AB 3190: Public works.
- Session Year: 2023-2024
- House: Assembly
- Latest Version Date: 2024-09-27
Current Status:
Passed
(2024-09-27: Chaptered by Secretary of State - Chapter 759, Statutes of 2024.)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Enacted
(1)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 the term public works for purposes of requirements regarding the payment of prevailing wages to include construction, alteration, demolition, installation, or repair work done under contract and paid for using public funds, except as specified. Existing law defines paid for in whole or in part out of public funds to include, among others, projects that involved transfer by the state or political subdivision of an asset of value for less than fair market price or projects where the money loaned by the state or political subdivision will be repaid on a contingent basis. Existing law makes a willful violation of laws relating to the payment of prevailing wages in public works a misdemeanor.
Commencing January 1, 2026, this bill would expand the definition of paid for in whole or in part out of public funds to include projects paid using credits against a tax, including certain low-income housing tax credits. The bill would also exempt from public works provisions, private residential projects built on private property when the public funds are less than $3,000,000 for a project that is the acquisition or rehabilitation of a specified residential project. By expanding the scope of a crime, the bill would impose a state-mandated local program.
The bill would make the bills provisions operative only if AB 3160 of the 202324 Regular Session is enacted and takes effect on or before January 1, 2025, and would repeal those provisions on January 1, 2031.
(2)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
(1)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 the term public works for purposes of requirements regarding the payment of prevailing wages to include construction, alteration, demolition, installation, or repair work done under contract and paid for using public funds, except as specified. Existing law defines paid for in whole or in part out of public funds to include, among others, projects that involved transfer by the state or political subdivision of an asset of value for less than fair market price or projects where the money loaned by the state or political subdivision will be repaid on a contingent basis. Existing law makes a willful violation of laws relating to the payment of prevailing wages in public works a misdemeanor.
Commencing January 1, 2026, this bill would expand the definition of paid for in whole or in part out of public funds to include projects paid using credits against a tax, including certain low-income housing tax credits. The bill would also exempt from public works provisions, private residential projects built on private property when the public funds are less than $3,000,000 for a project that is the acquisition or rehabilitation of a specified residential project. By expanding the scope of a crime, the bill would impose a state-mandated local program.
The bill would make the bills provisions operative only if AB 3160 of the 202324 Regular Session is enacted and takes effect on or before January 1, 2025, and would repeal those provisions on January 1, 2031.
(2)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
(1)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 the term public works for purposes of requirements regarding the payment of prevailing wages to include construction, alteration, demolition, installation, or repair work done under contract and paid for using public funds, except as specified. Existing law defines paid for in whole or in part out of public funds to include, among others, projects that involved transfer by the state or political subdivision of an asset of value for less than fair market price or projects where the money loaned by the state or political subdivision will be repaid on a contingent basis. Existing law makes a willful violation of laws relating to the payment of prevailing wages in public works a misdemeanor.
This
Commencing January 1, 2026, this bill would expand the definition of paid for in whole or in part out of public funds to include projects paid using credits against a tax, including certain low-income housing tax credits. The bill would also exempt from public works provisions, private residential projects built on private property when the public funds are less than $3,000,000 for a project that is the acquisition or rehabilitation of a specified residential project. By expanding the scope of a crime, the bill would impose a state-mandated local program.
The bill would make the bills provisions effective operative only if AB 3160 of the 202324 Regular Session is enacted and becomes operative takes effect on or before January 1, 2025, and would repeal those provisions on January 1, 2032. 2031.
(2)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
(1)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 the term public works for purposes of requirements regarding the payment of prevailing wages to include construction, alteration, demolition, installation, or repair work done under contract and paid for using public funds, except as specified. Existing law defines paid for in whole or in part out of public funds to include, among others, projects that involved transfer by the state or political subdivision of an asset of value for less than fair market price or projects where the money loaned by the state or political subdivision will be repaid on a contingent basis. Existing law makes a willful violation of laws relating to the payment of prevailing wages in public works a misdemeanor.
This bill would expand the definition of paid for in whole or in part out of public funds to include projects paid using credits against a tax, including certain low-income housing tax credits. The bill would also exempt from public works provisions, private residential projects built on private property when the public funds are less than $3,000,000 for a project that is the acquisition or rehabilitation of a specified residential project. By expanding the scope of a crime, the bill would impose a state-mandated local program.
The bill would make the bills provisions effective only if AB 3160 of the 202324 Regular Session is enacted and becomes operative on or before January 1, 2025, and would repeal those provisions on January 1, 2032.
(2)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
(1)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 the term public works for purposes of requirements regarding the payment of prevailing wages to include construction, alteration, demolition, installation, or repair work done under contract and paid for using public funds, except as specified. Existing law defines paid for in whole or in part out of public funds to include, among others, projects that involved transfer by the state or political subdivision of an asset of value for less than fair market price or projects where the money loaned by the state or political subdivision will be repaid on a contingent basis. Existing law makes a willful violation of laws relating to the payment of prevailing wages in public works a misdemeanor.
This bill would expand the definition of paid for in whole or in part out of public funds to include projects paid using credits that the state or political subdivision agrees to apply against tax liabilities to the state or political subdivision. against a tax, including certain low-income housing tax credits. The bill would also exempt from public works provisions, private residential projects built on private property when the public funds are less than $3,000,000 for a project that is the acquisition or rehabilitation of a specified residential project. By expanding the scope of a crime, the bill would impose a state-mandated local program.
Existing law, unless required by a public funding program, exempts the construction or rehabilitation of privately owned residential projects from applicable public works provisions if the public participation in the project would meet certain criteria and the funding is in the form of a below-market interest rate loan.This bill would remove the above-described exemption.By expanding the scope of a crime, the bill would impose a state-mandated local program.The bill would make the bills provisions effective only if AB 3160 of the 202324 Regular Session is enacted and becomes operative on or before January 1, 2025, and would repeal those provisions on January 1, 2032.
(2)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
(1)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 the term public works for purposes of requirements regarding the payment of prevailing wages to include construction, alteration, demolition, installation, or repair work done under contract and paid for using public funds, except as specified. Existing law defines paid for in whole or in part out of public funds to include, among others, projects that involved transfer by the state or political subdivision of an asset of value for less than fair market price or projects where the money loaned by the state or political subdivision will be repaid on a contingent basis. Existing law makes a willful violation of laws relating to the payment of prevailing wages in public works a misdemeanor.
This bill would expand the definition of paid for in whole or in part out of public funds to include projects paid using credits that the state or political subdivision agrees to apply against tax liabilities to the state or political subdivision.
Existing law, unless required by a public funding program, exempts the construction or rehabilitation of privately owned residential projects from applicable public works provisions if the public participation in the project would meet certain criteria and the funding is in the form of a below-market interest rate loan.
This bill would remove the above-described exemption.
By expanding the scope of a crime, the bill would impose a state-mandated local program.
(2)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law, as established in the case of Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex), creates a presumption that a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission. Existing statutory law codifies the decision in the Dynamex case and clarifies its application. Existing law considers, for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration to be an employee rather than an independent contractor unless the hiring entity demonstrates that certain conditions are satisfied, as specified.Existing law exempts specified occupations and business relationships from the application of these provisions, including the relationship between a motor club, as described, and an individual performing services pursuant to a contract between the motor club and a third party to provide motor club services utilizing the employees and vehicles of the third party. Existing law applies a different court case to the classification of such an individual.This bill would make a nonsubstantive change to the provisions governing the relationship between the above-described motor club and individual.Existing law, as established in the case of Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex), creates a presumption that a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission. Existing statutory law codifies the decision in the Dynamex case and clarifies its application. Existing law considers, for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration to be an employee rather than an independent contractor unless the hiring entity demonstrates that certain conditions are satisfied, as specified.
Existing law exempts specified occupations and business relationships from the application of these provisions, including the relationship between a motor club, as described, and an individual performing services pursuant to a contract between the motor club and a third party to provide motor club services utilizing the employees and vehicles of the third party. Existing law applies a different court case to the classification of such an individual.
This bill would make a nonsubstantive change to the provisions governing the relationship between the above-described motor club and individual.
(a)As used in this chapter, public works means all of the following:
(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 a 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, site assessment, feasibility study, and other preconstruction phases of construction, including, but not limited to, inspection and land surveying work, regardless of whether any further construction work is conducted, 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 works does not include the operation of the irrigation or drainage system of an 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 an officer or public body of the state, or of a political subdivision or district thereof, whether the political subdivision or district operates under a freeholders 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.
(8)Tree removal work done in the execution of a project under paragraph (1).
(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), all of the following apply:
(1)Private residential projects built on private property are not subject to this chapter unless the projects are built pursuant to an agreement with a state agency, a redevelopment agency, a successor agency to a redevelopment agency when acting in that capacity, or a 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 this chapter.
(B)(i)For purposes of subparagraph (A), a public subsidy is de minimis if it is both less than six hundred thousand dollars ($600,000) and less than 2 percent of the total project cost.
(ii)Notwithstanding clause (i), for purposes of subparagraph (A), a public subsidy for a project that consists entirely of single-family dwellings is de minimis if it is less than 2 percent of the total project cost.
(iii)This subparagraph shall not apply to a project that was advertised for bid, or a contract that was awarded, before July 1, 2021.
(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 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, and 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 are not, solely by reason of this section, subject to 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)Notwithstanding paragraph (1) of subdivision (a), construction, alteration, demolition, installation, or repair work on the electric transmission system located in California constitutes a public works project for the purposes of this chapter.
(f)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.
(g)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.
(h)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.
(i)This section shall remain in effect only until January 1, 2026, and as of that date is repealed.
SEC. 2.Section 1720 is added to the Labor Code, to read:1720.(a)As used in this chapter, public works means all of the following:
(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 a 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, site assessment, feasibility study, and other preconstruction phases of construction, including, but not limited to, inspection and land surveying work, regardless of whether further construction work is conducted, 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 works does not include the operation of the irrigation or drainage system of an 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 an officer or public body of the state, or of a political subdivision or district thereof, whether the political subdivision or district operates under a freeholders 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.
(8)Tree removal work done in the execution of a project under paragraph (1).
(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.
(7)Credits allowed pursuant to Sections 12206, 17058, and 23610.5 of the Revenue and Taxation Code.
(c)Notwithstanding subdivision (b), all of the following apply:
(1)(A)Except as provided in subparagraph (B), private residential projects built on private property are not subject to this chapter unless the projects are built pursuant to an agreement, including a tax credit agreement pursuant to paragraph (7) of subdivision (b) with a state agency, a redevelopment agency, a successor agency to a redevelopment agency when acting in that capacity, or a local public housing authority.
(B)Subparagraph (A) does not apply if the public funds are less than three million dollars ($3,000,000) for a project that is the acquisition or rehabilitation of a residential project of 50 units or less.
(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 this chapter.
(B)(i)For purposes of subparagraph (A), a public subsidy is de minimis if it is both less than six hundred thousand dollars ($600,000) and less than 2 percent of the total project cost.
(ii)Notwithstanding clause (i), for purposes of subparagraph (A), a public subsidy for a project that consists entirely of single-family dwellings is de minimis if it is less than 2 percent of the total project cost.
(iii)This subparagraph shall not apply to a project that was advertised for bid, or a contract that was awarded, before July 1, 2021.
(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 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, and architectural and engineering services.
(E)(i)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.
(ii)Clause (i) does not apply if the project is subject to the requirements of this chapter pursuant to paragraph (1) of subdivision (c).
(d)Notwithstanding any provision of this section to the contrary, the following projects are not, solely by reason of this section, subject to 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)Notwithstanding paragraph (1) of subdivision (a), construction, alteration, demolition, installation, or repair work on the electric transmission system located in California constitutes a public works project for the purposes of this chapter.
(f)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.
(g)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.
(h)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.
(i)Section 1750 does not apply to the amendments made to this section by this bill to designate additional categories of work as public works, and the amendments made to this section by this bill to designate additional categories of work as public works shall not be construed to implicate requirements of other California laws applicable to construction contracts awarded by public entities, including requirements within the Public Contract Code. The amendments affect the status of work only with regard to requirements set forth in Article 1 (commencing with Section 1720) of Chapter 1.
(j)This section shall become operative on January 1, 2026.
(k)This section shall remain in effect only until January 1, 2031, and as of that date is repealed.
SEC. 3.Section 1720 is added to the Labor Code, to read:1720.(a)As used in this chapter, public works means all of the following:
(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 a 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, site assessment, feasibility study, and other preconstruction phases of construction, including, but not limited to, inspection and land surveying work, regardless of whether any further construction work is conducted, 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 works does not include the operation of the irrigation or drainage system of an 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 an officer or public body of the state, or of a political subdivision or district thereof, whether the political subdivision or district operates under a freeholders 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.
(8)Tree removal work done in the execution of a project under paragraph (1).
(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), all of the following apply:
(1)Private residential projects built on private property are not subject to this chapter unless the projects are built pursuant to an agreement with a state agency, a redevelopment agency, a successor agency to a redevelopment agency when acting in that capacity, or a 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 this chapter.
(B)(i)For purposes of subparagraph (A), a public subsidy is de minimis if it is both less than six hundred thousand dollars ($600,000) and less than 2 percent of the total project cost.
(ii)Notwithstanding clause (i), for purposes of subparagraph (A), a public subsidy for a project that consists entirely of single-family dwellings is de minimis if it is less than 2 percent of the total project cost.
(iii)This subparagraph shall not apply to a project that was advertised for bid, or a contract that was awarded, before July 1, 2021.
(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 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, and 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 are not, solely by reason of this section, subject to 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)Notwithstanding paragraph (1) of subdivision (a), construction, alteration, demolition, installation, or repair work on the electric transmission system located in California constitutes a public works project for the purposes of this chapter.
(f)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.
(g)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.
(h)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.
(i)This section shall become operative on January 1, 2031.
SEC. 4.This measure shall become operative only if Assembly Bill 3160 of the 202324 Regular Session is enacted and takes effect on or before January 1, 2025.
SEC. 5.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)As used in this chapter, public works means all of the following:
(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 a 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, site assessment, feasibility study, and other preconstruction phases of construction, including, but not limited to, inspection and land surveying work, regardless of whether any further construction work is conducted, 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 works does not include the operation of the irrigation or drainage system of an 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 an officer or public body of the state, or of a political subdivision or district thereof, whether the political subdivision or district operates under a freeholders 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.
(8)Tree removal work done in the execution of a project under paragraph (1).
(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), all of the following apply:
(1)Private residential projects built on private property are not subject to this chapter unless the projects are built pursuant to an agreement with a state agency, a redevelopment agency, a successor agency to a redevelopment agency when acting in that capacity, or a 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 this chapter.
(B)(i)For purposes of subparagraph (A), a public subsidy is de minimis if it is both less than six hundred thousand dollars ($600,000) and less than 2 percent of the total project cost.
(ii)Notwithstanding clause (i), for purposes of subparagraph (A), a public subsidy for a project that consists entirely of single-family dwellings is de minimis if it is less than 2 percent of the total project cost.
(iii)This subparagraph shall not apply to a project that was advertised for bid, or a contract that was awarded, before July 1, 2021.
(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 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, and 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 are not, solely by reason of this section, subject to 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)Notwithstanding paragraph (1) of subdivision (a), construction, alteration, demolition, installation, or repair work on the electric transmission system located in California constitutes a public works project for the purposes of this chapter.
(f)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.
(g)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.
(h)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.
(i)This section shall remain in effect only until January 1, 2026, and as of that date is repealed.
SEC. 2.Section 1720 is added to the Labor Code, to read:1720.(a)As used in this chapter, public works means all of the following:
(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 a 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, site assessment, feasibility study, and other preconstruction phases of construction, including, but not limited to, inspection and land surveying work, regardless of whether further construction work is conducted, 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 works does not include the operation of the irrigation or drainage system of an 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 an officer or public body of the state, or of a political subdivision or district thereof, whether the political subdivision or district operates under a freeholders 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.
