complaint, august 27th, we went on-site, observed the work, and interviewed employees. we then reviewed the lease disposition agreement, [speaker not understood], small business inclusion plan provided to us by the office of economic and workforce development, and determined that there was a prevailing wage requirement for the temporary structures that were built on marina green for the events. the lease disposition agreement contained a workforce development plan that provide, and i'll quote from the plan. when the event authority enters into these venue lease agreements, it will follow all of the standard provisions for prevailing wages that are included in the lease agreement and agrees to extend those terms to construction trade work at any stage of erection, construction, renovation,

alteration, improvement, demolition, excavation, or installation including the installation or erection of temporary structures including but not limited to scaffolding, staging, or the installation of bleachers or tents. it goes on to say, the event authority contracts shall require the contractor and any subcontractors to pay prevailing wages set by the city and county of san francisco under san francisco admin code section 6.22 e3 for each of the aforementioned job classifications. compliance with prevailing wage requirements including certified payroll records shall be determined and enforced pursuant to california labor code section 17 20 et seq. each contractor and subcontractor shall employ apprentices at rates specified in the

california code section 17 77.5 from a state adjoined apprenticeship program. the olse relied on the office of economic workforce development to interpret the intent of the scope of work from the workforce development plan as to what work was subject to the prevailing wage requirements. and in the beginning of october , there was a determination that vertical construction of the temporary installations including bleachers, stages, tents, scaffolding, flooring and electrical lighting and av equipment associated with thats was covered by the prevailing wage requirement. the plan also expressly exempted from the payment of prevailing wages all construction buyer for sponsors and individual team facilities. we relied on the prime

contractor hartman studios, for a list of some subcontractors who worked on the events and we audited eight first and second tiers subcontractors who performed covered work. other than hartman studios whose signatory was iatse local 16 and is familiar with the city's local prevailing wage requirements for theatrical workers, and other than safeway scaffold who is a local construction contractor, the subcontractors who performed this work are not construction contractors who are familiar with prevailing wage laws. these are events staging companies. >> is the language that we had in the agreement, though, was that standard prevailing wage language? >> no. it referenced the prevailing wage requirement of the admin code, but not the other

provisions of the admin code that pertain to how we enforce prevailing wages on a public work. and it then went on to say that enforcement would be pursuant to the labor code. the labor code provides for the state labor commissioner to enforce. the state labor commissioner is not going to enforce a prevailing wage requirement on a privately funded san francisco project. so, the language could have been better. >> how was that language crafted? how was the process, was olse part half? >> olse was not part of that. ~ so, we requested payroll documents including time cards, check stubs from all the contractors as part of our audit. neither the event authority or hartman would provide olse with a copy of the contract between the event authority and

hartman, which was confidential. but both parties agreed that if it contained the prevailing wage requirement. ~ that it contained none of the subcontractors we spoke with at olse informed hartman of the prevailing wage requirements. none of the subcontractors maintained or kept certified payroll records or hired apprentices for the work. the audits were difficult because most of the subcontractors did not keep track of the hours worked specifically on this project. and, so, they had to reconstruct to the best of their abilities who worked when . some sent in estimates. some attempted to reconstruct the dates and the hours worked by which employees.

and because certified payroll records which would show the name of each employee, the hours they worked on this project, the hourly rates paid on this project were not kept, olse relied on the best available information provided by the employers and provided as part of the interviews we conducted on the one day we were on-site for our audit. ~ >> typically, what do you have in place that would prevent this from happening that you would have the contractor and subcontractor know exactly what they're supposed to do to follow prevailing wage rules? >> typically on a public works project there is a prebid meeting and a pre-construction meeting. and olse tries to attend one if not both of those meetings. and where the contractors are

informed that were available to answer any questions. so, on the front end any questions about the correct prevailing wage rate that needs to be paid or even in this case how to complete certified payroll records, which generally public works contractors know, but these contractors didn't would have been answered. >> quick question. first of all, thank you for being here and for talking about this. so, you talk about public works contracts and this was different because it was private. have you been involved -- how many other private developments have prevailing wage in the city before? >> prevailing wage is usually included by the port for projects that are privately funded but are built or worked on on port property. the same is true of treasure

island. there are a couple other examples that i can think of, maybe properties that the city leases, but work is done -- that's a little different. the work would still be publicly funded, but on private property. and then rec and park sometimes has privately funded like friends of the park who will fund some improvements in the parks. so, there are some unique situations like that where the city intends to or requires that prevailing wage be complied with even though the funding is private and sometimes it's on private

property as well. >> i guess what i'm trying to get at, it seems like there were issues before. your audit caught that. i guess i want to hear about the remedies going forward. but i think to the extent that wouldn't it be great if we saw more prevailing wage on private -- on private developments that happen going forward as a city. how do we make sure the city inserts itself early on like you're talking about doing in public works so there are no issues here and we don't have to do an audit going forward? that's what i'm really trying to get at. >> i totally appreciate that, supervisor. and i have been working with the city attorney's office to craft the strongest language that we can so that the intent to require prevailing wage is actually enforceable. and there have been situations where our office has done an audit related to work we just discussed, but we weren't able to enforce it because the

