Office of Labor Relations 

LABOR RELATIONS LETTERS

 

Date: June 5, 2006 Letter No. LR 2006-01 

SL: Distribution: W-3-1; R-1 (Regional Labor Relations Officers); R-3-1 (RC); R-6, R-6-2; R-7, R-7-2, R-9 

(Labor Relations) 

Subject: Housing Finance Agency Risk-Sharing Program and Projects 

I. Purpose 

II. Prevailing wage coverage 

III. Responsibilities of the HFA 

IV. Office of Labor Relations (OLR) staff procedures 

V. Additional references

I. Purpose 

 The purpose of this Letter is to provide operational guidance for Office of Labor 

Relations staff regarding multifamily development projects that are insured under the 

Housing Finance Agency (HFA) Risk-Sharing Program. This Letter discusses prevailing 

wage application, HFA responsibilities, and Office of Labor Relations procedures. Relevant 

references are also noted. 

II. Prevailing wage coverage

 The HFA risk-sharing program is authorized under Section 542(c) of the Housing and 

Community Development Act of 1992, as amended. The statute, itself, does not impose 

Davis-Bacon prevailing wage requirements. However, HUD has imposed such requirements 

administratively through regulations at 24 CFR §266.225. Pursuant to Section 266.225, 

Davis-Bacon wage and reporting requirements are imposed where the following conditions 

are met: 

(a) Advances for the project are insured under this part; 

(b)The project involves new construction or substantial rehabilitation; and, 

(c) The project will contain 12 or more dwelling units. 

 Risk-sharing projects that do not meet all of these conditions are not subject to DavisBacon requirements except to the extent required as a condition of other Federal assistance 

to the project. 
Page 2 of 3 Letter No. LR 2006-01

III. Responsibilities of the HFA

 HUD has delegated functions to HFAs, including labor standards and prevailing wage 

requirements, through regulation at 24 CFR §266.215(b). 

 At 24 CFR §266.225(e), HUD retains its authority and overall responsibility for labor 

standards enforcement and asserts its authority to delegate routine labor standards 

administration and enforcement responsibility to HFAs, subject to monitoring by HUD. 

This Section further makes HFAs responsible for financial liabilities that may arise for any 

deficiency in the payment of prevailing wages or, where applicable under DOL regulations 

at 29 CFR part 1, any increase in compensation to a contractor that is attributable to any 

failure of an HFA to properly carry out the delegated functions, e.g., failure to incorporate 

the appropriate wage decision or contract clauses into a contract or building loan agreement. 

IV. Office of Labor Relations (OLR) Regional and field staff procedures

 OLR Regional and field staff shall follow the following guidance and procedures to 

ensure that HFAs within its jurisdiction properly carry out delegated responsibilities 

concerning labor standards administration and enforcement activities: 

(a) OLR shall coordinate with the respective Office(s) of Housing to identify all HFAs 

within the OLR staff’s jurisdiction. 

(b)OLR shall include HFAs in developing its annual training plan. 

(c) OLR shall include HFAs in its annual risk analysis for monitoring. Should an 

HFA rise to a high-risk category during the risk analysis, the HFA should be 

scheduled for monitoring during the cycle. The OLR staff shall use the monitoring 

guidance for State LCAs. 

(d)OLR does not concur on initial or final endorsements of HFA risk-sharing projects. 

HFAs are responsible for the incorporation of the applicable wage decision and 

labor standards provisions in the contract/contract specifications, and for routine 

enforcement functions relative to risk-sharing projects. 

(e) OLR shall respond to inquiries from HFAs or other sources concerning Federal 

labor standards applicability. OLR shall refer inquiries concerning prevailing 

wage compliance on HFA risk-sharing projects to the responsible HFA. 
Page 3 of 3 Letter No. LR 2006-01

(f) Consistent with other HUD program activities that are not subject to direct OLR 

compliance monitoring (e.g., CDBG, HOME, public and Indian housing), HFA 

risk-sharing projects shall not be entered or tracked in LR2000. 

V. Additional references 

Additional references for OLR staff concerning HFAs and risk-sharing projects are 

found in HUD Handbook 4590.11

, including: 

(a) Chapter 3, Program Requirements, paragraph 3-11, outlining the administrative 

delegation of duties relative to Federal labor standards requirements delegated to 

HFAs on projects to which Federal labor standards are applicable. 

(b)Chapter 5, HFA Processing, Underwriting, and Construction, paragraph 5-3B, 

dealing with Federal labor standards responsibilities and enforcement activities 

required during the construction phase in accordance with Handbook 1344.1, Rev1, Chg 1. 

(c) Chapter 6, HFA Closing and HUD Endorsement of Loan, paragraphs 6-2 and 

6-3B.10, dealing with initial/final endorsement packages that include Federal labor 

standards compliance certifications. 

(d)Chapter 7, Program Monitoring, dealing with remote and on-site program 

monitoring. 

 Any questions regarding this Letter should be directed to the Regional or Field HUD 

Labor Relations staff, or to the OLR Headquarters Desk Officer, responsible for the 

jurisdiction involved. A list of Labor Relations staff and contact information is available at 

the Office of Labor Relations website: www.hud.gov/offices/olr 

 /s/ 

 Edward L. Johnson 

 Director 

 Office of Labor Relations 

 

1

 Handbook 4590.1 is available at HUDClips.