San Jose approves prevailing wages for private construction projects

While the unlicensed Silvery Towers subcontractor Job Torres Hernandez received his sentence in federal court for harboring undocumented workers in slave-like conditions, San Jose lawmakers on Tuesday passed a law to prevent construction companies from exploiting low-wage workers on private construction projects that receive tax breaks.

Spurring from negotiations with labor unions more than a year ago, private construction companies will now be required to pay a prevailing wage on projects that receive city subsidies. The now-renamed Silvery Towers, which is located at 188 W. St. James St., took center-stage during Tuesday’s discussion as union members urged the council to make sure history didn’t repeat itself.

“These protections strike reasonable balance to decrease the likelihood of workers being exploited by shady contractors,” said Will Smith, a union representative from IBEW Local 332.

During his trial earlier this year, government prosecutors accused Hernandez of recruiting workers from a Tijuana newspaper advertisement and promised them fair wages and legal status in the U.S. But once the workers arrived in Hayward, they were held in sordid quarters, denied compensation and were threatened with violence. On Tuesday afternoon, he was sentenced to 103 months in prison and was ordered to pay nearly $1 million in unpaid wages.

But years before Hernandez’s conviction, Silvery Towers received a high-rise incentive from the city — reducing the amount of park fees the developer paid from $19,000 per unit to $7,650 per unit. At 643 units, the project received an estimated $4.9 million in fee breaks – which would have made it subject to the city’s new law.

Although many developers and business organizations didn’t support the new standards –- as expressed during public testimony and through letters submitted to the city – not approving them could jeopardize extending the high-rise fee reduction program, business leaders said.

“While The SVO is firmly opposed to layering additional costly regulations onto private development projects, we also recognize that the standards are a significant piece of a complex puzzle in extending the Downtown High-Rise Fee Reduction program,” silicon valley organization President Matthew Mahood wrote in a letter to the council. “The program would address our current housing crisis, while also adding direly needed economic development to downtown San José.”

While councilors mainly agreed on supporting worker protections, they worried that additional regulations could stall the construction of new housing units – they ultimately voted to hire a consultant to study the impacts on projects already in the city’s pipeline.

“(We need to make) financially feasible on both the backs of the future residents and the workforce that builds the units,” Councilmember Raul Peralez said. “It’s an important balance to strike.”

Councilmember Maya Esparza echoed Peralez’s comments, but questioned whether city officials prioritized the new law which took more than a year to come back to council.

“We want to have housing and we also need a vibrant workforce,” she said. “I want to make sure we’re doing this right, we’re doing this is good faith and we’re moving forward with housing.”

Councilmember Johnny Khamis, however, objected to establishing new wage regulations. He ultimately supported studying how the city was over-taxing developments, but didn’t think San Jose needed to update any of its wage theft policies.

“We can’t keep taxing and expecting more housing,” he said. “This run-amok (contractor) is going to jail and paying a million dollars thanks to the existing policy we have. The system is working.”

Union members after the meeting praised the councilors’ actions, especially in the wake of Hernandez’s sentencing.

“The City Council’s decision today sends the right message to greedy developers and shady contractors,” Steve Flores, business manager for UA Local 393, told San José Spotlight. “It is our hope that the workforce protections adopted today will prevent another Silvery Towers from occurring and will provide construction workers a family sustainable wage.”

Contact Grace Hase at [email protected] or follow @grace_hase on Twitter.