(8)Tree removal work done in the execution of a project under paragraph (1).
(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.
(7)Credits allowed pursuant to Sections 12206, 17058, and 23610.5 of the Revenue and Taxation Code.
(c)Notwithstanding subdivision (b), all of the following apply:
(1)(A)Except as provided in subparagraph (B), private residential projects built on private property are not subject to this chapter unless the projects are built pursuant to an agreement, including a tax credit agreement pursuant to paragraph (7) of subdivision (b) with a state agency, a redevelopment agency, a successor agency to a redevelopment agency when acting in that capacity, or a local public housing authority.
(B)Subparagraph (A) does not apply if the public funds are less than three million dollars ($3,000,000) for a project that is the acquisition or rehabilitation of a residential project of 50 units or less.
(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 this chapter.
(B)(i)For purposes of subparagraph (A), a public subsidy is de minimis if it is both less than six hundred thousand dollars ($600,000) and less than 2 percent of the total project cost.
(ii)Notwithstanding clause (i), for purposes of subparagraph (A), a public subsidy for a project that consists entirely of single-family dwellings is de minimis if it is less than 2 percent of the total project cost.
(iii)This subparagraph shall not apply to a project that was advertised for bid, or a contract that was awarded, before July 1, 2021.
(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 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, and architectural and engineering services.
(E)(i)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.
(ii)Clause (i) does not apply if the project is subject to the requirements of this chapter pursuant to paragraph (1) of subdivision (c).
(d)Notwithstanding any provision of this section to the contrary, the following projects are not, solely by reason of this section, subject to 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)Notwithstanding paragraph (1) of subdivision (a), construction, alteration, demolition, installation, or repair work on the electric transmission system located in California constitutes a public works project for the purposes of this chapter.
(f)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.
(g)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.
(h)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.
(i)Section 1750 does not apply to the amendments made to this section by this bill to designate additional categories of work as public works, and the amendments made to this section by this bill to designate additional categories of work as public works shall not be construed to implicate requirements of other California laws applicable to construction contracts awarded by public entities, including requirements within the Public Contract Code. The amendments affect the status of work only with regard to requirements set forth in Article 1 (commencing with Section 1720) of Chapter 1.
(j)This section shall become operative on January 1, 2026.
(k)This section shall remain in effect only until January 1, 2031, and as of that date is repealed.
SEC. 3.Section 1720 is added to the Labor Code, to read:1720.(a)As used in this chapter, public works means all of the following:
(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 a 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, site assessment, feasibility study, and other preconstruction phases of construction, including, but not limited to, inspection and land surveying work, regardless of whether any further construction work is conducted, 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 works does not include the operation of the irrigation or drainage system of an 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 an officer or public body of the state, or of a political subdivision or district thereof, whether the political subdivision or district operates under a freeholders 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.
(8)Tree removal work done in the execution of a project under paragraph (1).
(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), all of the following apply:
(1)Private residential projects built on private property are not subject to this chapter unless the projects are built pursuant to an agreement with a state agency, a redevelopment agency, a successor agency to a redevelopment agency when acting in that capacity, or a 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 this chapter.
(B)(i)For purposes of subparagraph (A), a public subsidy is de minimis if it is both less than six hundred thousand dollars ($600,000) and less than 2 percent of the total project cost.
(ii)Notwithstanding clause (i), for purposes of subparagraph (A), a public subsidy for a project that consists entirely of single-family dwellings is de minimis if it is less than 2 percent of the total project cost.
(iii)This subparagraph shall not apply to a project that was advertised for bid, or a contract that was awarded, before July 1, 2021.
(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 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, and 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 are not, solely by reason of this section, subject to 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)Notwithstanding paragraph (1) of subdivision (a), construction, alteration, demolition, installation, or repair work on the electric transmission system located in California constitutes a public works project for the purposes of this chapter.
(f)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.
(g)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.
(h)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.
(i)This section shall become operative on January 1, 2031.
SEC. 4.This measure shall become operative only if Assembly Bill 3160 of the 202324 Regular Session is enacted and takes effect on or before January 1, 2025.
SEC. 5.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)As used in this chapter, public works means all of the following:
(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 a 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, site assessment, feasibility study, and other preconstruction phases of construction, including, but not limited to, inspection and land surveying work, regardless of whether any further construction work is conducted, 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 works does not include the operation of the irrigation or drainage system of an 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 an officer or public body of the state, or of a political subdivision or district thereof, whether the political subdivision or district operates under a freeholders 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.
(8)Tree removal work done in the execution of a project under paragraph (1).
(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), all of the following apply:
(1)Private residential projects built on private property are not subject to this chapter unless the projects are built pursuant to an agreement with a state agency, a redevelopment agency, a successor agency to a redevelopment agency when acting in that capacity, or a 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 this chapter.
(B)(i)For purposes of subparagraph (A), a public subsidy is de minimis if it is both less than six hundred thousand dollars ($600,000) and less than 2 percent of the total project cost.
(ii)Notwithstanding clause (i), for purposes of subparagraph (A), a public subsidy for a project that consists entirely of single-family dwellings is de minimis if it is less than 2 percent of the total project cost.
(iii)This subparagraph shall not apply to a project that was advertised for bid, or a contract that was awarded, before July 1, 2021.
(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 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, and 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 are not, solely by reason of this section, subject to 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)Notwithstanding paragraph (1) of subdivision (a), construction, alteration, demolition, installation, or repair work on the electric transmission system located in California constitutes a public works project for the purposes of this chapter.
(f)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.
(g)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.
(h)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.
(i)This section shall remain in effect only until January 1, 2026, and as of that date is repealed.
SEC. 2.Section 1720 is added to the Labor Code, to read:1720.(a)As used in this chapter, public works means all of the following:
(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 a 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, site assessment, feasibility study, and other preconstruction phases of construction, including, but not limited to, inspection and land surveying work, regardless of whether further construction work is conducted, 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 works does not include the operation of the irrigation or drainage system of an 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 an officer or public body of the state, or of a political subdivision or district thereof, whether the political subdivision or district operates under a freeholders 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.
(8)Tree removal work done in the execution of a project under paragraph (1).
(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.
(7)Credits allowed pursuant to Sections 12206, 17058, and 23610.5 of the Revenue and Taxation Code.
(c)Notwithstanding subdivision (b), all of the following apply:
(1)(A)Except as provided in subparagraph (B), private residential projects built on private property are not subject to this chapter unless the projects are built pursuant to an agreement, including a tax credit agreement pursuant to paragraph (7) of subdivision (b) with a state agency, a redevelopment agency, a successor agency to a redevelopment agency when acting in that capacity, or a local public housing authority.
(B)Subparagraph (A) does not apply if the public funds are less than three million dollars ($3,000,000) for a project that is the acquisition or rehabilitation of a residential project of 50 units or less.
(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 this chapter.
(B)(i)For purposes of subparagraph (A), a public subsidy is de minimis if it is both less than six hundred thousand dollars ($600,000) and less than 2 percent of the total project cost.
(ii)Notwithstanding clause (i), for purposes of subparagraph (A), a public subsidy for a project that consists entirely of single-family dwellings is de minimis if it is less than 2 percent of the total project cost.
(iii)This subparagraph shall not apply to a project that was advertised for bid, or a contract that was awarded, before July 1, 2021.
(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 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, and architectural and engineering services.
(E)(i)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.
(ii)Clause (i) does not apply if the project is subject to the requirements of this chapter pursuant to paragraph (1) of subdivision (c).
(d)Notwithstanding any provision of this section to the contrary, the following projects are not, solely by reason of this section, subject to 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)Notwithstanding paragraph (1) of subdivision (a), construction, alteration, demolition, installation, or repair work on the electric transmission system located in California constitutes a public works project for the purposes of this chapter.
(f)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.
(g)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.
(h)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.
(i)Section 1750 does not apply to the amendments made to this section by this bill to designate additional categories of work as public works, and the amendments made to this section by this bill to designate additional categories of work as public works shall not be construed to implicate requirements of other California laws applicable to construction contracts awarded by public entities, including requirements within the Public Contract Code. The amendments affect the status of work only with regard to requirements set forth in Article 1 (commencing with Section 1720) of Chapter 1.
(j)This section shall become operative on January 1, 2026.
(k)This section shall remain in effect only until January 1, 2031, and as of that date is repealed.
SEC. 2.SEC. 3.Section 1720 is added to the Labor Code, to read:1720.(a)As used in this chapter, public works means all of the following:
(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 a 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, site assessment, feasibility study, and other preconstruction phases of construction, including, but not limited to, inspection and land surveying work, regardless of whether any further construction work is conducted, 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 works does not include the operation of the irrigation or drainage system of an 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 an officer or public body of the state, or of a political subdivision or district thereof, whether the political subdivision or district operates under a freeholders 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.
(8)Tree removal work done in the execution of a project under paragraph (1).
(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), all of the following apply:
(1)Private residential projects built on private property are not subject to this chapter unless the projects are built pursuant to an agreement with a state agency, a redevelopment agency, a successor agency to a redevelopment agency when acting in that capacity, or a 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 this chapter.
(B)(i)For purposes of subparagraph (A), a public subsidy is de minimis if it is both less than six hundred thousand dollars ($600,000) and less than 2 percent of the total project cost.
(ii)Notwithstanding clause (i), for purposes of subparagraph (A), a public subsidy for a project that consists entirely of single-family dwellings is de minimis if it is less than 2 percent of the total project cost.
(iii)This subparagraph shall not apply to a project that was advertised for bid, or a contract that was awarded, before July 1, 2021.
(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 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, and 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 are not, solely by reason of this section, subject to 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)Notwithstanding paragraph (1) of subdivision (a), construction, alteration, demolition, installation, or repair work on the electric transmission system located in California constitutes a public works project for the purposes of this chapter.
(f)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.
(g)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.
(h)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.
(i)This section shall become operative on January 1, 2032. 2031.
SEC. 3.SEC. 4.This measure shall become operative only if Assembly Bill 3160 of the 202324 Regular Session is enacted and becomes operative takes effect on or before January 1, 2025.
SEC. 4.SEC. 5.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)As used in this chapter, public works means all of the following:
(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 a 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, site assessment, feasibility study, and other preconstruction phases of construction, including, but not limited to, inspection and land surveying work, regardless of whether further construction work is conducted, 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 works does not include the operation of the irrigation or drainage system of an 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 an officer or public body of the state, or of a political subdivision or district thereof, whether the political subdivision or district operates under a freeholders 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.
(8)Tree removal work done in the execution of a project under paragraph (1).
(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.
(7)Credits allowed pursuant to Sections 12206, 17058, and 23610.5 of the Revenue and Taxation Code.
(c)Notwithstanding subdivision (b), all of the following apply:
(1)(A)Except as provided in subparagraph (B), private residential projects built on private property are not subject to this chapter unless the projects are built pursuant to an agreement, including a tax credit agreement pursuant to paragraph (7) of subdivision (b), or a below-market interest rate loan (b) with a state agency, a redevelopment agency, a successor agency to a redevelopment agency when acting in that capacity, or a local public housing authority.
(B)Subparagraph (A) does not apply if the public funds are less than three million dollars ($3,000,000) for a project that is the acquisition or rehabilitation of a residential project of 50 units or less.
(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 this chapter.
(B)(i)For purposes of subparagraph (A), a public subsidy is de minimis if it is both less than six hundred thousand dollars ($600,000) and less than 2 percent of the total project cost.
(ii)Notwithstanding clause (i), for purposes of subparagraph (A), a public subsidy for a project that consists entirely of single-family dwellings is de minimis if it is less than 2 percent of the total project cost.
(iii)This subparagraph shall not apply to a project that was advertised for bid, or a contract that was awarded, before July 1, 2021.
(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 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, and architectural and engineering services.
(E)(i)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.
(ii)Clause (i) does not apply if the project is subject to the requirements of this chapter pursuant to paragraph (1) of subdivision (c).
(d)Notwithstanding any provision of this section to the contrary, the following projects are not, solely by reason of this section, subject to 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)Notwithstanding paragraph (1) of subdivision (a), construction, alteration, demolition, installation, or repair work on the electric transmission system located in California constitutes a public works project for the purposes of this chapter.
(f)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.
(g)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.
(h)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.
(i)Section 1750 does not apply to the amendments made to this section by this bill to designate additional categories of work as public works, and the amendments made to this section by this bill to designate additional categories of work as public works shall not be construed to implicate requirements of other California laws applicable to construction contracts awarded by public entities, including requirements within the Public Contract Code. The amendments affect the status of work only with regard to requirements set forth in Article 1 (commencing with Section 1720) of Chapter 1.
(j)This section shall remain in effect only until January 1, 2032, and as of that date is repealed.
SEC. 2.Section 1720 is added to the Labor Code, to read:1720.(a)As used in this chapter, public works means all of the following:
(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 a 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, site assessment, feasibility study, and other preconstruction phases of construction, including, but not limited to, inspection and land surveying work, regardless of whether any further construction work is conducted, 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 works does not include the operation of the irrigation or drainage system of an 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 an officer or public body of the state, or of a political subdivision or district thereof, whether the political subdivision or district operates under a freeholders 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.
(8)Tree removal work done in the execution of a project under paragraph (1).
(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), all of the following apply:
(1)Private residential projects built on private property are not subject to this chapter unless the projects are built pursuant to an agreement with a state agency, a redevelopment agency, a successor agency to a redevelopment agency when acting in that capacity, or a 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 this chapter.
(B)(i)For purposes of subparagraph (A), a public subsidy is de minimis if it is both less than six hundred thousand dollars ($600,000) and less than 2 percent of the total project cost.
(ii)Notwithstanding clause (i), for purposes of subparagraph (A), a public subsidy for a project that consists entirely of single-family dwellings is de minimis if it is less than 2 percent of the total project cost.
(iii)This subparagraph shall not apply to a project that was advertised for bid, or a contract that was awarded, before July 1, 2021.
(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 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, and 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 are not, solely by reason of this section, subject to 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)Notwithstanding paragraph (1) of subdivision (a), construction, alteration, demolition, installation, or repair work on the electric transmission system located in California constitutes a public works project for the purposes of this chapter.
(f)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.
(g)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.
(h)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.
(i)This section shall become operative on January 1, 2032.
SEC. 3.This measure shall become operative only if Assembly Bill 3160 of the 202324 Regular Session is enacted and becomes operative on or before January 1, 2025.
SEC. 4.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)As used in this chapter, public works means all of the following:
(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 a 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, site assessment, feasibility study, and other preconstruction phases of construction, including, but not limited to, inspection and land surveying work, regardless of whether further construction work is conducted, 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 works does not include the operation of the irrigation or drainage system of an 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 an officer or public body of the state, or of a political subdivision or district thereof, whether the political subdivision or district operates under a freeholders 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.
(8)Tree removal work done in the execution of a project under paragraph (1).
(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.
(7)Credits that the state or political subdivision agrees to apply against tax liabilities to the state or political subdivision. allowed pursuant to Sections 12206, 17058, and 23610.5 of the Revenue and Taxation Code.
(c)Notwithstanding subdivision (b), all of the following apply:
(1)Private (A)Except as provided in subparagraph (B), private residential projects built on private property are not subject to this chapter unless the projects are built pursuant to an agreement, including a tax credit agreement, agreement pursuant to paragraph (7) of subdivision (b), or a below-market interest rate loan with a state agency, a redevelopment agency, a successor agency to a redevelopment agency when acting in that capacity, a political subdivision of the state, or a local public housing authority.
