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New law impacts state solar projects

A bill passed during the Oregon Legislature’s recent special session requires prevailing wage to be paid for private solar projects on public property. Gov. Ted Kulongoski signed House Bill 3651 into law last week.

DJC See original article

POSTED: Tuesday, March 16, 2010 at 03:14 PM PT
Justin Carinci

A bill passed during the Oregon Legislature’s recent special session requires prevailing wage to be paid for private solar projects on public property. Gov. Ted Kulongoski signed House Bill 3651 into law last week.

The Oregon State Building and Construction Trades Council and the International Brotherhood of Electrical Workers pushed for the law, which supporters say clears up a loophole in existing law. Many people thought that projects on buildings or land owned by a public agency were already considered public, said Bob Shiprack, the building trades council’s executive secretary.

“A lot of legislators said, ‘I thought that’s the way it was now,’ ” Shiprack said. “Well, so did we.
“That’s why we put the bill in,” he said.

Under the new law, if a private contractor installs and then manages a solar array on a public building, that contractor must pay its workers the prevailing wage rate required for public works projects. The law takes effect next January, after the Bureau of Labor and Industries writes clarifying rules.

John Killin, executive director of the Independent Electrical Contractors of Oregon, said the new law overreaches. “This is the first time a bill has specifically stated that there will be prevailing wage on a private project,” he said.

Introducing new wage requirements, Killin said, can make it harder to navigate solar energy installations.

“There aren’t very many of these projects,” he said. “Our concern is that even just the complicated nature of involving prevailing wage may scare away projects.”

One large solar project in Portland has stalled while the contractor and building owner decipher changing laws. The Metropolitan Exposition Recreation Commission, a subsidiary of regional government Metro, awarded a contract to SunEdison last fall to cover the roof of the Oregon Convention Center with solar panels.

SunEdison would finance, design, build and operate the array, selling the electricity back to the convention center at a set rate for 20 years. Changes to the state’s energy tax credits have already affected that project, said Stephanie Soden, spokeswoman for the Oregon Convention Center.

“There was a little wrench thrown in by the Legislature’s modification of the (Business Energy Tax Credit) laws,” Soden said. “We’re working with SunEdison to determine if the project is compromised or if we can go ahead.”

Regarding prevailing wages, lawyers for the convention center are looking at how HB 3651 might affect the project. “Before the law, our legal opinion was that, because it’s a private contractor on a private project, those laws don’t apply,” Soden said.

School districts, counties and other public agencies have used similar arrangements, Shiprack said. Typically, the contractor acts as a utility, selling power to the building user.

“We’re building stuff on public property and the public kind of pays twice – once through the tax credit and once through the power purchase,” Shiprack said.

The new law simplifies things, he said. “If a government chooses to have solar panels installed on publicly owned property or land, then you pay prevailing wage.”

It isn’t so simple for nonunion contractors, Killin said. Because they don’t have fringe benefits administered through a union hall, the inclusion of benefits required by prevailing wage laws raises the contractors’ wage costs and payroll taxes, he said.

Open-shop contractors already earn a fair wage on solar installation projects, Killin said, even if it’s not the prevailing wage. “Electricians on projects like that are making at least $30 an hour.”

Even if the law applies to only a few projects, Killin said he’s concerned it will open the door to expansion of prevailing wage rate laws on private projects. “I’m confused why we need this,” he said.

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