A Multnomah County Circuit Court judge ruled May 3 that the state prevailing wage law doesn’t apply to a Portland renovation project that is being partially financed with taxpayer dollars.

The state prevailing wage law has been on the books in Oregon since 1959 and was last revised by the Legislature in 2005. It was enacted to ensure that contractors on public works projects compete on ability and efficiency rather than on who can pay the lowest wages and offer the fewest benefits.

Prevailing wages and benefits are set through annual surveys of more than 5,000 contractors by the Oregon Employment Department.

The Oregon Bureau of Labor and Industries (BOLI) enforces the law.

The court case stems from a lawsuit filed by the Portland Development Commission (PDC) against BOLI over a determination by state Labor Commissioner Dan Gardner that a redevelopment project in Northeast Portland — known as the Tin Roof project — was a prevailing wage job.

PDC — the development arm for the City of Portland — appealed, saying the project was a private one because the agency only loaned money and didn’t own the building.

When Gardner would not reverse his decision the agency sued BOLI.

PDC is involved in numerous partnerships with private developers, many of which involve taxpayer dollars through urban renewal districts, tax increment financing and other creative financing methods.

BOLI maintains that the prevailing wage law covers any binding agreement a public agency enters into which requires construction, uses public funds, and is done in the public interest.

PDC has argued for a much narrower legal interpretation, contending that the law applies only if a public agency contracts directly with a construction contractor or if the public agency actually owns the project at its conclusion.

PDC contributed about 40 percent of the Tin Roof project’s $3.4 million total cost to renovate an old bakery on Martin Luther King Jr. Blvd. into the headquarters for Henry V, a private corporate events planning company. The area is an urban renewal district. PDC money came in the form of a $1.2 million low-interest loan, plus a grant.

The court case focused on whether PDC had “contracted for” a public works project and whether the project was in the public interest.

Multnomah County Circuit Court Judge Henry Kantor ruled that PDC didn’t control construction of the project so, therefore, it wasn’t a prevailing wage job.

BOLI, represented in court by the Oregon Department of Justice, is appealing the decision.

Gardner told the Northwest Labor Press that while the appeal is pending, Kantor’s ruling will not be binding on his interpretation of prevailing wage rates in other cases.

Gardner said the appeal is part of an overall plan he has to help clarify the application of the law when it comes to public-private development projects.

“Our ultimate goal remains the same,” Gardner said. “We want clarity regarding prevailing wage rates on public-private projects for BOLI, public agencies, workers and developers. Because the lower court did not issue a written opinion, and given the fact that the case rests on the meaning of the words ‘contracted for’ by a public agency, an appellate court’s written opinion on the proper interpretation of the law is critical to getting clarity.”

Gardner also wants the appellate court to review the “carried on by” language in the prevailing wage law. He is looking for a public agency or a developer to work with BOLI on a stipulated hypothetical “set of facts” to which he would issue a declaratory ruling to be reviewed by the Oregon Court of Appeals based on revisions made by the 2005 Legislature.

“We really need resolution as quickly as possible and this could save months or even years,” he said.

The fact that PDC would sue over the creation of family-wage jobs was puzzling to some union officials.

Bob Shiprack, executive director of the Oregon State Building and Construction Trades Council, pointed to the results of a recent community outreach survey conducted by PDC whereby citizens ranked “increasing family-wage jobs” as PDC’s top priority.

The survey listed 14 PDC programs and how citizens felt each should be funded. Number one on the list was to “increase family wage jobs by providing economic development loans and support to businesses willing to expand/ stay within the city.”

“It shows how arrogant PDC can be — using taxpayer dollars to sue another public agency over an issue (family- wage jobs) the public says should be its top priority,” Shiprack told the Executive Board of the Oregon AFL-CIO. “This is not a union issue. It’s a basic workers’ issue.”

Gardner said he is in the process of adopting administrative rules based upon areas of consensus reached by the Task Force on Public-Private Partnerships. The task force, which has been meeting for the past eight months, included contractors, developers, lenders, bureaucrats and union officials. There wasn’t full consensus on when to apply prevailing wage rates, Gardner said, “but I think the group came closer to an answer.”

Gardner said he will adopt a rule clarifying BOLI’s policy to issue separate rates on mixed-use (commercial and residential) development projects, and also to continue segregating the public and private portions of a project whenever possible.

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