HUD Davis-Bacon Related Acts and Factors of Applicability

HUD Program Davis-Bacon Related Acts (DBRAs) and Factors of Applicability

Programs administered by LCAs

The five programs described in this section are those which have been funded annually since their inception. Other funding that has Davis-Bacon implications is provided via existing or new HUD programs from time-to-time to respond to special situations such as natural disasters. Please contact the Office of Labor Relations staff for your jurisdiction for information regarding the requirements for HUD programs not listed in this section.

Housing and Community Development Act of 1974, as amended (HCDA); Section 110* (CDBG, NSP, Section 108, EDI/BEDI)

HCDA (Title I) statutory language:

1. All laborers and mechanics employed by contractors or subcontractors in the performance of construction work financed in whole or in part with assistance received under this title shall be paid wages at rates not less than those prevailing on similar construction in the locality as determined by the Secretary of Labor in accordance with the Davis-Bacon Act, as amended.... Provided, that this section shall apply to the rehabilitation of residential property only if such property contains not less than 8 units....
   
   
2. Subsection (a) shall not apply to any individual that
3. performs services for which the individual volunteered;
1. (A) does not receive compensation for such services; or
2. is paid expenses, reasonable benefits, or a nominal fee for such services; and
3. is not otherwise employed at any time in the construction work.
* Section 107(e) (2) of the HCDA permits the Secretary of HUD to waive the provisions of Section 110 in connection with grants to Indian tribes. This waiver action was taken and can be found in HUD regulations at 24 CFR 1003.603.

HCDA Factors of Applicability:

1. ...construction work financed... HCDA funds (e.g., CDBG) can finance activities other than construction work which do not trigger Davis-Bacon requirements; e.g., realproperty acquisition, purchase ofequipment, architectural andengineering fees, other services(legal, accounting, constructionmanagement), other non-constructionitems (furniture, businesslicenses, real estate taxes, tenant allowances for such items).
   
   Also, financing is not limited to the act of paying for the construction work directly. Financing can mean, for example, using CDBG assistance to pay the interest charged or to reduce the interest rate on a construction loan (including certain collateral accounts). Generally, “financing” also means using HCDA funds to provide permanent financing (take-out loan) following construction.
2. ...in whole or in part... If HCDA funds finance only a portion of a construction work, labor standards are applicable to the entire construction work.
3. All laborers and mechanics employed by contractors or subcontractors... Labor standards provisions do not apply to employees of the grantee (force account workers) that may be engaged on an otherwise covered project.Note:The construction work iscovered but these force account workers are excluded.
4. ...shall apply to the rehabilitation of residential property only if such property contains not less than 8 units. Typically, single-family homeowner properties are excluded under this exemption. For example, a contract to rehabilitate any number of single family properties for homeownership is not covered by Davis-Bacon. However, property is not limited to a specific building. Property is defined as one or more buildings on an undivided lot or on contiguous lots or parcels, which are commonly-owned and operated as one rental, cooperative or condominium project. Examples of 8+ unit properties include:
1. 5 townhouses side-by-side which consist of 2 units each.
2. 3 apartment buildings each consisting of 5 units and located on one tract of land.
3. 8 single-family (not homeowner) houses located on contiguous lots and operated as a single rental property.

Further, HUD has concluded that the term “rehabilitation” as used within the statutory language is not meant to preclude new construction from this exemption. The Conference Report on the HCD Act of 1974 indicated that at the time that the statute was written, residential construction was not an eligible activity. However, subsequent changes to the statute now permit the use of CDBG (and other Title I funds) for residential new construction. Accordingly, residential new construction is treated in the same manner as residential rehabilitation for Davis-Bacon purposes.

National Affordable Housing Act of 1990 (NAHA); Section 286 (HOME):

NAHA statutory language:

1. In GENERAL Any contract for the construction of affordable housing with 12 or more units assisted with funds made available under this subtitle shall contain a provision requiring that not less than the wages prevailing in the locality, as predetermined by the Secretary of Labor pursuant to the Davis-Bacon Act..., shall be paid to all laborers and mechanics employed in the development of affordable housing involved,....
2. WAIVER. Subsection (a) shall not apply if the individual receives no compensation or is paid expenses, reasonable benefits, or a nominal fee to perform the services for which the individual volunteered and such persons are not otherwise employed at any time in the construction work.

