Affordable Housing Project Found to Be Subject to Prevailing Wages

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In a decision filed on June 15, 2012, the Fourth Appellate Court of Appeal determined that an affordable housing project in San Bernardino was subject to the requirement for the payment of prevailing wages under Labor Code Section 1720 notwithstanding the fact that the individual sources of funds for the project would have otherwise fallen within the statutory exception to the prevailing wage requirements. Housing Partners, Inc. v. Duncan (2012 DJDAR 8014, June 19, 2012). The court acknowledged that each source of funding for the project, taken by itself, would fall within one of the exemptions set forth in Labor Code Section 1720(c)(4) and (c)(6) but that the exemptions cannot be combined as they operate independently from one another.

The project applicant strenuously argued that housing policy and legislative intent would be furthered by reading the exemptions together, but the court was not persuaded. According to the court, the language in Section 1720(c)(4) plainly states that the exemption under that section applies only when the project is funded by low and moderate income redevelopment set-aside funds and private funds. It does not contemplate funding that includes other sources of public funds such as low interest loan funds, which are addressed in the exemption in Section 1720(c)(6).

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