BILL ANALYSIS
AB 677
Page 1
ASSEMBLY THIRD READING
AB 677 (Solorio)
As Amended April 14, 2009
Majority vote
LABOR AND EMPLOYMENT 5-2 APPROPRIATIONS 12-5
-------------------------------------------------------------------
|Ayes:|Monning, Eng, Furutani, |Ayes:|De Leon, Ammiano, Charles |
| |Ma, Portantino | |Calderon, Davis, Fuentes, |
| | | |Hall, John A. Perez, Price, |
| | | |Skinner, Solorio, |
| | | |Torlakson, Krekorian |
| | | | |
|-----+--------------------------+-----+----------------------------|
|Nays:|Bill Berryhill, Gaines |Nays:|Nielsen, Duvall, Harkey, |
| | | |Miller, |
| | | |Audra Strickland |
| | | | |
-------------------------------------------------------------------
SUMMARY : Provides that specified work related to renewable
energy generation is considered "public works" for purposes of
prevailing wage law. Specifically, this bill provides that
"public works" includes construction, alteration, demolition,
installation or repair work done under private contract when all
of the following conditions exist:
1 The work is performed in connection with the construction or
maintenance of renewable energy generation capacity
specifically to serve a school district or community college
district.
2)The work is performed in connection with a "long-term" (at
least five years) arrangement for the purchase of power by or
for the benefit of the school district or community college
district.
EXISTING LAW :
1) Requires the prevailing wage rate to be paid to all workers
on "public works" projects over $1,000.
2) Defines "public work" to include, among other things,
construction, alteration, demolition, installation or repair
AB 677
Page 2
work done under contract and paid for in whole or in part out
of public funds.
3) Defines "paid for in whole or in part out of public funds" as
used in public works as the following:
a) Payment of money or the equivalent of money by a state
or political subdivision directly to or on behalf of the
public works contractor, subcontractor, or developer;
b) Construction work performed by a state or political
subdivision in execution of a project;
c) Transfer of an asset of value for less than fair market
value;
d) Fees, costs, rents, insurance or bond premiums, loans,
interest rates, or other obligations normally required in
the execution of a contract that are paid, reduced, charged
at less than fair market value, waived or forgiven;
e) Money loaned that is to be repaid on a contingent basis;
and,
f) Credits applied against repayment obligations.
4) Exempts from the definition of "paid for in whole or in part
out of public funds" specified types of affordable housing,
private residential housing, private development projects,
qualified residential projects, low income housing projects,
state manufacturing tax credits, and single family
residential projects.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, annual costs, potentially in the range of $75,000 to
the Department of Industrial Relations to expand prevailing wage
calculations, to revise regulations, and enforce application of
the prevailing wage laws.
COMMENTS : This bill is sponsored by the State Building and
Construction Trades Council. They state that several energy
companies have teamed up with private investment firms and are
securing long term energy deals with local school districts.
The local school district allows the firm to build a solar
AB 677
Page 3
installation on their rooftops and signs a long-term commitment
to buy the energy produced by the solar installation. The
sponsor argues that clearly the use of the rooftops and the
long-term commitment to provide a revenue stream to the firm
should trigger the project as a public works project and require
the payment of prevailing wages to the construction workers.
The Western Electrical Contractors Association (WECA) opposes
this measure, stating that under existing law a variety of
federal, state and local public works projects paid for with
state dollars or other incentives are subject to prevailing wage
requirements. WECA argues that this bill expands this
requirement to private contracts under certain circumstances and
represents a significant and unwarranted expansion of the policy
into private works of improvement. WECA states that there can
be little disagreement that a prevailing wage mandate results in
higher costs. While this bill only applies to projects that
supply school and community college districts with renewable
energy, it is inappropriate to saddle either the energy provider
or its customer - the school or community college district -
with the higher costs.
Similarly, the Riverside County Schools Advocacy Association
argues that the additional costs imposed by this measure would
have a chilling effect on school district ability to consider
renewable energy projects. They contend that this bill would
result in a disservice not only to schools and students, but
also to local communities and the environment.
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091
FN: 0001090