Judge rules against prevailing wage on Oregon project

PORTLAND – A redevelopment project involving the city’s urban renewal agency does not have to pay state-imposed minimum wages for construction workers, a judge ruled Wednesday.

The Bureau of Labor and Industries had claimed that private construction projects receiving tax money and under government control should pay so-called “prevailing wages.”

But the Portland Development Commission contended it did not control the construction project at issue.

Multnomah County Circuit Judge Henry Kantor agreed with the commission and rejected the prevailing wage claim.

At stake was only $225,000 in additional wages. But developers were concerned the case would set a precedent that could boost the cost of future public-private redevelopment and affordable housing projects.

The development commission sued the Oregon Bureau of Labor and Industries after the state agency said the “prevailing wage” must be paid for a northeast Portland project.

The commission contended the prevailing wage could increase costs by up to 30 percent, although the state agency says it would be less.

Bruce Warner, the PDC’s executive director, says four projects were tied up in the wage debate.

A state task force tried but failed to reach a conclusion on the issue last week.

Labor Commissioner Dan Gardner created the task force to prevent future lawsuits, but it gave up last week, sending the dispute to court.

The dispute pitted the PDC and big developers against unions and workers who have been backed by rulings from Gardner, a former union leader.

At issue was what type of government assistance turns a private construction project into a public one requiring that the prevailing wage be paid.

The prevailing wage law was passed in 1959 so public works projects would be performed by contractors who didn’t undercut standard wages and training and get a bidding advantage.

The law requires prevailing wages for projects that use public funds and are “contracted for” or “carried on by” a public agency.

There is agreement that the standards apply to government work such as roads, fire stations and sewers but not over public-private deals where a business-owned development includes government support and control.