U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT. OFFICE OF THE SECRETARY WASHINGTON. D.C.2O41ff-Oaoi 7 If] *."'! 'C. I S IQfiR [

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1 U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT OFFICE OF THE SECRETARY WASHINGTON. D.C.2O41ff-Oaoi 7 If] *."'! 'C I S IQfiR [ MEMORANDUM FOR: Regional Administrators '< Regional Labor Relations Officers Labor Relations Directors FROM: Justin L. Logsdon, Office of Labor Relations, SL SUBJECT: Transmittal of Revised Davis-Bacon Coverage Chart and Appendices The attached chart is designed as a convenient thumbnail reference point for determining the Davis-Bacon consequences flowing from use of CDBG/UDAG monies to finance various activities associated with a development project. Divided into four columns, the chart lists some common activities connected with a construction project, states whether prevailing wage, rate requirements apply if that activity is federally-financed, then whether related non-federally financed construction is Davis-Baconcovered, and finally the authority for the conclusions reached. The "authority" column refers to eight attached appendices, including the 1987 Justice Department opinion on Davis-Bacon applicability to CDBG/UDAG projects, certain opinions issued by this Office and the Office of General Counsel, and excerpts from HUD Handbook , REV-1. Although the chart should be a helpful guide to providing quick and reliable answers to common Davis-Bacon applicability questions, it is not intended as an infallible instrument for the resolution of all prevailing wage coverage issues that may arise. Each case must be examined on its own merits, including the precise terms of grant documents and contracts, evidence regarding the actual use of the federal funds, and all other relevant circumstances. The chart itself cannot be relied on as binding in making applicability decisions. Only the official authority cited as well as other relevant authority can serve that purpose. In addition, if CDBG/UDAG monies are to be used to finance nonconstruction activities, it is imperative that grant agreements, development and construction contracts, and other legal instruments unambiguously dedicate the use of the HUD funds to those specific purposes. The Office of General Counsel has ruled that, Davis-Bacon requirements are applicable under Section 110 where [CDBG/UDAG] funds are made available to a beneficiary for a project that includes construction work, notwithstanding the assertion of any unilateral, after-the-fact allocation to non-

2 construction items, unless the terms of the instrument making the... funds available restrict the use of the funds to non-construction aspects of the project or other documentary evidence indicates that the... funds were not or could not have been used to finance the construction. (Memorandum entitled, "Applicability of Davis-Bacon wage rates to CO8Gassisted projects financed by Jacksonville Local Development Company, Inc." June 11, 1984, page 4) I hope this chart will be helpful in carrying out your responsibilities. As always, do not hesitate to call upon this Office if we can be of assistance on a specific case. o the Secretary Relations Attachments

3 u.s Office of Labor Relations Department of Housing and Urban Development Washington, I). C. REVISED DAVIS-BACON COVERAGE CHART CDBG/UDAG FINAHCEO ACTIVITIES October 15, 1988 Financed Construction Authority Real Property Acquisition (land, pre-existing build ings and other improvements N/R* No 8/6/87 DOJ opinion pp. 9-11, 14 (App. n); 11/19/87 OGC opinion, p (App. n) Demolition (no construction on-site contemplated) No N/R HUD Handbook , Rev-1, 7-5 (App. S3) Demolition (to be followed by on-site construction) Yes No, if demolition done under I?parate contract by grantee (state, county, city, etc.) or its contractor before transfer of land to developer. Yes, if demolition contracted Tor".by same entity (developer, contractor, etc.) doing private construction and will be carried out while contracting entity controls site. App. #3 in conjunction with 4/30/85 OGC opinion (by analogy to on-site improvements) (App. H)

4 Page 2 F i n a need Acti vity Construction Authority Off-site Improvements (street work, storm sewer and"utility construction, etc. ) Yes No, if off-site improvements are separately owned and the off-site work andon-sjte construction is provided for in separate construction 8/19/88 OLR opinion, pp. 1-2 (App. #5); 9/19/38 0 L R -Op_i n.i on. (A P_P_-. _ K. J contracts. On-site Improvements {excavation/grading, storm drainage, utility or sewer work, paving/walks/striping, site lighting, landscaping, etc.) Yes No, if on-site improvements FFe done under separate con tract by grantee (state, county, city, etc.) or its contractor before transfer of land to developer. Yes, if improvements are detigned and intended to serve building on the site; will be contracted for by same entity having building constructed; and will be carried out while contracting entity controls the App. si te. Cleaning During Construction Yes Yes App. #7 Cleaning After Construction to Prepare for Occupancy No, if 'performed under "separate contract. App. #7

5 Page 3 Financed Acti vity Construction Authori ty Materials Purchase N/R Yes, unless materials have an independent use App. $2, pp. 4-5 Equipment, Machinery, and Fixtures Purchase (as opposed to installation) N/R Ho, if purchased under separate contract. App. #1, pp ; App. #2, pp. 2-3; App. #5, PP. 2-3 Equipment, Machinery, and Fixtures Installation (as opposed to, or in addition to, purchase) Yes, if more than Incidental amount of construc tion work 1 nvolved i n the 1ns ta Uation.1/ Yes, if more than i nci dental amount construction work involved in the installation. 1/ an of App. #1. pp ; App. #2, pp. 2-3; App. 05, pp. 2-3 ; 10/15/87 OLR opinion (App. #8) Legal/Account! ng Services N/R No, if obtained under separate contract. App. #1, p pp ; App. #2 Architectural/ Engineering Services N/R1 No, if obtained under separate contract. App. #1. pp. 9-10, 14; App. 2, p. 5 1/ Construction work involving installation is incidental If U is 13% or cost of the COBG/UDAG-financed equipment; 1f It is more, a 4-part test less of the total applies. App. #8.

6 Page 4 Financed - Construction " Authority Construction Management N/R* No, i f provided for Under, separate contract App. #2, pp. 5-6 Tenant Allowances for Nonconstruction Expenses (furniture, business licenses, etc.) N/R No, i f provided for u~n"der separate contract App. #1, P. 14» App. 82, p. 6 - Hot relevant because no construction activity is involved.

7 REVISEO DAVIS-BACOH COVERAGE CHART C08G/UDAG FINANCED ACTIVITIES October 15, 1988 List of Appendices 1. Department of Justice legal opinion, dated August 6, HUO Office of General Counsel legal opinion, dated November 19, HUD Handbook , Rev-1, HUD Office of General Counsel legal opinion, dated April 30, HUD Office of Labor Relations opinion, dated August 19, HUD Office of Labor Relations opinion, dated September 19, HUD Handbook , Rev-1, HUD Office of Labor Relations opinion, dated October 15, 1987.