CCASE:
CHASTLETON APARTMENTS
DDATE:
19841211
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of
CHASTLETON APARTMENTS WAB Case No. 84-09
HUD Proj. No. 000-35318-PM SR Dated: December 11, 1984
APPEARANCES: Peter C. Schaumber, Esquire, Gerald F. Ivey, Esquire
for Interstate Land Development Company
Mary Vogel, Esquire for Building and Construction
Trades Department, AFL-CIO
Gerald Krizan, Esquire, Gail Coleman, Esquire
for the Wage and Hour Division, U.S. Department of
Labor
BEFORE: Alvin Bramow, Chairman, Thomas X. Dunn, Member
Stuart Rothman, Member, dissenting in part.
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition and
motion for expedited consideration of Interstate Land Development
Company (hereinafter petitioner) seeking review of the Assistant
Administrator's decision dated May 24, 1984. /FN1/
The decision in question was rendered in response to
petitioner's request for reconsideration of wage determination
DC84-3009 containing building construction wage rates applicable
[1]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ The Assistant Administrator's decision was issued orally.
Counsel for the Assistant Administrator has not objected to the
appeal proceeding without a written ruling due to petitioner's
motion for expedited consideration. [1]
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[2] to the rehabilitation of the Chastleton Apartments, an eight-
story apartment building in Washington, D.C.
The Chastleton was built in the 1920's as a hotel. It has
most recently been utilized as a rental apartment house and it
is proposed that it be renovated into 315 apartment units. The
extensive renovation which is proposed will consist of repair and
patching of plaster walls and ceilings, installation of new
bathroom plumbing fixtures (except tubs), new cooling and heating
systems, new carpeting and vinyl floors, removal and replacement
of kitchen cabinets, stoves, refrigerators, electrical wiring
and storm sashes, painting throughout and the installation of
a fire sprinkler system in the corridors and public rooms.
Additional interior and exterior work is proposed with the total
cost estimated to be $6,411,255.
Since the project will be insured pursuant to a Department
of Housing and Urban Development commitment, the project will be
subject to the prevailing wage labor standards provisions
determined by the Wage and Hour Division of the U.S. Department of
Labor. The applicable wage determination issued pursuant to
these labor standards provisions contained the building
construction wage rates recognized as prevailing by the Wage and
Hour Division for general building construction in Washington,
D. C.
Petitioner requested the Assistant Administrator of the Wage
and Hour Division to reconsider the wage rates issued, arguing [2]
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[3] that the work entailed by the project is more similar to
residential construction than to building construction, and that
the building construction wage rates issued are higher than those
actually prevailing on building construction in Washington, D.C.
The Wage and Hour Division has undertaken a review of the building
construction wage rates in Washington, but this survey has not
been completed. On May 24, 1984 the Assistant Administrator
orally denied petitioner's request for reconsideration. Petitioner
on the same date, May 24, 1984, petitioned the Wage Appeals Board
for review of the Assistant Administrator's decision.
The petitioner's argument centers on the claim that the
Chastleton rehabilitation cannot support the high wages required
to be paid in heavily mechanized construction of new, high-rise
structures. The structural beams, columns, slabs and exterior
walls are already in place. The work to be performed in the
building is characterized by petitioner as labor-intensive work
which would employ the same kind of work crews used in the
construction of a townhouse or other type of low-rise residential
project. Relying on the statutory language that predetermined
wage rates should be those being paid "...on projects of a
character similar to the contract work in the city, town, village,
or other civil subdivision...", petitioner disputes Wage and
Hour's classification of the proposed project as building
construction. According to petitioner, the Chastleton is a [3]
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[4] residential project, and merely because it is four stories
higher than Wage and Hour's usual criteria for residential
buildings, i.e. that a residential building must be four stories
or less to be accorded residential wage rates, petitioner claims
that Wage and Hour's decision is arbitrary and capricious in
denying the residential rates because of height alone. Petitioner
argues that since the major work to be performed is alteration
and repair of the interiors of the building's apartment units,
it is not appropriate to classify the project as building
construction since the actual construction techniques applied and
the materials used in rehabilitating the Chastleton are identical
in every significant respect to those involved in the construction
of a three or four story townhouse.
Petitioner further claims that if the wage rates listed in
the current wage determination are required on the project, it
is unlikely that the rehabilitation project can be performed at
all, thereby raising the substantial possibility of a foreclosure
on the project and the removal of over 300 rental units from the
District's depleted rental housing market.
The Wage and Hour Division also cites the statutory
requirement that the predetermined wage rates be those being paid
". . . on projects of a character similar to the contract work in
the city, town, village,or other civil subdivision...." However,
Wage and Hour relies on decisions of this Board which have held
that high-rise residential and garden-type apartments are different [4]
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[5] in a construction sense. See, Mattapony Towers Apartments,
WAB Case No. 64-02 (June 29, 1965), Largo Landing Fellowship
House, WAB Case No. 82-14 (March 11, 1983).
