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CCASE:
GREEN ISLAND ASSOCIATES
DDATE:
19920428
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
GREEN ISLAND ASSOCIATES
Bolton, New York WAB Case No. 90-31
BEFORE: Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Stuart Rothman, Senior Member
DATED: April 28, 1992
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petitions of
the Town of Bolton Landing ("the Town") and Green Island Associates
("GIA") for review of a June 11, 1990 ruling by the Acting
Administrator of the Wage and Hour Division. For the reasons set
forth below, the Board affirms the Acting Administrator's decision
and denies the petitions for review.
I. BACKGROUND
A. Factual background
1. The first UDAG grant application by the
Town of Bolton Landing
In 1981, developer Norman Wolgin launched an economic
development project involving a proposal for renovation of the
Sagamore Hotel on Green Island in Lake George, Town of Bolton
Landing, New York. On February 25, 1982, the Town of Bolton
Landing with the assistance of Wolgin and employees of Uccellini
Enterprises, Inc. ("Uccellini"), filed an application with the U.S.
Department of Housing and Urban Development ("HUD") for an Urban [1]
~2
[2] Development Action Grant ("UDAG") under the Housing and
Community Development Act of 1974. In the application the Town
requested a $315,000 grant in connection with an $18,315,500
project which was described as the "acquisition and renovation of
the 200 room Sagamore Hotel."
The grant application also contained a separate section
entitled "Assurances." This section specified the conditions with
which the Town agreed to comply if it received the UDAG grant. The
Assurances included the commitment that the grant recipients "will
administer and enforce the labor standards requirements set forth
in 24 CFR 570.605 and HUD regulations issued to implement such
requirements." The last page of the Assurances was signed on
behalf of the Town by Deputy Supervisor Mark J. Dagles.
2. The second UDAG grant application by the Town of
Bolton Landing
On February 28, 1983, the Town submitted a second UDAG grant
application. In this application, the Town requested a $6,525,000
UDAG grant as part of a $30 million project which encompassed
restoration and reconstruction of the Sagamore Hotel. A section of
the application contained a statement about the necessity of a UDAG
grant; this section of the application stated that the "proposed
project does not generate adequate revenues under market rate
financing to cover operating and debt service cost or give a
reasonable return to the developer." The second application also
contained "Assurances," which included the commitment that the Town
"will comply with . . . the Labor standards requirements as set
forth in Section 570.605 and HUD regulations issued to implement
such requirements." The last page of the Assurances was signed by
Town Supervisor Frank Leonbruno.
Wolgin and representatives of the Town met with HUD officials
in New York City on March 31, 1983. It is undisputed that at this
meeting HUD officials referenced an obligation to pay "prevailing
wages." In a letter to a Department of Labor investigator, an
attorney who attended the meeting with Wolgin characterized the
March 31 meeting as one at which "Davis-Bacon Act compliance was
discussed." See p. 4, infra.
HUD gave preliminary approval to the Town's second grant
application on May 4, 1983, authorizing $5,275,000 in UDAG funds.
On May 6, 1983, closing occurred on a purchase agreement entered
into in 1982 between Wolgin and the private corporation that owned
the Sagamore Hotel. Later in May 1983 some minor preliminary
construction activity related to the Sagamore Hotel was undertaken;
this activity consisted essentially of digging holes to evaluate
soil conditions, demolishing woodwork at various points throughout
the work site to determine the structural integrity of existing
timbers, and the beginning of construction of a $16,500 engineering
storage facility. [2]
~3
[3] By signing the grant agreement on July 19, 1983, HUD gave its
final approval for a $5,250,000 UDAG grant to be used for
rehabilitation of the hotel. The grant agreement stated the total
project cost as $32,245,000. The private lender for the project
was identified as Fidelity Bank of Philadelphia, which was to
provide a $20.5 million construction loan for the hotel and a
$2,220,000 loan for 24 condominium units. An amendment to the
grant was executed on January 31, 1984, indicating that the amount
of the UDAG grant remained the same but that the project had been
expanded to include 120 condominium units, raising the total
project cost to $55,625,000. The private investor group for the
project, headed by Wolgin, was formed in October 1983.
