Amended in Senate July 8, 2015

Amended in Senate May 28, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 251

Introduced by Assembly Member Levine

(Coauthors: Assembly Members Chau, Dodd, and Gonzalez)

February 9, 2015

An act to amend Section 1720 of the Labor Code, relating to public works.

LEGISLATIVE COUNSEL’S DIGEST

AB 251, as amended, Levine. Public works: public subsidies.

Existing law requires that, except as specified, not less than the general prevailing rate of per diem wages, determined by the Director of Industrial Relations, be paid to workers employed on public works projects. Existing law defines “public works” to include, among other things, construction, alteration, demolition, installation, or repair work done under contract and paid for, in whole or in part, out of public funds, but exempts from that definition, among other projects, an otherwise private development project if the state or political subdivision provides, directly or indirectly, a public subsidy to the private development project that is de minimis in the context of the project.

This bill would provide that a public subsidy is de minimis if it is both less than begin delete $75,000 end delete begin insert $250,000 end insert and less than begin delete 1% end delete begin insert 2% end insert of the total project cost. The bill would specify that those provisions do not apply to a project that was advertised for bid, or a contract that was awarded, before begin delete January 1, 2016. end delete begin insert July 1, 2016. end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 1720 of the Labor Code is amended to
read:

1720.  

(a) As used in this chapter, “public works” means:

(1) Construction, alteration, demolition, installation, or repair
work done under contract and paid for in whole or in part out of
public funds, except work done directly by any public utility
company pursuant to order of the Public Utilities Commission or
other public authority. For purposes of this paragraph,
“construction” includes work performed during the design and
preconstruction phases of construction, including, but not limited
to, inspection and land surveying work, and work performed during
the postconstruction phases of construction, including, but not
limited to, all cleanup work at the jobsite. For purposes of this
paragraph, “installation” includes, but is not limited to, the
assembly and disassembly of freestanding and affixed modular
office systems.

(2) Work done for irrigation, utility, reclamation, and
improvement districts, and other districts of this type. “Public
work” does not include the operation of the irrigation or drainage
system of any irrigation or reclamation district, except as used in
Section 1778 relating to retaining wages.

(3) Street, sewer, or other improvement work done under the
direction and supervision or by the authority of any officer or
public body of the state, or of any political subdivision or district
thereof, whether the political subdivision or district operates under
a freeholder’s charter or not.

(4) The laying of carpet done under a building lease-maintenance
contract and paid for out of public funds.

(5) The laying of carpet in a public building done under contract
and paid for in whole or in part out of public funds.

(6) Public transportation demonstration projects authorized
pursuant to Section 143 of the Streets and Highways Code.

(7) (A) Infrastructure project grants from the California
Advanced Services Fund pursuant to Section 281 of the Public
Utilities Code.

(B) For purposes of this paragraph, the Public Utilities
Commission is not the awarding body or the body awarding the
contract, as defined in Section 1722.

(b) For purposes of this section, “paid for in whole or in part
out of public funds” means all of the following:

(1) The payment of money or the equivalent of money by the
state or political subdivision directly to or on behalf of the public
works contractor, subcontractor, or developer.

(2) Performance of construction work by the state or political
subdivision in execution of the project.

(3) Transfer by the state or political subdivision of an asset of
value for less than fair market price.

(4) Fees, costs, rents, insurance or bond premiums, loans, interest
rates, or other obligations that would normally be required in the
execution of the contract, that are paid, reduced, charged at less
than fair market value, waived, or forgiven by the state or political
subdivision.

(5) Money loaned by the state or political subdivision that is to
be repaid on a contingent basis.

(6) Credits that are applied by the state or political subdivision
against repayment obligations to the state or political subdivision.

(c) Notwithstanding subdivision (b):

(1) Private residential projects built on private property are not
subject to the requirements of this chapter unless the projects are
built pursuant to an agreement with a state agency, redevelopment
agency, or local public housing authority.

(2) If the state or a political subdivision requires a private
developer to perform construction, alteration, demolition,
installation, or repair work on a public work of improvement as a
condition of regulatory approval of an otherwise private
development project, and the state or political subdivision
contributes no more money, or the equivalent of money, to the
overall project than is required to perform this public improvement
work, and the state or political subdivision maintains no proprietary
interest in the overall project, then only the public improvement
work shall thereby become subject to this chapter.

(3) (A) If the state or a political subdivision reimburses a private
developer for costs that would normally be borne by the public,
or provides directly or indirectly a public subsidy to a private
development project that is de minimis in the context of the project,
an otherwise private development project shall not thereby become
subject to the requirements of this chapter.

