• The City has two Citywide programs that make jobs with City contractors available to the City's low-income residents: the First Source Hiring Program, which is managed by the Human Services Agency and requires City contracts to make entry level jobs available to low-income City residents, and CityBuild, which is managed by the Department of Economic and Workforce Development and places low-income residents into construction jobs with City contractors.
  
  
• Because the First Source Hiring Program does not have a formal system to identify all City contractors who are required to make entry level jobs available to low-income City residents, nor an effective program to enforce compliance, the First Source Hiring Program does not ensure that all employers required to participate actually do so and that job opportunities for low-income City residents are maximized. Although the number of reported job placements through the First Source Hiring Program increased in FY 2006-2007 to 299 placements, compared to 142 placements in FY 2007-2008, an increase of 110 percent, only 128 City contractors posted non-construction jobs with First Source in FY 2006-2007. However, the Controller's database lists more than 20,000 vendors, suggesting many more contractors are subject to requirements.
  
  
  
• The First Source Hiring Administration, which governs the First Source Hiring Program, has not met since 2004. In the absence of an effective First Source Hiring Administration, City departments have not developed First Source Hiring implementation and monitoring plans nor has a Citywide system been developed to ensure that all City departments include First Source Hiring agreements in contracts, leases, and permits.
  
  
• Although the First Source Hiring Program has a mechanism to enforce compliance, no City department has assumed responsibility for enforcement. In the absence of systems to identify all employers and entry level positions subject to the First Source Hiring Program and an effective enforcement mechanism, First Source cannot ensure that jobs are made available to low-income City residents.
  
  
• The CityBuild program has been able to place low-income residents into jobs at a lower cost than community-based organizations were able to do previously. Additionally, approximately 60 percent of individuals recruited into the CityBuild Academy complete the program. However, job placement has been uneven, with far more residents of the City's southeastern neighborhoods placed into jobs than in other parts of the City. Job placements for CityBuild can vary in terms of substance and duration with some construction projects lasting for only two days.
  
  
• However, regardless of length, all job placements hold equal weight for the purposes of CityBuild job placement tracking. As a result there is no way to evaluate or classify the type of projects for which contractors are requesting CityBuild workers. Nor does CityBuild have a robust retention tracking system in place to evaluate the long-term effectiveness of CityBuild in helping low-income clients to secure long-term employment in the construction industry. Contractual agreements with community-based organizations established after June 1, 2006 will provide additional job retention data for CityBuild Academy graduates up to nine months after program completion. However, efforts to obtain information regarding the long-term employment outcomes for non-CityBuild Academy graduates remain limited at best.

In July of 1998, the Board of Supervisors passed the First Source Hiring Ordinance (File 98-663), which added Chapter 83 to the San Francisco Administrative Code. The First Source Hiring Ordinance (93First Source94) was intended as a means to connect low-income City residents with entry level employment opportunities available through City contracts. Essentially, First Source mandates that contractors who work for the City, and who meet certain threshold contract, lease, and permit amounts, give first right of referral for entry-level positions to economically-disadvantaged individuals participating in the City's workforce development system.

The First Source Hiring Program

There are two entities in the City that implement First Source: the First Source Hiring Program (FSHP) and CityBuild. CityBuild, which is a program in the Department of Economic and Workforce Development and is discussed later in this chapter, administers First Source requirements for construction contracts. The Human Services Agency operates the First Source Hiring Program, primarily identifying job opportunities with City contractors and matching job seekers with available jobs.

Reauthorization of and Amendments to First Source

The First Source Hiring Administration retained the San Francisco Urban Institute in March of 2004 to conduct an independent evaluation of First Source. That report, titled "First in Line: An Evaluation of San Francisco's First Source Hiring Program Ordinance," was issued on August 1, 2004. The evaluation was conducted during a five-month period, from March 1, 2004 through July 31, 2004, and covered five and a half years of the First Source Hiring program from January 1999 through May 15, 2004.

Some of the recommended changes resulting from the San Francisco Urban Institute evaluation of the program were reflected in an ordinance approved by the Board of Supervisors on October 14, 2004 (File 04-1190). Significant amendments in that ordinance included:

On April 18, 2006, the Board of Supervisors again amended First Source (File 06-0611). Significant amendments in that ordinance included strengthening the penalties mechanisms, and expanding the contracts covered to include contract modifications that trigger threshold levels, among other changes.