(B)Subparagraph (A) does not apply if the public funds are less than three million dollars ($3,000,000) for a project that is the acquisition or rehabilitation of a residential project of 50 units or less.
(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 this chapter.
(B)(i)For purposes of subparagraph (A), a public subsidy is de minimis if it is both less than six hundred thousand dollars ($600,000) and less than 2 percent of the total project cost.
(ii)Notwithstanding clause (i), for purposes of subparagraph (A), a public subsidy for a project that consists entirely of single-family dwellings is de minimis if it is less than 2 percent of the total project cost.
(iii)This subparagraph shall not apply to a project that was advertised for bid, or a contract that was awarded, before July 1, 2021.
(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 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, and architectural and engineering services.
(E)(i)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.
(ii)Clause (i) does not apply if the project is subject to the requirements of this chapter pursuant to paragraph (1) of subdivision (c).
(d)Notwithstanding any provision of this section to the contrary, the following projects are not, solely by reason of this section, subject to 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)Notwithstanding paragraph (1) of subdivision (a), construction, alteration, demolition, installation, or repair work on the electric transmission system located in California constitutes a public works project for the purposes of this chapter.
(f)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.
(g)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.
(h)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.
(i)Section 1750 does not apply to the amendments made to this section by this bill to designate additional categories of work as public works, and the amendments made to this section by this bill to designate additional categories of work as public works shall not be construed to implicate requirements of other California laws applicable to construction contracts awarded by public entities, including requirements within the Public Contract Code. The amendments affect the status of work only with regard to requirements set forth in Article 1 (commencing with Section 1720) of Chapter 1.
(j)This section shall remain in effect only until January 1, 2032, and as of that date is repealed.
SEC. 2.Section 1720 is added to the Labor Code, to read:1720.(a)As used in this chapter, public works means all of the following:
(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 a 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, site assessment, feasibility study, and other preconstruction phases of construction, including, but not limited to, inspection and land surveying work, regardless of whether any further construction work is conducted, 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 works does not include the operation of the irrigation or drainage system of an 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 an officer or public body of the state, or of a political subdivision or district thereof, whether the political subdivision or district operates under a freeholders 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.
(8)Tree removal work done in the execution of a project under paragraph (1).
(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), all of the following apply:
(1)Private residential projects built on private property are not subject to this chapter unless the projects are built pursuant to an agreement with a state agency, a redevelopment agency, a successor agency to a redevelopment agency when acting in that capacity, or a 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 this chapter.
(B)(i)For purposes of subparagraph (A), a public subsidy is de minimis if it is both less than six hundred thousand dollars ($600,000) and less than 2 percent of the total project cost.
(ii)Notwithstanding clause (i), for purposes of subparagraph (A), a public subsidy for a project that consists entirely of single-family dwellings is de minimis if it is less than 2 percent of the total project cost.
(iii)This subparagraph shall not apply to a project that was advertised for bid, or a contract that was awarded, before July 1, 2021.
(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 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, and 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 are not, solely by reason of this section, subject to 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)Notwithstanding paragraph (1) of subdivision (a), construction, alteration, demolition, installation, or repair work on the electric transmission system located in California constitutes a public works project for the purposes of this chapter.
(f)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.
(g)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.
(h)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.
(i)This section shall become operative on January 1, 2032.
SEC. 3.This measure shall become operative only if Assembly Bill 3160 of the 202324 Regular Session is enacted and becomes operative on or before January 1, 2025.
SEC. 3.SEC. 4.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
The Legislature finds and declares all of the following:
(a)Private developers who award construction contracts, particularly affordable housing developers, accrue certain financial benefits from the state and political subdivisions thereof that do not currently qualify as public funding for purposes of Californias prevailing wage laws. Their awards should qualify as public funding.
(b)Tax credits allocated and applied by the state or localities do not currently qualify as public funding because they are not expressly listed under subdivision (b) of Section 1720. They also do not qualify as public funding because the courts and the Department of Industrial Relations have concluded that tax credits do not meet any of the definitions found in that same subdivision.
(c)Below-market interest rate loans do not currently qualify as public funding because of a below-market interest rate loan exception in subdivision (c) of Section 1720.
(d)Both state and local tax credits and below-market loans should qualify as public funding because they help developers fund construction of their projects, both by providing direct financial benefits and by serving as leverage for developers to raise funding for construction from public and private sources.
(e)This act, therefore, fixes these two loopholes by adding tax credits allocated and applied by the state or localities as a separately enumerated form of public funding under subdivision (b) of Section 1720, and by removing the below-market interest rate loan exception in subdivision (c) of Section 1720.
SEC. 2.Section 1720 of the Labor Code is amended to read:1720.(a)As used in this chapter, public works means all of the following:
(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 a 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, site assessment, feasibility study, and other preconstruction phases of construction, including, but not limited to, inspection and land surveying work, regardless of whether any further construction work is conducted, 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 works does not include the operation of the irrigation or drainage system of an 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 an officer or public body of the state, or of a political subdivision or district thereof, whether the political subdivision or district operates under a freeholders 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.
(8)Tree removal work done in the execution of a project under paragraph (1).
(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.
(7)Credits that the state or political subdivision agrees to apply against tax liabilities to the state or political subdivision.
(c)Notwithstanding subdivision (b), all of the following apply:
(1)Private residential projects built on private property are not subject to this chapter unless the projects are built pursuant to an agreement agreement, including a tax credit agreement, with a state agency, a redevelopment agency, a successor agency to a redevelopment agency when acting in that capacity, a political subdivision of the state, or a 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 this chapter.
(B)(i)For purposes of subparagraph (A), a public subsidy is de minimis if it is both less than six hundred thousand dollars ($600,000) and less than 2 percent of the total project cost.
(ii)Notwithstanding clause (i), for purposes of subparagraph (A), a public subsidy for a project that consists entirely of single-family dwellings is de minimis if it is less than 2 percent of the total project cost.
(iii)This subparagraph shall not apply to a project that was advertised for bid, or a contract that was awarded, before July 1, 2021.
(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 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, and 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 are not, solely by reason of this section, subject to 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)Notwithstanding paragraph (1) of subdivision (a), construction, alteration, demolition, installation, or repair work on the electric transmission system located in California constitutes a public works project for the purposes of this chapter.
(f)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.
(g)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.
(h)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.
SEC. 3.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
SECTION 1.Section 2784 of the Labor Code is amended to read:2784.Section 2775 and the holding in Dynamex do not apply to the relationship between a motor club holding a certificate of authority issued pursuant to Chapter 2 (commencing with Section 12160) of Part 5 of Division 2 of the Insurance Code and an individual performing services pursuant to a contract between the motor club and a third party to provide motor club services utilizing the employees and vehicles of the third party. Instead, the determination of whether such an individual is an employee of the motor club shall be governed by Borello, if the motor club demonstrates that the third party is a separate and independent business from the motor club.Section 2775 and the holding in Dynamex do not apply to the relationship between a motor club holding a certificate of authority issued pursuant to Chapter 2 (commencing with Section 12160) of Part 5 of Division 2 of the Insurance Code and an individual performing services pursuant to a contract between the motor club and a third party to provide motor club services utilizing the employees and vehicles of the third party and, instead, party. Instead, the determination of whether such an individual is an employee of the motor club shall be governed by Borello, if the motor club demonstrates that the third party is a separate and independent business from the motor club.
|
Date
|
Status
|
|---|---|
| Sep 27, 2024 | Chaptered by Secretary of State - Chapter 759, Statutes of 2024. |
| Sep 27, 2024 | Approved by the Governor. |
| Sep 11, 2024 | Enrolled and presented to the Governor at 4 p.m. |
| Aug 29, 2024 | Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 68. Noes 0.). |
| Aug 29, 2024 | Assembly Rule 77 suspended. |
| Aug 28, 2024 | In Assembly. Concurrence in Senate amendments pending. May be considered on or after August 30 pursuant to Assembly Rule 77. |
| Aug 28, 2024 | Read third time. Passed. Ordered to the Assembly. (Ayes 28. Noes 7.). |
| Aug 26, 2024 | Read second time. Ordered to third reading. |
| Aug 23, 2024 | Read third time and amended. Ordered to second reading. |
| Aug 19, 2024 | Read second time. Ordered to third reading. |
| Aug 15, 2024 | Read second time and amended. Ordered returned to second reading. |
| Aug 15, 2024 | From committee: Amend, and do pass as amended. (Ayes 5. Noes 2.) (August 15). |
| Aug 5, 2024 | In committee: Referred to suspense file. |
| Jun 26, 2024 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 4. Noes 1.) (June 26). Re-referred to Com. on APPR. |
| Jun 5, 2024 | Referred to Com. on L., P.E. & R. |
| May 24, 2024 | In Senate. Read first time. To Com. on RLS. for assignment. |
| May 23, 2024 | Read third time. Passed. Ordered to the Senate. (Ayes 65. Noes 0. Page 5641.) |
| May 21, 2024 | Read second time. Ordered to third reading. |
| May 20, 2024 | Read second time and amended. Ordered returned to second reading. |
| May 20, 2024 | From committee: Amend, and do pass as amended. (Ayes 11. Noes 0.) (May 16). |
| May 8, 2024 | In committee: Set, first hearing. Referred to APPR. suspense file. |
| Apr 18, 2024 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 7. Noes 0.) (April 17). Re-referred to Com. on APPR. |
| Apr 1, 2024 | Re-referred to Com. on L. & E. |
| Mar 21, 2024 | Referred to Com. on L. & E. |
| Mar 21, 2024 | From committee chair, with author's amendments: Amend, and re-refer to Com. on L. & E. Read second time and amended. |
| Feb 17, 2024 | From printer. May be heard in committee March 18. |
| Feb 16, 2024 | Read first time. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Aug 29, 2024 | AB 3190 Haney Concurrence in Senate Amendments | Assembly Floor |
Passed |
|
| Aug 28, 2024 | Assembly 3rd Reading AB3190 Haney et al. By Wiener | Senate Floor |
Passed |
|
| Aug 15, 2024 | Do pass as amended | Senate Standing Committee on Appropriations |
Passed |
|
| Aug 5, 2024 | Placed on suspense file | Senate Standing Committee on Appropriations |
Passed |
|
| Jun 26, 2024 | Do pass, but first be re-referred to the Committee on [Appropriations] | Senate Standing Committee on Labor, Public Employment and Retirement |
Passed |
|
| May 23, 2024 | AB 3190 Haney Assembly Third Reading | Assembly Floor |
Passed |
|
| May 16, 2024 | Do pass as amended. | Assembly Standing Committee on Appropriations |
Passed |
|
| Apr 17, 2024 | Do pass and be re-referred to the Committee on [Appropriations] | Assembly Standing Committee on Labor and Employment |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| Associated General Contractors Of California | ** Against | |
| Associated General Contractors-San Diego Chapter | ** Against | |
| BlueGreen Alliance | ** Support | |
| California Coalition For Rural Housing | ** Against | |
| California Conference of Carpenters | ** Support | |
| California Council For Affordable Housing | ** Against | |
| California Housing Consortium | ** Against | |
| California Housing Partnership | ** Against | |
| California State Association Of Electrical Workers | ** Support | |
| California State Council Of Laborers | ** Support | |
| California State Council of Service Employees International Union | ** Support | |
| California State Pipe Trades Council | ** Support | |
| California Teamsters | * Support | Apr 17, 2024 |
| Center for Sustainable Neighborhoods | ** Support | |
| Construction Employers' Association | ** Support | |
| Contra Costa County | * Support | Apr 17, 2024 |
| District Council of Iron Workers | * Support | Apr 17, 2024 |
| Drywall Lathers Local 9109 | * Support | Apr 17, 2024 |
| fresno building healthy communities | ** Support | |
| Housing California | ** Against | |
| International Brotherhood Of Electrical Workers Local 465 | * Support | Apr 17, 2024 |
| Local 34 Union | * Support | Apr 17, 2024 |
| Nor Cal Carpenters Union | ** Support | |
| Painters and Allied Trades District Council 16 | * Support | Apr 17, 2024 |
| San Diego Housing Federation | ** Against | |
| Southern California Association of Non-Profit Housing | ** Against | |
| State Building and Construction Trades Council | * Support | Jun 26, 2024 |
| Wall and Ceiling Alliance | ** Support | |
| Western States Council Sheet Metal, Air, Rail And Transportation | ** Support | |
| Western States Regional Council or Capenters | ** Support | |
| Western Wall And Ceiling Contractors Association | ** Support |
CONCURRENCE IN SENATE AMENDMENTS
CSA1 Bill Id:AB 3190
Author:(Haney and Wicks)
As Amended Ver:August 23, 2024
Majority vote
SUMMARY
Subjects to public works law, beginning on January 1, 2026 and ending on January 1, 2031, certain affordable housing projects by adding certain low-income housing tax credits to the definition of "paid for in whole or in part out of public funds," and providing that specified projects built pursuant to certain low-income housing tax credits with a state agency, redevelopment agency, successor agency to a redevelopment agency when acting in that capacity, or a local housing authority, are subject to public works requirements.
Senate Amendments
- Remove the requirement that certain private residential projects built on private property pursuant to a below-market interest rate loan with a state agency, a redevelopment agency, a successor agency to a redevelopment agency when acting in that capacity, or a local housing authority, be subject to the requirements of public works law.
- Change the bill's effective date to January 1, 2026, and sunsets and repeals its provisions on January 1, 2031.
COMMENTS
Public works laws require that, among other things, prevailing wage is paid to workers on publicly-funded projects, as specified. In California, the prevailing wage rate is an hourly rate paid on public works projects that is often set in the terms of a collective bargaining agreement. According to the Department of Industrial Relations, the wage rate relies upon such factors as "the particular craft, classification or type of work within the locality and in the nearest labor market area (if majorities of such workers are paid at a single rate). If there is no single rate paid to a majority, then the single or modal rate being paid to the greater number of workers is prevailing."
Prevailing wage laws are intended to ensure that contractors are not awarded public works contracts by paying low wages and undercutting competitors who provide higher compensation. In this way, these laws create a level playing field by requiring an across-the-board rate for all bidders on publicly-subsidized projects.
Three types of public funds that have been historically used by affordable housing developers are currently exempt from public works law that requires paying workers a prevailing wage:
- State Low-Income Housing Tax Credits (State LIHTCs);
- State and Local Below Market-Rate Loans (BMR loans);
- Redevelopment Agencies' Low- and Moderate-Income Housing Funds.
Since redevelopment agencies were dissolved in 2012, the only two functional exemptions are for State LIHTCs and BMR loans.
According to the Nor Cal Carpenters Union (NCCU), between 2021 and 2023, nearly $2 billion of State LIHTC funding was awarded to fund the construction of more than 22,000 housing units. Of those, nearly 13,000 units were built without any requirement to pay prevailing wages. The NCCU further estimates that more than $700 million below market-rate loans are awarded to affordable housing projects per year.
According to the Author
"California has set important affordable housing goals—but it lacks a dedicated workforce to actually build that housing. If workers aren't being paid a prevailing wage, there is no way the State can retain and recruit the 100,000 workers it needs to meet its affordable housing goals. By ensuring that all workers on affordable housing projects are being paid the industry standard, AB 3190 will help grow the residential construction workforce. As a result, we will be able to build more affordable housing for Californians."
Arguments in Support
The California State Association of Electrical Workers, the California State Pipe Trades Council, and the Western States Council of Sheet Metal Workers are in support and state, "As our communities continue to grow and develop, it is imperative that we maintain oversight over projects financed through various means, including tax credits. AB 3190's proposal to broaden the definition of projects funded by public funds to include those financed through credits applied against tax liabilities is a progressive step towards achieving this goal. By encompassing projects funded through tax credits, AB 3190 ensures that the public has a clear understanding of where public funds are being utilized. This transparency fosters trust between the government and its citizens, reinforcing the integrity of our public infrastructure projects."
