Azusa Land Partners v. Department of Industrial Relations
120 Cal. Rptr. 3d 27
Cal. Ct. App.2010Background
- ALP appeals a judgment denying its petition for writ of mandate challenging a Department of Industrial Relations determination that the Rosedale Project is a public work under Labor Code §1720.
- The Project in Azusa involves 1,200+ homes and substantial public infrastructure funded in part by Mello-Rroos CFD bonds; a May 2004 development agreement with the City memorialized required public facilities.
- ALP entered a 2005 Acquisition Agreement to fund required facilities with CFD bonds; CFD issued bonds and allocated ~$71 million for public facilities; remaining costs were privately funded.
- The Department determined in 2007 that the entire Project is a public work and that Mello-Roos funds constitute public funds for purposes of the PWL; subdivision (c)(2) was identified as limiting prevailing wages to public improvements required as a condition of regulatory approval.
- ALP argued only the portion funded by CFD/public funds should be subject to the PWL; the trial court agreed with the Department, rejecting a contract-based (a)(1) vs (a)(2) split and applying a project-wide analysis under §1720.
- The appellate court affirms, holding that (i) the project is a public work and (ii) subdivision (c)(2) exempts all public improvements required as a condition of regulatory approval so long as public funds do not exceed the total cost of those improvements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §1720(a)(1) or (a)(2) governs the analysis of the Project as a public work | ALP argues (a)(2) governs because CFD is an improvement district and funding flows through CFD. | Department contends a cohesive project-based analysis under (a)(1) applies, with (a)(2) not controlling here. | Project-based analysis under (a)(1) governs; (a)(2) not controlling. |
| Whether Mello-Roos bond proceeds are “public funds” under §1720 | ALP asserts CFD bond proceeds are not public funds under §1720(b)(1),(4),(5). | Department and trial court treat CFD bond proceeds as public funds used to pay ALP for public improvements. | Mello-Roos bond proceeds are public funds under §1720. |
| Whether all required public improvements are subject to prevailing wages if funded partly by public funds | ALP contends only improvements funded by CFD should be subject to the PWL. | Department/Trial court hold that once a project is a public work, the PWL applies to all required improvements, unless exempt by subdivision (c)(2). | All required public improvements are subject to the PWL, with subdivision (c)(2) providing an exemption in the described private-development context. |
| Whether subdivision (c)(2) exemptions apply to the entire project as a whole or only to the individual public work | Subdivision (c)(2) applies only to a single public work that is the condition of regulatory approval. | Subdivision (c)(2) applies project-wide if the public funds do not exceed the cost of the required improvements. | Subdivision (c)(2) applies to the overall project; it exempts all public work required as a condition of regulatory approval if public funds do not exceed the cost of those improvements. |
Key Cases Cited
- City of Long Beach v. Department of Industrial Relations, 34 Cal.4th 942 (Cal. 2004) (independent judgment in reviewing whether a project is a public work)
- Duncan v. State Building & Construction Trades Council of California, 162 Cal.App.4th 289 (Cal. App. 2008) (statutory construction of §1720; integration of scheme)
- Lusardi Construction Co. v. Aubry, 1 Cal.4th 976 (Cal. 1992) (contracting cannot defeat prevailing wage obligations)
- Reclamation District No. 684 v. Department of Industrial Relations, 125 Cal.App.4th 1000 (Cal. App. 2005) (maintenance work and subdivision (a)(2) scope; broader public works interpretation)
- In re Ritter Ranch Development, LLC, 255 B.R. 760 (Bankr. 9th Cir. 2000) (public funds interpretation of Mello-Roos bonds in bankruptcy context)
- Santa Clara Valley Transportation Authority v. Public Utilities Commission, 124 Cal.App.4th 346 (Cal. App. 2004) (project-based analysis and interpretation of related statutes)