Opinion ID: 2321104
Heading Depth: 2
Heading Rank: 2

Heading: The Parties' Presentations

Text: Presently, the Bureau maintains its core position that: the Collegium Charter School project was artificially bifurcated via a belated alteration of a lease designed to evade wage regulation; the result is to undermine the legislative policy dictating that cost savings on construction projects financed in whole or in part by public funds are not to be achieved at the expense of workers; the Commonwealth Court inappropriately ignored that there are many avenues, in today's sophisticated business and legal environments, for thwarting the Wage Act's requirements; careful screening by administrative and judicial tribunals is essential to guard against abuses; and the Phoenix Field Office test is an appropriate litmus to ensure effectuation of the salient legislative objectives. The Bureau also continues to advance its factual assertion that the building was a directed-purpose project from the outset. See, e.g., Brief for Intervenor at 14 (This project was designed to be completed as the Collegium Charter School from the start.). Additionally, the Bureau frames its position on this point in terms of the allocation of the burden of proof to Developer. See id. at 15 (Developer had the burden of proof in this proceeding and failed to point out anything in the record that the project was not a custom-built facility.). In response, Appellees reiterate their position concerning the propriety of and common instance of bifurcation to accommodate tenant needs; the concomitant separateness of the public and private financing aspects of the Collegium Charter School project; and the legitimacy and accouterments of the lease relationship between Developer and the Foundation. From the broadest frame of reference, Appellees' position remains that a private developer assumes and retains substantial risk in undertaking a pre-development lease, which does not attend a conventional construction contract employed in connection with a public work. According to Appellees, this amply distinguishes a lease scenario from the public-work paradigm. Appellees also place substantial reliance on the following explanation from Penn. National I: Nothing in section 5 of the Act mandates that an entire construction project be covered by the Act. On the contrary, section 5 is a limited requirement that workmen be paid prevailing wage only on public work. The legislature could have crafted the definition of public work to include work that was not paid for in whole or in part with funds of a public body, but instead it chose to limit prevailing wage to be paid only on that work that satisfies the four element definition of public work. Brief for Appellees at 10-11 (quoting Penn. Nat'l I, 552 Pa. at 398, 715 A.2d at 1074). Appellees maintain that Developer planned to construct a generic commercial building on the premises prior to the Foundation's involvement, albeit they provide no response to the Bureau's observations that this is not a fact of record and that the burden to create a record to support such a contention rested with Appellees. Appellees' amicus, the Keystone Chapter of Associated Builders and Contractors, agrees with Appellees that bifurcation into shell and fit-out is a common business practice and suggests that applying what it terms an overreaching interpretation of the Act could have a detrimental effect on development in Pennsylvania and the construction industry, and make developers less likely to offer their space to public users. Brief for Amicus Keystone Chapter of Associated Builders & Contractors, Inc. at 3. Appellees' other amicus, the Pennsylvania Coalition of Public Charter Schools, maintains that it would be improper to use the multi-factored test developed by a federal agency under the Davis-Bacon Act in the present circumstances, because nothing in the Charter School Law or the Wage Act suggests that the General Assembly intended that such a test be applied with respect to charter schools. It alleges, as well, that the test is overly subjective and that its practical effect would be to reduce the supply of buildings available for lease to charter schoolsthereby thwarting the apparent legislative goal in favor of having charter schools lease their facilitiesas well as to significantly increase the costs to charter schools of leasing a facility.
Upon our initial review, we found it difficult to address a number of the parties' arguments on the basis of the stipulation they presented, and we directed them to provide correction or clarification per Rule of Appellate Procedure 1926. See Order, 500 James Hance Court v. PWAB, No. 49 MAP 2010 (Pa. Aug. 5, 2011) ( per curiam ). In particular, we were concerned with the absence of lease attachments containing material terms governing the Foundation's and Developer's contractual relationship. We also questioned the accuracy of the indication, in the parties' stipulation, that there was some early request for prevailing wages for the fit-out. [19] The implication [of the stipulation] seems to be that the lessee or the lessor (or at the very least someone besides the Bureau) considered interior construction to be subject to the Prevailing Wage Act prior to August 25, 2006, and requested prevailing wage rates in that time period per the Act. This is consistent with various representations made by the appellee[s] throughout the litigation. See, e.g., Brief for Appellants, 500 James Hance Court, L.P. v. PPWAB, 983 A.2d 792 (Pa.Cmwlth.2008 [2009]), 2008 WL 7276625, at  ([F]rom the outset, there has never been a question whether prevailing wages were mandatory for the fit out performed by the Foundation since public funds were used to complete this portion of the project.). Nevertheless, Bureau correspondence dated October 27, 2006, seems to contradict such an inference, as the Bureau's deputy chief counsel indicates that Pennsylvania prevailing wages were not requested for this project. Id. at 3 (emphasis in original). In response, a supplemental record was provided containing some of the exhibits to the leases, including Exhibit E to the October 1, 2006, lease. As previously noted, Exhibit E confirms that the $1.6 million security deposit to be provided by the Foundation was allocated largely to funding the procurement of materials necessary to the building fit-out. The parties also supplied documents confirming that the School took the position from the outset that no part of the project was subject to prevailing wage requirements. The Bureau and Appellees also filed supplemental briefs. The Bureau explained that the stipulation was materially inaccurate in its suggestion of an early request of the Department for prevailing wage rates. In fact, according to the Bureau's supplemental brief, the first actual request for rates (other than the Bureau's own request upon its determination that the Wage Act applied) occurred on May 11, 2007. On this point, Appellees' brief responds to this Court's query as to who other than the Bureaurequested prevailing wage rates by acknowledging somewhat of a mistake in the existing stipulation. Supplemental Brief for Appellees at 4. Unhelpfully, Appellees phrase their remaining explanation, again, in the passive voice, stating: [P]revailing wage rates for the construction of the `fit-out' work ... were requested on November 20, 2006. Id. [20]