
“It is unacceptable to maintain the reservoir at an elevation higher than necessary when it can be reduced, thereby decreasing the risk to public safety and the large population downstream of Anderson Dam,” wrote David Capka, director of FERC’s Division of Dam Safety and Inspections, in a letter to the Santa Clara Valley Water District on Thursday.
Anderson Reservoir is owned by the Santa Clara Valley Water District, a government agency based in San Jose. When full, it holds 89,278 acre feet of water — more than all other nine dams operated by the Santa Clara Valley Water District combined.
In a statement Monday, Norma Camacho, the water district’s CEO, said the impacts of draining the largest reservoir in Santa Clara County will be significant.
“With these new requirements, we expect to see an impact to groundwater basins that are replenished with water released from Anderson Reservoir, including South County and southern San Jose,” Camacho said. “Staff is already exploring other sources of water that will have to come from outside of the county. While residents have done an excellent job of conserving water since 2013, another drought during this time frame could require everyone to significantly decrease their water use.”
Camacho also said that draining the reservoir starting in seven months is likely to kill wildlife downstream in Coyote Creek, including endangered steelhead trout, amphibians and reptiles. Coyote Creek flows from the dam through downtown San Jose to San Francisco Bay.
Complicating the issue, California may be heading into a new drought. On Monday, amid a dry winter, Anderson Reservoir was just 29% full. Nevertheless, the 26,133 acre feet of water stored there is an important part of the South Bay’s water supply — holding enough water for the annual needs of at least 130,000 people, and what the district considers an emergency supply.
The water district, a government agency based in San Jose, became aware of the dam’s problems a decade ago.
In December 2008, an engineering consultant found that a 6.6 magnitude quake centered on the Calaveras Fault directly at Anderson Reservoir, or a 7.2 quake centered one mile away, could cause the reservoir’s huge dam to fail.
Although unlikely, if that occurred when the reservoir was full, such as during a wet winter, it could send a wall of water 35 feet high into downtown Morgan Hill within 14 minutes, and eight feet deep into San Jose within three hours, potentially killing thousands of people, studies from that time showed.
The largest earthquake recorded on the Calaveras Fault was a 6.5 in 1911. But the U.S. Geological Survey has estimated the Calaveras Fault can produce a quake of up to 7.2.
During test borings in 2008, consultants found that the dam’s foundation was not built on solid bedrock in the 1950s. Rather, there is some sand and gravel under it, which could liquefy in a big quake, causing the dam potentially to slump and fail.
The district has worked on a project to rebuild the dam, but it has faced numerous delays and cost overruns. The project’s cost estimate is now $563 million. Construction was scheduled to begin in 2022, but the district has said it has had difficulty obtaining permits from other government agencies.
In October, after federal officials raised concerns about delays, the district said that the most balanced course of action was for it to fill Anderson Reservoir to no more than about 45% full. That, the agency wrote, would balance water supply and environmental needs and also reduce the risk of damage to the dam’s intake structure.
But FERC rejected that approach, essentially saying the agency hadn’t done enough fast enough.
“Your actions to date do not demonstrate an appropriate sense of urgency regarding the interim conditions at the project,” Capka wrote in Thursday’s letter.
Three years ago, FERC and the State Department of Water Resources came under criticism after the spillway at Oroville Dam in Butte County, the nation’s tallest dam, crumbled during heavy winter storms, causing the emergency evacuation of nearly 200,000 people. As a result, both agencies have taken a sharper view of safety.
“I think people are waking up to the reality of seismic instability and the consequences for Silicon Valley,” said Jeffrey Hare, a San Jose attorney who is suing the water district on behalf of roughly 200 people whose homes and businesses were flooded in 2017 when Coyote Creek went over its banks.
“The risk is well beyond what happened with Oroville,” he said, “in terms of economic and human losses, if Anderson Dam failed.”
The water district, which provides drinking water to 2 million people in Santa Clara County, produces nearly half of its supply from groundwater wells. After two wet winters, groundwater supplies are in good shape, district officials have said.
The agency also holds contracts with the federal Bureau of Reclamation and State Department of Water Resources to buy water from the Central Valley Project and the State Water Project — two massive systems of dams and canals that deliver it from across the state. And the agency produces roughly 5 percent of its supply from recycled wastewater.
Also, although California’s 2012-17 drought ended three years ago, the district’s customers are using 21 percent less water now than they were before it began, due to conservation measures such as low-flush toilets and water-efficient landscaping that were put in place during the drought.
It’s likely the district will work to bring water it has stored underground at Semitropic Water Storage District in Kern County to make up the difference from Anderson’s drained reservoir.
The district also is sponsoring a bill in the state Legislature, introduced Friday, AB 3005, that would expedite permits for the dam rebuilding project. On Monday, many questions remained unanswered. Nevertheless, the news that the biggest reservoir in the county will go dry sometime after Oct. 1 is a major development in Silicon Valley’s water picture.
“Lowering the reservoir water level below the current restricted normal pool would impair the water delivery mission of Valley Water dramatically,” Christopher Hakes, deputy operating officer for the water district’s dam safety division, wrote Dec. 31 in a letter to FERC.
