>> thank you. it's not just for future america's cup events. we have a number of events that are coming to the -- projects coming to the port. [speaker not understood] as well who made commitments around prevailing wage, local hire, that we need to use our experience here which i wish we didn't have to. we already have in place to inform how we actually do the implementation and enforcement in the future. >> point well taken. it will be a little less challenging with a major construction contract because contractors will be familiar with prevailing wage requirements. >> okay, thank you. like to call back up mr. martin. my concern, mr. martin, is that, you know, we have had long discussionses about we want to make sure we have high standard for prevailing wage and participation. we should have seen a lot of

these concerns moving forward. what is your response to that? ~ >> supervisor, i would say i definitely hear your point loud and clear. certainly -- and i think the rest of this hearing will indicate, this is a lot of why we want to bring the america's cup to san francisco. and i would, i would like to point out again the commitment to pay prevailing wages on a temporary event, not a construction event, a privately run event, is a significant sort of concession during the agreement. and as you know, supervisor, you were very much involved in the sort of negotiation of the final workforce plan provided by the america's cup authority. certainly if we had it to do over again, we would love to avoid this conversation. but looking at where we are now, i just want to echo what supervisor farrell said. i'm very appreciative of the event authority and studios saying we want to make this right for the worker. ~ hartman through this crucible we have a

much better template moving forward. certainly through what olse did we're able to identify potential pitfalls going forward and we have a much better line of communication and sort of spotting those issues ahead of time. so, with the much larger events coming this summer, we want to use these lessons learned and make this event deliver on its promises. hopefully use it as a way to avoid these pitfalls on other projects. >> thank you. could you do corrective action moving forward on the m-o-u and how you see that being implemented? >> so, the m-o-u is a short-page m-o-u. but it talks about hartman reaching out to the subcontractors and moving quickly to pay their workers that were identified in the audit. we provided them with the information of the audit so they are more easily able to do so. the m-o-u does contemplate the possibility that these workers are not easily reached or just, you know, they can't get the payment within a reasonable amount of time which i think is

60 days. i don't have it in front of me unfortunately. if there is no payment made by then as what was mentioned, olse would be the recipient of those funds and would work to return those funds to the workers. if that task remains unfulfilled after two years, it would be -- the monies would be basically kept by the olse for future enforcement efforts. and also, excuse me, the apprenticeship funds ms. levin mentioned would be paid to oewd in support of apprenticeship opportunities in the city. >> thank you. i think it's important for me to reiterate that i supported this project because of the concessions made. at the time the concessions were made, i pressed my appreciation for them. when it comes to actually carrying out the construction and set up of the facilities, i would expect that they actually get carried out. and that's not too much to ask.

my disappointment about that is somewhat great. and i know that we now have learned how we can perhaps do things better in the future, but it's -- you know, people like me who have to approve projects like this, it's a very difficult place because we work really hard to get the best we can, to get concession like this that help overall san franciscans that don't get carried out. and i feel like people have not been communicating in good faith. even when we do it in the public place like this. so, i am very happy that we have this conversation to know that we actually are going to move forward and make things better. but, you know, i'm unhappy with what happened in the past. hopefully we'll see some strong corrective action. >> supervisor, i want to definitely say that i understand your point of view and what you just said, but i do have to push back on the words good faith. i don't think anyone has come into this with bad faith or

intent not to pay. the olse report presents the opposite. as soon as the findings were put together, we work with the contractor to say how can this be made right. i look back and say as i have, i already acknowledged your concerns about our office's ability to oversee this event and i'm trying to give you every commitment i can to say that we will oversee this event appropriately. but there was -- i dispute the idea there was an intent to get to this place because i don't think there was. >> i wouldn't say intent necessarily. possibly [speaker not understood] neglect, which is different. >> but that doesn't amount to a lack of good faith, i guess is my point. i understand your point. that's the point we're here, wanting to do this right. >> i appreciate your presence. yesterday i invited [speaker not understood] from the event authority and i would like to actually call him up if he's interested in talking with us about his experience and how we

can make sure we can have a strong partnership moving forward on these commitments. mr. barkley. welcome. >> thank you, supervisor avalos . >> pull the mic down in front of you. >> thanks for inviting me here today. the speaker from the office of labor standards, i just learned that it's difficult to apply ~ the rules or obligations to private events, but the office of labor standards stand really to assist. it's a bit unfortunate that that tone wasn't carried through to the report. the report in actual fact has a tone about it that suggests someone is trying to hide something. if the office of labor standards had come down to the event authority officers, they would have been shown the contract with hartman. and they would have seen the words in there that read,