NAHA (HOME) Factors of Applicability:

1. ...affordable housing with 12 or more units assisted with funds made available under this subtitle...Unlike CDBG, the standard for coverage is assisted not financed - which provides for much broader application. This means that Davis-Bacon requirements are operable without regard to whether the HOME funds are used for construction or non-construction activities. Non-construction activities include real property acquisition, architectural and engineering fees, and other professional services. In some cases, Davis-Bacon requirements may be triggered when HOME funds are used to provide down payment assistance to individual homebuyers. [LCAs should refer to HUD’s HOME regulations (24 CFR 92.354(a)(2)) or consult with HUD Labor Relations Staff if their project involves down payment assistance to homebuyers.]
   
   This also recognizes that HOME projects can contain units that are not assisted by HOME. The threshold applies only to the number of units assisted by HOME. For unit threshold purposes, we use the number of units identified as “HOME” units under the program definition whether determined on a pro-rata basis, specific designation or other means allowable by HUD’s Office of Community Planning and Development (CPD).
   
   Note also that once Davis-Bacon requirements are triggered, the labor standards are applicable to the construction of the entire project -including the portions of the project other than the assisted units.
2. Any contract for the construction of affordable housing with 12 or more units assisted with funds... Davis-Bacon requirements are applicable to contracts for construction covering 12 or more HOME-assisted units. Davis-Bacon does not follow “construction work” or “projects”. This factor has implications in two ways:
1. First, a HOME project with 12 or more assisted units that is constructed under multiple contracts each containing less than 12 HOME units is not covered. (Note: HOME regulations prohibit breaking a single project into multiple contracts for the purpose of avoiding Davis-Bacon.)
2. Second, if multiple HOME projects each containing less than 12 assisted units are grouped into a contract(s) for construction that covers a total of 12 or more assisted units, the contract is covered.
3. Sweat Equity. HOME provides for a sweat equity program (see NAHA Sec. 255) which permits members of an eligible family to provide labor in exchange for acquisition of property for homeownership or to provide labor in lieu of, or as a supplement to, rent payments. Such sweat equity participants are exempt from Davis-Bacon prevailing wage requirements.

U.S. Housing Act of 1937, as amended (USHA); Section 12* (Public Housing/Section 8):

1. Any contract for loans, contributions, sale, or lease pursuant to this Act ....shall also contain a provision that not less than the wages prevailing in the locality, as predetermined by the Secretary of Labor pursuant to the Davis-Bacon Act..., shall be paid to all laborers and mechanics employed in the development of the project involved (including a project with nine or more units assisted under section 8 of this Act, where the public housing agency or the Secretary and the builder or sponsor enter into an agreement for such use before construction or rehabilitation is commenced), and the Secretary shall require certification as to compliance with the provisions of this section prior to making any payment under such contract.
2. Subsection (a) and the provisions relating to wages (pursuant to subsection (a)) in any contract for loans, annual contributions, sale, or lease pursuant to this Act, shall not apply to any individual that
   
   
   1. performs services for which the individual volunteered;
   2. (A) does not receive compensation for such services; or
      
      (B) is paid expenses, reasonable benefits, or a nominal fee for such services; and
   3. is not otherwise employed at any time in the construction work.
   * Section 12(a) of the USHA also mandates the payment of HUD-determined prevailing wage rates to all maintenance laborers and mechanics engaged in the operation of PHA low-income housing projects.

USHA (PHA/Sec 8) Factors of Applicability

1. Any contract for loans, contributions, sale, or lease pursuant to this Act… Prevailing wage requirements apply through provisions required in any contract for loans, contributions, sale or lease…. Generally, the “contract” referenced means the Annual Contributions Contract (ACC) between HUD and the respective PHA. (Be aware that “contract” has other relevance, some not germane to LCAs and this Guide.) Prevailing wage applicability is not tied to a funding source nor to a specific use of funds. This means that federal funding for development work is not a prerequisite to Davis-Bacon requirements applicability.
2. ... (HUD-determined wage rates) shall b e paid to all architects, technical engineers, draftsmen, and technicians employed in the development, and all maintenance laborers and mechanics employed in the operation…, …(Davis-Bacon wage rates) shall be paid to all laborers and mechanics employed in the development….
   
