[Cite as Northwestern Ohio Bldg. & Constr. Trades Council v. Ottawa Cty. Improvement Corp.,

122 Ohio St.3d 283, 2009-Ohio-2957.] 

NORTHWESTERN OHIO BUILDING & CONSTRUCTION TRADES COUNCIL,

APPELLANT, ET AL., v. OTTAWA COUNTY IMPROVEMENT 

CORPORATION ET AL., APPELLEES. 

[Cite as Northwestern Ohio Bldg. & Constr. Trades Council v. Ottawa Cty. 

Improvement Corp., 122 Ohio St.3d 283, 2009-Ohio-2957.] 

Labor — Prevailing wage — R.C. 4115.03 — Prevailing-wage law applies only 

when public authority spends public funds to construct public 

improvement — Public improvement, by definition, must be constructed by 

a public authority or must benefit public authority. 

(No. 2008-1069 — Submitted March 25, 2009 — Decided June 30, 2009.) 

APPEAL from the Court of Appeals for Ottawa County, 

No. OT-07-017, 2008-Ohio-1852. 

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SYLLABUS OF THE COURT

The prevailing-wage law applies only when a public authority, including an 

institution, spends public funds to construct a “public improvement,” 

which by definition must be constructed by a public authority or must 

benefit a public authority. (R.C. 4115.03, construed.) 

__________________ 

LUNDBERG STRATTON, J. 

I. Introduction 

{¶ 1} We are asked to determine whether the mere expenditure of public 

funds by an institution defined as a public authority in R.C. 4115.03(A) triggers 

the prevailing-wage requirement set forth in R.C. 4115.03 et seq. We hold that 

the wage requirement is triggered only when an R.C. 4115.03(A) institution 

spends public funds to construct a public improvement, which by definition must 
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be constructed by a public authority or must benefit a public authority. Because 

the public funds herein were not spent on construction of a public improvement, 

we affirm the judgment of the court of appeals in holding that the prevailing-wage 

law does not apply. 

II. Facts and Procedure 

{¶ 2} Appellee Fellhauer Mechanical Systems, Inc. (“Fellhauer”) is a 

private, for-profit electrical, heating, cooling, and plumbing contractor located in 

Ottawa County. Fellhauer also has a retail business, which sells security systems, 

audio and video equipment, televisions, and home-theater systems. 

{¶ 3} Fellhauer decided to purchase a building, the real property on 

which it stood, and office equipment and to renovate the portion of the building 

that was used for retail sales. Fellhauer financed the project through several 

sources, acquiring both public and private funding. Fellhauer applied for a loan 

from Ottawa County. The source of these funds was a Small Cities Community 

Developmental Block Grant, which consists of federal funds that are disbursed by 

the Ohio Department of Development (“ODOD”). Thus, Ottawa County filed an 

application for the grant on Fellhauer’s behalf with the ODOD. The ODOD 

approved the grant, which expressly provided that Fellhauer was to use $300,000 

of these funds to finance the purchase of the building, real property, and office 

machinery.1

{¶ 4} Fellhauer also acquired a loan for $36,750 from appellee Ottawa 

County Improvement Corporation (“OCIC”), which is a publicly funded 

corporation formed under R.C. 1724.10 to promote economic development in 

Ottawa County. This loan was funded by conveyance fees on real estate transfers 

within Ottawa County. Fellhauer also used these public funds to finance its 

purchase of the building, the property, and the office equipment. 

 

1. Five thousand dollars of the grant was used to pay administrative expenses. 
January Term, 2009 

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{¶ 5} Finally, in addition to the $40,000 of John Fellhauer’s own money, 

he secured $308,250 in private funding. He used $135,000 to finance renovation 

of the building, and the remainder of the private funds was applied to the balance 

of the acquisition costs. 

{¶ 6} Thus, Fellhauer used public and private funds to finance the 

purchase of the real property, a building, and office equipment, but used only 

private funds to finance the renovation of the building. 

{¶ 7} Appellant Kevin J. Flagg (now deceased), a state taxpayer, and 

appellant Northwestern Ohio Building & Construction Trades Council 

(“appellants”), wrote to the Ottawa County prosecutor, stating that Fellhauer’s 

project was subject to Ohio’s prevailing-wage law, R.C. 4115.03 et seq., and 

demanding legal action to enforce the prevailing-wage law at the project. 

{¶ 8} When the prosecutor failed to take any action, appellants filed a 

verified complaint seeking preliminary and permanent injunctive relief. 

Appellants alleged that failure to comply with the prevailing-wage law would 

cause irreparable harm once construction contracts were awarded in the Fellhauer 

project. The complaint asked the court to compel OCIC and Ottawa County to 

comply with the prevailing-wage law in connection with public funds they 

disbursed for the Fellhauer project. Appellants also sought to enjoin the awarding 

of any contracts in connection with the project until the project came into full 

compliance with the law. 