company shall pay its representatives and/or subcontractors prevailing wages as set forth by the city and county of san francisco and the san francisco administrative code section 6.22, et cetera. of course, we can't handout confidential documents, but we can show people the relevant clause he in the real documents. i think it's also a bit disingenuous of the office of labor standards not to acknowledge the part of the discussions with hartman regarding paying and when the payment should be made and if you don't pay -- part of the discussions, i should say, where the decisions were made not to pay until the audit was completed. and finally, i'd like to say that the reports ~ report makes

quite a bit about the legal agreements between the parties. the legal agreement that mr. martin referenced was signed on the 14th of august. it seems to have already happened. as the office of labor standards says, it's difficult to understand how you apply these things to private events. it took two months to work out how to do that. and once it was done, then the allocation of prevailing wage to the contracts was agreed to all the parties. hence, the memorandum of understanding. i think it's also a bit disingenuous not to acknowledge that hartman studios pays union wages to local 16 and they did so on the project. i think it's also a bit disingenuous not to mention the event authority paid prevailing wage on the significant

construction work that we did for ourselves to create our own offices on pier 23. and i think the biggest point that i'd like to make regarding this issue and the local hiring issue is the foundation stone upon which the workforce plan was produced was the development deal that was going to take place on piers 30-32. the event authority was going to spend $55 million and was going to be reimbursed by rent [speaker not understood]. its was through that process that the workforce plan and the fact that we were on port land, et cetera, et cetera, contemplated the prevailing wage and the other provisions, et cetera. of course, that deal didn't

move forward, but there was still obligations or still requirements for the event authority to spend money upgrading or making ready piers 30-32 for the team to arrive there. of course, what happened subsequent to that was that the port of san francisco took over those works. so, let me read out to everybody what the executive summary sees and workforce development plan. so, before august -- >> so, before august 14th of last year, had you had any discussion of prevailing wage? ~ >> yes, we had. >> seems like it was a discussion of developing piers 30-32, that was well before august 14. so it seems like there had been some time to anticipate there would be a need to -- for subcontractors about prevailing wage requirements and about what prevailing wage would be.

it seemed like that had never happened. ~ >> that is incorrect. the executive summary says the city acknowledges that the event activities are not public works. all improvements subject to the laws and regulations pertaining to the city contracts. and the laws such as san francisco administrative code section 6.22 g do not apply to the event and activities associated with it. ~ but because the city has agreed to reimburse the event authority for all amounts expended on construction contracts, the parties have agreed to apply the provisions of section 6.22 g. there is no reimbursement. the event authority is not being reimbursed one cent for any construction contracts being undertaken.

so, all i can say to this committee is the foundation stone upon which the workforce plan was prepared and upon which the event authority agreed to pay prevailing wage and all the other things have been removed. and yet we have still voluntarily agreed to do it. and, so, in the backdrop of that, i really do question the tone here. the tone of innuendo that would try to tell somebody they were not trying to do the right thing. >> so, did you not agree to prevailing wage? >> we agreed to prevailing wage on the basis that we would be reimbursed for construction work. beyond construction work we were being reimbursed for. so, the memorandum of understanding that has subsequently been signed, and that is a great story.

the great story is that the event authority, a private organization, handed subcontractors had agreed to be bound voluntarily to the prevailing wage conditions, et cetera. and, so, as i say, i think that's a great story for the city and one that it can build on for the future. thanks. >> mr. barkley, quick question for you. i don't want to get into comments of tone, tone and innuendos and so forth. my concern is really going forward the contract was president signed till mid august, and under that. what could we as a city have done better to ensure that this didn't happen? and let me also say i appreciate the fact there is acknowledgment of paying these fees, the back wages and so forth. i think we would all say we wish we wouldn't be here and it could have been identified up front. what could we do as a city going forward? i appreciate this is a unique

contract and appreciate everything you said. i want to make sure we know what to look for next time around. not only america's cup, but other events, other developments in the city. >> sure. unfortunately events of this size and the event will be expending hundreds of millions in running these events, et cetera, have been and will, they are bound on contract, legal contracts that take time to work through. in this particular version of the america's cup there's been a number. a host and venue agreement. there's been a lease disposition agreement. there's been the e-i-r. there's been the risk mitigation plan. there's been the memorandum of agreement that was attached to it. and now there's been another memorandum of understanding. et cetera. you can't accelerate those processes. and, so, the problem we were faced with was the final one of those documents was only signed on the 14th of august. the first event had taken

