IT HAS been almost two years since Nancy J. Leppink, acting administrator of the Labor Department’s Wage and Hour Division, declared that CityCenterDC, a $700 million private-sector complex under construction at the downtown site of the former convention center, is a public works project for purposes of the Davis-Bacon Act — the de facto super-minimum wage law for government-backed projects.
Ms. Leppink’s decision overturned a career labor official’s previous determination that the privately financed, privately occupied, privately operated office-retail-residential development had little in common with the federally funded roads and courthouses that usually fall under Davis-Bacon’s prevailing wage provision. Developers, investors and Mayor Vincent C. Gray’s administration were shocked — not least because Ms. Leppink’s opinion threatened to add up to $20 million to CityCenterDC’s costs and implied that District taxpayers should pick up the tab.
Now comes word that the ultimate Labor Department authority above Ms. Leppink (who has since left office), the Administrative Review Board, has rejected an appeal of her ruling by the developers and the District. On April 30, the five-member panel agreed with Ms. Leppink that CityCenter’s condos and shops are “public buildings or public works” under Davis-Bacon. The reasons: The District still owns the land under them, and the city is leasing it for 99 years rather than selling it outright; the District retains “direct authority” in the form of a limited veto over aspects of construction; and the city has touted the public benefits of the project, such as more jobs and tax revenue.
Never mind that this strained notion of a public project contradicts any common-sense definition, or that it could apply to — and raise the cost of — all future commercial redevelopment of land belonging to the District or to the federal government anywhere.
The Labor Department’s handling of this situation is undoubtedly pleasing to the Mid-Atlantic Regional Council of Carpenters, which brought the original petition to apply Davis-Bacon in 2009. But for the District and the developers who quite understandably never saw it coming, it amounts to an unjustified, and potentially expensive, departure from previous legal understandings.
D.C. Attorney General Irvin B. Nathan filed suit Monday in U.S. District Court, asking it to overturn a ruling that the complaint quite correctly labels “arbitrary” and “capricious.” The District is right to keep fighting for its taxpayers and the legitimate interests of businesses that invest here. Long, tedious and costly as it may be, this battle is well worth waging and winning, as we hope the court will agree.