Groundbreaking on the project had occurred on July 20, 1983.
Thereafter some demolition work and work to preserve the Sagamore
Hotel's structural integrity was undertaken; gutting of the hotel
was nearly complete by November 1, 1983.
The grant agreement stated that the Secretary of HUD, "in
reliance upon the representations set forth in the application, has
approved the award of grant funds to the Recipient, to be expended
by the Recipient in conformity with the requirements and provisions
of the Grant Agreement." The grant agreement also specified that
"[t]his agreement shall consist of the grant agreement and the
Application," and that the Recipient (the Town) assumes the
"responsibilities for compliance with all applicable Federal Rules"
and agrees to "comply with UDAG regulations, including the
certification specified therein." Town Supervisor Leonbruno signed
the agreement on behalf of the Town on November 18, 1983.
3. The request for a Davis-Bacon wage determination
The Town had entered into an agreement with Uccellini on
August 9, 1983, pursuant to which Uccellini was to assist the Town
in carrying out its responsibilities under the grant agreement.
Accordingly, on December 12, 1983 Uccellini employee Tom Beyer
requested a Davis-Bacon wage determination from HUD for
construction work on the hotel. HUD then requested a wage
determination from the Department of Labor, which issued Wage
Determination (WD) No. 84-NY-8 on February 10, 1984 for application
to the renovation of the Sagamore Hotel. HUD transmitted the wage
determination Uccellini on February 13, 1984. Uccellini wrote to
HUD and objected to the wage rates in WD No. 84-NY-8 on February
22, 1984.
Also on February 22, 1984, the Town and developer GIA executed
a loan agreement which stated that the Town was loaning $5 million
in grant monies to GIA "in accordance with the Grant Agreement."
By an agreement entered into on February 28, 1984, the Bank
of New York agreed to loan $40,350,000 for project construction;
and GIA and the Town agreed to assign to the bank their rights to
the UDAG funds if the bank called a default under any loan
agreement with the parties. [3]
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[4] 4. The Department of Labor investigation of
the wage rates paid on the project
As the result of an investigation begun in early summer 1984,
the New York Regional Wage and Hour Division office determined that
the required Davis-Bacon wage rates were not being paid on the
Sagamore Hotel project. The Department of Labor calculated the
amount of the prevailing wage and overtime violations for the
period beginning April 1984 at about $630,000. In early 1985 the
Wage and Hour Division requested that the Town and HUD institute
action to withhold federal grant funds to cover the alleged wage
violations. Wolgin then wrote to HUD and stated that due to the
withholding, the loan agreement with the Bank of New York was about
to go into default. Wolgin stated that he had "pleaded and assured
the Department of Labor that if any employee is entitled to further
compensation, I would honor the obligation." HUD then told the
Town not to withhold the grant funds from GIA. Wolgin entered into
an agreement with the Town by which he agreed to indemnify and hold
the Town harmless against any claim under the Davis-Bacon Act in
return for the Town's release of $490,000 in UDAG funds.
Department of Labor Compliance Officer William Watkins and
Area Director Samuel Weitman met with Wolgin and his attorney,
Robert Kafin, on December 2, 1985 to discuss the results of the
Department's investigation of the wage rates paid on the Sagamore
Hotel project. Watkins' report of that meeting, prepared a day
after the meeting, noted that Wolgin "stated he was always aware
that DBRA [Davis-Bacon Related Acts] applied and met with HUD
(March 31, 1983) in a pre-award conference to discuss DBRA
applicability." Attorney Kafin wrote Weitman on December 11, 1985
in response to a request for information made by Weitman at the
December 2, 1985 meeting. Kafin's letter to Weitman stated that a
"meeting with HUD at which Davis-Bacon Act compliance was discussed
took place in New York City on March 31, 1983."
B. Procedural history
1. GIA's appeal of the wage rates in the
applicable wage determination
As discussed earlier, the Department of Labor issued WD No.