Arguments in Opposition
A coalition of housing organizations, including the California Housing Consortium and Housing California are opposed and state, "Our organizations represent development, non-profit, financial, and public sectors united in the goal of increasing the supply of safe, stable, and affordable housing options for the people of California. Given our collective mission, we are concerned that as drafted, AB 3190 will significantly reduce the number of affordable units that can be produced."
"The research shows that 'the high cost of construction is a fundamental obstacle to building more housing in California. This is particularly true for subsidized affordable housing since higher costs typically translate into the need for more public funding.'"
FISCAL COMMENTS
According to the Senate Appropriations Committee:
- The Department of Industrial Relations (DIR) indicates that it would incur annual costs in the millions of dollars to implement the provisions of the bill (Labor Enforcement and Compliance Fund). Workload drivers would include investigating complaints, imposing penalties, and hearings related to appeals.
- To the extent prevailing wage requirements increase project costs, this bill would result in General Fund cost pressures to augment funding for affordable housing tax credit programs. Specifically, affordable housing developers utilizing the Low Income Housing Tax Credit (LIHTC) would not be able to build as many units under this bill as would have occurred otherwise. Consequently, this bill would increase cost pressures to fund additional credits to support an equivalent level of housing production as would have occurred absent the bill.
VOTES:
ASM LABOR AND EMPLOYMENT: 7-0-0
YES: Ortega, Flora, Alanis, Wendy Carrillo, Lee, Ward, Zbur
ASM APPROPRIATIONS: 11-0-4
YES: Wicks, Arambula, Bryan, Calderon, Wendy Carrillo, Mike Fong, Grayson, Haney, Hart, Pellerin, Villapudua
ABS, ABST OR NV: Sanchez, Dixon, Jim Patterson, Ta
ASSEMBLY FLOOR: 65-0-15
YES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Flora, Mike Fong, Friedman, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Rodriguez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Wallis, Ward, Weber, Wilson, Wood, Zbur, Robert Rivas
ABS, ABST OR NV: Cervantes, Megan Dahle, Dixon, Essayli, Vince Fong, Gallagher, Holden, Mathis, Jim Patterson, Joe Patterson, Luz Rivas, Blanca Rubio, Sanchez, Waldron, Wicks
SENATE FLOOR: 28-7-5
YES: Archuleta, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dodd, Durazo, Eggman, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Padilla, Portantino, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener
NO: Dahle, Jones, Nguyen, Niello, Ochoa Bogh, Seyarto, Wilk
ABS, ABST OR NV: Allen, Alvarado-Gil, Ashby, Glazer, Grove
UPDATED
VERSION: August 15, 2024
CONSULTANT: Erin Hickey / L. & E. / (916) 319-2091 FN: 0004854
CONCURRENCE IN SENATE AMENDMENTS
CSA1 Bill Id:AB 3190
Author:(Haney and Wicks)
As Amended Ver:August 23, 2024
Majority vote
SUMMARY
Subjects to public works law, beginning on January 1, 2026 and ending on January 1, 2031, certain affordable housing projects by adding certain low-income housing tax credits to the definition of "paid for in whole or in part out of public funds," and providing that specified projects built pursuant to certain low-income housing tax credits with a state agency, redevelopment agency, successor agency to a redevelopment agency when acting in that capacity, or a local housing authority, are subject to public works requirements.
Senate Amendments
- Remove the requirement that certain private residential projects built on private property pursuant to a below-market interest rate loan with a state agency, a redevelopment agency, a successor agency to a redevelopment agency when acting in that capacity, or a local housing authority, be subject to the requirements of public works law.
- Change the bill's effective date to January 1, 2026, and sunsets and repeals its provisions on January 1, 2031.
COMMENTS
Public works laws require that, among other things, prevailing wage is paid to workers on publicly-funded projects, as specified. In California, the prevailing wage rate is an hourly rate paid on public works projects that is often set in the terms of a collective bargaining agreement. According to the Department of Industrial Relations, the wage rate relies upon such factors as "the particular craft, classification or type of work within the locality and in the nearest labor market area (if majorities of such workers are paid at a single rate). If there is no single rate paid to a majority, then the single or modal rate being paid to the greater number of workers is prevailing."
Prevailing wage laws are intended to ensure that contractors are not awarded public works contracts by paying low wages and undercutting competitors who provide higher compensation. In this way, these laws create a level playing field by requiring an across-the-board rate for all bidders on publicly-subsidized projects.
Three types of public funds that have been historically used by affordable housing developers are currently exempt from public works law that requires paying workers a prevailing wage:
- State Low-Income Housing Tax Credits (State LIHTCs);
- State and Local Below Market-Rate Loans (BMR loans);
- Redevelopment Agencies' Low- and Moderate-Income Housing Funds.
Since redevelopment agencies were dissolved in 2012, the only two functional exemptions are for State LIHTCs and BMR loans.
According to the Nor Cal Carpenters Union (NCCU), between 2021 and 2023, nearly $2 billion of State LIHTC funding was awarded to fund the construction of more than 22,000 housing units. Of those, nearly 13,000 units were built without any requirement to pay prevailing wages. The NCCU further estimates that more than $700 million below market-rate loans are awarded to affordable housing projects per year.
According to the Author
"California has set important affordable housing goals—but it lacks a dedicated workforce to actually build that housing. If workers aren't being paid a prevailing wage, there is no way the State can retain and recruit the 100,000 workers it needs to meet its affordable housing goals. By ensuring that all workers on affordable housing projects are being paid the industry standard, AB 3190 will help grow the residential construction workforce. As a result, we will be able to build more affordable housing for Californians."
Arguments in Support
The California State Association of Electrical Workers, the California State Pipe Trades Council, and the Western States Council of Sheet Metal Workers are in support and state, "As our communities continue to grow and develop, it is imperative that we maintain oversight over projects financed through various means, including tax credits. AB 3190's proposal to broaden the definition of projects funded by public funds to include those financed through credits applied against tax liabilities is a progressive step towards achieving this goal. By encompassing projects funded through tax credits, AB 3190 ensures that the public has a clear understanding of where public funds are being utilized. This transparency fosters trust between the government and its citizens, reinforcing the integrity of our public infrastructure projects."
Arguments in Opposition
A coalition of housing organizations, including the California Housing Consortium and Housing California are opposed and state, "Our organizations represent development, non-profit, financial, and public sectors united in the goal of increasing the supply of safe, stable, and affordable housing options for the people of California. Given our collective mission, we are concerned that as drafted, AB 3190 will significantly reduce the number of affordable units that can be produced."
"The research shows that 'the high cost of construction is a fundamental obstacle to building more housing in California. This is particularly true for subsidized affordable housing since higher costs typically translate into the need for more public funding.'"
FISCAL COMMENTS
According to the Senate Appropriations Committee:
- The Department of Industrial Relations (DIR) indicates that it would incur annual costs in the millions of dollars to implement the provisions of the bill (Labor Enforcement and Compliance Fund). Workload drivers would include investigating complaints, imposing penalties, and hearings related to appeals.
- To the extent prevailing wage requirements increase project costs, this bill would result in General Fund cost pressures to augment funding for affordable housing tax credit programs. Specifically, affordable housing developers utilizing the Low Income Housing Tax Credit (LIHTC) would not be able to build as many units under this bill as would have occurred otherwise. Consequently, this bill would increase cost pressures to fund additional credits to support an equivalent level of housing production as would have occurred absent the bill.
VOTES:
ASM LABOR AND EMPLOYMENT: 7-0-0
YES: Ortega, Flora, Alanis, Wendy Carrillo, Lee, Ward, Zbur
ASM APPROPRIATIONS: 11-0-4
YES: Wicks, Arambula, Bryan, Calderon, Wendy Carrillo, Mike Fong, Grayson, Haney, Hart, Pellerin, Villapudua
ABS, ABST OR NV: Sanchez, Dixon, Jim Patterson, Ta
ASSEMBLY FLOOR: 65-0-15
YES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Flora, Mike Fong, Friedman, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Rodriguez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Wallis, Ward, Weber, Wilson, Wood, Zbur, Robert Rivas
ABS, ABST OR NV: Cervantes, Megan Dahle, Dixon, Essayli, Vince Fong, Gallagher, Holden, Mathis, Jim Patterson, Joe Patterson, Luz Rivas, Blanca Rubio, Sanchez, Waldron, Wicks
UPDATED
VERSION: August 15, 2024
CONSULTANT: Erin Hickey / L. & E. / (916) 319-2091 FN: 0004854
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB 3190 |
THIRD READING
Bill No: AB 3190
Author: Haney (D) and Wicks (D)
Amended: 8/23/24 in Senate
Vote: 21
SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 4-1, 6/26/24
AYES: Smallwood-Cuevas, Cortese, Durazo, Laird
NOES: Wilk
SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/15/24
AYES: Caballero, Ashby, Becker, Bradford, Wahab
NOES: Jones, Seyarto
ASSEMBLY FLOOR: 65-0, 5/23/24 - See last page for vote
SUBJECT: Public works
SOURCE: California Conference of Carpenters
DIGEST:
This bill (a) applies public works law to certain affordable housing projects by expanding the definition of “paid for in whole or in part out of public funds” to include specified low-income housing tax credits; and (b) requires private residential projects built on private property to abide by public works law if the project receives specified low-income housing tax credits. These provisions become operative January 1, 2026 and are repealed January 1, 2031.
Senate Floor Amendments of 8/23/24 make the bill’s provisions operative January 1, 2026 and repeal them January 1, 2031. AB 3160 (Gabriel, 2024), which this bill is contingent upon, contains the same timeline.
ANALYSIS:
Existing law:
- Requires that not less than the general prevailing rate of per diem wages be paid to all workers employed on a “public works” project costing over $1,000 dollars and imposes misdemeanor penalties for violation of this requirement. (Labor Code §1771)
- Requires the Director of the Department of Industrial Relations to ascertain and consider the applicable wage rates established by collective bargaining agreements and the rates that may have been predetermined for federal public works, within the locality and in the nearest labor market area, when determining the general prevailing rate of per diem wages. (Labor Code §§1770, 1773)
- 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, except work done directly by a public utility company pursuant to order of the Public Utilities Commission or other public authority. (Labor Code §1720(a))
- Defines “paid for in whole or in part out of public funds” to include, among others:
- 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.
- The transfer by the state or political subdivision of an asset of value for less than fair market price.
- 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.
- Money loaned by the state or political subdivision that is to be repaid on a contingent basis. (Labor Code §1720(b))
- Exempts from public works law private residential projects built on private property unless the projects are built pursuant to an agreement with a state agency, a redevelopment agency, a successor agency to a redevelopment agency when acting in that capacity, or a local public housing authority. (Labor Code §1720(c)(1))
- Exempts, unless required by a public funding program, the construction or rehabilitation of privately owned residential projects from public works law if the public participation in the project that would otherwise meet the criteria of “paid for in whole or in part out of public funds” 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, as specified, to individuals or families earning no more than 80 percent of the area median income. (Labor Code §1720(c)(5)(E))
- Allows a state low-income housing tax credit (LIHTC) for costs related to construction, rehabilitation, or acquisition of low-income housing. This credit, which mirrors the federal LIHTC, may be used by taxpayers to offset tax under the Personal Income Tax, the Corporation Tax, and the Insurance Tax laws. (Revenue and Taxation Code §§12206, 17058, 23620.5)
- Allocates $70 million on an ongoing basis to the California Tax Credit Allocation Committee (TCAC) for the purposes of administering the LIHTC and adjusts this amount for inflation. (Revenue and Taxation Code §§12206, 17058, 23620.5)
This bill:
- Expands the definition of “paid for in whole or in part out of public funds” for purposes of defining what constitutes a public works project to include certain low-income housing tax credits, as specified.
- Requires private residential projects built on private property to abide by public works law if they receive specified low-income housing tax credits pursuant to 1), above, with a state agency, a redevelopment agency, a successor agency to a redevelopment agency, when acting in that capacity, or a local public housing authority.
- Provides that 2), above, does not apply if the public funds are less than three million dollars for a project that is the acquisition or rehabilitation of a residential project of 50 units or less.
- Provides that projects subject to 2), above, do not qualify for an existing exemption from public works law for the construction or rehabilitation of privately owned residential projects that are funded in the form of a below-market interest rate loan for a project in which occupancy of at least 40 percent of the units is restricted for at least 20 years, as specified, to individuals or families earning no more than 80 percent of the area median income.
- Specifies that the provisions to designate additional categories of work as public works shall not be construed to implicate requirements of other laws applicable to construction contracts awarded by public entities, including requirements within the Public Contracts Code, as specified. The provisions affect the status of work only with regard to requirements set forth in Article 1 of Chapter 1 of the Labor Code.
- Provides that the above provisions become operative January 1, 2026 and are repealed January 1, 2031.
- Becomes operative only if AB 3160 of the 2023-24 Regular Session is enacted, as specified.
Background
Prevailing Wages. All contractors working on “public works” projects are required to abide by a set of laws that ensure the responsible use of public funds. Among other requirements, this means paying a prevailing wage. The prevailing wage rate is the basic hourly rate paid on public works projects to a majority of workers engaged in a particular craft, classification, or type of work within the locality and in the nearest labor market area. The Director of the Department of Industrial Relations issues wage determinations semiannually. In determining the rates, the Director ascertains and considers the applicable wage rates established by collective bargaining agreements and the rates that may have been predetermined for federal public works. Prevailing wage laws ensure that contractors are not awarded public works contracts by paying low wages and undercutting competitors.
In California and across the nation, construction is a bifurcated industry, separated into a high wage, often unionized nonresidential construction sector and a low-wage, often exploitative residential construction sector. A 2021 report by the UC Berkeley Labor Center found that almost half of families of construction workers in California are enrolled in a safety net program, at an annual cost of over $3 billion. The hardship created by low wages and misclassification extends beyond workers and their families. When employers underpay and misclassify their workers, they also defund government programs like workers’ compensation, Social Security, and Medicare.
State Low-Income Housing Tax Credit (LIHTC). In 1986, the federal government established the LIHTC to incentivize the private development of affordable rental housing for low-income households. The program enables low-income housing sponsors and developers to raise project equity through the allocation of tax benefits to investors. In 1987, California authorized a state LIHTC to augment the federal one. Recipients must receive the federal LIHTC to be eligible for the state one. The annual amount of money allocated for the state LIHTC is limited to $70 million, adjusted for inflation. In 2020, the total credit amount available for allocation was about $100 million plus any unused or returned credit allocations from previous years. Affordable housing projects typically have several funding sources outside of the state LIHTC.
Beginning in 2020, California began providing an additional $500 million in “enhanced” state LIHTCs. The $500 million is subject to appropriation, but has been authorized in the budget each year since. Over their first four years, the enhanced state housing credits have made possible an additional 25,000 homes affordable to low-, very low-, and extremely low-income households. Since their inception, demand for the enhanced state credits has been oversubscribed.
State LIHTCs are excluded from prevailing wage requirements. A 2020 report conducted by the Terner Center for Housing Innovation at UC Berkeley found that although the LIHTC program does not trigger prevailing wage requirements, LIHTC projects often layer other forms of public funding that do require either federal or state prevailing wage, or they may be subject to local project labor agreements for their construction contracting . To that effect, the report found that approximately 60 percent of LIHTC projects awarded funds between 2008 and 2019 were subject to either prevailing wage or local project labor agreements, or both.
The Terner Center report identified hard construction costs, specifically the costs of material and labor, as the primary driver of rising development costs . This increase in costs has real consequences. For example, the report found the same amount of public subsidy is needed to build two units at 1,000 square feet as was needed for three units just 10 years ago. That said, an increase in cost is not necessarily a bad thing when it ensures that workers are paid well. In California, the mismatch between the number of permitted units and the growth in the construction sector is significant. The author of this measure points out that 100,000 more residential construction workers are need to meet affordable housing production goals.
