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Housing Opportunity Ordinance September 7, 2021 Page 6 Orange County are not privy to project level financial data; and the development community indicated this type of data was confidential and therefore did not share it. Staff met with the local labor unions at their request and received input regarding the STW and the various benefits that it will bring to the City and residents. This meeting included the Building and Construction Trades Council, Local 652 of the Laborers' International Union of North America based in Santa Ana, Local 441 of the International Brotherhood of Electrical Workers, Local Union 105, and the Southwest Regional Council of Carpenters (collectively referred to as the building trade labor unions). The labor unions recognize that there is a cost increase when using a skilled and trained workforce and contend that the waterfall of benefits are tangible and address the core of the affordable housing crisis. An employee earning a living wage with employment benefits can attain decent housing and a higher quality of life. Other key benefits include a reliable and stable workforce, reduced public reliance on government assistance programs, higher efficiency from a trained employee, a career pathway to the various construction trades, promote regional jobs -housing balance, promote environmental benefits from reduced vehicle miles traveled, local pride of working on a project developed in Santa Ana, and many other social and economic benefits. The labor unions also expressed support for a sliding scale approach to incentivize the use of a STW. Staff also met with the BIA and received feedback that the proposed $15 per square foot cannot be absorbed by a project. While no specific data were provided by the BIA regarding the cost differential using STW, the verbal indication is a STW requirement will significantly impact the feasibility of constructing a project in the City. As an alternative data source to this outreach, staff obtained data from the Terner Center for Housing at the University of California, Berkeley (Terner Center).According to a study, "The Hard Costs of Construction", completed in March of 2020 by the Terner Center, hard construction costs per square foot from 2008 to 2018 generally fluctuated between $177 to $222 per square foot. Hard construction costs include materials and labor only where materials make up approximately 85% of the hard construction costs and labor makes up the remaining 15%. The study also found that prevailing wage requirements are associated with higher hard costs and on the average, add $30 or more per square foot than those without. While prevailing wage requirements do not have the exact same stringent requirements as a STW represented by a labor organization, they share similar labor monitoring and wage requirements and characteristics. Depending on the per square foot total indicated in the study, the addition of a $30 per square foot in labor, increases the hard construction costs of a project on the average between 14% to 17%. Anecdotally, verbal feedback received from the development community indicates the average per square foot hard construction costs for a residential project range between $130 and $250 depending on construction and housing type and the inclusion of a STW requirement would increase their estimated cost per square foot approximately 15% to 20%. The labor union and BIA representatives all acknowledged the percentage increase in costs and the information that staff had gathered from the research. City Council 35 — 6 9/7/2021