84-NY-8 on February 10, 1984 for application to the renovation of
the Sagamore Hotel. On April 13, 1984 GIA requested that the
Administrator of the Wage and Hour Division reconsider the rates in
WD No. 84-NY-8 on the ground that the rates in the wage
determination did not reflect the rates prevailing in the area.
The Administrator denied GIA's request and reaffirmed the rates in
WD No. 84-NY-8 on January 29, 1985. [4]
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[5] GIA filed a petition for review with the Wage Appeals Board
on March 15, 1985. Before this appeal was decided, the Wage and
Hour Division learned that construction on the Sagamore Hotel had
begun as early as July 1983, rather than in spring 1984.
Accordingly, WD No. 84-NY-8, effective February 10, 1984, was not
applicable to the project. The Wage and Hour Division determined
that another wage decision (No. S-85-NY-0324) reflecting wage rates
for the earlier time period should be issued. The Board dismissed
GIA's petition for review on WD No. 84-NY-8, with leave for GIA to
reinstate the petition if it wished to challenge the rates in the
new wage determination. GIA then requested that the Administrator
reconsider the new determination (No. S-85-NY-0324) on the ground
that the rates in that wage determination did not reflect the rates
prevailing in the area. The Administrator denied the request for
reconsideration; on August 1, 1986 GIA requested that the Board
reactivate GIA's petition for review.
2. The Board's decision in Case No. 86-21
In a decision issued August 7, 1987 in WAB Case No. 86-21, the
Board affirmed the correctness of the wage rates in WD No.
S-85-NY-0324. However, the Board remanded the matter to the Wage
and Hour Division for further investigation of two points. First,
the Board determined that a remand was necessary in order to
ascertain whether negotiations between the Town and the developer
were concluded prior to June 28, 1983 -- the effective date of 29
C.F.R. 1.6(g), which authorizes the Administrator in certain
circumstances to incorporate a wage determination in a contract
after contract award or the beginning of construction. "If
negotiations were concluded," stated the Board, "then the Board
would rule as in [Muskogee Shopping Mall, WAB Case No. 85-26 (Jan.
21, 1986)] that the Wage and Hour Division has no authority to
issue a wage determination."
In addition, the Board decided that a remand was necessary to
determine whether the developer had knowledge that Davis-Bacon
labor standards applied to the project prior to the conclusion of
negotiations and the beginning of construction. The Board
characterized this point as "an important element" in light of the
decision in Granite Builders, Inc., WAB Case No. 85-22 (Jan. 27,
1986), where the Board stated (at p. 7):
. . . it appears to the Board that the only reason an
appropriate wage determination was not given to the
petitioner or the owners was due to their reluctance or
negligence in obtaining the labor standards required by
the loan agreement. It was incumbent upon them to go
forward with all of the requirements of their agreement.
This type of activity cannot be endorsed by the Board as
an excuse to avoid Federal labor standards laws and
regulations. [5]
~6
[6] 3. The Acting Administrator's decision on remand
The Acting Administrator issued a decision on remand on June
11, 1990, stating that he "concluded (1) that negotiations between
[the Town] and [developer GIA] were not concluded until after June
28, 1983; and (2) that irrespective of when negotiations were
concluded the Town and GIA are liable for the payment of
Davis-Bacon prevailing wages inasmuch as the Town contractually
agreed that such wages would be paid, and both the Town and GIA had
been advised prior to accepting the federal funds that construction
of the project was subject to the Davis-Bacon prevailing wage
requirements."
a. The conclusion of negotiations
between the Town and GIA
The Acting Administrator noted that GIA had suggested that it
had completed an agreement with the Town before June 28, 1983 to
renovate the Sagamore Hotel without the use of federal funds.
However, the Acting Administrator stated,
not only has GIA failed to present evidence which
establishes this as fact, but it is clear that any such
agreement is not the one ultimately reached between the
parties. Rather, an integral part the agreement
ultimately reached between these parties for renovation
of the hotel was the use of the $5,000,000 UDAG loan.
