Housing Partners v. Duncan: Court of Appeal Declines to Combine Statutory Exemptions to Prevailing Wage Requirement

A quick note on this case for those of you who deal with prevailing wage law. In Housing Partners I, Inc. v. Duncan (6/15/12), a developer appealed from a judgment denying its petition for writ of mandate against respondent John C. Duncan, the Director of Industrial Relations for the State of California (Director). The Director had determined that a low-income housing project developed by HPI was a “public work” within the meaning of Labor Code section 1720 and was not subject to a statutory exception to the requirement that it pay prevailing wages.

The developer had argued that the Director should combine two statutory exemptions to find the project was exempt from the prevailing wage requirement:

One exception, section 1720, subdivision (c)(4), applies to affordable housing projects that receive money from a redevelopment agency's low and moderate income housing fund. Another exemption, section 1720, subdivision (c)(6)(E), applies to residential projects that receive below-market interest rate loans if the project dedicates a percentage of its units to low income occupants. Because a combination of three kinds of funding sources was used for the subject project, the Director concluded that neither exemption under section 1720, subdivision (c)(4) or subdivision (c)(6)(E) could be satisfied.

Slip op. at 3.

The trial court (San Bernardino Superior, Judge W. Robert Fawke) denied the developer's petition, and the developer appealed. The Court of Appeal affirmed, holding that the project did not qualify for either of the claimed exemptions.  

Section 1720, subdivision (c)(4) applies to a project receiving money solely from a qualified housing fund or from a combination of housing funds and private funds.  In contrast, subdivision (c)(6)(E) applies to a project receiving below-market interest rate public funding.  The exceptions operate independently, neither expressly including nor excluding one another.  Had the Legislature intended for the two exceptions to operate together, it would have been simple to draft the statute that way.  As the statute currently exists, however, the two exceptions are distinct and operate separately. 

Slip op. at 11. 

The opinion is available here.