First Source Employers and Job Placements

The First Source Hiring Program was incorporated into the Human Services Agency in 2004. As shown in Table 5.1, reported job placements through the First Source Hiring Program have increased since FY 2004-2005.

Table 5.1
First Source Hiring Program Budget, Clients and Placements¹
FY 2004-2005 through FY 2005-2006

Source: Human Services Agency

According to the 2004 San Francisco Urban Institute report on the First Source Hiring Program, it is estimated that only 189 individuals may have been hired for permanent jobs from January 1, 1999 through December 20, 2003.

The First Source Hiring Administration and Program Compliance and Performance

Under the Administrative Code, the First Source Hiring Administration oversees the First Source Hiring Program, providing policy direction, developing program procedures and ensuring compliance. The First Source Hiring Administration is intended to include City department heads or their designees:

• Director of Economic and Workforce Development,

• Executive Director of the Human Services Agency,

• Director of the Mayor's Office of Community Development,

• President of the Private Industry Council,

• Chancellor of the City College of San Francisco,

• Other City department representatives appointed by the First Source Hiring Administration as necessary from time to time; and

• Other San Francisco governmental agency representatives participating in the First Source Hiring Program and invited by the First Source Hiring Administration.

According to the Human Services Agency's First Source Hiring Program Manager, the First Source Hiring Administration has not met since 2004 pending reconstitution of Workforce Investment San Francisco and transfer of First Source Hiring Program administrative responsibility to Workforce Investment San Francisco and the Department of Economic and Workforce Development.

Because of the First Source Hiring Administration's inactivity and the Human Services Agency's defined role, limited to identifying job opportunities and matching job seekers to jobs, the First Source Hiring Program has failed to meet its intended goals.

First Source Requirements for City Contractors and Developers

First Source requirements apply to all City contracts if they meet or exceed the legislated threshold amounts. The scope of First Source has expanded since its initiation in 1998, and current thresholds that trigger First Source are (a) construction contracts greater than $350,000, (b) goods and service contracts greater than $50,000, and (c) grants over $50,000. First Source requirements apply to contract modifications, subcontractors, and contract work on City-owned property in contiguous counties.

First Source also applies to building permits for a commercial activity over 25,000 square feet in floor area and residential permits with 10 or more dwelling units. All employers working under a permit that have First Source requirements are required to comply as well, including any employers occupying the commercial space after its construction.

Human Services Agency's Tracking of Employers

The Human Services Agency lacks data on how many employers contracting with the City are subject to First Source hiring requirements. The Human Services Agency has 71 First Source Agreements with private developers who have filed permits with the Planning Department, of which 29 were enacted in FY 2006-2007. For City leases and contracts for goods and services, First Source Hiring provisions are contained in the standard lease or contract language. Department contract managers are responsible to inform contractors of their First Source Hiring requirements. 128 City contractors posted non-construction jobs with First Source in FY 2006-2007, although the Controller's database lists more than 20,000 vendors, suggesting many more contractors are subject to requirements.

The First Source Hiring Program relies on the contracts and projects referred by City departments, making the program's ability to identify employers dependent primarily on City departments. Although the First Source Hiring Program staff have worked with City departments during the year to identify contracts and job opportunities, the Human Services Agency has not yet developed a systematic method to identify employers and ensure that entry level jobs are made available.

Further, in the absence of an effective First Source Hiring Administration, City departments have not developed First Source Hiring implementation and monitoring plans nor has a Citywide system been developed to ensure that all City departments include First Source Hiring agreements in contracts, leases, and permits.

To better gauge compliance, the First Source Hiring Program, like CityBuild, should require employers to provide forecasting data of entry level positions on a regular schedule, thereby providing a figure against which actual posted jobs can be measured.

Penalties for Non-Compliance

The First Source Hiring Program does have a mechanism to penalize non-compliance, but it is not used. The First Source Hiring ordinance requires that every contract covered by the ordinance contain provisions that:

(a) subject the contractor to enforcement of the First Source Hiring provisions;

(b) hold the contractor liable for ordinance violations; and

(c) assess an amount up to $5,000 for every new hire for an entry level position that is not in accordance with First Source Hiring requirements.