Labor Dispute Derails Large Water Recycling Project
San Diego Tribune
San Diego’s long-awaited Pure Water project, a sewage recycling system that would boost the city’s water independence, is facing legal challenges that could last longer and cost more than city officials previously anticipated.
A dispute that emerged last year over the use of unionized construction workers to build the project became more complex last fall when state lawmakers tried to solve the problem by intervening.
They passed a law requiring any part of the project that receives state funding to use a union-friendly project labor agreement. But a group of local contractors who want to use non-union workers quickly filed a lawsuit contending that the move was illegal.
Superior Court Judge Richard Strauss has scheduled a hearing in the case this Friday. City officials say the litigation might not be resolved for years, especially if the ruling Strauss eventually makes gets appealed to higher courts.
A similar legal dispute over the city’s 2012 cuts to employee pensions has lasted more than seven years, including two rulings by the 4th District Court of Appeal, one ruling by the state Supreme Court and an unsuccessful appeal to the U.S. Supreme Court.
City officials say that every month of delay adds $4 million to the overall cost of the project, which has already risen from $3 billion to more than $5 billion since 2015, because of unanticipated costs for the project’s treatment plants and pipelines.
The city passes those cost increases onto its water and sewer ratepayers, who would benefit from the greater water independence Pure Water would create by giving drought-vulnerable San Diego its own reliable, local water supply.
City officials say they are doing everything possible to minimize delays by making thorough preparations for whatever legal outcome the city ends up facing.
That includes hiring consultants to work out the details of what would be San Diego’s first project labor agreement, which would be required if the state legislation stands.
In project labor agreements, unions guarantee a steady supply of trained workers, while employers agree to hire union workers or union-trained apprentices.
“We know there are these ancillary things out there with some of the lawsuits, but our job in operations is to continue to move the project forward,” said Johnnie Perkins, the city’s deputy chief operating officer for public utilities and public works.
“Once these ancillary activities are settled, I want to be ready Day One to move a contract forward,” he said. “If it’s a PLA, great. If not, fine. But I’m going to be ready to go with the bid specs and a request for proposals that I can get on the street rather quickly, so we can start getting back to our schedule for having Pure Water completed.”
City officials have also continued work securing state and federal contributions to the project. And they are scheduled in April to seek approval from the Regional Water Quality Control Board to store recycled water in the Miramar Reservoir.
Meanwhile attorneys for the city say they can’t comment on the litigation because it involves the state and contractors who use non-union workers, the San Diego chapter of the Associated General Contractors.
The city’s lead attorney for Pure Water, Deputy City Attorney Travis Phelps, said it would be difficult to estimate how long the legal wrangling might last.
“We do not know,” he said by email. “It could be years.”
When asked whether it could take as long as the legal dispute over the 2012 pension cuts, Phelps said “we can’t speculate.”
Eddie Sprecco, chief executive of the local chapter of the Associated General Contractors, said by phone that his group would prefer a settlement over years of legal disputes.
“We obviously want things built,” he said.
Sprecco said his group has made offers, but he declined to reveal specifics.
“We’ll leave that for the lawyers to talk about,” he said. “It takes two to settle, and we’ve definitely offered those on-ramps.”
Sprecco said the city’s best opportunity to settle was last summer, shortly after Superior Court Judge John Meyer issued an injunction based on the dispute over the use of unionized workers to construct the Pure Water System.
The dispute arose when the city tried in 2018 to craft a compromise requiring union workers on some Pure Water projects and allowing union and non-union workers on others.
The Associated General Contractors sued to block the compromise, contending it violates a successful 2012 city ballot measure that regulates the use of union workers on projects.
Judge Meyer ruled in favor of the contractors and issuing the injunction, which forced city officials to halt soliciting bids for Pure Water projects.
Sprecco said a settlement could have been reached after that ruling. But instead state Assembly members Todd Gloria and Toni Atkins, both of San Diego, proposed a legislative solution at the state level.
AB 1290, which was approved by both houses of the state Legislature and signed by Gov. Gavin Newsom last fall, says that all parts of Pure Water that get state funding must use a project labor agreement.
The law was initially heralded as a solution to the legal mess, but the lawsuit filed by the Associate General Contractors says it’s illegal for legislation to single out a specific geographic area at the state funding level.
“The state law is really just a way to bypass the local injunction,” Sprecco said this week. “It’s the state intervening on a local issue in violation of the state constitution.”
State officials have argued that geographic-specific legislation was necessary because San Diego urgently needs to move forward with Pure Water.
The city’s Point Loma Wastewater Treatment Plant is violating the federal Clean Water Act. Pure Water would solve that by allowing the city to recycle its sewage.
When lawmakers invoke urgency as a rationale, they typically base their argument on threats to public safety, such as earthquakes or wildfires. This case may come down to whether violating the Clean Water Act qualifies as urgent.
The city also is facing separate litigation from a group of University City homeowners over Pure Water and its pipelines, which would travel through the area. That litigation is close to being settled.