A key amendment to the state’s prevailing wage laws was passed by the General Assembly last night (June 3) as part of the passage of the comprehensive State Budget Implementer Bill (Bill No. 7187). The amendment helps resolve a major challenge to developers, municipalities and businesses seeking to redevelop Brownfield sites. In 2017, the legislature revised Section 31-53c of the General Statutes to make any construction project receiving financial assistance from the Department of Economic and Community Development (DECD) in the amount of $1 million or more subject to the prevailing wage statutes, including those projects receiving Brownfield grants and loans from DECD. The application of the prevailing laws to Brownfield grants and loans has created a huge disincentive for developers, municipalities, and businesses to redevelop Brownfield sites, because the Department of Labor (DOL) has interpreted the revised statutes as subjecting not only the remediation work funded by a DECD grant or loan but also the vertical construction at that site to the prevailing wage statutes, even if the vertical construction is being performed by a new owner and financed by different funds.
According to some in the real estate industry, the broad application of the prevailing wage requirements to the entire project would increase the cost of a Brownfield redevelopment project significantly - as much as 20 to 30 percent. Developers and businesses, already facing considerable risk and expense associated with Brownfield redevelopment, simply can’t afford these additional costs. In the past few years, a growing number of municipalities, which have investigated and at least partially remediated Brownfield sites with grants from DECD, have been unable to find businesses or developers willing to acquire and redevelop these sites. Likewise, some developers who have been awarded brownfield financial assistance from DECD have returned the funds and put their projects on hold, because the prevailing wage requirements have made their projects financially infeasible.
Among other things, Section 160 of the Implementer Bill corrects this problem. It amends subsection (f) of Section 31-53c to provide that on projects receiving DECD-qualifying brownfield financial assistance, the prevailing wage requirements will now be limited to only those remediation, demolition and abatement activities of the project described in the financial assistance contract between the applicant of Brownfield funds and DECD. This limitation provides a bright line for brownfield redevelopers in determining what aspects of their projects will be subject to the prevailing wage laws, and assures them that the vertical construction will be free from the prevailing wage requirements.
Section 160 also clarifies which entities are subject to the prevailing laws under Section 31-53c of the General Statutes. The current version of Section 31-53c provides that any “business organization” that receives qualifying financial assistance from DECD is subject to the prevailing wage laws; however, the definition of “business organization” under subsection (a)(1) is not well drafted and it has created some uncertainty as to which types of entities are included. Section 160 makes clear that public entities, such as municipalities, regional councils of government and certified Connecticut Brownfield Land Banks, are included in the definition of “business organization.” It also excludes from the definition of “business organization” any federally tax-exempt 501(c)(3) nonprofit or 501(c)(6) chamber of commerce that accepts DECD financial assistance for a covered project valued at not more than $10 million, unless it is a remediation, demolition, or pollution abatement project, which presumably will be covered under the revised subsection (f) as noted above.
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