Home values and rents in California are among the most expensive in the nation. A 2023 statewide survey by Public Policy Institute of California found that about half of Californians report that the cost of housing is a financial strain for them and their families . Recruiting and training construction workers is a pivotal component of ramping up affordable housing. As California adopts policies meant to incentivize housing development, the state must balance this with its commitment to create high-road jobs that don’t force workers to rely on safety net programs. Certainly, this is no easy task.
Package Deal: AB 3160 (Gabriel, 2024). The provisions of this bill are contingent upon AB 3160 and shall become operative only if both become law. AB 3160 would provide that an additional allocation of $500 million to the state LIHTC is not subject to an appropriation in the annual Budget Act for calendar years 2026 through 2030.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
According to the Senate Appropriations Committee:
- The Department of Industrial Relations (DIR) indicates that it would incur annual costs in the millions of dollars to implement the provisions of the bill (Labor Enforcement and Compliance Fund). Workload drivers would include investigating complaints, imposing penalties, and hearings related to appeals.
- To the extent prevailing wage requirements increase project costs, this bill would result in General Fund cost pressures to augment funding for affordable housing tax credit programs. Specifically, affordable housing developers utilizing the Low Income Housing Tax Credit (LIHTC) would not be able to build as many units under this bill as would have occurred otherwise. Consequently, this bill would increase cost pressures to fund additional credits to support an equivalent level of housing production as would have occurred absent the bill.
SUPPORT: (Verified 8/23/24)
California Conference of Carpenters (source)
Bluegreen Alliance
California State Association of Electrical Workers
California State Council of Laborers
California State Council of Service Employees International Union
California State Pipe Trades Council
Center for Sustainable Neighborhoods
Construction Employers' Association
Fresno Building Healthy Communities
Nor Cal Carpenters Union
Wall and Ceiling Alliance
Western States Council Sheet Metal, Air, Rail and Transportation
Western States Regional Council of Carpenters
Western Wall and Ceiling Contractors Association
OPPOSITION: (Verified 8/23/24)
Associated General Contractors of California
Associated General Contractors-san Diego Chapter
California Coalition for Rural Housing
California Council for Affordable Housing
California Housing Consortium
California Housing Partnership
Housing California
San Diego Housing Federation
Southern California Association of Non-profit Housing
ARGUMENTS IN SUPPORT: The sponsors of the measure, the California Conference of Carpenters, argue:
“AB 3190 will close loopholes in the Prevailing Wage Laws that have allowed affordable housing developers to receive state and local public subsidies without paying prevailing wages. AB 3190 is a logical next step to recently enacted housing legislation such as AB 2011 (Wicks, 2022), SB 423 (Wiener, 2023), and SB 4 (Wiener, 2023) that condition state intervention in favor of housing production on prevailing wage standards…
“The affordable housing prevailing wage loopholes have perpetuated poverty- and near-poverty-levels of compensation for thousands of California residential construction workers building publicly financed projects without the benefit of prevailing wage standards. Exploitative pay rates in the residential construction trades often are aggravated by contractor wage theft and tax fraud. Researchers estimate that ‘low road’ construction contractor employment practices have a public cost that tallies in the billions of dollars annually in safety net program expenditures and foregone tax revenues…
“State and local government-subsidized affordable housing should be built by workers who do not add to mile-long waiting lists of Californians seeking spots in affordable housing developments. For these reasons, the NCCU urges members of the Senate Labor Committee to support AB 3190.”
ARGUMENTS IN OPPOSITION: The California Housing Consortium and Housing California are opposed to the bill, stating:
“Given our collective mission, we are concerned that the costs [of] AB 3190 will significantly reduce the number of affordable units that can be produced.
“Our organizations have been partners with labor, in fact, together we successfully passed AB 2011 (Wicks, Statues 2022, Chapter 647), which created a ministerial, streamlined approval process for 100% affordable housing projects in commercial zones and for mixed-income housing projects along commercial corridors, under certain circumstances…
“The research shows that hard construction costs—specifically the costs of material and labor— are the primary driver of rising development costs. Adding more cost when existing resources are so scarce, when the Governor is proposing to cut $1.2 billion in General Fund investment plus reducing by $500 million critical tax credits will undermines all the progress made. Affordable housing financing is already an overly complex system, this bill adds an outsize amount of cost for the benefit it delivers.
“As written this is an anti-affordable housing bill. To apply prevailing wages on tax credits and existing loans simply means reducing the number of new affordable units that can be produced.”
ASSEMBLY FLOOR: 65-0, 5/23/24
AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Flora, Mike Fong, Friedman, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Rodriguez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Wallis, Ward, Weber, Wilson, Wood, Zbur, Robert Rivas
NO VOTE RECORDED: Cervantes, Megan Dahle, Dixon, Essayli, Vince Fong, Gallagher, Holden, Mathis, Jim Patterson, Joe Patterson, Luz Rivas, Blanca Rubio, Sanchez, Waldron, Wicks
Prepared by: Emma Bruce / L., P.E. & R. / (916) 651-1556
8/26/24 11:53:26
**** END ****
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB 3190 |
THIRD READING
Bill No: AB 3190
Author: Haney (D) and Wicks (D)
Amended: 8/15/24 in Senate
Vote: 21
SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 4-1, 6/26/24
AYES: Smallwood-Cuevas, Cortese, Durazo, Laird
NOES: Wilk
SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/15/24
AYES: Caballero, Ashby, Becker, Bradford, Wahab
NOES: Jones, Seyarto
ASSEMBLY FLOOR: 65-0, 5/23/24 - See last page for vote
SUBJECT: Public works
SOURCE: California Conference of Carpenters
DIGEST:
This bill (1) applies public works law to certain affordable housing projects by expanding the definition of “paid for in whole or in part out of public funds” to include specified low-income housing tax credits; and (2) requires private residential projects built on private property to abide by public works law if the project receives specified low-income housing tax credits, as specified.
ANALYSIS:
Existing law:
- Requires that not less than the general prevailing rate of per diem wages be paid to all workers employed on a “public works” project costing over $1,000 dollars and imposes misdemeanor penalties for violation of this requirement. (Labor Code §1771)
- Requires the Director of the Department of Industrial Relations to ascertain and consider the applicable wage rates established by collective bargaining agreements and the rates that may have been predetermined for federal public works, within the locality and in the nearest labor market area, when determining the general prevailing rate of per diem wages. (Labor Code §§1770, 1773)
- 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, except work done directly by a public utility company pursuant to order of the Public Utilities Commission or other public authority. (Labor Code §1720(a))
- Defines “paid for in whole or in part out of public funds” to include, among others:
- 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.
- The transfer by the state or political subdivision of an asset of value for less than fair market price.
- 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.
- Money loaned by the state or political subdivision that is to be repaid on a contingent basis. (Labor Code §1720(b))
- Exempts from public works law private residential projects built on private property unless the projects are built pursuant to an agreement with a state agency, a redevelopment agency, a successor agency to a redevelopment agency when acting in that capacity, or a local public housing authority. (Labor Code §1720(c)(1))
- Exempts, unless required by a public funding program, the construction or rehabilitation of privately owned residential projects from public works law if the public participation in the project that would otherwise meet the criteria of “paid for in whole or in part out of public funds” 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, as specified, to individuals or families earning no more than 80 percent of the area median income. (Labor Code §1720(c)(5)(E))
- Allows a state low-income housing tax credit (LIHTC) for costs related to construction, rehabilitation, or acquisition of low-income housing. This credit, which mirrors the federal LIHTC, may be used by taxpayers to offset tax under the Personal Income Tax, the Corporation Tax, and the Insurance Tax laws. (Revenue and Taxation Code §§12206, 17058, 23620.5)
- Allocates $70 million on an ongoing basis to the California Tax Credit Allocation Committee (TCAC) for the purposes of administering the LIHTC and adjusts this amount for inflation. (Revenue and Taxation Code §§12206, 17058, 23620.5)
This bill:
- Expands the definition of “paid for in whole or in part out of public funds” for purposes of defining what constitutes a public works project to include certain low-income housing tax credits, as specified.
- Requires private residential projects built on private property to abide by public works law if they receive specified low-income housing tax credits pursuant to 1), above, with a state agency, a redevelopment agency, a successor agency to a redevelopment agency, when acting in that capacity, or a local public housing authority.
- Provides that 2), above, does not apply if the public funds are less than three million dollars for a project that is the acquisition or rehabilitation of a residential project of 50 units or less.
- Provides that projects subject to 2), above, do not qualify for an existing exemption from public works law for the construction or rehabilitation of privately owned residential projects that are funded in the form of a below-market interest rate loan for a project in which occupancy of at least 40 percent of the units is restricted for at least 20 years, as specified, to individuals or families earning no more than 80 percent of the area median income.
- Specifies that the provisions to designate additional categories of work as public works shall not be construed to implicate requirements of other laws applicable to construction contracts awarded by public entities, including requirements within the Public Contracts Code, as specified. The provisions affect the status of work only with regard to requirements set forth in Article 1 of Chapter 1 of the Labor Code.
- Becomes operative on or before January 1, 2025, and only if AB 3160 of the 2023-24 Regular Session is enacted.
- Repeals the bill’s provisions on January 1, 2032.
Background
Prevailing Wages. All contractors working on “public works” projects are required to abide by a set of laws that ensure the responsible use of public funds. Among other requirements, this means paying a prevailing wage. The prevailing wage rate is the basic hourly rate paid on public works projects to a majority of workers engaged in a particular craft, classification, or type of work within the locality and in the nearest labor market area. The Director of the Department of Industrial Relations issues wage determinations semiannually. In determining the rates, the Director ascertains and considers the applicable wage rates established by collective bargaining agreements and the rates that may have been predetermined for federal public works. Prevailing wage laws ensure that contractors are not awarded public works contracts by paying low wages and undercutting competitors.
In California and across the nation, construction is a bifurcated industry, separated into a high wage, often unionized nonresidential construction sector and a low-wage, often exploitative residential construction sector. A 2021 report by the UC Berkeley Labor Center found that almost half of families of construction workers in California are enrolled in a safety net program, at an annual cost of over $3 billion[1]. The hardship created by low wages and misclassification extends beyond workers and their families. When employers underpay and misclassify their workers they also defund government programs like workers’ compensation, Social Security, and Medicare[2].
State Low-Income Housing Tax Credit (LIHTC). In 1986, the federal government established the LIHTC to incentivize the private development of affordable rental housing for low-income households. The program enables low-income housing sponsors and developers to raise project equity through the allocation of tax benefits to investors. In 1987, California authorized a state LIHTC to augment the federal one. Recipients must receive the federal LIHTC to be eligible for the state one. The annual amount of money allocated for the state LIHTC is limited to $70 million, adjusted for inflation. In 2020, the total credit amount available for allocation was about $100 million plus any unused or returned credit allocations from previous years. Affordable housing projects typically have several funding sources outside of the state LIHTC.
Beginning in 2020, California began providing an additional $500 million in “enhanced” state LIHTCs. The $500 million is subject to appropriation, but has been authorized in the budget each year since. Over their first four years, the enhanced state housing credits have made possible an additional 25,000 homes affordable to low-, very low-, and extremely low-income households. Since their inception, demand for the enhanced state credits has been oversubscribed.
State LIHTCs are excluded from prevailing wage requirements. A 2020 report conducted by the Terner Center for Housing Innovation at UC Berkeley found that although the LIHTC program does not trigger prevailing wage requirements, LIHTC projects often layer other forms of public funding that do require either federal or state prevailing wage, or they may be subject to local project labor agreements for their construction contracting[3]. To that effect, the report found that approximately 60 percent of LIHTC projects awarded funds between 2008 and 2019 were subject to either prevailing wage or local project labor agreements, or both.
The Terner Center report identified hard construction costs, specifically the costs of material and labor, as the primary driver of rising development costs[4]. This increase in costs has real consequences. For example, the report found the same amount of public subsidy is needed to build two units at 1,000 square feet as was needed for three units just 10 years ago. That said, an increase in cost is not necessarily a bad thing when it ensures that workers are paid well. In California, the mismatch between the number of permitted units and the growth in the construction sector is significant. The author of this measure points out that 100,000 more residential construction workers are need to meet affordable housing production goals.
Home values and rents in California are among the most expensive in the nation. A 2023 statewide survey by Public Policy Institute of California found that about half of Californians report that the cost of housing is a financial strain for them and their families[5]. Recruiting and training construction workers is a pivotal component of ramping up affordable housing. As California adopts policies meant to incentivize housing development, the state must balance this with its commitment to create high-road jobs that don’t force workers to rely on safety net programs. Certainly, this is no easy task.
Package Deal: AB 3160 (Gabriel, 2024). The provisions of this bill are contingent upon AB 3160 and shall become operative only if both become law. AB 3160 would provide that an additional allocation of $500 million to the state LIHTC is not subject to an appropriation in the annual Budget Act for calendar years 2025 through 2030.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
According to the Senate Appropriations Committee:
- The Department of Industrial Relations (DIR) indicates that it would incur annual costs in the millions of dollars to implement the provisions of the bill (Labor Enforcement and Compliance Fund). Workload drivers would include investigating complaints, imposing penalties, and hearings related to appeals.
- To the extent prevailing wage requirements increase project costs, this bill would result in General Fund cost pressures to augment funding for affordable housing tax credit programs. Specifically, affordable housing developers utilizing the Low Income Housing Tax Credit (LIHTC) would not be able to build as many units under this bill as would have occurred otherwise. Consequently, this bill would increase cost pressures to fund additional credits to support an equivalent level of housing production as would have occurred absent the bill.
SUPPORT: (Verified 8/15/24)
California Conference of Carpenters (Source)
Bluegreen Alliance
California State Association of Electrical Workers
California State Council of Laborers
California State Council of Service Employees International Union
California State Pipe Trades Council
Center for Sustainable Neighborhoods
Construction Employers' Association
Fresno Building Healthy Communities
Nor Cal Carpenters Union
Wall and Ceiling Alliance
Western States Council Sheet Metal, Air, Rail and Transportation
Western States Regional Council of Carpenters
Western Wall and Ceiling Contractors Association
OPPOSITION: (Verified 5/14/24)
Associated General Contractors of California
Associated General Contractors-san Diego Chapter
California Coalition for Rural Housing
California Council for Affordable Housing
California Housing Consortium
California Housing Partnership
Housing California
San Diego Housing Federation
Southern California Association of Non-profit Housing
ARGUMENTS IN SUPPORT: The sponsors of the measure, the California Conference of Carpenters, argue:
“AB 3190 will close loopholes in the Prevailing Wage Laws that have allowed affordable housing developers to receive state and local public subsidies without paying prevailing wages. AB 3190 is a logical next step to recently enacted housing legislation such as AB 2011 (Wicks, 2022), SB 423 (Wiener, 2023), and SB 4 (Wiener, 2023) that condition state intervention in favor of housing production on prevailing wage standards…
“The affordable housing prevailing wage loopholes have perpetuated poverty- and near-poverty-levels of compensation for thousands of California residential construction workers building publicly financed projects without the benefit of prevailing wage standards. Exploitative pay rates in the residential construction trades often are aggravated by contractor wage theft and tax fraud. Researchers estimate that ‘low road’ construction contractor employment practices have a public cost that tallies in the billions of dollars annually in safety net program expenditures and foregone tax revenues…
“State and local government-subsidized affordable housing should be built by workers who do not add to mile-long waiting lists of Californians seeking spots in affordable housing developments. For these reasons, the NCCU urges members of the Senate Labor Committee to support AB 3190.”