This is consistent with the Housing and Community
Development Act of 1974, which provides that such a UDAG
grant may be made "only where the Secretary [of Housing
and Urban Development] determines that there is a strong
probability that . . . the non-Federal investment in the
project would not be made without the grant[.]" [42
U.S.C. 5318(j)]
That the agreement between the Town and GIA for renovating the
Sagamore Hotel was dependent on the UDAG loan is made apparent, the
Acting Administrator stated, not only by the loan agreement between
GIA and the Town but also by financing arrangements and other
events. Thus, a condition required by the Bank of New York for
making a construction loan of $40,350,000 for the project was that
the Town and GIA assign their rights to the $5 million UDAG loan to
the bank in the event that the bank called a default. Furthermore,
the Acting Administrator added, "the developer stated in a letter
to HUD that if the funds withheld from the developer ($490,000 --
less than 10 per cent of the UDAG loan utilized by the hotel) at
the request of the Wage and Hour Division for the payment of
alleged back wage violations were not released, the prime lender
. . . would not make the next disbursement and would consider the
loan in default, 550 construction workers would be fired, the first
mortgage holder [6]
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[7] would declare a default and the $4,510,000 in UDAG funds previously
disbursed to the developer would be lost."
On the question of when negotiations between the Town and GIA
were completed, the Acting Administrator found several facts to be
pertinent. First, he noted that HUD gave its preliminary approval
of the UDAG loan on May 4, 1983, and that HUD did not give final
approval until July 19, 1983. Furthermore, he stated, according to
counsel for the developer after this final approval officials of
the Town and HUD engaged in extensive negotiations about the terms
of the grant agreement. The Acting Administrator added that a
representative of the Town initially executed the grant agreement
on November 18, 1983, and as amended on January 31, 1984. The
Acting Administrator further noted that the investor group for the
project was not established until the fall of 1983, and that the
Town Board did not approve the $5 million UDAG loan to be made to
the developer until December 19, 1983. He added that the loan
agreement between the Town and the developer providing UDAG funds
for renovating the Sagamore Hotel, although dated December 1, 1983,
was not signed until February 22, 1984. Shortly thereafter
(February 28, 1984), the Acting Administrator stated, a four-party
agreement was entered into by the Town, GIA, the Bank of New York
and the Counties of Warren and Washington Industrial Development
Agency -- an agreement that specified that as a condition for the
bank's making a $40,350,000 construction loan the other parties
were required to assign their rights in the $5 million UDAG loan in
the event the bank called a default. The Acting Administrator
additionally noted that GIA did not enter into a construction
manager agreement for the project with L.F. Driscoll Company until
December 21, 1983.
Based on these facts and a review of the record, the Acting
Administrator stated, "I conclude that negotiations between GIA and
the Town were not concluded until well after June 28, 1983."
b. The liability of the Town and GIA for payment
of the required Davis-Bacon prevailing wage
rates
The Acting Administrator also concluded that the Town and GIA
were liable for payment of Davis-Bacon wage rates regardless of
when negotiations between the Town and the developer were
concluded. First, the Acting Administrator stated, "[t]he Town
contractually agreed to Davis-Bacon compliance." The Town
submitted two grant applications, he noted, and the final grant
agreement specifically includes the application as part of the
grant agreement. In the applications, the Acting Administrator
stated, "the Town assured that it would comply with the labor
standards requirements as set forth in 24 C.F.R. [sec]
570.605."/FN1/ [7]
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[8] The Acting Administrator stated that Town officials may
initially have been "inattentive or negligent" in determining their
Davis-Bacon obligations; however, he added, Town Supervisor
Leonbruno was "personally aware prior to his acceptance of the UDAG
grant on behalf of the Town that construction of the hotel was
subject to the payment of Davis-Bacon prevailing wages as
determined by the Secretary of Labor." Furthermore, he stated,
before GIA signed the loan agreement with the Town for the UDAG
funds, "the developer was aware that construction of the hotel was
subject to the payment of Davis-Bacon prevailing wages . . . ." In
these circumstances, the Acting Administrator stated, to permit
parties to accept federal funds without complying with Davis-Bacon
requirements "would be contrary to both the letter and spirit of
the applicable statute and regulations, as well as contrary to the
contractual commitments undertaken by the parties."
