May It Please The Court

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May It Please The Court
by Leonard Rivkin
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Quote of the Day - There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible. - Henry Ford
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Redevelopment Housing Projects Not Subject To Prevailing Wage Law

Developers will be pleased to learn that housing developments built under the auspices of a Redevelopment Agency do not constitute "public works" that subject them to the the prevailing wage law.  Greystone Homes, Inc. bid on a job to "redevelop the 'Cleveland Triangle' area in Pleasant Hill, a 7.5 acre site consisting of 29 separate parcels of property. Redeveloping this site, located within the “Schoolyard Redevelopment Project Area,” was part of the Agency’s general plan to use its financial resources and administrative powers to stimulate private development and help improve the economic base of the project area and community," according to the Court.

The California Director of Industrial Relations ruled (and the trial court agreed) that because Greystone was building homes for a government agency and in part receiving the benefits of tax-increment financing, then it was a "public work," requiring Greystone to pay prevailing wages.  Greystone and the Pleasant Hill Redevelopment Agency appealed. 

The Court of Appeal reversed, disagreeing with the DIR.  If you're a developer either involved with a redevelopment project or considering getting involved, then read this case carefully - it's highly fact-specific, and there's a right way to accomplish this end, as well as a wrong way.  Essentially, the Court ruled (based on a earlier case) that the use of redevelopment agency funds to reimburse the developer for land acquisition costs did not constitute payment for “construction,” triggering the prevailing wage law.  Since Greystone paid all demolition and construction costs with private funds, the project wasn't a public work.

Posted by J. Craig Williams on Wednesday, December 21, 2005 at 23:51 Comments (0)


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