Cost overrun on $28 million SRJC theater project renews debate over labor agreement

Santa Rosa Junior College’s renovation of venerable Burbank Auditorium got started recently on a $28 million contract that was well over the estimated cost, but college and labor officials expressed doubt the overrun was due to a controversial labor pact.

Market forces, including the cost of materials and a tight labor market, more likely contributed to a cost exceeding the $25 million estimate for the long-awaited remake of the theater that has served the junior college for more than 75 years, officials said.

Bids from three contractors, all within a 10 percent range, were evidence of competitive bidding, they said, while a critic from the construction industry maintained that taxpayer money may have been wasted.

But no one was ready to say definitively that a labor union-backed construction management plan, approved by SRJC trustees for the first time last fall, had reduced competition for the project or boosted the price.

“It’s a great question,” SRJC President Frank Chong said. “I couldn’t tell you (the answer).”

Chong and Leigh Sata, the school’s capital projects director, suggested the reason for the increased cost was a tight labor market in the midst of a Bay Area-wide building boom that has inflated prices as contractor and labor services are in high demand.

“The economy is bustling,” Chong said.

Labor leader Jack Buckhorn said three bids on a project are a “recognized industry standard for competitive bidding.”

Wright Contracting, a 63-year-old Santa Rosa firm, won the contract with a $28,067,000 bid, beating the $28,635,193 bid from Arntz Builders of Novato by just 2 percent. Oakland-based Balfour Beatty Construction’s $30,976,068 bid was 10 percent higher than Wright’s.

“The market told us the project should be about?$28 million,” Sata said.

Buckhorn, head of the Sonoma Lake & Mendocino Counties Building & Construction Trades Council, said the close bidding showed the contractors had “sharpened their pencils.”

The so-called project stabilization agreement - advocated by Buckhorn and approved by SRJC trustees on a contentious 4-3 vote in September - had no effect on costs, he said.

“It’s all about market forces,” Buckhorn said.

Mark Davis, co-owner and president of Wright Contracting, said the agreement added nothing to his own company’s portion of the bid, but he couldn’t say if any subcontractors’ bids were impacted by it.

Wright, which has handled 11 SRJC projects worth more than $200 million since the 1960s, would have bid on the Burbank Auditorium job with or without the agreement “based solely on our relationship with the junior college,” Davis said.

Three bids was a sufficient number for the project, he said. In 2009-10, at the end of the recession, “you might have seen more bidders,” Davis said, because “there was a lot less work out there.”

Last fall, the North Coast Builders Exchange waged an aggressive campaign against the labor agreement, contending it is discriminatory and reduces competition, leading to higher project costs.

The SRJC Board of Trustees approved it on a 4-3 vote, with the aye votes coming from four trustees elected since 2014 with endorsements from the Sonoma County Democratic Party and union groups.

Keith Woods, chief executive officer of the builders group, reiterated his criticism Wednesday but declined to say if three bids was sufficient. For some projects “that’s a very appropriate number,” he said, but for others “it would be light.”

“If you reduce (the number of) bidders that increases your cost,” Woods said. “Now they’ve got a very restrictive set of conditions for bids.”

Woods suggested comparing the Burbank Auditorium bids to other projects, such as the SRJC parking garage and student center.

But projects undertaken years ago wouldn’t be comparable, Sata said, because economic conditions influence bidding. When he was working at College of Marin during the recession, some bids came in?30 percent below the project engineer’s estimate, he said.

The labor agreement includes cost-control measures, including prohibitions on labor strikes and contractor lockouts, an apprenticeship program that will award associate degrees to people who complete the construction trades training, and a provision to track the ZIP codes of all workers to determine how many are local.

Chong told the trustees last year the Burbank renovation project would serve as a test of the labor agreement, and if it worked well similar agreements could be applied to other campus projects funded by a $410 million bond measure approved by voters in 2014.

On Wednesday, Chong said it would be premature to assign a grade. The evaluation can only come when the work is done and the final costs are known.

“We’re hoping they can build it on time and on budget,” he said.

That’s exactly labor’s goal, Buckhorn said.

You can reach Staff Writer Guy Kovner at 707-521-5457 or guy.kovner@pressdemocrat.com.