{¶ 9} The trial court accepted appellants’ assertion that Ottawa County 

and OCIC were institutions and public authorities as defined in R.C. 4115.03(A). 

However, the trial court held that the prevailing wage was not triggered, because 

expenditure of the funds did not benefit a public authority, but instead benefited 

Fellhauer, a private, for-profit corporation. 

{¶ 10} The trial court also held that Fellhauer’s project did not qualify as a 

public improvement to which the prevailing wage automatically applies under 
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R.C. 4115.032, which designates certain types of projects that are subject to R.C. 

Chapter 4115. The trial court concluded that Fellhauer’s project was not an 

“eligible project” under this statute because (1) the project was not funded by the 

Director of Development and (2) the renovation of a retail sale facility is excluded 

from the purview of R.C. 4115.032 by R.C. 166.01(D). The trial court entered 

judgment for the county and OCIC. 

{¶ 11} The court of appeals affirmed the judgment of the trial court on 

different grounds. The court of appeals reasoned that no entity that satisfied the 

definition of an institution as defined in R.C. 4115.03(A) had expended any funds 

on the Fellhauer project. Ottawa App. No. OT-07-017, 2008-Ohio-1852, ¶ 32. 

{¶ 12} Alternatively, the court of appeals held that even if an institution as 

so defined was associated with the project, no public funds were spent on any 

construction, i.e., the public funds were used to finance purchase of real property, 

a building, and office equipment. Id. at ¶ 33. 

{¶ 13} We have accepted Northwestern’s discretionary appeal, which 

raises the following propositions of law: (1) “An R.C. Chapter 1724 ‘Community 

Improvement Corporation’ is an ‘institution’ as defined by O.A.C. 4101:9-4-

02(P), and a ‘public authority’ under R.C. 4115.03(A),” (2) “Expenditures of an 

institution supported in part by public funds trigger prevailing wage applicability 

under R.C. 4115.03(A) as a matter of law,” (3) “An Administrative Rule, 4101:9-

4-02(BB)(1)(d), cannot be construed in a way that restricts the application of 

Revised Code, 4115.03(A),” and (4) “Subdividing a single public improvement 

project into construction and acquisition component parts to avoid prevailing 

wage applicability violates R.C. 4115.033 and O.A.C. 4101:9-4-17(C).” 

III. Analysis 

A. Ohio’s Prevailing-Wage Law 

{¶ 14} “The prevailing wage statutes, R.C. 4115.03 through R.C. 4115.16, 

require contractors and subcontractors for public improvement projects to pay 
January Term, 2009 

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laborers and mechanics the so-called prevailing wage in the locality where the 

project is to be performed.” J.A. Croson Co. v. J.A. Guy, Inc. (1998), 81 Ohio 

St.3d 346, 349, 691 N.E.2d 655. 

{¶ 15} Prevailing wage applies to “construction projects that are ‘public 

improvements’ as defined in R.C. 4115.03(C): ‘Public improvement’ includes all 

buildings, roads, streets, alleys, sewers, ditches, sewage disposal plants, water 

works, and all other structures or works constructed by a public authority of the 

state or any political subdivision thereof or by any person who, pursuant to a 

contract with a public authority, constructs any structure for a public authority of 

the state or political subdivision thereof.” Episcopal Retirement Homes, Inc. v. 

Ohio Dept. of Indus. Relations (1991), 61 Ohio St.3d 366, 369, 575 N.E.2d 134. 

To qualify as a public improvement, the project must be constructed by a public 

authority or must benefit a public authority. Id.; see also U.S. Corr. Corp. v. Ohio 

Dept. of Indus. Relations (1995), 73 Ohio St.3d 210, 219, 652 N.E.2d 766. 

{¶ 16} A “public authority” is defined as “any officer, board, or 

commission of the state or any political subdivision of the state, authorized to 

enter into a contract for the construction of a public improvement or to construct 

the same by the direct employment of labor, or any institution supported in whole 

or in part by public funds and said sections apply to expenditures of such 

institutions made in whole or in part from public funds.” R.C. 4115.03(A). 

{¶ 17} Northwestern argues that an institution defined as a public 

authority in R.C. 4115.03(A) is distinguishable from other public authorities 

defined in the same provision in that once such an institution expends public 

funds, the prevailing-wage requirement applies automatically, regardless of 

whether the project meets the usual criteria set forth in the rest of the prevailingwage statutes.2

 In support of this argument, Northwestern directs our attention to 

 

4. OCIC’s counsel conceded at oral argument that OCIC is an institution, and therefore a public 

authority, as defined in R.C. 4115.03(A). 
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the final phrase of R.C. 4115.03(A): “said sections [i.e., R.C. 4115.03 to 4115.16] 

apply to expenditures of such institutions made in whole or in part from public 

funds.” This clause, Northwestern contends, “refers to the Prevailing Wage Law 

as a whole and independently triggers its application” where an institution 

expends public funds. In other words, when an institution expends public funds, 

the prevailing wage must be paid as a matter of law, regardless of the statutory 

criteria set forth elsewhere in the prevailing-wage law. Thus, Northwestern 

argues that prevailing wage is triggered merely upon an institution’s expenditure 

of public funds to finance a project, regardless of whether the project involves 

actual construction of a “public improvement” as defined in R.C. 4115.03(C), 

which is normally required to trigger payment of prevailing wage. We disagree. 

