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Date: August 12, 2009 Letter No. LR 2009-01
Subject: Davis-Bacon applicability to demolition work
IL. Purpose
II. — General principles
IIL. Character of work for “covered” demolition
I. Purpose

The purpose of this Letter is to discuss the applicability of Davis-Bacon wage
requirements to demolition work conducted in relation to HUD program activity. In
addition, this Letter provides guidance concerning character of work determinations where
demolition work is covered by Davis-Bacon requirements.

I. General principles

Demolition, by itself, is not necessarily considered to be construction, alteration or
repair (i.e., activities to which Davis-Bacon requirements may apply). As a result, Davis-
Bacon wage requirements are not typically triggered by demolition work, alone. However,
if subsequent construction at the site is planned as part of the same contract or if subsequent
construction is contemplated as part of a future construction project, then the demolition
work is considered to be part of the overall construction project. In such cases, if the
subsequent construction work is subject to Davis-Bacon requirements, then the demolition
would likewise be covered by Davis-Bacon requirements. |

Therefore, in most cases, demolition is not covered by Davis-Bacon requirements
unless it will be followed by Davis-Bacon — covered construction. This principle remains
true whether the demolition is financed or assisted with HUD program funds or with other
(non-HUD) funding. There are very few exceptions. For example, Davis-Bacon
requirements apply to demolition work where such requirements are imposed by statutory
provisions that specify demolition as a Davis-Bacon — covered activity’.

In the context of HUD program activity, Davis-Bacon coverage of demolition would
necessarily involve knowledge that there will be subsequent construction and that the

' See All Agency Memorandum 190 and DOL Field Operations Handbook, para 15d02 , available in the Library at ww dol.gov,
and HUD Handbook 1344.1, para 7-5, available at in the Library at www.hud.gow/offices‘olr Note: Davis-Bacon applicability to
subsequent construction may be triggered by HUD-assisted demolition. For example, the use of CDBG funds to finance demolition
work that will be followed by construction work financed from other sources may trigger Davis-Bacon requirements on the
construction work and thus, also, on the demolition. Please contact the HUD Labor Relations staff for your area for assistance with
applicability determinations.

? Housing Act of 1949, Urban Renewal Program.



Page 2 of 2 Letter No. LR 2009-01

subsequent construction work will be covered by Davis-Bacon. This knowledge, whether of
planned or contemplated construction work, implies that there is documented evidence of the
expected subsequent construction. Such evidence may include contract specifications;
disposition plans; budgets; applications for assistance; and similar records.

Ill. Character of work for “covered” demolition

When demolition work is covered by Davis-Bacon wage requirements, the next issue
is the determination of the character of work for wage determination purposes — whether the
applicable wage decision is residential, building, highway, or heavy. In such cases, the
determining factor for character of work is the end result of the work at that site. That is,
whether the end result is “residential” (single-family homes or apartments 4 stories or less in
height); “building” (e.g., an apartment building greater than 4 stories, an office building,
parking garage, or community center); “highway” (e.g., a parking lot, streets, or sidewalks);
or “heavy” (e.g., an outdoor swimming pool).’

For example, the demolition of a 16-story apartment building that results in the
construction of 2-story townhomes would be subject to a residential wage decision; the
demolition of an office building that is followed by the construction of a parking lot would
be subject to a highway wage decision.

Finally, in some circumstances, it may be known that the demolition will be followed
by Davis-Bacon — covered construction work but the character of the end result is not yet
determined. For example, it isn’t known at the time the demolition is conducted whether the
following construction will involve low-rise apartments (4 stories or less) or a high-rise
apartment building (5 or more stories). In such cases, a heavy wage decision is applicable.

Any questions regarding this Letter should be directed to the Regional or Field HUD
Labor Relations staff responsible for the jurisdiction involved. A list of Labor Relations
staff, the jurisdictions they serve, and contact information is available at the Office of Labor
Relations web site: www.hud.

i) L.
Waite H. Madison
Director

Office of Labor Relations

* See AAMs 130 and 131.