The Wage and Hour Division also relies on the Department's
regulations which provide that the Administrator "shall give
foremost consideration to area practice" in determining application
of wage rate schedules. 29 CFR [sec] 1.6(b) (1983). Wage and Hour
disputes petitioner's contention that the Chastleton's
rehabilitation is more similar to residential construction by
arguing that the only difference between the proposed work and
conventional building construction is Chastleton's pre-existing
foundation, structural framework, and finished exterior.
Otherwise, the work to be performed, and materials and equipment
used is claimed to be the same as those used on the interior of any
other building project.
Finally, Wage and Hour disputes the wage rate data appended to
petitioner's brief and post-hearing statements. It appears that
several of the projects are not of a character similar to the
Chastleton and others do not contain wage rate information in a
form that would be useable by Wage and Hour.
The Building and Construction Trades Department, AFL-CIO,
submitted a brief and post-hearing statement which supports the
position of the Wage and Hour Division in this appeal.
* * *[5]
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[6] The Board considered the appeal on the basis of the Petition
for Review and supplemental submissions filed by petitioner, a
statement and post-hearing statement on behalf of the Assistant
Administrator and the record of the appeal before the Wage and
Hour Division filed by the Solicitor of Labor for the Assistant
Administrator, and a statement and post-hearing statement filed
by the Building and Construction Trades Department, AFL-CIO. An
oral hearing was held on August 28, 1984, at which all interested
persons were present and participated.
As stated, the petitioner argues that the renovation of the
Chastleton Apartments is, for all intents and purposes, a
residential construction project and is more similar to low-rise
residential construction than building construction. It makes
this assertion on the theory that the project essentially involves
interior "finish" work similar to that done on low-rise residential
projects and the work differs from "new" construction which
involves structural work such as erecting support columns and
pouring slabs.
The majority of the Board does not dispute that the work to be
performed on Chastleton is very similar to that performed on any
low-rise residential project. But the majority does not agree that
because the work is essentially interior "finish" work similar to
that done on low-rise residential projects it should be
characterized as residential construction. The majority finds, [6]
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[7] and it was admitted at the hearing, that the same kind of
"finishing" work is also routinely performed on new building
construction and rehabilitation and renovation of all types of
commercial buildings.
The "work similarity" test relied on by petitioner was the
criteria found in the original Davis-Bacon Act passed in 1931.
However, the current Act as amended in 1935 (40 USC 276a et seq.)
changed this criteria to "projects of a character similar".
Therefore, the Board must look to the project itself and not just
to the work items to be performed.
Here, the Board is confronted with the problem of determining
the classification of construction and the wage rate determination
to be issued for the conversion of an eight-story building into
a 315 unit apartment. The Board must look to the nature of the
project itself which is an eight-story apartment building. As
such, the majority rejects the petitioner's argument that the
Chastleton rehabilitation project falls within the category of
residential construction as it is understood by the Board, and
more importantly, by the construction industry. See Wage Rates
for Biscayne Retirement Home, WAB Case No. 83-02 (March 16, 1983);
Largo Landing Fellowship House, supra; 2900 Van Ness Street,
WAB Case No. 76-11 (January 27, 1977).
The petitioner argues in the alternative that if the Board
disagrees that the Chastleton project is indeed a residential
construction project, then a separate category should be
established for residential rehabilitation projects. [7]
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[8] In 2900 Van Ness Street, supra, the petitioner's request that
the Board recognize high-rise residential construction in the
District of Columbia as a separate category for wage determination
purposes was denied. The Board in that case stated "The test of
whether a project is of character similar to another project refers
to the nature of the project itself in a construction sense, not to
whether union or nonunion wages are paid or whether union or
nonunion workers are employed. Since the 1935 amendments to the
Davis-Bacon Act the statutory focus has always been on the
character of the project itself rather than on who was employed on
the project or how much he or she was being paid."
The only evidence of record to substantiate a claim for the
establishment of a separate category for residential rehabilitation
projects is a statement presented at the hearing from the
President-elect of the Washington Chapter of the American Institute
of Architects and a few contractors who pay non-negotiated wage
rates and employ mostly helpers. /FN2/ In fact, the wage rates
paid other than those paid to helpers generally do not even show a
practice to pay rates differing from those currently recognized by
the Wage and Hour Division for the category of building
construction. [8]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN2/ Even assuming a separate category was established for
residential rehabilitation, wage rates for the semi-skilled
classifications of helpers when such classifications are
"identified" in the area could not be issued in the wage
determination. As a result of a suit filed against the Department
of Labor (Building and Construction Trades Department, AFL-CIO, et
al. v. Raymond J. Donovan, et al., 543 F.Supp. 1282), the court
issued a permanent injunction on December 23, 1982, prohibiting the
issuance of wage determinations containing rates for semi-skilled
classification of helpers when such classifications [8][FN2
CONTINUED ON PAGE 9] (Cont.) are "identifiable" in the area.