place. and, so, if i could offer a suggestion, it would be that the conciliatory nature and the working collaborative nature of how we are proposing to work -- move forward should have been engaged through the process back in august, september of last year. that would have been my suggestion. >> so, there's a lot of timing issues seems like. >> absolutely. >> okay. you know, i was president here on the board when the deal was signed. i think which is neither here nor there, but it always struck me that this was done very rapidly and people were, you know, learning to walk on the fly, if you will, throughout this agreement. i'm thinking maybe that's the nature of hosting an event the first time in san francisco, things happen so quickly. i'm trying to see how we do it better going forward. >> learning from this, how do you hold a event of this

magnitude on public land down on the waterfront. there are a number of agencies involved in those decisions. hopefully people can learn from this process. and as i say, i mean, this is a good story. this is the private organization agreeing to be bound by voluntarily agreeing to be bound by these rules and signed a memorandum of understanding, subsequent to the first event and now following through on that. >> thank you. >> i appreciate the agreement, and the agreement was made. it's a binding agreement. it needs to be acknowledged. i appreciate the fact that the authority had voluntarily made that agreement, but they made the agreement. and once the agreement is made, it's not a voluntary thing any more. it's something that is compelled. >> i completely agree with you, supervisor. but subsequent to the agreement

being done, the foundations changed. the words that i read out of the executive summary say that because the city has agreed to reimburse the event authority for all amounts expended on construction contracts -- there is no reimbursement. >> thank you. i believe we need to get mr. martin's take on that and we can move on to the next subject of this hearing. i appreciate, mr. barkley, your coming in today. thank you. >> supervisor, i'm sorry, what's the question? >> well, mr. barkley discussed that prevailing wage is really to be applied in conditions where there is going to be a reimbursement for work that had been done. but now the idea -- that's different from what i had expected our discussion would be today. it seems like we're applying it now across the board for projects that are part of the america's cup event. and i'm wondering what your understanding is where what the original intent was around prevailing wage. i believe it is actually just a

standard we've applied for the america's cup project. >> i agree with parts of what mr. barkley said in terms of the reference to the reimbursement for construction works. as i mentioned in my open or opening part of this presentation, we came back to you. the deal was recast as potentially the port doing the work and the port actually did do the work. so, the provision that mr. barkley is referring to is right. we depth have the authority do the work and reimbursement for that. that would create other requirements. the work would be public works construction contract. however, there are other provisions in the workforce agreement that were referred to installation of -- temporary installation of event opportunities. and that's where the olse based its review on and that's where we got the m-o-u through that discussion. >> okay, thank you. next up i'd like to call to

talk about our first choice program, pat mulligan from the economic workforce development. good morning, welcome. >> thank you, supervisor. so, just to get a summary of how we've lived up to our first source agreement in this event. >> sure. ~ just for background, so, first source hiring policies apply to this project as well as some additional language per the agreement. there's two conditions. first, for the event management in staging, there is a 50% of all-new entry level hires as well as that exceed $150,000 or more. and then for construction work, a goal of 20% and overall goal of 20%. with 50% of all the [speaker

not understood] and 25% of those the economically disadvantaged, identified as economically disadvantaged. per the first source language, which is referenced just after the introduction, it refers to section 83. it speak to good faith efforts and notification of the office of economic and workforce development. we did not receive any notification for employment opportunities that may have arose during the staging component of this event. that's the only thing i can really speak to. seems that there was some scheduling constraints around this, but at no time did we receive any official notification for employment opportunities. >> and typically that's required under the first source program? >> first source, good faith effort speaks to notification of our office, yes. >> and, so, do you feel that the authority was actually

notified of their requirement to notify oewd about employment opportunities? >> it is section 83 is identified in the signed document and that refers to first source language. also speaks to the notification process. ~ >> so, that wasn't done? >> that's part of the document, yes. >> but in terms of the oewd being informed of the employment opportunities, it wasn't? >> we were never informed -- you know, similar with donald levitt's comments from office of economic -- or office of labor standards enforcement. there was no -- the event had a different feel, so, there was no pre-con meetings. there were no prebid meetings. we didn't have any sort of normal debriefing. for our office we do deal a lot with a considerable amount of

private development, first source in san francisco. triggering mechanism is department of building inspection, to determine entitlement. that's where our initial notification does come for development in san francisco. prior to the commencement of work they're required to engage our office around employment opportunities and put a plan together. because this project did not come through department of building inspection, it bypassed our normal notification process. >> and do we have data about how the authority did according to the workforce hiring goal, local hire goal? >> i don't have any information pertaining to what their goals, you know, how they performed in terms of residency involvement. i can't speak to that. >> it would be typical for knowing that in the city, again, that information, that data? ~ who >> first source compliance, what our office does track is san francisco residents who gain employment.

