Hiring issues imperil AvalonBay project in Concord

The Concord City Council’s commitment to union hires and prevailing wages continues to complicate AvalonBay’s plans for a multi-family, mixed-use project on the so-called “white picket fence property.”

The March 5 council meeting was one of many discussions about 310 housing units and 6,500 sq. ft. of commercial/retail space on three city-owned acres at 1765 Galindo St.

After trying to hammer out an agreement on labor, the council continued the plan to the April 9 meeting. That could be do or die time for the project, because the city’s Exclusive Negotiating Agreement with the developer expires May 1.

“We will either resolve this or we won’t. We don’t want to keep dragging this out,” said David Bowlby of AvalonBay.

Other projects delayed

The development might not be the only downtown Concord housing project plagued by rising costs. Councilwoman Laura Hoffmeister referred to projects “that don’t pencil out” and may not move forward. “So that’s no jobs in the construction industry,” she noted.

The plan for 230 units at Concord Village includes a Project Labor Agreement (PLA), but developer Brent Nicholson said it’s not the reason for the delay. He told the Pioneer he is out to market for a sale or joint venture. He hopes to have an agreement soon and be under construction within a year at Salvio Street and Willow Pass Road.

Nicholson called the PLA “a unique situation” for him but says it’s not restricting the development. “The labor agreement just adds to the overall project cost. It’s just one of those things you have to factor in and sort your way through,” he told the Pioneer.

According to John Montagh, the city’s Economic Development manager, that PLA was a private agreement between the developer and the unions. The difference with the AvalonBay proposal is that because the city owns the property, the City Council is pushing labor agreements as part of the land sale.

“This is the City Council’s opportunity to do the right thing,” Mayor Carlyn Obringer said. “We don’t always have the opportunity to require union labor on projects.”

The Argent, with another 181 units on Willow Pass Road, may also be stalled. The project changed hands, and the developer did not return calls for an update. Montagh said that plan did not include a PLA.

New incentives from Avalon

Using feedback from the Jan. 8 meeting, AvalonBay senior vice president Nathan Hong brought the council additions to the Disposition and Development Agreement for review on March 5. Noting that the $120 million project was “barely feasible as it is,” Hong said AvalonBay would add five affordable units to the market-rate project and donate $30,000 a year for 10 years to a community event benefit fund.

As for labor, however, Hong’s proposal only included a commitment to local workforce outreach before going out for bids. At the March meeting, Hong said it would cost 32 percent more to pay prevailing wages for the entire project. Keyser Martson Associates, a third-party consultant, concurred with Hong’s findings.

“That would result in a $30 million increase in construction costs, which is an insurmountable delta for us,” he said.
Throughout the meeting, though, Hong stated the company’s commitment to the project. “We do want to be here in Concord. We want to contribute what we can to the community, long-term,” he said.

Hong also brought the council information comparing the Concord project to Avalon’s plan at the Pleasant Hill BART station. There, BART retains ownership of the land and Avalon receives ongoing subsidies. In Concord, Avalon needs to purchase the land for $4 million – with no city subsidies.

“The main reason that Avalon Walnut Creek can take prevailing wage is that it is a subsidized development,” Hong said.

Looking for a compromise

After it was clear the updated proposal was unacceptable to the council, Hong suggested a 15 percent commitment to union labor. Because the idea came together late in the meeting, Avalon executives couldn’t provide exact figures.
Therefore, the council directed Hong to meet with four local unions – sheet metal 104, electrical 302, sprinkler fitters 483 and plumbers 159 – to see if an agreement could be reached. The groups had sent the city a letter suggesting union goals for the project.

“I hope they can work it out. I think they’re a lot closer than they are apart,” Hoffmeister told the Pioneer. “Both sides are compromising. Maybe they can figure out the right formula.”

Hoffmeister noted that while affordable housing is important, the city needs a variety of housing ranges and options. “We’re trying to also add a balance of having some different income brackets in our community in that area to help support the businesses and the mixed-use vibrancy we’re getting,” she said at the meeting. “So I think we need to look at this as another catalyst site that can help generate more interest.”

Vice Mayor Tim McGallian also expressed hope the project could be a success. “If we can’t get some feet underneath this, we could delay getting something built here for now another three to five years,” he said. “You kind of go back to: Do you want a little bit of something or all of nothing?”