ARGUMENTS IN OPPOSITION: The California Housing Consortium and Housing California are opposed to the bill, stating:
“Given our collective mission, we are concerned that the costs [of] AB 3190 will significantly reduce the number of affordable units that can be produced.
“Our organizations have been partners with labor, in fact, together we successfully passed AB 2011 (Wicks, Statues 2022, Chapter 647), which created a ministerial, streamlined approval process for 100% affordable housing projects in commercial zones and for mixed-income housing projects along commercial corridors, under certain circumstances…
“The research shows that hard construction costs—specifically the costs of material and labor— are the primary driver of rising development costs. Adding more cost when existing resources are so scarce, when the Governor is proposing to cut $1.2 billion in General Fund investment plus reducing by $500 million critical tax credits will undermines all the progress made. Affordable housing financing is already an overly complex system, this bill adds an outsize amount of cost for the benefit it delivers.
“As written this is an anti-affordable housing bill. To apply prevailing wages on tax credits and existing loans simply means reducing the number of new affordable units that can be produced.”
ASSEMBLY FLOOR: 65-0, 5/23/24
AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Flora, Mike Fong, Friedman, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Rodriguez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Wallis, Ward, Weber, Wilson, Wood, Zbur, Robert Rivas
NO VOTE RECORDED: Cervantes, Megan Dahle, Dixon, Essayli, Vince Fong,
Gallagher, Holden, Mathis, Jim Patterson, Joe Patterson, Luz Rivas, Blanca Rubio, Sanchez, Waldron, Wicks
Prepared by: Emma Bruce / L., P.E. & R. / (916) 651-1556
8/19/24 12:46:45
Ken Jacobs and Kuochih Huang, “The Public Cost of Low-Wage Jobs in California’s Construction Industry,” UC Berkeley Labor Center, June 8, 2021, The Public Cost of Low-Wage Jobs in California’s Construction Industry - UC Berkeley Labor Center ↑
Ibid. ↑
Carolina Reid, “The Costs of Affordable Housing Production: Insights from California’s 9% Low-Income Housing Tax Credit Program,” Terner Center for Housing Innovation UC Berkeley, March 2020, LIHTC_Construction_Costs_March_2020.pdf (berkeley.edu) ↑
Ibid. ↑
Mark Baldassare, et al., “PPIC Statewide Survey: Californians and Their Government,” PPIC, December 2023, https://www.ppic.org/publication/ppic-statewide-survey-californians-and-their-government-december-2023/ ↑
SENATE COMMITTEE ON
Senator Anna Caballero, Chair
2023 - 2024 Regular Session
AB 3190 (Haney) - Public works
Version: | Policy Vote: |
Urgency: | Mandate: |
Hearing Date: | Consultant: |
Bill Summary:
AB 3190 would (1) apply public works law to certain affordable housing projects, as specified, and (2) require private residential projects built on private property to abide by public works law if the project receives specified low-income housing tax credits or a below-market interest rate loan.
*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********
The following information is revised to reflect amendments
adopted by the committee on August 15, 2024
Fiscal Impact:
- The Department of Industrial Relations (DIR) indicates that it would incur annual costs in the millions of dollars to implement the provisions of the bill (Labor Enforcement and Compliance Fund). Workload drivers would include investigating complaints, imposing penalties, and hearings related to appeals.
- To the extent prevailing wage requirements increase project costs, this bill would result in General Fund cost pressures to augment funding for affordable housing tax credit programs. Specifically, affordable housing developers utilizing the Low Income Housing Tax Credit (LIHTC) would not be able to build as many units under this bill as would have occurred otherwise. Consequently, this bill would increase cost pressures to fund additional credits to support an equivalent level of housing production as would have occurred absent the bill.
Committee Amendments:
Strike “below-market interest rate loan” provision from the bill.
-- END --
SENATE COMMITTEE ON APPROPRIATIONS
Senator Anna Caballero, Chair
2023 - 2024 Regular Session
AB 3190 (Haney) - Public works
Version: May 20, 2024 | Policy Vote: L., P.E. & R. 4 - 1 |
Urgency: No | Mandate: Yes |
Hearing Date: August 5, 2024 | Consultant: Robert Ingenito |
Bill Summary:
AB 3190 would (1) apply public works law to certain affordable housing projects, as specified, and (2) require private residential projects built on private property to abide by public works law if the project receives specified low-income housing tax credits or a below-market interest rate loan.
Fiscal Impact:
- The Department of Industrial Relations (DIR) indicates that it would incur first-year costs of $6.4 million, and $5.9 million annually thereafter, to implement the provisions of the bill (Labor Enforcement and Compliance Fund). Workload drivers would include investigating complaints, imposing penalties, and hearings related to appeals.
- To the extent prevailing wage requirements increase project costs, this bill would result in General Fund cost pressures to augment funding for affordable housing tax credit programs. Specifically, affordable housing developers utilizing the Low Income Housing Tax Credit (LIHTC) would not be able to build as many units under this bill as would have occurred otherwise. Consequently, this bill would increase cost pressures to fund additional credits to support an equivalent level of housing production as would have occurred absent the bill.
Background:
All contractors working on “public works” projects are required to abide by a set of laws that ensure the responsible use of public funds. Among other requirements, this means paying a prevailing wage. The prevailing wage rate is determined by DIR and generally based on the basic hourly rate paid on public works projects to a majority of workers engaged in a particular craft or classification within a locality. Requiring an across-the-board rate ensures bidders are not awarded public works contracts by virtue of paying low wages and undercutting competitors who provide higher compensation. Existing law requires payment of prevailing wage to all workers employed on a public works project valued over $1,000, such as publicly funded construction, alteration, demolition, installation, maintenance, or repair work done under contract.
Current federal law provides for a federal LIHTC to incentivize private development of affordable rental housing. The tax credit enables low-income housing sponsors and developers to raise project equity through the allocation of tax benefits to investors. In 1987, the Legislature authorized the creation of a state LIHTC program to augment the federal tax credit program, and existing law authorizes TCAC to allocate $70 million in state LIHTCs each year, adjusted for inflation. The state program is generally patterned after the federal program, but project developers or housing sponsors that receive a state credit allocation must agree to specified terms, including a minimum of 55 years of rent and tenant income restrictions. Existing law designates TCAC as the entity responsible for administering both the federal and state LIHTC programs, including the allocation of tax credits to housing sponsors through a competitive application process, and authorizes the Tax Credit Allocation Committee (TCAC) to adopt, amend, or repeal rules and regulations for the allocation of LIHTCs. TCAC must submit an annual report to the Legislature on its activities related to the allocation of tax credits and the projects and units that benefit from those credits.
TCAC’s most recent annual report indicates that the state LIHTC cap was nearly $119 million in 2023, plus a 2022 carry forward amount of around $30 million for a total of $148,742,850 for 2023. To augment the state tax credit cap, AB 101 (Budget Committee, 2019) authorized an additional $500 million in state LIHTCs for calendar year 2020. For calendar year 2021 and each year thereafter, current law specifies that up to $500 million in additional state LIHTCs is only available pursuant to an authorization in the annual Budget Act or related legislation. The Legislature has authorized the additional $500 million in LIHTC authorizations each year in the Budget Act, providing the augmentations for the 2021 through 2025 calendar years.
In addition to using state LIHTCs, affordable housing developers also make use of below market rate (BMR) loans. Currently, both state LIHTCs and BMR loans are excluded from prevailing wage requirements.
Proposed Law:
This bill would do the following:
- Expand the definition of “paid for in whole or in part out of public funds” for purposes of defining what constitutes a public works project to include certain low-income housing tax credits, as specified.
- Require private residential projects built on private property to abide by public works law if they receive specified low-income housing tax credits, or a below-market interest rate loan with a state agency, a redevelopment agency, a successor agency to a redevelopment agency, when acting in that capacity, or a local public housing authority. These provisions would not apply if the public funds are less than three million dollars for a project that is the acquisition or rehabilitation of a residential project of 50 units or less.
- Provide that projects subject to the above requirement do not qualify for an existing exemption from public works law for the construction or rehabilitation of privately owned residential projects that are funded in the form of a below-market interest rate loan for a project in which occupancy of at least 40 percent of the units is restricted for at least 20 years, as specified, to individuals or families earning no more than 80 percent of the area median income.
- Specify that the provisions to designate additional categories of work as public works shall not be construed to implicate requirements of other laws applicable to construction contracts awarded by public entities, including requirements within the Public Contracts Code, as specified.
- Become operative on or before January 1, 2025, and only if AB 3160 of the 2023-24 Regular Session is enacted. Repeal its provisions on January 1, 2032.
Related Legislation:
- AB 3160 (Gabriel) would provide that an additional allocation of $500 million to the Low Income Housing Tax Credit is not subject to an appropriation in the annual Budget Act for calendar years 2025 through 2030. AB 3160 would only become operative if AB 3190 (Haney, 2024) is enacted and becomes effective on or before January 1, 2025. This bill is currently pending in this Committee.
- AB 2231 (Kalra, Chapter 346, Statutes of 2020) defined a public subsidy as de minimis for the purpose of paying the prevailing wage in private projects if it is both less than $600,000 and less than 2 percent of the total project cost for bids advertised or contracts awarded after July 1, 2021. If the subsidy is for a residential project consisting entirely of single-family dwellings, the subsidy is de minimis so long as it is less than 2 percent of the total project cost.
- AB 101 (Committee on Budget and Fiscal Review, Chapter 159, Statues of 2019) among other things, allocated $500 million for LIHTC in 2020, and up to $500 million, upon appropriation, in 2021 and beyond.
- SB 972 (Costa, Chapter 1048, Statutes of 2002) provided exemptions from prevailing wage requirements for the construction or rehabilitation of privately-owned residential projects, as specified.
- SB 975 (Alcaron, Chapter 938, Statutes of 2001) provided that certain private residential housing projects and development projects built on private property are not subject to the prevailing wage, hour, and discrimination laws that govern employment on public works projects.
Staff Comments:
A 2020 UC Berkeley report found that although the LIHTC program does not trigger prevailing wage requirements, LIHTC projects often layer other forms of public funding that do require either federal or state prevailing wage, or they may be subject to local project labor agreements for their construction contracting. Overall, the report found that approximately 60 percent of LIHTC projects awarded funds between 2008 and 2019 were subject to either prevailing wage or local project labor agreements, or both.
The report further identified hard construction costs, specifically the costs of material and labor, as the primary driver of rising development costs. Among other conclusions, it found the same amount of public subsidy is needed to build two units at 1,000 square feet as was needed to construct three units 10 years ago. Information provided to the Committee suggests that paying prevailing wages increases total housing development costs by roughly 25 percent.
As noted above, this bill AB includes a “contingent enactment” provision specifying that it would only become operative if AB 3160 (Gabriel) is also enacted and becomes effective by January 1, 2025. Also as noted above, current law authorizes the allocation of up to $500 million in additional LIHTCs each year only to the extent that an additional amount is authorized in the annual Budget Act or similar legislation. AB 3160 would eliminate that discretion by requiring that an additional $500 million in LIHTCs be available to TCAC for allocation in calendar years 2025 through 2030. To the extent AB 3160 results in the allocation of LIHTCs that would not have been authorized in annual Budget Acts over that timeframe, it would result in significant General Fund impacts in the form of revenue reductions when LIHTCs allocated from 2025 through 2030 are claimed on tax returns. Again, recent budget actions have provided the full $500 million in additional LIHTCs each year since 2020 to augment the statutory state LIHTC cap, but in light of the budget deficits that are projected for the foreseeable future, there is considerable uncertainty that this pattern would continue, absent the bills.
Any local government costs resulting from the mandate in this measure are not state-reimbursable because the mandate only involves the definition of a crime or the penalty for conviction of a crime.
-- END --
SENATE COMMITTEE ON LABOR, PUBLIC EMPLOYMENT AND RETIREMENT
Senator Lola Smallwood-Cuevas, Chair
2023 - 2024 Regular
Bill No: AB 3190 Hearing Date: June 26, 2024
Author: | Haney | ||
Version: | May 20, 2024 | ||
Urgency: | No | Fiscal: | Yes |
Consultant: | Emma Bruce | ||
SUBJECT: Public works
KEY ISSUE
This bill 1) applies public works law to certain affordable housing projects by expanding the definition of “paid for in whole or in part out of public funds” to include specified low-income housing tax credits and 2) requires private residential projects built on private property to abide by public works law if the project receives specified low-income housing tax credits or a below-market interest rate loan, as specified.
ANALYSIS
Existing law:
- Requires that not less than the general prevailing rate of per diem wages be paid to all workers employed on a “public works” project costing over $1,000 dollars and imposes misdemeanor penalties for violation of this requirement. (Labor Code §1771)
- Requires the Director of the Department of Industrial Relations to ascertain and consider the applicable wage rates established by collective bargaining agreements and the rates that may have been predetermined for federal public works, within the locality and in the nearest labor market area, when determining the general prevailing rate of per diem wages. (Labor Code §§1770, 1773)
- 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, except work done directly by a public utility company pursuant to order of the Public Utilities Commission or other public authority. (Labor Code §1720(a))
- Defines “paid for in whole or in part out of public funds” to include, among others:
- 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.
- The transfer by the state or political subdivision of an asset of value for less than fair market price.
- 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.
- Money loaned by the state or political subdivision that is to be repaid on a contingent basis. (Labor Code §1720(b))
- Exempts from public works law private residential projects built on private property unless the projects are built pursuant to an agreement with a state agency, a redevelopment agency, a successor agency to a redevelopment agency when acting in that capacity, or a local public housing authority. (Labor Code §1720(c)(1))
- Exempts, unless required by a public funding program, the construction or rehabilitation of privately owned residential projects from public works law if the public participation in the project that would otherwise meet the criteria of “paid for in whole or in part out of public funds” 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, as specified, to individuals or families earning no more than 80 percent of the area median income. (Labor Code §1720(c)(5)(E))
- Allows a state low-income housing tax credit (LIHTC) for costs related to construction, rehabilitation, or acquisition of low-income housing. This credit, which mirrors the federal LIHTC, may be used by taxpayers to offset tax under the Personal Income Tax, the Corporation Tax, and the Insurance Tax laws. (Revenue and Taxation Code §§12206, 17058, 23620.5)
- Allocates $70 million on an ongoing basis to the California Tax Credit Allocation Committee (TCAC) for the purposes of administering the LIHTC and adjusts this amount for inflation. (Revenue and Taxation Code §§12206, 17058, 23620.5)
This bill:
- Expands the definition of “paid for in whole or in part out of public funds” for purposes of defining what constitutes a public works project to include certain low-income housing tax credits, as specified.
- Requires private residential projects built on private property to abide by public works law if they receive specified low-income housing tax credits pursuant to 1), above, or a below-market interest rate loan with a state agency, a redevelopment agency, a successor agency to a redevelopment agency, when acting in that capacity, or a local public housing authority.
- Provides that 2), above, does not apply if the public funds are less than three million dollars for a project that is the acquisition or rehabilitation of a residential project of 50 units or less.
- Provides that projects subject to 2), above, do not qualify for an existing exemption from public works law for the construction or rehabilitation of privately owned residential projects that are funded in the form of a below-market interest rate loan for a project in which occupancy of at least 40 percent of the units is restricted for at least 20 years, as specified, to individuals or families earning no more than 80 percent of the area median income.
- Specifies that the provisions to designate additional categories of work as public works shall not be construed to implicate requirements of other laws applicable to construction contracts awarded by public entities, including requirements within the Public Contracts Code, as specified.
- Becomes operative on or before January 1, 2025, and only if AB 3160 of the 2023-24 Regular Session is enacted.
- Repeals the bill’s provisions on January 1, 2032.