and we track employment opportunities as they arise and what san francisco residents are employed on that project. because we weren't notified, i can't speak to any individuals who may have been hired. different from the mandatory ordinance, we don't track overall percentages. we may try to make estimations around that, but we don't -- because we don't have access to relations-type data on a private development . it has a very different feel. ~ >> i know we had separate from america's cup recently in my district, there was an agreement that whole foods had signed onto that actually didn't fulfill around first source and local hire in term of their good faith efforts. actually, the result was not quite so bad in terms of their hiring locales -- local residents. they didn't follow the local letter of the law. we learned from that in the 15

years, 16 years the first source program has been around, that not once has any entity ever been penalized for violations of the first source agreement. ~ is that your understanding as well? >> correct, supervisor. my tenure doesn't go 15 year back, 15 months. at no time has liquidated damages been associated with first source. >> is there a policy within oewd that tries, attempts to avoid having liquidated damages apply? >> i wouldn't say it's a matter of policy, but the goal of city on our office on the employment side is to put san francisco residents to work, not to penalize employers. so, we will frequently use that as leverage as a means to gain employment for san francisco residents. similarly with the mandatory

local hiring ordinance, we've been fortunate to date not to have levied any liquidated damages associated with that, but we have used that as a means to put san francisco residents to work successfully. >> so in the case with america's cup since we don't have any data available, we don't have any idea how the authority of the contract has lived up to first source agreement, is that correct? >> city build does not have any, yeah, we have no knowledge as to the success or failureses that they may have had with regards to employing -- >> would you call that a violation of our -- >> their failure to notify our office would be a violation, as defined in the first source language. >> so, moving forward -- because we're going to have more staging, more vertical construction -- how can we fix this? >> certainly our office needs to be more proactively involved as this project moves forward. and i think speaking to the lessons learned through this

early phase of the project, we can move, you know, we will have a better understanding towards our goals of putting san francisco residents to work. >> i think there needs to be also considered and used [speaker not understood]. and i think that with this new enforcement there is not really anything we have to compel anyone to really follow what the law is. do you see that applying liquidated damages to be something that could be conveyed? >> we reserve office of economic and workforce development reserves the right to apply liquidated damage for any violation at any time. and i agree with you, supervisor. laws or rules only exist insofar as they are enforced. so, taken to heart. >> it is very loose we make agreements about having a huge economic benefit for the city and we're going to have local residents be part of that benefit and yet we don't do the work of the city to ensure that it happens and we don't -- and

even if we do inform our contractors to do everything they can to follow the letter of the law, there is no way to enforce that or enforcement is not applied. i think moving forward it makes sense we are as strong as we can be and make it happen. >> i agree with you wholeheartedly, supervisor. if i can just offer, on private development there's always challenges associated with some of these measures. it's a different animal compared to projects that are funded by the city and county of san francisco. >> do we intend to apply liquidated damages? >> i can't speak to that at this time. but i'm sure we'll have conversations shortly to that effect. >> thank you. >> thank you. >> quick question for you. thanks for being here. so, obviously there was -- part of the agreement was to notify you guys and that wasn't done. problem, got to get it resolved.

so the end result is you haven't been able to track. you don't even know. they could be doing okay. you just don't know at this point in time and it's a matter of getting you involved and getting that data and verifying it? >> yeah, if i could speak to supervisor avalos' example, there was concern about the new whole foods on ocean avenue. they claimed to be unaware of the local hiring requirements for first source. after they had made significant number of hires associated with the new store opening, they did present all their data to us and they actually had a significant percentage of san francisco residents and had done outreach nearby. certainly not in the same manner that our office would have performed, but they did make an effort towards this. and i can't speak to that at this time with regard to the america's cup. thanks. >> okay. >> okay. mr. barkley, if you can approach the podium, please.

i think commissioner farrell or chair farrell has some questions for you. actually, i'd like to ask you before if you heard of our first source agreement and the process of ensuring that our office of economic and workforce development is informed of employment opportunities as they arise so that we can actually do our work of getting local residents into the pipeline? >> yes, i have heard it. >> and in this case, was that prior to you actually starting construction and bringing people on that you had heard and you just didn't contact the office of economic workforce development, or was there a lapse between when you were informed or were you informed after the employment opportunities arose? >> i'm glad you mentioned office of economic workforce and development. i think the previous speaker works for the first source and that part of the