Furthermore, the Acting Administrator stated, "Davis-Bacon
coverage cannot be defeated simply because the developer elected to
begin construction work prior to the completion of negotiations
with the Town." Some employees of L.F. Driscoll Company may have
performed some demolition and maintenance work on the hotel in the
summer of 1983, he said, but apparently with the understanding that
the developer would reimburse Driscoll for the employees' wages
plus a monthly fee. The Acting Administrator again noted that the
developer did not enter into a construction manager agreement with
Driscoll until December 21, 1983. He also noted that when
Uccellini made a request for a Davis-Bacon wage determination on
behalf of the Town on December 12, 1983, Uccellini stated that the
bid opening date was March 1, 1984. In addition, he stated, when
GIA challenged the wage determination on April 13, 1984, GIA stated
that the developer would be hiring several contractors to perform
the construction work in the future. Therefore, the Acting
Administrator stated, "prior to accepting the Federal funds and
before making any significant binding commitments to perform the
renovation of the Sagamore Hotel, both the Town and GIA were aware
of their obligation that Davis-Bacon prevailing wages be paid on
the project." Citing the Board's decision in Granite Builders, WAB
Case No. 85-22 (Jan. 27, 1986), the Acting Administrator concluded
that in such circumstances "application of Davis-Bacon prevailing
wage requirements is not dependent upon the authority contained in
29 C.F.R. 1.6."
II. DISCUSSION
As discussed above, the Acting Administrator addressed two
points in his decision on remand. The Acting Administrator
determined that negotiations between the Town and GIA were not
concluded until after June 28, 1983. He also determined that
regardless of when negotiations were concluded, the Town and GIA
had contractually agreed that Davis-Bacon wage rates would be paid,
and had been advised before accepting federal funds that the
project was subject to Davis-Bacon prevailing wage requirements;
thus, the Town and GIA were [8]
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[9] liable for payment of Davis-Bacon wage rates. On review, the Board
concludes that the Acting Administrator's decision is unassailable and
should be affirmed.
A. The obligation of the Town and GIA to meet Davis-Bacon
prevailing wage requirements
The facts underlying the Acting Administrator's determination
are delineated in his June 11, 1990 ruling and are discussed above,
and need not be fully restated here. Some key points, however, are
worthy of reiteration.
We turn first to the obligation of the Town to comply with
Davis-Bacon requirements. In the Board's view, the issue of the
Town's Davis-Bacon obligations is settled by the fact that the Town
contractually agreed to adhere to Davis-Bacon requirements. As the
Acting Administrator noted, the Town submitted two grant
applications to HUD (one submitted in 1982, and the second
submitted February 28, 1983), and the final UDAG grant agreement
specifically includes the grant application as part of the grant
agreement. Both grants (the second of which was approved by HUD)
contained Assurances signed by a Town official, by which the Town
specifically agreed to comply with the labor standards requirements
as set forth in 24 CFR 570.605 and HUD regulations issued to
implement such requirements. Section 570.605, specifically
referenced in the Assurances signed by the Town, provides:
[Sec] 570.605 Labor standards.
All laborers and mechanics employed by contractors or
subcontractors on construction work assisted under this
Part shall be paid wages at rates not less than those
prevailing on similar construction in the locality as
determined by the Secretary of Labor in accordance with
the Davis-Bacon Act, as amended (40 U.S.C. 276a-276a-5),
and shall receive overtime compensation in accordance
with and subject to the provisions of the Contract Work
Hours and Safety Standards Act (40 U.S.C. 327-333), and
the contractors and subcontractors shall comply with all
regulations issued pursuant to these Acts and with other
applicable Federal laws and regulations pertaining to labor
standards. This section shall apply to the rehabilitation
of residential property only if such property is designed
for residential use of eight or more families. The
Secretary of Labor has, with respect to the labor standards
specified in this section, the authority and functions set
forth in Reorganization Plan Number 14 of 1950 (5 U.S.C.