   Notice that, unlike other HUD labor standards provisions, the USHA makes no distinction between laborers and mechanics employed by the agency and those employed by contractors and subcontractors. This means the “force account” labor – workers employed directly by the agency, whether on a full-time, part-time, permanent or temporary basis – must receive the prevailing wages applicable to the work they perform. (See Labor Relations Letter 2004-02.)
3. ... (Davis-Bacon wage rates) shall be paid...in the development of the project involved (including a project with nine or more units assisted under Section 8 of this Act, where the public housing agency or the Secretary and the b uilder or the sponsor enter into an agreement for such use...before construction or rehabilitation is commenced)...
   
   Notice, also, that the only applicability thresholds pertain to Section 8 projects: there must be 9 or more Section 8-assisted units and there must be an agreement for the Section 8 assistance before construction begins. These agreements are referred to as AHAPs and/or APRACs. The 9 unit threshold refers to the number of units in the project that are Section 8-assisted, not to the total number of units in the project. The USHA contains no unit threshold for public housing.
   
   While the USHA does not contain a dollar threshold, HUD observes the statutory Davis-Bacon Act $2,000 threshold for development work and has implemented a $2,000 threshold for maintenance contracts.

Native American Housing Assistance and Self-Determination Act of 1996, as amended, (NAHASDA); Section 104(b)*:

1. IN GENERAL. Any contract or agreement for assistance, sale, or lease pursuant to this Act...shall also contain a provision that not less than the wages prevailing in the locality, as predetermined by the Secretary of Labor pursuant to the Act of March 3, 1931 (commonly known as the Davis-Bacon Act;…); shall be paid to all laborers and mechanics employed in the development of the affordable housing involved, and the Secretary shall require certification as to compliance with the provisions of this paragraph before making any payment under such contract or agreement.
2. EXCEPTIONS. Paragraph (1) and the provisions relating to wages (pursuant to paragraph (1)) in any contract or agreement for assistance, sale, or lease pursuant to this Act, shall not apply to any individual who receives no compensation or is paid expenses, reasonable benefits, or a nominal fee to perform the services for which the individual volunteered and who is not otherwise employed at any time in the construction work.
3. APPLICATION OF TRIBAL LAWS.—Paragraph (1) shall not apply to any contract or agreement for assistance, sale, or lease pursuant to this Act, if such contract or agreement is otherwise covered by one or more laws or regulations adopted by an Indian Tribe that requires the payment of not less than prevailing wages, as determined by the Indian tribe.
   
   * Section 104(b)(1) of NAHASDA also mandates the payment of HUD-determined prevailing wage rates to all maintenance laborers and mechanics engaged in the operation of NAHASDA-assisted affordable housing projects.

NAHASDA (TDHE/IHA) Factors of Applicability

1. Any contract or agreement for assistance, sale, or lease pursuant to this Act...
   
   Similar to the USHA (public housing), prevailing wage requirements apply through provisions required in any contract or agreement for assistance, sale, or lease…. Prevailing wage applicability is not tied to a funding source, nor to a specific use of any funds. This means that Federal funding for the particular development or operations work is not a prerequisite to Davis-Bacon or HUD-determined wage rate applicability.
2. .... (HUD-determined wage rates) shall be paid to all architects, technical engineers, draftsmen, and technicians employed in the development, and all maintenance laborers and mechanics employed in the operation..., ... (Davis-Bacon wage rates) shall be paid to all laborers and mechanics employed in the development...
   
   Again, NAHASDA mirrors the USHA in that it makes no distinction between laborers and mechanics employed by the agency and those employed by contractors and subcontractors. This means that “force account” labor – workers employed directly by the agency, whether on a full-time, part-time, permanent or temporary basis – must receive the prevailing wages applicable to the work they perform.
3. Threshhold.
   
   NAHASDA contains no dollar or number of units threshold. However, HUD observes the statutory Davis-Bacon Act $2,000 threshold for development work and has implemented a $2,000 threshold for maintenance contracts.
4. (HUD-determined and/or Davis-Bacon wage provisions) shall not apply to any contract or agreement..., if such contract or agreement is otherwise covered by one or more laws or regulations adopted by an Indian Tribe that requires the payment of not less than the prevailing wages, as determined by the Indian Tribe...
   
