SBCTC Wins Prevailing Wage Victory On Redevelopment Projects

December 14, 2005 - The State Building Trades recently won a prevailing wage victory before the State Department of Industrial Relations (DIR) that will have implications for redevelopment projects.

Developers asked DIR to rule that a transfer of property at "fair reuse value" is equivalent to a transfer at the "fair market price" and, therefore, does not trigger the prevailing wage law. Because the "fair reuse value" is the value of property with all the use restrictions imposed by a development agreement, the fair reuse value is less than the true fair market price.

The developers wanted redevelopment agencies to be able to subsidize projects by purchasing property at the market price and then re-selling the property to the developer at a much lower "fair reuse" price -- without the below-market sale triggering prevailing wage coverage. That would defeat the Legislature's intent that workers on projects subsidized with public funds be paid prevailing wages.

The State Building Trades asked Attorney Scott Kronland of Altshuler, Berzon, Nussbaum, Rubin & Demain to submit a brief to DIR arguing that the "fair reuse value" is not the fair market price and that the developers were seeking to evade the prevailing wage law. DIR Director John Rea agreed and ruled against the developers. The ruling is a clear victory for the Building Trades.


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