133z-15) and section 2 of the Act of June 13, 1934, as amended
(40 U.S.C. 276c). [9]
~10
[10] Furthermore, the grant agreement signed by the Town also
specified that the Town took on "the responsibilities for
compliance with all Federal Rules" and agreed to "comply with the
UDAG regulations, including the certifications specified therein."
Thus, as noted by counsel for the Acting Administrator (Statement,
at p. 15), the Town contractually agreed to pay prevailing wages
"as determined by the Secretary of Labor in accordance with the
Davis-Bacon Act." 29 CFR 570.605. As made clear by both Board and
court precedent, parties are obliged to adhere to their contractual
commitments to comply with Davis-Bacon requirements. See Woodside
Village v. Secretary of United States Department of Labor, 611 F.2d
312 (9th Cir. 1980); Dairy Development, Ltd., WAB Case No. 88-35
(Aug. 24, 1990); Arbor Hill Rehabilitation Project, WAB Case No.
87-04 (Nov. 3, 1987).
The Town's essential argument is that Town officials lacked
knowledge that Davis-Bacon requirements were applicable to the
hotel project. However, as aptly stated by counsel for the Acting
Administrator (Statement, at pp. 15-16), "the fact that Town
officials may not have bothered to read either the grant or the
grant application is irrelevant to the binding legal nature of
their contractual commitment." Furthermore, the Acting
Administrator found that Town Supervisor Leonbruno was on notice
regarding Davis-Bacon prevailing wage requirements prior to his
acceptance of the UDAG grant on behalf of the Town. /FN2/
The Board also affirms the Acting Administrator's
determination that developer GIA is liable for payment of
Davis-Bacon prevailing wage rates on the hotel project. As noted
by counsel for the Acting Administrator (Statement, at p. 20), the
record reveals that Norman Wolgin of GIA was a principal impetus
regarding the Town's application for a UDAG grant, and that as
early as May 1982 Wolgin had access to a copy of the first grant
application. Both grant applications, as discussed above,
contained the Town's signed assurances of compliance with the labor
standards requirements set forth at 24 CFR 570.605.
In addition Wolgin, attorney Kafin and Town representatives
attended a meeting with HUD on March 31, 1983 (before construction
began) -- a meeting characterized by attorney Kafin in a letter as
one at which "Davis-Bacon Act compliance was discussed." See p. 4,
supra. Before the Board, GIA now acknowledges (Petition for
Review, at p. 8) that "prevailing wages" were discussed at the
March 31 meeting, but claims that "[t]he Town and Green Island
understood that HUD wanted them to pay laborers and materialmen
prevailing [10]
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[11] `local wages,' [*] not [*] Davis-Bacon wages." [*(Original
emphasis.)*] The Board agrees with counsel for the Acting Administrator
that the record -- namely, the reference in Kafin's letter to discussion
of compliance with the Davis-Bacon Act at the March 31 meeting -- casts
doubt on GIA's current version of what occurred at that meeting. We
also agree with counsel that the Board need not resolve this factual
dispute, given the existence of undisputed facts -- Wolgin's involvement
in the grant application process, his possession of the grant
application containing the Town's signed assurances, and his presence at
a meeting with HUD at which payment of prevailing wages was discussed.
These facts demonstrate that Wolgin, an experienced developer, had
sufficient knowledge of the existence of federal labor standards
requirements to cause him to inquire about the exact nature of those
requirements, even assuming that Wolgin was not certain about the nature
and extent of those requirements.
The Board also agrees that GIA has not pointed to any evidence
which would contradict the Acting Administrator's determination
that before Wolgin signed the loan agreement with the Town for the
UDAG funds, developer GIA was aware that the hotel project was
subject to Davis-Bacon requirements. The loan agreement itself
made reference to both the grant agreement and the grant
application. Furthermore, the loan agreement contained, among
other things, the representation that "the Borrower has obtained,
or has reasonable assurance that he will obtain, all Federal,
State, and local government approvals and/or reviews required by
law." Likewise, the loan agreement contained the assurance by the
Borrower that "all reasonable efforts will be made by the Borrower
to complete the activities to be performed by the Borrower
according to the terms of this Loan Agreement and the Grant
Agreement between the Secretary and the Lender." Thus, developer
GIA made a contractual commitment to conduct the hotel project in
accordance with the terms of the grant agreement signed by the
Town.