(B) For purposes of subparagraph (A), a public subsidy is de
minimis if it is both less than begin delete seventy-five thousand dollars
($75,000) end delete begin insert two hundred fifty thousand dollars ($250,000) end insert and less
than begin delete 1 end delete begin insert 2 end insert percent of the total project cost. This subparagraph shall
not apply to a project that was advertised for bid, or a contract that
was awarded, before begin delete January 1, 2016. end delete begin insert July 1, 2016. end insert

(4) The construction or rehabilitation of affordable housing units
for low- or moderate-income persons pursuant to paragraph (5) or
(7) of subdivision (e) of Section 33334.2 of the Health and Safety
Code that are paid for solely with moneys from the Low and
Moderate Income Housing Fund established pursuant to Section
33334.3 of the Health and Safety Code or that are paid for by a
combination of private funds and funds available pursuant to
Section 33334.2 or 33334.3 of the Health and Safety Code do not
constitute a project that is paid for in whole or in part out of public
funds.

(5) Unless otherwise required by a public funding program, the
construction or rehabilitation of privately owned residential projects
is not subject to the requirements of this chapter if one or more of
the following conditions are met:

(A) The project is a self-help housing project in which no fewer
than 500 hours of construction work associated with the homes
are to be performed by the home buyers.

(B) The project consists of rehabilitation or expansion work
associated with a facility operated on a not-for-profit basis as
temporary or transitional housing for homeless persons with a total
project cost of less than twenty-five thousand dollars ($25,000).

(C) Assistance is provided to a household as either mortgage
assistance, downpayment assistance, or for the rehabilitation of a
single-family home.

(D) The project consists of new construction, expansion, or
rehabilitation work associated with a facility developed by a
nonprofit organization to be operated on a not-for-profit basis to
provide emergency or transitional shelter and ancillary services
and assistance to homeless adults and children. The nonprofit
organization operating the project shall provide, at no profit, not
less than 50 percent of the total project cost from nonpublic
sources, excluding real property that is transferred or leased. Total
project cost includes the value of donated labor, materials,
architectural, and engineering services.

(E) The public participation in the project that would otherwise
meet the criteria of subdivision (b) is public funding in the form
of below-market interest rate loans for a project in which
occupancy of at least 40 percent of the units is restricted for at
least 20 years, by deed or regulatory agreement, to individuals or
families earning no more than 80 percent of the area median
income.

(d) Notwithstanding any provision of this section to the contrary,
the following projects shall not, solely by reason of this section,
be subject to the requirements of this chapter:

(1) Qualified residential rental projects, as defined by Section
142(d) of the Internal Revenue Code, financed in whole or in part
through the issuance of bonds that receive allocation of a portion
of the state ceiling pursuant to Chapter 11.8 (commencing with
Section 8869.80) of Division 1 of Title 2 of the Government Code
on or before December 31, 2003.

(2) Single-family residential projects financed in whole or in
part through the issuance of qualified mortgage revenue bonds or
qualified veterans’ mortgage bonds, as defined by Section 143 of
the Internal Revenue Code, or with mortgage credit certificates
under a Qualified Mortgage Credit Certificate Program, as defined
by Section 25 of the Internal Revenue Code, that receive allocation
of a portion of the state ceiling pursuant to Chapter 11.8
(commencing with Section 8869.80) of Division 1 of Title 2 of
the Government Code on or before December 31, 2003.

(3) Low-income housing projects that are allocated federal or
state low-income housing tax credits pursuant to Section 42 of the
Internal Revenue Code, Chapter 3.6 (commencing with Section
50199.4) of Part 1 of Division 31 of the Health and Safety Code,
or Section 12206, 17058, or 23610.5 of the Revenue and Taxation
Code, on or before December 31, 2003.

(e) If a statute, other than this section, or a regulation, other than
a regulation adopted pursuant to this section, or an ordinance or a
contract applies this chapter to a project, the exclusions set forth
in subdivision (d) do not apply to that project.

(f) For purposes of this section, references to the Internal
Revenue Code mean the Internal Revenue Code of 1986, as
amended, and include the corresponding predecessor sections of
the Internal Revenue Code of 1954, as amended.

(g) The amendments made to this section by either Chapter 938
of the Statutes of 2001 or the act adding this subdivision shall not
be construed to preempt local ordinances requiring the payment
of prevailing wages on housing projects.