FOR THE District government and the taxpayers it serves, persistence has paid off. After three years of litigation, a federal judge ruled last week that the city won’t have to pay millions of dollars in extra labor costs for the massive CityCenterDC complex, which is under construction at the downtown site of the former convention center. The ruling, by Judge Amy Berman Jackson, is a model of lucidity and common sense that could spare not only the District but also other jurisdictions a lot of hassle and expense.
The origins of the case go back to 2011, when Nancy J. Leppink, acting administrator of the U.S. Labor Department’s Wage and Hour Division, ruled that CityCenterDC was subject to the Davis-Bacon Act. That Depression-era law requires builders to pay a kind of super-minimum wage to construction workers on federally funded public works projects and all public projects in the semi-federal nation’s capital. Issued in response to an appeal by construction unions, Ms. Leppink’s ruling was unprecedented — for the good reason that no one had previously considered a privately funded, private-purpose office-hotel-retail complex to be a “public work” like the Hoover Dam.
But Ms. Leppink thought that the project’s location on city-owned land (under a 99-year lease), plus its promised public benefits, such as jobs and tax revenue, rendered it “public” and, hence, subject to Davis-Bacon. Officials estimated this would add as much as $20 million to the project’s cost, and Ms. Leppink, in a breezy footnote, implied that the city could foot the bill. The ruling threatened to affect commercial redevelopment of land belonging to the District and to the federal government anywhere. Yet higher authorities in the Obama administration’s Labor Department upheld it, forcing the District to take the administration to federal court.
Judge Jackson’s opinion vindicates all those who thought that the administration was blatantly distorting the Davis-Bacon Act’s language and purpose; the law was meant to apply to post offices and other clearly public facilities, not hotels. The fact that CityCenterDC “is expected to give rise to incidental public benefits — such as employment opportunities, increased tax revenue, and even a certain amount of open space — does not transform it into a public work; these are the goals of every urban development project,” Judge Jackson explained. The Labor Department’s ruling to the contrary was “unworkable,” “arbitrary” and “capricious,” she wrote; that’s legalese for “bogus.”
We only have one regret: It took untold lawyer-hours and thousands of dollars to reach this obviously correct result and restore the commonsensical status quo, assuming unions don’t waste further time and money trying to get it overturned.