COMMENTS
1. Background:
Prevailing Wages
All contractors working on “public works” projects are required to abide by a set of laws that ensure the responsible use of public funds. Among other requirements, this means paying a prevailing wage. The prevailing wage rate is the basic hourly rate paid on public works projects to a majority of workers engaged in a particular craft, classification, or type of work within the locality and in the nearest labor market area. The Director of the Department of Industrial Relations issues wage determinations semiannually, on February 22 and August 22. In determining the rates, the Director ascertains and considers the applicable wage rates established by collective bargaining agreements and the rates that may have been predetermined for federal public works. Prevailing wage laws ensure that contractors are not awarded public works contracts by paying low wages and undercutting competitors. In this way, these laws create a level playing field on publicly-subsidized projects.
In California and across the nation, construction is a bifurcated industry, separated into a high wage, often unionized nonresidential construction sector and a low-wage, often exploitative residential construction sector. A 2021 report by the UC Berkeley Labor Center found that almost half of families of construction workers in California are enrolled in a safety net program, at an annual cost of over $3 billion[1]. The hardship created by low wages and misclassification extends beyond workers and their families. When employers underpay and misclassify their workers they also defund government programs like workers’ compensation, Social Security, and Medicare[2].
State Low-Income Housing Tax Credit (LIHTC) and Below Market-Rate Loans (BMR Loans)
In 1986, the federal government established the LIHTC to incentivize the private development of affordable rental housing for low-income households. The program enables low-income housing sponsors and developers to raise project equity through the allocation of tax benefits to investors. In 1987, California authorized a state LIHTC to augment the federal one. Recipients must receive the federal LIHTC to be eligible for the state one. The annual amount of money allocated for the state LIHTC is limited to $70 million, adjusted for inflation. In 2020, the total credit amount available for allocation was about $100 million plus any unused or returned credit allocations from previous years. Affordable housing projects typically have several funding sources outside of the state LIHTC.
Beginning in 2020, California began providing an additional $500 million in “enhanced” state LIHTCs. The $500 million is subject to appropriation, but has been authorized in the budget each year since. The credits are "enhanced" because they have a higher credit rate, providing more assistance to each development than the original state ones. Over their first four years, the enhanced state housing credits have made possible an additional 25,000 homes affordable to low-, very low-, and extremely low-income households. Since their inception, demand for the enhanced state credits has been oversubscribed.
In addition to using state LIHTCs, affordable housing developers also make use of BMR loans. Both state LIHTCs and BMR loans are excluded from prevailing wage requirements. A 2020 report conducted by the Terner Center for Housing Innovation at UC Berkeley found that although the LIHTC program does not trigger prevailing wage requirements, LIHTC projects often layer other forms of public funding that do require either federal or state prevailing wage, or they may be subject to local project labor agreements for their construction contracting[3]. To that effect, the report found that approximately 60 percent of LIHTC projects awarded funds between 2008 and 2019 were subject to either prevailing wage or local project labor agreements, or both.
The Terner Center report identified hard construction costs, specifically the costs of material and labor, as the primary driver of rising development costs[4]. This increase in costs has real consequences. For example, the report found the same amount of public subsidy is needed to build two units at 1,000 square feet as was needed for three units just 10 years ago. In California, the mismatch between the number of permitted units and the growth in the construction sector is significant. The author of this measure points out that 100,000 more residential construction workers are need to meet affordable housing production goals.
Home values and rents in California are among the most expensive in the nation. A 2023 statewide survey by PPIC found that about half of Californians report that the cost of housing is a financial strain for them and their families[5]. Furthermore, majorities of Californians across partisan and demographic groups and regions say the state needs more policies geared towards making both home buying and rental housing more accessible[6]. Recruiting and training construction workers is a pivotal component of ramping up affordable housing. As California adopts policies meant to incentivize housing development, the state must balance this with its commitment to create high-road jobs that don’t force workers to rely on safety net programs. Certainly, this is no easy task.
Package Deal: AB 3160 (Gabriel, 2024)
The provisions of this bill are contingent upon AB 3160 and shall become operative only if both become law. AB 3160 would provide that an additional allocation of $500 million to the state LIHTC is not subject to an appropriation in the annual Budget Act for calendar years 2025 through 2030. Securing this enhanced credit provides developers the certainty they need to pursue affordable housing projects without worrying that funding will disappear.
2. Need for this bill?
According to the author:
“There are three types of public funds that have been historically used by affordable housing developers that makes them exempt from paying their workers a prevailing wage [State LIHTCs, state and local below market-rate loans, and redevelopment agencies’ low and moderate-income housing funds]. If a project receives funding through any of these funds, they are not required to pay the industry standard prevailing wage…
From 2021 to 2023, $1 billion worth of affordable housing projects (nearly 16,500 units) were funded through one of the exemptions and the workers on these projects were not paid a prevailing wage. Additionally, the State LIHTC program has grown to provide hundreds of millions of dollars per year to affordable housing projects. State and local BMR loans contribute an additional hundreds of millions per year in funding for affordable housing. The increase in the use of both of these funds – and their exemption from public works law – means that many affordable housing projects in our State do not have to pay the workers on these jobs a prevailing wage.
Unfortunately, the prevailing wage exemptions – as well as lack of benefits and wage theft – prevent the State from recruiting construction workers to work on housing projects. California needs 100,000 more residential construction workers to meet the State’s affordable housing production goals. It also needs an additional 200,000 construction workers to meet the State’s overall housing goals. The U.S. Bureau of Labor Statistics has even concluded that many construction workers prefer to work on non-housing commercial projects because of the higher wages and better benefits.”
Under this bill, “Construction trades workers who build publicly subsidized affordable housing construction projects will be paid prevailing wages the same as workers who build publicly subsidized, nonresidential projects, including those that receive tax credits under President Joe Biden’s Inflation Reduction Act and the CHIPS and Science Act. The effect of this bill also will be to promote the recruitment, training and retention of apprentices registered in state-approved programs.”
3. Proponent Arguments:
The sponsors of the measure, the California Conference of Carpenters, argue”
“For over 90 years, California’s Prevailing Wage Laws have required contractors on publicly funded projects to pay construction workers occupation- and geographic area-specific prevailing wages. AB 3190 will close loopholes in the Prevailing Wage Laws that have allowed affordable housing developers to receive state and local public subsidies without paying prevailing wages. AB 3190 is a logical next step to recently enacted housing legislation such as AB 2011 (Wicks, 2022), SB 423 (Wiener, 2023), and SB 4 (Wiener, 2023) that condition state intervention in favor of housing production on prevailing wage standards.
In recent years, hundreds of millions of dollars in State Low Income Housing Tax Credits (LIHTCs) and below-market-rate interest state and local government loans have been awarded annually to private affordable housing developers in California without a requirement that contractors on these projects pay prevailing wages.
The affordable housing prevailing wage loopholes have perpetuated poverty- and near-poverty-levels of compensation for thousands of California residential construction workers building publicly financed projects without the benefit of prevailing wage standards.2 Exploitative pay rates in the residential construction trades often are aggravated by contractor wage theft and tax fraud. Researchers estimate that ‘low road’ construction contractor employment practices have a public cost that tallies in the billions of dollars annually in safety net program expenditures and foregone tax revenues.
The 37,000 members of the Nor Cal Carpenters Union have a deep vested interest in housing. Our union organizes and bargains for construction workers who build affordable housing, and our members and their families desperately need a more abundant supply of affordable housing. State and local government-subsidized affordable housing should be built by workers who do not add to mile-long waiting lists of Californians seeking spots in affordable housing developments. For these reasons, the NCCU urges members of the Senate Labor Committee to support AB 3190.”
4. Opponent Arguments:
The California Housing Consortium and Housing California are opposed to the bill, stating:
“Our organizations represent development, non-profit, financial, and public sectors united in the goal of increasing the supply of safe, stable, and affordable housing options for the people of California. Given our collective mission, we are concerned that the costs [of] AB 3190 will significantly reduce the number of affordable units that can be produced.
Our organizations have been partners with labor, in fact, together we successfully passed AB 2011 (Wicks, Statues 2022, Chapter 647), which created a ministerial, streamlined approval process for 100% affordable housing projects in commercial zones and for mixed-income housing projects along commercial corridors, under certain circumstances. The legislation, which is optional for developers, also imposes specified labor standards on those projects, including requirements that contractors pay prevailing wages, participate in apprenticeship programs, and make specified healthcare expenditures.
The research shows that hard construction costs—specifically the costs of material and labor— are the primary driver of rising development costs. Adding more cost when existing resources are so scarce, when the Governor is proposing to cut $1.2 billion in General Fund investment plus reducing by $500 million critical tax credits will undermines all the progress made. Affordable housing financing is already an overly complex system, this bill adds an outsize amount of cost for the benefit it delivers.
As written this is an anti-affordable housing bill. To apply prevailing wages on tax credits and existing loans simply means reducing the number of new affordable units that can be produced.”
5. Prior Legislation:
AB 3160 (Gabriel, 2024) would provide that an additional allocation of $500 million to the Low Income Housing Tax Credit is not subject to an appropriation in the annual Budget Act for calendar years 2025 through 2030. AB 3160 would only become operative if AB 3190 (Haney, 2024) is enacted and becomes effective on or before January 1, 2025. This bill is pending in the Senate Revenue and Taxation Committee.
AB 2231 (Kalra, Chapter 346, Statutes of 2020) defined a public subsidy as de minimis for the purpose of paying the prevailing wage in private projects if it is both less than $600,000 and less than 2 percent of the total project cost for bids advertised or contracts awarded after July 1, 2021. If the subsidy is for a residential project consisting entirely of single-family dwellings, the subsidy is de minimis so long as it is less than 2 percent of the total project cost.
AB 101 (Committee on Budget and Fiscal Review, Chapter 159, Statues of 2019) among other things, allocated $500 million for LIHTC in 2020, and up to $500 million, upon appropriation, in 2021 and beyond.
SB 972 (Costa, Chapter 1048, Statutes of 2002) provided exemptions from prevailing wage requirements for the construction or rehabilitation of privately-owned residential projects, as specified.
SB 975 (Alcaron, Chapter 938, Statutes of 2001) provided that certain private residential housing projects and development projects built on private property are not subject to the prevailing wage, hour, and discrimination laws that govern employment on public works projects.
SUPPORT
California Conference of Carpenters (Sponsors)
Bluegreen Alliance
California State Association of Electrical Workers
California State Council of Laborers
California State Council of Service Employees International Union
California State Pipe Trades Council
Construction Employers' Association
Fresno Building Healthy Communities
Nor Cal Carpenters Union
Wall and Ceiling Alliance
Western States Council Sheet Metal, Air, Rail and Transportation
Western States Regional Council of Carpenters
Western Wall and Ceiling Contractors Association (WWCCA)
OPPOSITION
Associated General Contractors of California
Associated General Contractors-San Diego Chapter
California Coalition for Rural Housing
California Council for Affordable Housing
California Housing Consortium
California Housing Partnership
Housing California
San Diego Housing Federation
Southern California Association of Non-profit Housing (SCANPH)
-- END --
Ken Jacobs and Kuochih Huang, “The Public Cost of Low-Wage Jobs in California’s Construction Industry,” UC Berkeley Labor Center, June 8, 2021, The Public Cost of Low-Wage Jobs in California’s Construction Industry - UC Berkeley Labor Center ↑
Ibid. ↑
Carolina Reid, “The Costs of Affordable Housing Production: Insights from California’s 9% Low-Income Housing Tax Credit Program,” Terner Center for Housing Innovation UC Berkeley, March 2020, LIHTC_Construction_Costs_March_2020.pdf (berkeley.edu) ↑
Ibid. ↑
Mark Baldassare, et al., “PPIC Statewide Survey: Californians and Their Government,” PPIC, December 2023, https://www.ppic.org/publication/ppic-statewide-survey-californians-and-their-government-december-2023/ ↑
Ibid. ↑
ASSEMBLY THIRD READING
ATR Bill Id:AB 3190
Author:(Haney and Wicks)
As Amended Ver:May 16, 2024
Majority vote
SUMMARY
Subjects to public works law certain affordable housing projects by adding certain low-income housing tax credits to the definition of "paid for in whole or in part out of public funds," and providing that specified projects built pursuant to certain low-income housing tax credits or a below-market interest rate loan with a state agency, redevelopment agency, successor agency to a redevelopment agency when acting in that capacity, or a local housing authority, are subject to public works requirements.
Major Provisions
- Expands the definition of "paid for in whole or in part out of public funds" for purposes of defining what constitutes a public works project to include certain low-income housing tax credits, as specified.
- Provides that private residential projects built on private property pursuant to 1), above, or a below-market interest rate loan with a state agency, a redevelopment agency, a successor agency to a redevelopment agency when acting in that capacity, or a local housing authority, are subject to the requirements of public works law.
- Provides that 2), above, does not apply if the public funds are less than three million dollars ($3,000,000) for a project that is the acquisition or rehabilitation of a residential project of 50 units or less.
- Provides that projects subject to 2), above, do not qualify for the exemption from applicable public works provisions for the construction or rehabilitation of privately owned residential projects, as specified, where the public participation in the project meets certain criteria and the funding is in the form of a below-market interest rate loan 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% of the area median income.
- Provides that the bill's provisions to designate additional categories of work as public works affect the status of work only with regards to the public works section of the Labor Code and do not apply to other laws applicable to construction contracts awarded by public entities, as specified, including requirements within the Public Contract Code.
- Provides that this bill's provisions become effective on or before January 1, 2025, and only if AB 3160 of the 2023-24 Regular Session is enacted, and repeals the bill's provisions on January 1, 2032.
COMMENTS
Public works laws require that, among other things, prevailing wage is paid to workers on publicly-funded projects, as specified. In California, the prevailing wage rate is an hourly rate paid on public works projects that is often set in the terms of a collective bargaining agreement. According to the Department of Industrial Relations, the wage rate relies upon such factors as "the particular craft, classification or type of work within the locality and in the nearest labor market area (if majorities of such workers are paid at a single rate). If there is no single rate paid to a majority, then the single or modal rate being paid to the greater number of workers is prevailing."
Prevailing wage laws are intended to ensure that contractors are not awarded public works contracts by paying low wages and undercutting competitors who provide higher compensation. In this way, these laws create a level playing field by requiring an across-the-board rate for all bidders on publicly-subsidized projects.
Three types of public funds that have been historically used by affordable housing developers are currently exempt from public works law that requires paying workers a prevailing wage:
- State Low-Income Housing Tax Credits (State LIHTCs);
- State and Local Below Market-Rate Loans (BMR loans);
- Redevelopment Agencies' Low- and Moderate-Income Housing Funds.
Since redevelopment agencies were dissolved in 2012, the only two functional exemptions are for State LIHTCs and BMR loans.
According to the Nor Cal Carpenters Union (NCCU), between 2021 and 2023, nearly $2 billion of State LIHTC funding was awarded to fund the construction of more than 22,000 housing units. Of those, nearly 13,000 units were built without any requirement to pay prevailing wages. The NCCU further estimates that more than $700 million below market-rate loans are awarded to affordable housing projects per year.
According to the Author
"California has set important affordable housing goals—but it lacks a dedicated workforce to actually build that housing. If workers aren't being paid a prevailing wage, there is no way the State can retain and recruit the 100,000 workers it needs to meet its affordable housing goals. By ensuring that all workers on affordable housing projects are being paid the industry standard, AB 3190 will help grow the residential construction workforce. As a result, we will be able to build more affordable housing for Californians."
Arguments in Support
NCCU is in support and states, "Regarding prevailing wage requirements on public funds for affordable housing specifically, the Minnesota Housing Finance Agency has written into law requirements comparable to AB 3190. Prevailing wages are required on all new construction housing projects that receive funding from their State Housing Tax Credit program, as well as grants and below market-rate interest loans made by state agencies. The Minnesota law was written to address the same issues we face in California, where, without prevailing wage requirements and meaningful enforcement mechanisms, public investment in affordable housing is at risk of flowing to developers and contractors that exploit vulnerable workers who earn too little to afford the very homes they build."
