SENATE BUDGET AND APPROPRIATIONS COMMITTEE

STATEMENT TO

SENATE, No. 3407

STATE OF NEW JERSEY

DATED:  JUNE 24, 2024

      The Senate Budget and Appropriations Committee reports favorably Senate Bill No. 3407.

      This bill removes provisions in the current law that exclude financing under the Commercial Property Assessed Clean Energy (“C-PACE”) Program from being considered as authority financial assistance or financial assistance that would require payment of the prevailing wage.  The bill expressly provides that any direct financing provided by a capital provider for a C-PACE project is considered "authority financial assistance" as that term is defined in section 1 of P.L.1979, c.303 (C.34:1B-5.1) and that work on the project is subject to the prevailing wage requirements of that section.

      The C-PACE program provides financing for renewable energy, energy efficiency, water conservation, and certain types of resiliency-related improvements for New Jersey.

      Pursuant to the bill, employers are required to ensure that not less than the prevailing wage rate is paid to workers involved in construction contracts connected to C-PACE program financing.  This includes projects undertaken to meet conditions for receiving assistance.  The prevailing wage rate, determined by the Commissioner of Labor and Workforce Development, applies to any authority financial assistance including loans, loan guarantees, grants, incentives, tax exemptions, or other financial assistance provided by the authority.

FISCAL IMPACT:

      The Office of Legislative Services (OLS) estimates the bill will result in an indeterminate increase annual State expenditures by requiring the payment of the prevailing wage for projects financed through the commercial property assessed clean energy (C-PACE) program, which would finance commercial properties undertaken by participating property owners. 

      The bill removes provisions in the current law that exclude financing under the C-PACE program from being considered as authority financial assistance, or financial assistance that would require payment of the prevailing wage.  The Economic Development Authority provides general oversight of the program and may need to implement additional monitoring and enforcement mechanisms to ensure adherence to the Prevailing Wage Act, which may create additional administrative costs.  However, these costs may be partially offset by the fees the authority may charge to review a C-PACE program ordinance or project application.

      Under current law, the authority is authorized to potentially recoup administrative costs by charging a county or authorized municipality a one-time fee, not to exceed $5,000, to review the proposed C-PACE program ordinance.  Additionally, the authority may charge a property owner a fee for the review of an application for a C-PACE project in the Garden State C-PACE program and for its fulfillment of such obligations.

      The OLS notes that the bill is permissive regarding a participating municipality’s or county’s participation in the C-PACE program.  As a result, the OLS is unable to quantify the impact of the bill on local finances.  Any local government that participates in and provides financing through a C-PACE program may experience increased costs due to the requirement to pay the prevailing wage.