The City has a number of offices involved in the compliance with contract requirements. These include the Office of Labor Standards Enforcement, Office of Contract Administration, and Human Rights Commission. None of these three has any measurable role in ensuring compliance with First Source. The Office of Labor Standards Enforcement enforces labor lawsand ensuresthat public works contractors comply with prevailing wage regulations, enforces theMinimum Compensation Ordinance and Health Care Accountability Ordinance, and administers the City's Sweat Free Contracting Ordinance. The Office of Labor Standards Enforcement also enforces labor laws of general application, including the San Francisco Minimum Wage Ordinance, Paid Sick Leave Ordinance, and Health Care Security Ordinance. Even though the Office of Labor Standards Enforcement is required by the First Source Ordinance to administer appeal hearings for liquidated damages assessed to employers who violate First Source hiring requirements, the Office of Labor Standards Enforcement does not even mention First Source on its public website. The Office of Contract Administration provides contracts and potential contractors with information related to the City's contracting processes and requirements, but its website and materials do not mention First Source hiring requirements anywhere. The Human Rights Commission does not monitor or enforce employer compliance with First Source, although some of its forms collect data important for First Source implementation. (See HRC Attachment 2, Section 4.03 and Form 5, for example).

First Source Reporting and Performance Measures

Because the First Source Hiring Administration has been inactive, the Program has failed to meet reporting requirements. The Administrative Code states that the First Source Hiring Administration is required to prepare an annual report to the Mayor and the Board of Supervisors on the progress of First Source hiring including the:

• Status of first source implementation by all City departments;

• Number of contractors by department subject to First Source requirements by department;

• Number and percent of contractors with signed first source agreements on file, First Source employers posting jobs, and first source employers hiring job seekers;

• Number of jobs posted and the wage data associated with those jobs, job seekers referred to employers, job seekers hired by First Source employers; and

• Length of time that hired individuals remain employed.

Under the Administrative Code provision, the Board of Supervisors shall hold a hearing on the report within 45 days of its submission to the Clerk of the Board of Supervisors.

However, the First Source Hiring Administration has not provided the Board of Supervisors with an annual report regarding the status of First Source Implementation. Further, there is no public information portal for First Source other than a phone number that connects to the secretary of the First Source Hiring Program director.

First Source Hiring Administration as Part of Workforce Investment San Francisco

The San Francisco Urban Institute also recommended that Workforce Investment San Francisco should assume program oversight. As described in Section 1 of this report, the City, under the direction of the Department of Economic and Workforce Development, will be rebuilding Workforce Investment San Francisco in FY 2006-2007. Because many of the designees of the First Source Hiring Administration will also be included in the new Workforce Investment San Francisco, and because the functions of the two policy bodies are interconnected, the Board of Supervisors should incorporate the First Source Hiring Administration into Workforce Investment San Francisco, as part of the recommended Administrative Code amendment in Section 1 of this report. Further, the San Francisco Urban Institute recommended relocating First Source policy activities to the Department of Economic and Workforce Development, which is consistent with the Department's role in supporting Workforce Investment San Francisco and providing coordination of the City's workforce development programs in general.

CityBuild

CityBuild is administered by the Department of Economic and Workforce Development in partnership with other City departments, community-based organizations, and the San Francisco County Transportation Authority and performs three key functions with respect to the coordination and provision of construction-related workforce development programs and services in San Francisco - training, centralization, and job placement.

• Training: CityBuild provides hands-on construction training through CityBuild Academy to increase the number of low-income City residents prepared to work in various skilled trades.

• Centralization: CityBuild centralizes and streamlines construction employment efforts across City departments by serving as the single-point-of-entry through which several City departments and agencies secure construction staff for City projects.

• Job Placement: CityBuild serves as the operational arm of the First Source Hiring Program, intended to place low-income residents into City construction jobs.

The intent of CityBuild is to leverage relationships with contractors, building trades, and community-based organizations in order to maximize local resident participation in City public works projects and private First Source Hiring construction projects (with Union contractors) as a means to facilitate their long-term employment in the construction industry. The Board of Supervisors approved CityBuild as a pilot program in FY 2005-2006 based on findings by the San Francisco County Transportation Authority that low-income residents were not participating in City construction projects, such as the Third Street Light Rail project.