Arguments in Opposition
California Housing Consortium and Housing California are opposed and state, "The research shows that hard construction costs—specifically the costs of material and labor—are the primary driver of rising development costs. Adding more cost when existing resources are so scarce…will undermine all the progress made. Affordable housing financing is already an overly complex system, this bill adds an outsize amount of cost for the benefit it delivers. As written this is an anti-affordable housing bill. To apply prevailing wages on tax credits and existing loans simply means reducing the number of new affordable units that can be produced."
FISCAL COMMENTS
According to the Assembly Appropriations Committee:
- Ongoing costs of an unknown, but potentially significant, amount to the Department of Industrial Relations (DIR) for increased oversight of new public works projects (Labor Enforcement and Compliance Fund). The Division of Labor Standards Enforcement investigates complaints and imposes penalties, while DIR's Office of the Director's Legal Unit hears appeals. Although it is unknown how many projects may become public works as a result of this bill, there will likely be additional complaints of violations and resulting enforcement and appeal workload.
- To the extent prevailing wage requirements increase project costs, this bill may increase General Fund (GF) cost pressures to increase funding for tax credit programs utilized by such projects. For example, AB 101 (Committee on Budget), Chapter 159, Statutes of 2019, allocated an additional $500 million in state low-income housing tax credits (LIHTCs) for the 2020 calendar year and every year thereafter, if authorized in the annual Budget Act. If affordable housing developers utilizing the LIHTC cannot build as many units due to public works requirements, this bill may increase GF cost pressures to fund additional credits to support an equivalent level of housing production.
According to the Legislative Analyst's Office, the GF faces a structural deficit in the tens of billions of dollars over the next several fiscal years.
VOTES
ASM LABOR AND EMPLOYMENT: 7-0-0
YES: Ortega, Flora, Alanis, Wendy Carrillo, Lee, Ward, Zbur
ASM APPROPRIATIONS: 11-0-4
YES: Wicks, Arambula, Bryan, Calderon, Wendy Carrillo, Mike Fong, Grayson, Haney, Hart, Pellerin, Villapudua
ABS, ABST OR NV: Sanchez, Dixon, Jim Patterson, Ta
UPDATED
VERSION: May 16, 2024
CONSULTANT: Erin Hickey / L. & E. / (916) 319-2091 FN: 0003385
Date of Hearing: May 8, 2024
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Buffy Wicks, Chair
ABPCA Bill Id:AB 3190
Author:(Haney) – As Amended Ver:March 21, 2024
Policy Committee: | Labor and Employment | Vote: | 7 - 0 |
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Urgency: No State Mandated Local Program: Yes Reimbursable: No
SUMMARY:
This bill expands the definition of a public works project to include a project “paid for in whole or in part” with a state or local tax credit.
This bill also repeals an exemption from public works law for certain privately owned affordable housing projects with public funding from a below-market interest rate (BMR) loan.
FISCAL EFFECT:
- Ongoing costs of an unknown, but potentially significant, amount to the Department of Industrial Relations (DIR) for increased oversight of new public works projects (Labor Enforcement and Compliance Fund). The Division of Labor Standards Enforcement investigates complaints and imposes penalties, while DIR’s Office of the Director’s Legal Unit hears appeals. Although it is unknown how many projects may become public works as a result of this bill, there will likely be additional complaints of violations and resulting enforcement and appeal workload.
- To the extent prevailing wage requirements increase project costs, this bill may increase General Fund (GF) cost pressures to increase funding for tax credit programs utilized by such projects. For example, AB 101 (Committee on Budget), Chapter 159, Statutes of 2019, allocated an additional $500 million in state low-income housing tax credits (LIHTCs) for the 2020 calendar year and every year thereafter, if authorized in the annual Budget Act. If affordable housing developers utilizing the LIHTC cannot build as many units due to public works requirements, this bill may increase GF cost pressures to fund additional credits to support an equivalent level of housing production. The Governor’s proposed 2024-25 budget does not include the additional $500 million for LIHTCs appropriated in recent years.
According to the Legislative Analyst’s Office, the GF faces a structural deficit in the tens of billions of dollars over the next several fiscal years.
COMMENTS:
- Purpose. According to the author:
California has set important affordable housing goals – but it lacks a dedicated workforce to actually build that housing. If workers aren’t being paid a prevailing wage, there is no way the State can retain and recruit the 100,000 workers it needs to meet its affordable housing goals. By ensuring that all workers on affordable housing projects are being paid the industry standard, AB 3190 will help grow the residential construction workforce. As a result, we will be able to build more affordable housing for Californians.
- Support and Opposition. This bill is supported by various labor organizations, with the California Conference of Carpenters arguing, “This bill provides the protection of prevailing wage law to thousands of often exploited, low-wage, primarily immigrant Latino construction workers who toil on projects in which the state is investing hundreds of millions of dollars through income tax credits each year.”
This bill is opposed by affordable housing and contractor associations, with the California Housing Consortium and Housing California jointly arguing that “research shows that hard construction costs – specifically the costs of material and labor – are the primary driver of rising development costs” and cautioning against “Adding more cost when existing resources are so scarce, when the Governor is proposing to cut $1.2 billion in [GF] investment” in affordable housing.
- Background.
LIHTC. Existing federal law provides for a 4% LIHTC and a 9% LIHTC. The terms refer to the approximate percentage of a project’s costs that may be claimed as a credit by a taxpayer. 9% credits are generally for new construction projects financed without tax-exempt bonds and 4% credits are generally for rehabilitation or new construction projects federally subsidized by tax-exempt bonds. Existing state law allows an LIHTC that generally conforms to the federal credit, administered by California Tax Credit Allocation Committee. A taxpayer must qualify for the federal credit to receive the state credit.
As referenced above, AB 101 allocated an additional $500 million in state LIHTCs, on top of the state’s original annual statutory allocation of approximately $120 million (based on the $70 million statutory allocation, as adjusted), for the 2020 calendar year and every year thereafter, if authorized in the annual Budget Act. Although $500 million has been annually allocated in subsequent years, the Governor’s proposed 2024-25 state budget does not include another $500 million LIHTC allocation. The State Treasurer’s Office indicates the state’s LIHTCs are oversubscribed by a three-to-one ratio.
Prevailing Wage for Public Works. The prevailing wage rate is determined by DIR and generally based on the basic hourly rate paid on public works projects to a majority of workers engaged in a particular craft or classification within a locality. Requiring an across-the-board rate ensures bidders are not awarded public works contracts by virtue of paying low wages and undercutting competitors who provide higher compensation. Existing law requires payment of prevailing wage to all workers employed on a public works project valued over $1,000, such as publicly funded construction, alteration, demolition, installation, maintenance, or repair work done under contract.
However, existing law does not designate an affordable housing project benefiting from public funds through state LIHTCs or BMR loans as a “public work.” This bill expands the definition of a public works project to include a project funded with a state or local tax credit and repeals an existing exemption providing that certain affordable housing projects funded with a BMR loan are not public works. Although much of the discussion around this bill centers on the LIHTC, this bill may also subject other non-housing construction-related projects supported by a tax credit, such as the California Soundstage Filming Tax Credit and California Competes Tax Credit, to public works law.
- Related Legislation. AB 3160 (Gabriel) requires the additional allocation of LIHTCs be $500 million annually through the 2030 calendar year and eliminates the requirement that the additional allocation be subject to the Budget Act or related legislation. AB 3160 is pending hearing by this committee.
Analysis Prepared by: Irene Ho / APPR. / (916) 319-2081
Date of Hearing: April 17, 2024
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Liz Ortega, Chair
ABPCA Bill Id:AB 3190 (
Author:Haney) – As Amended Ver:March 21, 2024
SUBJECT: Public works
SUMMARY: Adds tax credits to the definition of “paid for in whole or in part out of public funds” for purposes of defining what constitutes public works projects, and eliminates an exemption from public works law for below-market interest rate loans for affordable housing projects, as specified. Specifically, this bill:
- Expands the definition of “paid for in whole or in part out of public funds” for purposes of defining what constitutes public works to include projects paid using credits that the state or political subdivision agrees to apply against tax liabilities to the state or political subdivision.
- Provides that private residential projects built on private property that are built pursuant to a tax credit agreement with a state agency, a redevelopment agency, a successor agency to a redevelopment agency when acting in that capacity, a political subdivision of the state or a local housing authority, are subject to the requirements of public works law.
- Removes an exemption from applicable public works provisions for the construction or rehabilitation of privately owned residential projects, as specified, where the public participation in the project meets certain criteria and the funding is in the form of a below-market interest rate loan 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.
EXISTING LAW:
- Requires that not less than the general prevailing rate of per diem wages be paid to all workers employed on a "public works" project costing over $1,000 dollars and imposes misdemeanor penalties for violation of this requirement. Labor Code § 1771.
- Defines “public works,” for the purposes of regulating public works contracts, as, 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. Labor Code § 1720(a).
- Defines “paid for in whole or in part out of public funds” to include, among others, projects that involved transfer by the state or political subdivision of an asset of value for less than fair market price or projects where the money loaned by the state or political subdivision will be repaid on a contingent basis. Labor Code § 1720(b).
- Exempts, unless required by a public funding program, the construction or rehabilitation of privately owned residential projects from applicable public works provisions if the public participation in the project would meet certain criteria and the funding is in the form of a below-market interest rate loan 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. Labor Code § 1720(c)(5)(E).
FISCAL EFFECT: Unknown
COMMENTS: Public works laws require that, among other things, prevailing wage is paid to workers on publicly-funded projects, as specified. In California, the prevailing wage rate is an hourly rate paid on public works projects that is often set in the terms of a collective bargaining agreement. According to the Department of Industrial Relations, the wage rate relies upon such factors as "the particular craft, classification or type of work within the locality and in the nearest labor market area (if majorities of such workers are paid at a single rate). If there is no single rate paid to a majority, then the single or modal rate being paid to the greater number of workers is prevailing."
Prevailing wage laws are intended to ensure that contractors are not awarded public works contracts by paying low wages and undercutting competitors who provide higher compensation. In this way, these laws create a level playing field by requiring an across-the-board rate for all bidders on publicly-subsidized projects.
Three types of public funds that have been historically used by affordable housing developers are currently exempt from public works law that requires paying workers a prevailing wage:
- State Low-Income Housing Tax Credits (State LIHTCs);
- State and Local Below Market-Rate Loans (BMR loans);
- Redevelopment Agencies’ Low- and Moderate-Income Housing Funds.
Since redevelopment agencies were dissolved in 2012, the only two functional exemptions are for State LIHTCs and BMR loans.
According to the Nor Cal Carpenters Union (NCCU), between 2021 and 2023, nearly $2 billion of State LIHTC funding was awarded to fund the construction of more than 22,000 housing units. Of those, nearly 13,000 units were built without any requirement to pay prevailing wages. The NCCU further estimates that more than $700 million below market-rate loans are awarded to affordable housing projects per year.
This bill would amend the Labor Code to add tax credits to the definition of “paid for in whole or in part out of public funds” and eliminate the exemption for BMR loans for deed-restricted affordable housing projects, as specified.
According to the author, “California has set important affordable housing goals—but it lacks a dedicated workforce to actually build that housing. If workers aren’t being paid a prevailing wage, there is no way the State can retain and recruit the 100,000 workers it needs to meet its affordable housing goals. By ensuring that all workers on affordable housing projects are being paid the industry standard, AB 3190 will help grow the residential construction workforce. As a result, we will be able to build more affordable housing for Californians.”
Regarding the bill’s impact on underserved and marginalized communities, the author added that, “Nearly half of all California construction worker families are low-income – and the residential construction industry in particular has lower wages compared to the non-residential construction industry. These lower wages are deterring many construction workers from working in residential construction, which prevents the State from retaining a workforce to build affordable housing. By paying these workers a prevailing wage, AB 3190 levels the playing field, grows the workforce, and helps the State build more affordable housing.”
Arguments in Support
NCCU is in support and states, “While State LIHTC and below market-rate interest loans have been excluded from prevailing wage requirements for the last twenty years, ample precedent has been established in recent years to expand the Labor Code to cover these public subsidies. Both the Inflation Reduction Act (2022) and the CHIPS and Science Act (2022), which offer tax credits in exchange for investment, require construction workers to be paid prevailing wages. Regarding prevailing wage requirements on public funds for affordable housing specifically, the Minnesota Housing Finance Agency has written into law requirements comparable to AB 3190. Prevailing wages are required on all new construction housing projects that receive funding from their State Housing Tax Credit program, as well as grants and below market-rate interest loans made by state agencies. The Minnesota law was written to address the same issues we face in California, where, without prevailing wage requirements and meaningful enforcement mechanisms, public investment in affordable housing is at risk of flowing to developers and contractors that exploit vulnerable workers who earn too little to afford the very homes they build.”
Arguments in Opposition
California Housing Consortium and Housing California are opposed and state, “The research shows that hard construction costs—specifically the costs of material and labor—are the primary driver of rising development costs. Adding more cost when existing resources are so scarce, when the Governor is proposing to cut $1.2 billion in General Fund investment plus reducing by $500 million critical tax credits will undermines all the progress made. Affordable housing financing is already an overly complex system, this bill adds an outsize amount of cost for the benefit it delivers. As written this is an anti-affordable housing bill. To apply prevailing wages on tax credits and existing loans simply means reducing the number of new affordable units that can be produced.”
Prior Legislation
AB 2231 (Kalra) Chapter 346, Statutes of 2020 defined a public subsidy as de minimis for the purpose of paying the prevailing wage in private projects if it is both less than $600,000 and less than 2 percent of the total project cost for bids advertised or contracts awarded after July 1, 2021. If the subsidy is for a residential project consisting entirely of single family dwellings, the subsidy is de minimis so long as it is less than 2 percent of the total project cost.
AB 2765 (O’Donnell), Chapter 355, Statutes of 2020 expanded the definition of "public works," for the purpose of the payment of prevailing wages, to also include any construction, alteration, demolition, installation, or repair work done under private contract on a project for a charter school, as defined, when it is paid for, in whole or in part, with the proceeds of conduit revenue bonds issued on or after January 1, 2021.
SB 854 (Committee on Budget and Fiscal Review) Chapter 28, Statutes of 2014 revised the state’s public works program by requiring that, among other things, a contractor be registered and qualified by the DIR in order to bid on, be listed in a bid proposal for, or engage in the performance of any contract for a public work and as part of the registration process, provide specified information to establish the contractor’s eligibility to be registered.
SB 972 (Costa) Chapter 1048, Statutes of 2002 provided provides for exemptions from prevailing wage requirements for the construction or rehabilitation of privately-owned residential projects, as specified.
SB 975 (Alcaron) Chapter 938, Statutes of 2001 provided that certain private residential housing projects and development projects built on private property are not subject to the prevailing wage, hour, and discrimination laws that govern employment on public works projects.
REGISTERED SUPPORT / OPPOSITION:
Support
California Conference of Carpenters
Construction Employers' Association
Nor Cal Carpenters Union
Western States Regional Council of Carpenters
Opposition
Associated General Contractors of California
Associated General Contractors-San Diego Chapter
California Housing Consortium
Housing California
Analysis Prepared by: Erin Hickey / L. & E. /
Discussed in Hearing
51SEC
Assembly Floor
2MIN
Senate Floor
13MIN
Senate Standing Committee on Labor, Public Employment and Retirement
1MIN
Assembly Floor
1MIN
Assembly Floor
16MIN
Assembly Standing Committee on Labor and Employment
Bill Co-Author(s):