language wasn't tight enough. >> so, my concern is that it was part of the agreement that we were going to do that. we should have the mechanism in place to make sure that it's carried out. that ball was dropped when it comes to that. my concern about doing this, we came -- this project came to the board with a blank slate and through the public process, there was a lot of discussion about how we're going to live up to certain commitments around standards, around jobs, and public inclusion and we did not live up to those standards. so, this hearing is really to right the ship and to make sure that we're looking back and looking forward to making sure we're doing it right. >> supervisor avalos and through the chair. thanks, ms. levitt, for raising these issues. since the carpenters raised the complaint, i think it's been mentioned that $400,000 of back pay has been owed, that's been reported in the media. is that the amount that's owed

for the subcontractors that didn't pay the prevailing weighingv? >> -- wage. >> so, there is a chart if we can bring it up. there we go. >> and when will the carpenters or the folks that did that work be paid their back wages? >> okay. so, this chart shows the eight subcontractors who were audited the amount of back wages that is owed by each, the back wages total $400,455.03. the amount that -- so, prevailing wages include a basic hourly wage and fringe benefits. one of the fringe benefits is an apprenticeship training contribution. that doesn't go to the worker. that goes to an apprenticeship on a public works contract. that would go to an apprenticeship program or the state of california apprenticeship council.

that amount totals $3,99 6.29. ~. i'll get to your question if i may, i'll review a bit about the audit procedure. >> okay. >> okay. and as a follow-up to chair farrell's points, i really want to know who is responsible for ensuring that this doesn't happen again? is it the event authority? and as a so-called private project, it seems to me like it's more of a public and a private project given the port's involvement and i'm just hoping where your stadium or other projects like this that we're looking very, very carefully so that the workers are paid the prevailing wage if that's been the part of the agreement and that we don't have this happen again. especially given the number of jobs that are still to be involved in the build out in the project, but yeah, this is very troubling but i'm really appreciative of the information

that you've given. >> the back wages are owed to a total of 113 employees. the amount of back wages owed is quite high for events of this short of a duration because the hourly under payments, that is the difference between the actual amount paid and the required prevailing wage rate were very significant. for example, the prevailing wage rate for a carpenter who installed bleachers is about $64 an hour. that's the wage and hourly fringe benefit amount. and the three contractors who did this work paid no more than $27 an hour. prevailing wage laws were created to protect local businesses and local workers from unfair competition from out of area employers who would undermine local wage standard and destabilize local economies. unfortunately the america's cup world series events demonstrate how this can happen.

the audited subcontractors included companies that are based in virginia, pennsylvania, louisiana, texas, and san diego. three of the eight subcontractors failed to even pay the san francisco minimum wage rate of 10.24 an hour to some employees. employees worked long days and some contractors paid over time only after 40 hours a week, not the daily overtime of time and a half after 8 hours or the daily -- the overtime -- double time after 12 hours as required by california law. and contractors also failed to pay the weekend overtime rates that are part of the prevailing wage requirements. the olse findings were presented to the event authority and to hartman studios on february 25th and hartman promptly accepted responsibility for ensuring the

payment of all back wages owed by each subcontractor. >> are there penalties applied as well besides pay back wages? >> in our calculations, we followed the provisions of the workforce development plan and we applied the labor code penalties. we applied both the prevailing wage penalties which in this labor code -- >> it's very difficult. >> the state labor code can range from $40 per worker per day to $$200 per worker per day. the commissioner makes a judgment on the -- based on whether it was a good faith semis -- mistake, whether it was a first-time violation. we use the $40 per worker per

day and we use the $25 per worker per day penalty provisions from labor code 18 13 for the overtime violations. ~ and that's the calculation that we use to estimate the cost of the city's enforcement efforts. an m-o-u was signed on march 6th that provides a framework and timelines for the payment of the back wages to the workers which will be monitored by the olse. the m-o-u also provides for payment of the apprenticeship training funds to the oewd to be used for apprenticeship opportunities in san francisco. >> is that oewd and the authority? >> the event authority hartman studios and the olse. >> olse. >> all parties are committed to

ensuring compliance with prevailing wage requirements on the upcoming america's cup main event this summer. the event authority has been informed that the olse is available to answer any questions that bidder may have at this point regarding the prevailing wage requirements. and the oewd will provide a pre-construction meeting with olse and the contractors to review the applicable prevailing wage rates before any work begins. while it's challenging to apply prevailing wage rates and prevailing wage requirements to a privately funded temporary event of this kind, it can be done and our office is committed to making this summer's events a success. >> thank you. do you see the penalties, they actually will or will not be levied? >> the penalty discussion is, as i understand it, is still ongoing and we're hopeful that there will be some compensation to the city for our enforcement costs.

>> okay. thank you very much for your presentation. i believe [speaker not understood]. >> thanks again, donna, for being here. i guess from my perspective, it seems like we had an issue, it was discovered -- it seems to me it was on the page an m-o-u signed to correct and no one is saying that no one is going to pay those prevailing wages. but how do we move forwardv and do it better going forward? so, do you have any thoughts around that? >> well, my thoughts are ~ before any work begins that we ensure that every subcontractor who is going to perform covered work and the event authority and oewd are clear what is covered work, meaning covered by the prevailing wage requirements, that they all understand their obligations. and both are paying the correct

wage rate and for reporting it and maintaining certified payroll records to provide to the city to show that they paid it. ~ >> 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 au