Private v. Public

Whether a particular real estate development project is viewed as “private” or “public” makes a huge difference with respect to costs and paperwork, since “prevailing wage” statutes often require public works to pay much higher wages than private employers would and to keep detailed records.  This is estimated to increase total construction costs from 10 to 33 percent.

Developers in California are therefore welcoming a recent decision by the state’s Department of Industrial Relations that reliance on tax-exempt bonds and Federal tax credits by does not make a project “public” so as to trigger the prevailing wage statutes.  Such funding is a common part of developments that include low- or middle-income housing.  Gary P. Downs of Pillsbury Winthrop Shaw Pittman LLP discusses the issues in a recent client piece.