As stated by the Acting Administrator, to permit parties to
accept federal funds in the circumstances presented in this case
without complying with Davis-Bacon requirements "would be contrary
to both the letter and spirit of the applicable statute and
regulations, as well as contrary to the contractual commitments
undertaken by the parties." Furthermore, given the circumstances
of this case, the Board affirms the Acting Administrator's
determination -- based upon the Board's decision in Granite
Builders, supra -- that in these circumstances "application of
Davis-Bacon prevailing wage requirements is not dependent upon
the authority contained in 29 C.F.R. 1.6." As stated by counsel
for the Acting Administrator (Statement, at p. 30) acceptance of
the petitioners' attempts to argue that Section 1.6 is applicable
here and to cast this case as more like Muskogee Shopping Center,
supra, than like Granite Builders would have absurd consequences --
that is, "conscientious grant recipients and developers who
carefully attempt to ascertain and adhere to the federal
obligations they have contractually assumed will be held liable for
Davis-Bacon compliance, while [11]
~12
[12] negligent recipients or developers who ignore their
responsibilities may possibly escape any Davis-Bacon liability."/FN3/
B. The completion of negotiations between the Town and GIA
The Board also affirms the Acting Administrator's
determination -- assuming the applicability of Section 1.6 -- that
negotiations between the Town and GIA were concluded after June 28,
1983, the effective date of 29 CFR 1.6. Again, the Board notes
that the facts upon which the Acting Administrator's determination
is based are carefully recounted in his decision (see also, pp.
1-4, supra), and need not be repeated here. In reaching his
determination the Acting Administrator focused on the agreement
reached between the Town and GIA for renovation of the hotel with
the use of $5 million in UDAG funds, and concluded on the basis of
the facts set forth in his decision that negotiations were
completed after June 28, 1983. The Board concludes that the Acting
Administrator's focus on the agreement involving use of UDAG funds
was entirely proper. As the Acting Administrator stated in
rejecting GIA's claim that it had reached agreement with the Town
to renovate the hotel without federal funds before June 28, 1983:
"[N]ot only had GIA failed to present evidence which establishes
this as fact, but it is clear that any such agreement is not the
one ultimately reached by the parties. Rather, an integral part of
the agreement ultimately reached between these parties for
renovation of the hotel was the use of the $5,000,000 UDAG
loan." [12]
~13
[13] In sum, the Acting Administrator's decision is affirmed in
all respects. The petitions for review are denied.
BY ORDER OF THE BOARD:
Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Gerald F. Krizan, Esq.
Executive Secretary
SENIOR MEMBER ROTHMAN, CONCURRING
I concur in all respects with the majority's finely ground
factual analysis. I further concur, with one exception, in the
majority's conclusions dismissing the petition.
At page 9 of the majority's decision the Board states the
following as the primary principle requiring dismissal.
We turn first to the obligation of the Town to comply
with Davis-Bacon requirements. In the Board's view, the
issue of the Town's Davis-Bacon obligations is settled by
the fact that the Town contractually agreed to adhere to
Davis-Bacon requirements.
Further, at page 10, the Board states:
As made clear by both Board and court precedent, parties
are obliged to adhere to their contractual commitments to
comply with Davis-Bacon requirements. See Woodside
Village v. Secretary of United States Department of
Labor, 611 F.2d 312 (9th Cir. 1980); Dairy Development
Ltd., WAB Case No. 88-35 (Aug. 24, 1990); Arbor Hill
Rehabilitation Project, WAB Case No. 87-04 (Nov. 3,
1987).
