BILL ANALYSIS �
SB 136
Page 1
SENATE THIRD READING
SB 136 (Yee)
As Amended August 22, 2011
Majority vote
SENATE VOTE :Vote not relevant
LABOR & EMPLOYMENT 5-2 APPROPRIATIONS 12-5
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|Ayes:|Swanson, Alejo, Allen, |Ayes:|Fuentes, Blumenfield, |
| |Furutani, Yamada | |Bradford, Charles |
| | | |Calderon, Campos, Davis, |
| | | |Gatto, Hall, Hill, Lara, |
| | | |Mitchell, Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Morrell, Beth Gaines |Nays:|Harkey, Donnelly, |
| | | |Nielsen, Norby, Wagner |
| | | | |
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SUMMARY : Provides that specified energy-related projects are
public works projects and subject to applicable prevailing wage
laws. Specifically, this bill provides that a "public work"
means specified work when all of the following conditions exist:
1)The work is performed in connection with the construction or
maintenance of renewable energy generating capacity or energy
efficiency improvements.
2)The work is performed on the property of the state or a
political subdivision of the state.
3)Either of the following conditions exist:
a) More than 50% of the energy generated is purchased or
will be purchased by the state or a political subdivision
of the state; or,
b) The energy efficiency improvements are primarily
intended to reduce energy costs that would otherwise be
incurred by the state or a political subdivision of the
state.
SB 136
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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;
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, to the extent local governments are not currently
paying a prevailing wage on energy service contracts, local
contract costs may increase; these costs, however, are not
SB 136
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reimbursable.
COMMENTS : This bill deals in part with "energy service
contracts," sometimes also referred to as "energy performance
contracting." Energy performance contracting is an alternative
procurement and funding mechanism that allows public entities to
enter into agreements for new energy-efficient equipment and
services. Under this process, an "energy service contract" is
an agreement made between the public entity and an energy
service company (ESCO). The ESCO will generally perform an
inspection and identify energy-saving opportunities and
recommend a package of improvements to be performed. The ESCO
will usually guarantee that the energy savings meet or exceed
annual payments to cover all project costs - usually over a
contract terms of seven to ten years.
Supporters argue that this bill will "put to rest a convoluted
interpretation of the application of prevailing wages regarding
energy service contracts." They contend that some local
agencies have found a creative loophole to avoid paying
prevailing wages for energy service contracts. Despite the fact
that the work is being completed on public infrastructure and
will be paid back from energy savings that otherwise would have
been utilized by the public agency, some have argued that such
work is exempt from the prevailing wage requirement.
This bill was recently amended to include elements similar to
those contained in AB 436 (Solorio), which provides that
specified work related to renewable energy generation is
considered "public works" for purposes of prevailing wage law.
AB 436 is currently pending in the Senate.
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091
FN: 0001860