Legal Alert: Protecting Projects with CFD Financing from Prevailing Wage Requirements

The California Director of Industrial Relations (the "DIR") recently issued a public works coverage determination (the "Determination") that provides valuable insights for developers seeking financing for public infrastructure improvements through a Mello-Roos Community Facilities District ("CFD"). The Determination makes it clear that CFD financing must be carefully structured to ensure that only public improvements funded from bond proceeds ("Bond Proceeds") are subject to a prevailing wage requirement. The requirement to pay prevailing wages can substantially increase construction costs. In particular, a developer should ensure that the "Regulatory Exemption" is available to protect the "private" elements of the project from a prevailing wage requirement by making it clear that...

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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