Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Thursday, April 21, 2016

Tortured logic in development law case?

The Washington Post editorialized ("Dear Labor Department: Give up on meddling with CityCenterDC already") in favor of a recent federal court decision on wage rates on for profit construction projects involving DC Government owned land (that is, land owned by the citizens of the City of Washington).

Over the last 10 years, DC has initiated development of various parcels through multi-decade leases.

The city still owns the property, usually planned how it would be developed (it sure did with CityCenterDC and helped to find a financier), sought proposals for development, chose a developer and entered into a contract to develop the land and collect "payments in lieu of taxes" on the land since technically the land isn't subject to property tax since it is owned by the city.  Usually these contracts and projects involve city-provided funds and inducements as well.

How can these not be city-involved "undertakings" thereby justifying the triggering of the Davis-Bacon Act and the higher wage rates the act imposes?
CityCenterDC shopping ad, Washingtonian Magazine, 2/2016
CityCenterDC shopping ad, Washingtonian Magazine, 2/2016

One line in the Post article seems to indicate to me very clearly that this is a city undertaking, and therefore the holding--I AM NOT A LAWYER--may well in fact be "wrong."
At stake for the District was far more than the estimated $20 million in additional CityCenterDC costs taxpayers would have been on the hook for because of the federal regulations requiring reimbursement to the developers.
But the Post doesn't explain why "federal regulations" require that the city reimburse the developers for the higher wage rates, so maybe I'm wrong.

If I am right that it has to do with the underlying contract between DC and the developer than I am right that it very clearly is a city undertaking.

Then again, the Federal Court of Appeals which covers DC is considered to be conservative and like the Supreme Court under Chief Justice Roberts, quite pro-business.

A Home Rule based counterargument.  For a counter-interpretation see "Davis-Bacon CityCenterDC Case" from the Labor & Employment Law blog.from the ShepherdMullin law firm.

Note that DC is a special case because DC is considered a federal agency by the Federal government and therefore it is subject to federal laws like the Davis-Bacon Act.  Other cities are not subject to its provisions, unless the project uses federal funds.

So you can argue that on matters not involving federal action, local DC actions shouldn't be subject to federal laws that wouldn't apply to other cities as a matter of course.

But the Post editorial wasn't basing its arguments on Home Rule.  It was arguing an anti-labor, lower wages position.

Reading the blog entry, I'd argue that the Department of Labor used the wrong arguments--they should have argued along the lines of my paragraphs two and three above, that the property is owned by the city and ultimately controlled by the city, not that the public benefits from the end result of the privately constructed development. As long as the city is subject to Davis-Bacon provisions, if it's city property that the city still controls, it's a city undertaking. (However, from a legal standpoint, I don't know if this element of property control is interpreted differently by the Courts as it relates to long term leases.)

And the city should have argued a Home Rule position, that local undertakings shouldn't be subject to the Davis-Bacon Act, only local undertakings involving federal funds, like transit or road construction.

Likely then the Court would have come to the same decision, but with a far more logical argument.

As public-private partnerships between government and the private sector, should past legal interpretations be revisited?  According to the ShepherdMullin piece:
Judge Jackson’s decision questions a number of the Administrative Review Board’s findings, but it ultimately rests on a rejection of the Administrative Review Board’s conclusion that CityCenterDC is a public work. She reasoned that the “text, history, and purpose of the Davis-Bacon Act reveal that Congress used the term ‘public work’ in its traditional sense: work that is either funded by public dollars or used by the public, and usually both.”
What is the definition of a "public work" when the private sector becomes much more intertwined with the development, delivery, management, and lease of public buildings and projects?

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At 1:30 PM, Anonymous charlie said...

Interesting. Didn't know the city center condos had a 99 ground lease.

I'd say I agree with your second option -- government owned land, private building (albeit it with a heavy government hand) and davis-bacon shouldn't apply.


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