   This provision allows for the preemption of Federally-determined (HUD-determined and/or Davis Bacon) wage rates where a Tribe has determined prevailing wage rates for operations and/or development work. Note that the tribal determination must be of rates that “prevail”1 and the tribal law or regulation must be applicable to the work in question. (See also ONAP Program Guidance 2003-04, dated 2/4/2003.)
1. 1 HUD has not defined “prevailing” for the purposes of tribally-determined wage rates. HUD also has not prescribed policies or procedures for the administration or enforcement of such tribal rates. HUD defers to each Tribe to establish the definitions, parameters and methodology for the determination, administration and enforcement of tribally determined prevailing wage rates.
5. Sweat Equity.
   
   HUD has concluded that, consistent with a provision in the USHA (predecessor to NAHASDA), family members providing sweat equity labor for construction or rehabilitation of a home assisted under NAHASDA are excluded from prevailing wage (HUD-determined and/or Davis-Bacon) coverage. Sweat equity means members of an eligible family may contribute labor toward the development of a homeownership project. These sweat equity participants are not covered by prevailing wage requirements. (See also, ONAP Program Guidance 2003-03, dated 2/4/2003.)

Housing Assistance for Native Hawaiians, Title VIII of the Native American Housing Assistance and Self-Determination Act of 1996, as amended, (NAHASDA); Section 805(b)*:

1. IN GENERAL. Any contract or agreement for assistance, sale, or lease pursuant to this title shall contain—
   
   (B) a provision that an amount not less than the wages prevailing in the locality, as predetermined by the Secretary of Labor pursuant to the Act commonly known as the ‘Davis-Bacon Act’...shall be paid to all laborers and mechanics employed in the development of the affordable housing involved.
2. EXCEPTIONS. Paragraph (1) and provisions relating to wages required under paragraph (1) in any contract or agreement for assistance, sale, or lease under this title, shall not apply to any individual who performs the services for which the individual volunteered and who is not otherwise employed at any time in the construction work and received no compensation or is paid expenses, reasonable benefits, or a nominal fee for those services.
   
   * Section 805(b)(1) also mandates the payment of HUD-determined prevailing wage rates to all maintenance laborers and mechanics engaged in the operation of NAHASDA-assisted affordable housing projects.

NAHASDA (Native Hawaiian Housing): Factors of Applicability

1. Any contract or agreement for assistance, sale, or lease pursuant to this Act…
   
   Similar to the USHA (public housing), prevailing wage requirements apply through provisions required in any contract or agreement for assistance, sale, or lease…. Prevailing wage applicability is not tied to a funding source nor to a specific use of any funds. This means that Federal funding for the particular development or operations work is not a prerequisite to Davis-Bacon or HUD-determined wage rate applicability.
2. .... (HUD-determined wage rates) shall be paid to all architects, technical engineers, draftsmen, technicians employed in the development, and all maintenance...laborers and mechanics employed in the operation..., ...(Davis-Bacon wage rates) shall be paid to all laborers and mechanics employed in the development…
   
   Again, NAHASDA mirrors the USHA in that it makes no distinction between laborers and mechanics employed by the agency and those employed by contractors and subcontractors. This means that “force account” labor – workers employed directly by the agency, whether on a full-time, part-time, permanent or temporary basis – must receive the prevailing wages applicable to the work they perform.
3. Threshhold.
   
   NAHASDA contains no dollar or number of units threshold. However, HUD observes the statutory Davis-Bacon Act $2,000 threshold for development work and has implemented a $2,000 threshold for maintenance contracts.
4. Sweat Equity.
   
   HUD has concluded that, consistent with a provision in the USHA (predecessor to NAHASDA), family members providing sweat equity labor for construction or rehabilitation of a home assisted under NAHASDA are excluded from prevailing wage (HUD-determined and/or Davis-Bacon) coverage. Sweat equity means members of an eligible family may contribute labor toward the development of a homeownership project. These sweat equity participants are not covered by prevailing wage requirements. (See also, ONAP Program Guidance 2003-03, dated 2/4/2003.)