Prominent Developer, Sage Equities, Allows Cited Cheating Contractor on New Bakersfield Development
Updated: Mar 17
918 East Chester, a mixed-use development in Bakersfield California, is under fire from labor activists for using alleged criminal contractor, Grant Construction, in the build. The developer behind the project, Sage Equities, is no stranger to controversy having previously been at odds with not only labor activists but local government watchdog organizations as well.
It is not a good look for embattled councilman, Bob Smith and his son Austin Smith, the owners of Sage Equities. Their last project, the Cue, was also questioned by labor activists for their use of contractors that allegedly engage in wage fraud and worker exploitation. Sage has continued along the same trajectory by allowing on its job Grant Construction - a contractor that has recently been cited by the government for the same things that were alleged with the Cue.
"Sage Equities is proving that they care far more about their self-interests, than about the community. They once again have an opportunity to give back, hire local and contract with companies that pay area standard wages, yet they go for the bottom line once again. They did it with the Cue and this time they’ve taken it even further by using a contractor that just got busted by the State for wage fraud. Shouldn't a council member put his community over shameless profit? The taxpayers and residents of Bakersfield deserve better,” said Josh Taylor, special representative from the Southwest Mountain States Carpenters Union.
The development at 918 East Chester is using general contractor Wallace & Smith Contractors. They hired sub-contractor Grant Construction, which recently received a Department of Labor judgement against them. In December of last year, the California Labor Commissioners office cited them $1,331,682 in wages and penalties, resulting from a prevailing wage assessment against the contractor.
It was determined that Grant looked the other way as 27 workers were defrauded on a project in Kern County. According to a press release from the California Dept. of Industrial Relations, “The public works investigation… found that a Grant Construction crew leader would collect the paychecks of the 27 workers, sign and cash them, and then pay the workers significantly less than the amount listed on their checks.”
The Labor Commissioner’s investigation determined that not only was the labor broker used to underpay the workers, but that Grant was guilty of cooking the books. The contractor did not truthfully report all workers and hours on Certified Payroll Reports (CPR) and falsified the CPRs, paychecks, and pay stubs.
Grant Construction is sub-contracted through Wallace & Smith Contractors, who was hired by Sage Equities, the company co-owned by Bakersfield City Councilman, Bob Smith, and his son Austin Smith. They are prominent developers in the Bakersfield area and regarded as pillars of the community, yet beneath the surface they have repeatedly been accused of being unscrupulous in their business dealings.
In addition to their hiring practices, critics have been questioning the rapidity with which Sage's projects are approved. In 2017 Smith Sr. was brought up on conflict-of-interest charges for using his position on the council to influence the City Planning Commission in an application for development. In defense, he only had this to say, “I was just doing what I’ve always done. I’m here to serve the community the best I can and if they perceive that and interpret that as a conflict then I’ll just do business differently.” Smith ultimately admitted wrongdoing and paid a fine.
In 2021, an advocacy group called People's Budget Bakersfield called for a boycott of businesses owned by City Council members. Two of the businesses on the list owned by Bob Smith are Sage Equities and Cafe Smitten. The group argues that Bakersfield City Council votes their own projects through at the detriment of residents. “Bakersfield City Council directly profits from continuing to vote for budgets that do not fund our public services,” said Daulton Jones, a co-founder of People’s Budget Bakersfield. Critics like Daulton point up the inevitable conflicts of interest that arise when business owners champion their own projects as members of a governing body like City Council.
Hurting the community
Critics argue that Bob Smith and Sage Equities are once again contributing to the erosion of “community standards.” Is it possible that Smith is using bottom barrel cheap contractors, while at the same time using his influence to expedite projects? Critics like Taylor question his motives as a public servant and wonder if Bob Smith and his family have put personal interests and money ahead of the citizens of Bakersfield. “What’s it going to take for this local developer to be held accountable for allowing a criminal contractor on their luxury residential project?”
The facts speak for themselves. In the last handful of years Sage Equities has been the focus of increasing scrutiny and with each misstep the chorus of detractors grows louder. Soon, Smith will have to define what exactly he meant by saying, “I’ll just do business differently.”