S-1439/A-5085, which requires employers or contractors engaged in government work for a public body to register with and submit payroll records to the Department of Labor Workforce Development, was recently amended to include PILOT projects.
S-1439/A-5085 was amended on the Assembly floor on May 25. The amendments expand the original intent of the legislation by expanding the requirements of the Public Works Contractor Registration Act, and by extension the Prevailing Wage Act, to projects “undertaken in connection with any loan, loan guarantee, grant, incentive, expenditure, investment, tax exemption, or other financial assistance approved, funded, authorized, administered, or provided by a public body, or undertaken to fulfill any condition of receiving any of the financial assistance.”
This is highly problematic. Not only does it expand reporting requirements and the work that would trigger those reporting requirements, but it also mandates fees and apprenticeships for all small businesses. Additionally, this vague language will have the unintended consequences of capturing every public subsidy, tax credit, tax abatement, PILOT agreement, loan, or loan program, whether for affordable housing, redevelopment, or for clean-up.
Payment In Lieu of Taxes (PILOTs) are the single-most powerful tool available to municipalities to encourage property owners and developers to make improvements to property or to locate a project in a distressed or blighted area. With respect to long-term tax exemptions in particular, exemptions are granted only where the municipality has determined that the project would not occur but for the PILOT. Increasing the cost of already challenged projects by requiring a private property owner to pay prevailing wage for improvements on their property will prompt a greater demand on the municipality for a lower PILOT (thereby diminishing municipal revenue and property tax relief) and may even prevent a project from moving forward.
This is of particular concern where a project’s revenues will be limited, as in the construction of affordable housing, or where a project bears additional costs to meet other public needs or interests, such as environmental remediation, historic preservation, or the installation of infrastructure.
This is overburdensome and unnecessary and was never the original intent of the legislation. Please reach out to your Senate and Assembly Representatives urging them to vote no on S-1439/A-5085 and to Governor Murphy expressing our concerns with the amended bill.
Lori Buckelew, Deputy Executive Director & Director of Government Affair, firstname.lastname@example.org, 609-695-3481, x. 112.