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Monday, August 29, 2011

Hensel Phelps Construction Co: Project on Public Land Subsidized by Rent Credits is Subject to Prevailing Wage Law

Interesting prevailing wage case: Hensel Phelps Construction Company v. San Diego Unified Port District (7/26/11) 197 Cal.App.4th 1020.

The Department of Industrial Relations (DIR) determined that a hotel construction project on public land leased from a government entity was covered by the Prevailing Wage Law (PWL). The developer and general contractor petitioned for writ of mandate, and a trade union intervened. The trial court (San Diego Superior, Judge William R. Nevitt) granted the developer's petition, and the trade union appealed.

The Court of Appeal reversed, holding that the construction project qualified as a public work where the lease required the lessor to build a hotel on the property, according to the government entity's specifications, and provided a rent credit to subsidize the project. A public agency may pay for construction out of public funds either by reducing rent or by charging rent at less than fair market value, and the rent credit constituted a reduction and waiver of rent for purposes of Labor Code Sec. 1720(b)(4). Because the project was paid for out of public funds, the PWL applied.

The opinion is available here.

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