{¶ 18} The phrase “said sections apply” within R.C. 4115.03 must be read 

in its entirety: “said sections apply to expenditures of such institutions made in 

whole or in part from public funds.” (Emphasis added.) The intent is clear: the 

legislature wanted to stress that institutions, which, unlike the state or a political 

subdivision, may have private sources of funding, are still required to comply 

with the prevailing-wage law even if some of the expenditures come from private 

sources. The intent of this phrase was clearly not to saddle institutions with a 

prevailing-wage obligation every time they expend funds on any project. 

{¶ 19} Moreover, Northwestern’s argument that any spending of public 

funds by an R.C. 4115.03(A) institution would require payment of the prevailing 

wage would unjustifiably expand the scope of prevailing-wage law to include 

projects that are not public improvements, that are not constructed by a public 

authority, or that do not benefit a public authority. Therefore, just as with any 

other public authority, an institution’s expenditure of public funds triggers the 

prevailing-wage requirement only when the project meets the statutory criteria for 

determining the applicability of prevailing wage, i.e., where a public authority 

using public funds contracts to construct a public improvement. 
January Term, 2009 

7

{¶ 20} Accordingly, we hold that the prevailing-wage law applies only 

when a public authority, including an institution, spends public funds to construct 

a “public improvement,” which by definition must be constructed by a public 

authority or must benefit a public authority. See Episcopal Retirement, 61 Ohio 

St.3d at 369, 575 N.E.2d 134 (a project must be constructed “for a public 

authority” in order for the prevailing-wage statutes to apply); Ohio Adm.Code 

4101:9-4-02(BB)(1) and (2) (defining “public improvement” as a structure 

“[c]onstructed” by or for a public authority). 

B. The Fellhauer Project 

{¶ 21} Having concluded that the project at issue today must be subjected 

to the same prevailing-wage analysis as any other project, we turn now to the task 

of determining whether the prevailing-wage requirement applies under these facts. 

{¶ 22} The Fellhauer project is not a “public improvement.” That term is 

limited to “all buildings, roads, streets, alleys, sewers, ditches, sewage disposal 

plants, water works, and all other structures or works constructed by a public 

authority of the state or any political subdivision thereof or by any person who, 

pursuant to a contract with a public authority, constructs any structure for a public 

authority of the state or a political subdivision thereof.” (Emphasis added.) R.C. 

4115.03(C). 

{¶ 23} Moreover, the Fellhauer project will not be (1) constructed (2) by 

or for a public authority as also required by R.C. 4115.03(C). Episcopal 

Retirement, 61 Ohio St.3d at 369, 575 N.E.2d 134. The only portion of the 

project that can possibly be “constructed” is the renovation portion, and that is 

being done by Fellhauer, using private funds. And none of the project, in fact, is 

destined to be used by or for any public authority. The entire project is for 

Fellhauer alone. 

{¶ 24} The simple fact is that the Fellhauer project is not a “construction” 

of a “public improvement” by or for a public authority. Consequently, because no 
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public funds were used to finance any actual construction of a public 

improvement that benefits a public authority, the prevailing-wage requirement 

does not apply to the Fellhauer project. 

{¶ 25} Accordingly, we affirm the judgment of the court of appeals. 

Judgment affirmed. 

 MOYER, C.J., and PFEIFER, O’CONNOR, O’DONNELL, LANZINGER, and

CUPP, JJ., concur. 

__________________ 

 Cosme, D’Angelo & Szollosi Co., L.P.A., and Joseph M. D’Angelo, for 

appellants. 

 Ross, Brittain & Schonberg Co., L.P.A., Alan G. Ross, and Nick A. 

Nykulak, for appellee Fellhauer Mechanical Systems, Inc. 

 Squire, Sanders & Dempsey, L.L.P., Vincent Atriano, David S. Farkas, 

and Matthew L. Sagone; Mark E. Mulligan, Ottawa County Prosecuting Attorney; 

and Kohli & Christie and Gary A. Kohli, for appellees Ottawa County 

Improvement Corporation and Ottawa County Board of Commissioners. 

 Calfee, Halter & Griswold, L.L.P., Peter A. Rosato, and Stanley J. 

Dobrowski, urging reversal for amicus curiae Mechanical Contractors Association 

of Ohio. 

 Ross, Brittain & Schonberg Co., L.P.A., Alan G. Ross, and Nick A. 

Nykulak, urging affirmance for amicus curiae Associated Builders & Contractors 

of Ohio, Inc. 

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