Training

City Build Academy is a feature of the CityBuild program and is managed by the Department of Economic and Workforce Development in partnership with the Northern California Carpenters Regional Council, City College of San Francisco, and the San Francisco County Transportation Authority.² The Academy is a full-time, unpaid, 14-week pre-apprenticeship program that provides participants with hands-on and classroom introductory construction skills training. CityBuild Academy is designed to prepare clients for entry-level work in various skilled trades. The Academy's first class began in February of 2006 and there have been four classes to date. The fifth class will graduate on August 31, 2007.

Prior to CityBuild Academy, the City provided an estimated $700,000 to approximately six community-based organizations to provide construction training services for economically disadvantaged City residents. However, this funding only trained an estimated 90 participants at a cost of approximately $7,777 per participant. Further, only an estimated 25 individuals were placed into post-training construction employment at a cost of approximately $28,000 per placement.

In FY 2006-2007, approximately 113 CityBuild Academy graduates received job placements at a total cost $5,930 per student.³ Thus, CityBuild Academy has been able to place roughly the same number of students into post-training construction employment at significantly lower costs than previous efforts.

Recruitment

The Mayor's Office of Economic and Workforce Development contracts with community-based organizations to provide recruitment, case management, and retention/ mentoring services for CityBuild Academy participants. Prior to June 1, 2006, contracted organizations were paid up to $3,600 per participant according to the fixed-unit costs schedule specified below in Table 5.1. Community-based organizations can now receive a maximum of $4,600 per participant. CityBuild staff also recruit potential participants by conducting program orientation sessions at the City's One Stop Centers.

Table 5.1
Fixed-Unit Costs Schedule for CityBuild Academy

Source: Department of Economic and Workforce Development

According to CityBuild, from September of 2005 to May of 2006, 248 students have been recruited by community-based organizations to participate CityBuild Academy. Of those students recruited, 151 or 60.9 percent have completed the program at a total cost of $3,121 per completion.⁴ Table 5.2 below provides the completion rate and the total cost per client completion for each community-based organization from September 2005 to May 2006.

This suggests that the majority of individuals who are recruited to participate in CityBuild Academy by community-based organizations will ultimately complete the program - approximately six out of ten participants for program cycles one through four.

Table 5.2
Community-Based Organizations
Total Cost per Completion
September 2005 to May 2006

Source: CityBuild Academy Recruitment, Enrollment, and Completion Data

* Total cost includes recruitment and program retention and counseling costs.

Zip code data for 230 individuals who received job placements through CityBuild from September of 2005 through May of 2007 indicate that the majority of CityBuild participants live in the Bayview-Hunters Point and Visitacion Valley/Sunnydale neighborhoods. As can be seen in Table 5.3 below, of the 230 individuals who received job placements through CityBuild, 104 or 45.2 percent came from Bayview-Hunters Point while 35 or 15.2 percent came from Visitacion Valley/Sunnydale. Residents of other neighborhoods are represented in much lower numbers.

Table 5.3
CityBuild Placements by Neighborhood and Zip Code,
September 2005 through May 2007

Source: CityBuild Placement Data

According to CityBuild staff, while other City neighborhoods may have comparable unemployment rates to those seen in Bayview-Hunters Point and Visitacion Valley/Sunnydale, in the absence of strong workforce development partners to conduct the outreach and recruitment services necessary to funnel participants into the program, the number of participants from these areas will remain low. As such, while CityBuild may accept participants from all communities, clearly all City residents do not have equal access to the program.

Centralization and Job Placement

As the hub for citywide construction project staffing, CityBuild receives construction staffing requests - job orders - from several City departments and agencies and the Pacific Gas and Electric Company. There are currently 403 construction projects in the CityBuild project database for a total contract amount of over $2.4 billion.

Job placements for CityBuild can vary in terms of substance and duration with some construction projects lasting for only two days. However, regardless of length, all job placements hold equal weight for the purposes of CityBuild job placement tracking. As a result there is no way to evaluate or classify the type of projects for which contractors are requesting CityBuild workers.

CityBuild job placements occur on two levels - direct placements and CityBuild Academy placements. Direct placements link qualified individuals, who are recruited via One Stop Centers or through ties with community-based organizations, to any building contractor in need of additional workers. CityBuild Academy graduates, however, are only placed in construction apprenticeships with union contractors.

