A homeless housing project praised by state and local leaders during the pandemic is the site of wage theft and hazardous conditions, according to interviews and documents obtained by San José Spotlight.
“This was by far the worst I’ve ever seen in regards to violations from A to Z,” said Mauricio Velarde, director of compliance at South Bay Piping Industry. “It’s a cesspool of violations.”
The Bernal Monterey emergency interim housing site, one of three opened by the city in October for homeless residents during COVID-19, felt like something hastily built by teenagers, union leaders said. Those charged with overseeing it groaned about the project’s delays in emails. City code enforcement flagged electrical issues. And San Jose Mayor Sam Liccardo and Gov. Gavin Newsom used the site as the backdrop for a news conference on helping those in need during the pandemic.
So far there is at least one lawsuit, several citations and fines related to the project that created 78 new bedrooms for people living on the streets.
At least 20 to 30 workers on the project were not paid money owed to them under a citywide union agreement with labor unions across the county, Velarde said.
Multiple subcontractors on the project violated labor agreements with the city that required them to hire apprentices on the project, and the main builder, Veev, used a staffing agency to hire non-union laborers for less than what prevailing wage laws allow.
“You get the irony: This is a homeless shelter. In San Jose, it’s so hard to live, expensive to live in, and then at a homeless shelter they’re ripping off the workers,” Velarde said. “They’re perpetuating the same thing … they cheat them, they can’t afford to live, etc.”
The emergency housing project at Monterey and Bernal roads cost about $11 million in public funds, a threshold that triggers an agreement requiring the builder to hire union labor, hire apprentices and pay prevailing wages.
But union workers cost more money. By classifying workers on the project as “laborers,” a more general, unskilled designation, Veev could save tens of dollars per hour, per employee in wages, Velarde said.
Attorney Tómas Margain of Justice at Work Law Group represents a carpenter who worked on the project. Margain said workers are owed more than $150,000, according to his records.
San Jose Public Works Director Matt Cano said the city recently cited contractors for prevailing wage and labor standards violations on the project.
“City staff identified violations on certain subcontractors and violation notices were issued to contractors and partner agencies,” Cano said. “City staff has notified and provided documentation to the agencies that would enforce and collect the fines, fees, and penalties.”
Margain said the irony is that Veev ended up paying more for each worker through the staffing agency than if they had paid them as union workers.
“But (the staffing agency) charged them payroll taxes, insurance, and profit and overhead,” he said. “Had the job actually been under the project labor agreement … workers would have been paid correctly — carpenters would have been used and apprentices trained. (This is why) San Jose wants to have these project labor agreements on file on large construction projects in the first place.”
Margain filed a lawsuit on Feb. 22 in Santa Clara County Superior Court against Veev on behalf of his client, San Jose carpenter Kahree Jahi. The suit alleges Veev failed to pay Jahi prevailing wages, failed to provide meal breaks, did not pay overtime and violated unfair competition laws, among other infractions.
At times during the project, according to court documents, Jahi worked more than eight hours a day and in excess of 40 hours a week without overtime pay. At other times, Jahi worked more than 12 hours a day, without receiving the legally required extra pay.
Veev officials did not respond to San José Spotlight’s request for comment.
By late summer, Velarde started requesting documentation from the city about the violations to date on the project.
“We didn’t know at that time that the city…was going to have a press conference with the governor (about the project),” Velarde said,
In October, Liccardo, Newsom and other lawmakers stood in front of TV cameras and touted the project’s 78 beds to provide shelter to homeless people amid the pandemic, along with the speed it had been build. In a news release, the city boasted that the units were “built in a matter of months and at a fraction of the cost of traditional housing.”
At the unveiling, Liccardo said that the project would become a model for San Jose and beyond. Liccardo did not respond to a request for comment Friday.
“By eliminating red tape and deploying more innovative, cost-effective construction methods, San Jose is showing how we can build housing in four months–where it previously took four years–at one-eighth of the standard cost of development,” Liccardo said. “This will become a national model for saving lives and rebuilding communities.”
Velarde was furious.
On several occasions, Velarde and Margain went to the site, which Margain described as “a high school theater stage the week before the play.”
Workers were not wearing hardhats, safety glasses or safety vests, while several others were not wearing proper PPE. Velarde said he saw workers not wearing a face shield or glasses when using power tools, including a chop saw. He also documented workers on the roof of the project without fall protection.
“The project didn’t look right,” Margain said. “You had too many people in a small spot working on top of each other to get the project done.”
Emails and letters obtained by San José Spotlight show there were problems with Veev and the city since the project began.
San Jose Deputy City Manager Jim Ortbal expressed “disappointment and concern” with the pace of the project in a July 6 email to Habitat for Humanity president and CEO Janice Jensen. The nonprofit served as the general contractor for all three emergency housing communities.
Habitat for Humanity officials did not respond to requests for comment.
According to the letter, the city expected construction to finish by July 1 and found the delays “unacceptable.” Veev pushed back its delivery date to Aug. 24.
“Given the importance of housing the unsheltered in our city during the shelter in place order, we expect Habitat to engage Veev at the highest levels of ownership and executive management to ensure that Veev’s resources and energy are focused on delivering the project as soon as possible—and certainly well before the proposed Aug. 24 date,” Orbital wrote.
Construction projects in Silicon Valley came to a screeching halt in April after county health officials restricted building to only essential projects like emergency housing and shelters. Uncertainty about what was allowed caused delays, as well as supply chain breaks after COVID-19 upended businesses all over the world. The project was approved April 20.
Three weeks after the letter was issued, San Jose public works officials found more problems as Veev rushed to complete the project.
“The electrical equipment (for the project) was installed on-site and not in the factory,” wrote Rodney Turco, the city’s senior electrical inspector, in an email to Veev and Habitat for Humanity. “In addition, the installation is in clear violation of the product listing and the minimum California Electrical Code for such installations.”
Brian Lee, a senior civil engineer with the city, forwarded his email up the chain of command.
“FYI, I’m trying to get a handle on this,” Lee wrote. “These panels were supposed to be installed in the factory yet they were done on-site and not up to electrical standards. Veev needs to go back to the state and get a letter relieving the city inspectors of liability before we can open phase 1.”
Twelve minutes later, James Stagi, a housing policy administrator with the city’s department of housing, emailed Lee back.
“Thanks Brian. Yeah, another example of Veev drifting away from the off-site manufacturing that we originally agreed to,” Stagi wrote.
Fallout and repercussions
The city has fined at least two subcontractors on the project already.
In an Oct. 20 letter, city compliance officer Steven De La O informed Habitat for Humanity that a subcontractor, Beth’s Construction, was in violation of state and local labor laws.
Beth’s Construction did not hire apprentices, and Habitat for Humanity was fined $200 by the city for that violation. Habitat for Humanity was also fined $4,700 after subcontractor Rivera’s Fine Flooring failed to hire apprentices, submit a notice of public award and was not properly registered as a public works contractor.
Habitat for Humanity faced the fines instead of Veev because it’s named on the agreements with the city.
Steve Flores, business manager for UA Local 393, representing the Bay Area’s HVAC technicians, plumbers, steamfitters and pipefitters, said he’s disappointed by the treatment of workers on the project, and that these conditions happened on a project affiliated with Habitat for Humanity.
“It’s a great organization and I feel bad,” Flores said. “But these workers are not being treated properly. You’re looking at marginalized people, first-generation Americans, non-English speaking, that are being taken advantage of. They don’t know what their rights are, and it sucks.”