BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 677|
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THIRD READING
Bill No: AB 677
Author: Solorio (D)
Amended: 7/23/09 in Senate
Vote: 21
SENATE LABOR & INDUSTRIAL RELAT. COMMITTEE : 4-1, 7/8/09
AYES: DeSaulnier, Ducheny, Leno, Yee
NOES: Hollingsworth
NO VOTE RECORDED: Wyland
SENATE APPROPRIATIONS COMMITTEE : 8-3, 8/17/09
AYES: Kehoe, Corbett, Hancock, Leno, Price, Wolk, Wyland,
Yee
NOES: Cox, Denham, Walters
NO VOTE RECORDED: Oropeza, Runner
ASSEMBLY FLOOR : 49-30, 6/2/09 - See last page for vote
SUBJECT : Public works: prevailing wages
SOURCE : State Building and Construction Trade Council,
AF-CIO
DIGEST : This bill expands the definition of public
works, for the purpose of requiring the payment of
prevailing rate of per diem wages, to include work
performed under private contract in connection with the
construction or maintenance of renewable energy generation
capacity on property wholly or partially owned by a school
or community college district or on public property
CONTINUED
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specifically to serve a school or community college
district.
ANALYSIS :
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 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.
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,
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low income housing projects, state manufacturing tax
credits, and single family residential projects.
This bill 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, on property wholly or partially
owned by a school district or community college district
or on public property.
2. The work is performed in connection with a "long-term"
(at least five years) arrangement for the purchase of
partially or fully exported power by or for the benefit
of the school district or community college district.
Comments
Energy prices are expected to increase over the longer term
and trend of global warming is nearly universally accepted,
thus giving an impetus to the demand for renewable energy
supplies. This bill arguably allows for an increased
number of public-private partnerships supporting renewable
energy projects while providing adequate wages and benefits
to workers on the projects. School and community college
districts may be able to lower their energy costs and/or
gain revenue by exporting a portion of the energy capacity.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11
2011-12 Fund
Revision of definition Up to $30 Up to
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$60Up to $60 Special*
of public works
*Labor Enforcement and Compliance Fund
SUPPORT : (Verified 8/19/09)
State Building and Construction Trades Council, AFL-CIO
(source)
Chevron
Southern California Contractors Association
OPPOSITION : (Verified 8/19/09)
Associated Builders and Contractors of California
Association of California School Administrators
California Association of School Business Officials
Department of Industrial Relations
Department of Finance
Riverside County Schools Advocacy Association
Western Electrical Contractors Association
ARGUMENTS IN SUPPORT : 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 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. Prevailing wage law, according to the sponsor, is
meant to protect workers in a time of rapidly growing
unemployment and government involvement in the economy.
ARGUMENTS IN OPPOSITION : The Western Electrical
Contractors Association (WECA) opposes this bill, 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
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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 bill 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.
ASSEMBLY FLOOR :
AYES: Ammiano, Beall, Blumenfield, Brownley, Buchanan,
Caballero, Charles Calderon, Carter, Chesbro, Coto,
Davis, De La Torre, De Leon, Eng, Evans, Feuer, Fong,
Fuentes, Furutani, Galgiani, Hall, Hayashi, Hernandez,
Hill, Huber, Huffman, Jones, Krekorian, Lieu, Bonnie
Lowenthal, Ma, Mendoza, Monning, Nava, John A. Perez, V.
Manuel Perez, Portantino, Price, Ruskin, Salas, Saldana,
Skinner, Solorio, Swanson, Torlakson, Torres, Torrico,
Yamada, Bass
NOES: Adams, Anderson, Arambula, Bill Berryhill, Tom
Berryhill, Blakeslee, Conway, Cook, DeVore, Duvall,
Emmerson, Fletcher, Fuller, Gaines, Garrick, Gilmore,
Hagman, Harkey, Jeffries, Knight, Logue, Miller,
Nestande, Niello, Nielsen, Silva, Smyth, Audra
Strickland, Tran, Villines
NO VOTE RECORDED: Block
AGB:do 8/19/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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