From September of 2005 through May of 2007, CityBuild has placed 452 workers on City-sponsored construction sites. Approximately 140 or 40.9 percent of these individuals have been graduates of CityBuild Academy. Table 5.4 below lists the number of CityBuild placements and job orders received from September of 2005 through May of 2007. As can be seen from the table, approximately one-third (32.7 percent) of all CityBuild placements are with the Public Utilities Commission.

CityBuild placement data shows that, consistent with the pool of workers recruited by CityBuild, representing economically disadvantaged City residents, the majority of jobs provided through CityBuild are trades apprenticeship jobs. However, nearly one-third of the jobs represented (34.7 percent) were journey level positions. Table 5.5 below provides CityBuild job placements by classification category.

Table 5.4
CityBuild Placements and Job Orders Received by Department
September 2005 through May 2007

Table 5.5
CityBuild Job Placement by Classification Category
September 2005 through May 2007

Monitoring and Enforcement

CityBuild shares many of the same enforcement difficulties as First Source. CityBuild must rely on City departments to identify construction contractors with requirements to make entry level jobs available to eligible City residents. CityBuild also lacks procedures to identify City contractors who do not comply with CityBuild hiring requirements.

Retention

According to CityBuild, tracking long-term retention in job placements is a challenge for all participants. Currently, retention is defined by whether or not the participant was able to 93stay on94 with the contractor to continue working on subsequent - possibly non-City associated - projects. CityBuild has anecdotal evidence which suggests that approximately 65.0 percent of CityBuild Academy graduates have been retained. However, because these individuals have been indentured into a trade union, they are likely to have more and continued access to additional employment opportunities than non-indentured CityBuild participants.

Thus, CityBuild does not have a robust retention tracking system in place to evaluate the long-term effectiveness of CityBuild in helping low-income clients to secure long-term employment in the construction industry. Contractual agreements with community-based organizations established after June 1, 2006 will provide additional job retention data for CityBuild Academy graduates up to nine months after program completion. However, efforts to obtain information regarding the long-term employment outcomes for non-CityBuild Academy graduates remain limited at best.

The CityBuild program has been able to place low-income residents into jobs at a lower cost than community-based organizations were able to do previously. Additionally, approximately 60 percent of individuals recruited into the CityBuild Academy complete the program. However, job placement has been uneven, with far more residents of the City's southeastern neighborhoods placed into jobs than in other parts of the City. Job placements for CityBuild can vary in terms of substance and duration with some construction projects lasting for only two days. Regardless of length, all job placements hold equal weight for the purposes of CityBuild job placement tracking. As a result there is no way to evaluate or classify the type of projects for which contractors are requesting CityBuild workers. Nor does CityBuild have a robust retention tracking system in place to evaluate the long-term effectiveness of CityBuild in helping low-income clients to secure long-term employment in the construction industry. Contractual agreements with community-based organizations established after June 1, 2006 will provide additional job retention data for CityBuild Academy graduates up to nine months after program completion. However, efforts to obtain information regarding the long-term employment outcomes for non-CityBuild Academy graduates remain limited at best.

The Board of Supervisors should:

The Director of the Department of Economic and Workforce Development, as staff support to Workforce Investment San Francisco, should:

The Human Services Agency, which manages the First Source Hiring Program, and the Department of Economic and Workforce Development, which manages the CityBuild program should be able to implement these recommendations within existing resources. These recommendations are intended to increase the cost-effectiveness of the First Source Hiring Program and CityBuild and improve program outcomes, through identifying and assigning policy and oversight responsibility, and improving monitoring of program performance.

1 According to the Human Services Agency, the Agency had not fully developed their data system in FY 2004-2005, and therefore, FY 2004-2005 data has not been verified.

2 Prior to its dissolution on June 30, 2007, the Private Industry Council managed recruitment contracts for CityBuild Academy.

3 According to CityBuild, approximately 45.0 percent of CityBuild placements are CityBuild Academy graduates. From September of 2005 through May of 2007, 452 individuals received job placements though CityBuild - approximately 21 placements per month or 252 placements per year. Thus, 45.0 percent of 252 CityBuild placements would be approximately 113 CityBuild Academy graduate placements in FY 2006-2007.

4 According to CityBuild, the of the 248 individuals recruited to the program, 178 enrolled in CityBuild Academy. Of the 178 who enrolled, 151 completed the program, or 85 percent.