This ruling of the District Court was reversed in part by the U.S.
Court of Appeals for the District of Columbia, 712 F.2d 611 (1983),
cert. denied No. 83-697 (January 17, 1984), but the District
Court's injunction continues in effect. [END FN2] [9]
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[9] Since the amendment of the Davis-Bacon Act in 1935 it has
been a long recognized practice by the Wage and Hour Division to
categorize rehabilitation, whether high-rise residential or
commercial, as within the category of general building
construction. The reason for this is found in the Act itself. The
character of the structure in a construction sense dictates its
characterization for Davis-Bacon wage purposes. Here, there is a
substantial amount of rehabilitation work being done on a project
of a "character similar" to a high-rise residential and commercial
building in a construction sense. Accordingly, it is not necessary
to determine whether there is an industry practice to recognize a
different category for rehabilitation where the "construction,
alteration and/or repair" is being performed on a building of a
"character similar" to other high-rise residential and commercial
structures. See Van Ness, supra. [9]
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[10] In view of the foregoing, the decision of the Assistant
Administrator is affirmed /FN3/ and the petition is dismissed.
* * *
Member Rothman, dissenting in part.
I am in agreement with the Board majority that the projects
upon which the petitioner relies are not of a character similar to
the Chastleton project and the wage rate data in petitioner's brief
and post-hearing statement is not useable in the resolution of this
dispute. It is, as the majority points out, based on the use of
classifications extraneous to the predetermined wage schedules
involved. The data also raises serious questions for determining
Davis-Bacon wage rates because of possible misclassification and
impermissible use of helpers.
The majority concludes as follows. "Since the amendment of
the Davis-Bacon Act in 1935 it has been a long recognized [10]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN3/ The Board through the Chairman ruled at the hearing that it
was not necessary for the Board to consider the issue of whether
the building construction wage rates contained in the wage
determination applicable to the Chastleton project are higher than
those actually prevailing in the Washington, D.C. area. It was
pointed out by the Chairman that the Statement on behalf of the
Assistant Administrator indicated that Wage and Hour is currently
conducting a building construction wage rate survey and the
resultant wage rates would be applicable to the project if the
petitioner does not receive its initial endorsement under the
National Housing Act prior thereto. As a result of this decision,
the wage rate survey should contain information from high-rise
residential and commercial rehabilitation projects as well as new
building construction. [10]
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[11] practice by the Wage and Hour Division to categorize
rehabilitation, whether high-rise residential or commercial, as
within the category of general building construction."
It is with respect to this conclusion that I find myself
differing from the majority. I do not know on the basis of the
record that has been made whether in this case there has been
a long recognized practice in the District of Columbia to
characterize the interior rehabilitation of high-rise residential
construction as within the category of general building
construction and more importantly, whether that is the case today.
Because I see substantial differences in the nature and
characteristics of the interior rehabilitation by alteration
and repair in a high-rise residential building from the init[i]al
construction of such a building itself (in this case a building
50 years old), I would question the procedures of the Wage and
Hour Administrator in relying upon assumptions that this or that
practice is so.
The majority of the Board may well be right in the result
it reached, but I do not feel it safe to reach the same conclusion
on the basis of surmise and assumption. This is particularly so
because there has been no rebuttal information submitted by the
Wage and Hour Division that the interior modification of 50 year
old high-rise residential buildings such as the Chastleton in the
past and is presently being recognized in the District of Columbia
as subject to the same general wage [11]
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[12] scales applicable to the new construction of the building
itself.
I believe that the Wage and Hour Administrator also has a
burden to develop an adequate factual background upon which a fully
informed decision can be based, one in which the Wage and Hour's
point can be shown to a petitioner to be factually correct and not
based upon presumings.
I would remand this case to the Administrator for specific
examination of current industry practice to be made by a locally
conducted survey of such nature as he concludes to be adequate.
The question is: Does such survey identify a significant local
industry practice recognizing a different category of construction
from general high-rise building and commercial construction in the
case of high-rise residential rehabilitation similar in character
to the Chastleton project?
If there is such a practice, the Administrator should modify
his decision in accordance with his normal operating procedures
in such a case.
BY ORDER OF THE BOARD
Craig Bulger,
Executive Secretary
Wage Appeals Board [12]