In my view this reason for determining the petition must be
dismissed is too broadly stated. The Wage-Hour Administrator is
primarily concerned with the administration of Davis-Bacon and
Davis-Bacon Related Acts as provided in Reorganization Plan 14 of
1950, not with parties' contractual agreements. That a party
agreed to accept and apply Davis-Bacon requirements can be strong
evidence that the Davis-Bacon or a Davis-Bacon Related Act was
understood to [13]
~14
[14] apply. A signatory should not be heard in an enforcement
proceeding to say it did not know the project sponsor intended
Davis-Bacon to apply. But the Administrator's jurisdiction and this
Board's involvement in this case derive from the fact that this is a
Davis-Bacon Related Act project subject to Davis-Bacon requirements. It
does not stem from the fact alone that a contracting party voluntarily
agreed to adhere to Davis-Bacon Act requirements. If in fact the
Administrator or this Board would conclude in the appropriate case that
a particular project is not Davis-Bacon covered, the fact parties
mutually agreed in advance, though erroneously, that it was would not
necessarily subject that project to Davis-Bacon Act requirements. Each
case must be examined on the basis of its own factual circumstances. To
illustrate further, in the case in which a government procurement
program would be subject, for example, to Walsh-Healey Act requirements
and not the Davis-Bacon Act, the fact that the contracting parties
agreed in advance that such a project was subject to Davis-Bacon would
not necessarily confer jurisdiction upon the Wage and Hour Administrator
to treat the project as Davis-Bacon covered.
In close cases of coverage the fact that a governmental or
sponsoring agency insisted on including Davis-Bacon requirements
which were accepted by the contracting party may be strong evidence
that there was a waiver of any further right to complain that the
sponsoring agency's determination was wrong. But in the case in
which it can be clearly perceived that the sponsoring or government
grant agency was wrong in insisting that Davis-Bacon requirement be
included in the agreement, I would not opine that in every such
case the Administrator must treat the project as Davis-Bacon Act or
Davis-Bacon Related Act-covered for DOL enforcement purposes.
As a general proposition, parties who have accepted an award
or entered into a negotiated agreement as being subject to
Davis-Bacon or DBRA requirements or is about to sign such an
agreement should come forward and raise their concerns before
laborers and mechanics are hired at the project site. They should
not wait until the enforcement stage is reached. They will be at
risk of being told they have waived the timely opportunity to
object.
On another matter, when this case was before the Board in
Green Island Associates, WAB Case No. 86-21, decided August 7,
1987, the Board remanded for further proceedings. I wrote
separately that on the basis of the evidentiary record I was not
prepared to conclude that a rambling wood structure four stories or
less should be categorized as general building construction without
a better record on local practice. That kind of issue has not been
brought back to the Board. Several hundred new condominiums have
been added to the project that started out as the rehabilitation of
the Sagamore Hotel.
I am in agreement that the petition must be dismissed and the
decision of the Administrator affirmed. [14]
[ENDNOTES]
/FN1/ See pages 9-10, infra.
/FN2/ For example, counsel for the Acting Administrator notes
(Statement, at p. 16 n.12) that a June 7, 1983 letter from the
Town's agent, Uccellini Enterprises, to Leonbruno specifically
stated that the UDAG program's administrative requirements included
"weekly payroll and construction progress inspections." The weekly
payroll requirements that are applicable to the UDAG program are
those established by the Secretary of Labor's Copeland Act and
Davis-Bacon regulations at 29 CFR 3.3 and 5.5.
/FN3/ The Board rejects the Town's argument that the Acting
Administrator and the Board lack jurisdiction to adjudicate the
Town's Davis-Bacon liability. As noted by counsel for the Acting
Administrator (Statement, at p. 18), the Acting Administrator's
decision in this matter was issued pursuant to 29 CFR 5.13, which
sets out the broad authority of the Administrator of the Wage and
Hour Division to issue authoritative rulings on questions relating
to application and interpretation of the Davis-Bacon Act, the
Related Acts, and pertinent regulations. This provision does not
in any way circumscribe the Acting Administrator's authority (or
the Board's review authority) so as to preclude adjudication of the
liability of entities other than contractors. Indeed, past Board
decisions have dealt with the liability of entities such as
developers, grant recipients and a local housing authority. See
Dairy Development, Ltd., supra; Colby Cooperative Starch Company,
WAB Case No. 84-21 (June 3, 1985); Quincy Housing Authority, WAB
Case No. 87-32 (Feb. 17, 1989).
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