Court Opinion

ID: 9890536
Source: CourtListenerOpinion
Date Created: 2023-10-13 14:09:29.854757+00
Date Added: 2024-06-11T07:50:02.568224
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

22 S. 40th Street Owner LLC,                  :
                   Petitioner                 :
                                              :
       v.                                     : No. 689 C.D. 2022
                                              :
Pennsylvania Prevailing Wage                  :
Appeals Board,                                :
                  Respondent                  : Argued: September 11, 2023

BEFORE:        HONORABLE PATRICIA A. McCULLOUGH, Judge
               HONORABLE ANNE E. COVEY, Judge
               HONORABLE ELLEN CEISLER, Judge

OPINION BY JUDGE CEISLER                                       FILED: October 13, 2023

       22 South 40th Street Owner LLC (Owner) petitions for review of the June 14,
2022 Final Decision of the Pennsylvania Prevailing Wage Appeals Board (PWAB)1
denying Owner’s grievance filed under Section 2(e)(1) of the Pennsylvania
Prevailing Wage Act (Act), Act of August 15, 1961, P.L. 987, as amended, 43 P.S.
§ 165-2.2(e)(1).2 We affirm the PWAB’s Final Decision.

                                          Background
                                      1. Factual History
       In 2017, Owner purchased a historically significant building located at 22
South 40th Street in Philadelphia, Pennsylvania (Project), with the intent of

       1
          By letter dated September 19, 2022, the PWAB notified this Court that it is a disinterested
party in this matter; as such, it is not participating in this appeal.

       2
         Section 2(e)(1) of the Act was added by the Act of August 9, 1963, P.L. 653, and provides
that the PWAB “shall have the power and duty to[] . . . [h]ear and determine any grievance or
appeal arising out of the administration of this [A]ct.” 43 P.S. § 165-2.2(e)(1).
rehabilitating it for use as a commercial space.3 The building was originally known
as The West Philadelphia Institute and was designed by renowned Philadelphia
architect Frank Furness in the 1870s for use as an auditorium and library for trade
instruction. In 1927, the building was renovated for office and retail use. By the
1980s, however, the renovations had deteriorated, and eventually the building’s
exterior was covered with aluminum and its windows were sealed with bricks.
       The Project is located near the campuses of both University of Pennsylvania
and Drexel University. Owner asserts that it “purchased the building because it
respected its historical significance and feared that it would be subject to the
wrecking ball of a student housing developer.” Owner Br. at 6.
       After purchasing the building, Owner took steps to list it on both the local and
federal registries for historic properties. To help fund the renovations for the Project,
Owner      applied     for   grants     from     the    Commonwealth          of    Pennsylvania
(Commonwealth) under its Regional Assistance Capital Program (RACP).4 The
Commonwealth awarded Owner a total of $750,000 in RACP grant money in two
issuances: $250,000 in 2017 and $500,000 in 2018.
       The Project developer, U3 Ventures, LLC, managed all aspects of the Project.
The total cost of the Project was $2,522,889, which included demolition, exterior

       3
        The building is comprised of three floors and a 22,800-square-foot basement.
Reproduced Record (R.R.) at 164a.

       4
         “RACP is a Commonwealth grant program administered by the Office of the Budget for
the acquisition and construction of regional economic, cultural, civic, recreational, and historical
improvement projects. . . . RACP projects are state-funded projects that cannot obtain primary
funding under other state programs.” Owner Br. at 7-8 n.2.

        Section 302 of the Capital Facilities Debt Enabling Act, Act of February 9, 1999, P.L. 1,
as amended, 72 P.S. § 3919.302, requires that an RACP project “[have] at least a 50% non-State
financial participation documented at the time of application” and “a total project cost of at least
$1,000,000.”

                                                 2
and interior painting and millwork, masonry, roofing, flooring, ceilings, windows,
fire protection, plumbing, heating, ventilation, and air conditioning (HVAC) work,
and electrical work.
       Owner bifurcated the Project into two phases and contracted each phase
separately with the same general contractor, Columbus Construction, LLC. The first
contract related to historical renovations, which totaled $810,582 (historical work
contract).      The second contract related to general renovations, which totaled
$1,702,307 (general work contract). Different subcontractors performed the work
for each contract.
       Owner paid for the historical work contract with RACP funds and paid for the
general work contract with non-RACP funds. Owner separated the Project in this
way due to “the distinct costs for the historic rehabilitation work on the [building’s]
exterior and portions of the interior (roofing, painting, masonry, tin ceilings, etc.)
from the rest of the building (HVAC, electrical, etc.).” R.R. at 6a. Because Owner
applied public funds only to what it categorized as historical renovations, it paid
prevailing wages only to the workers who performed work under the historical work
contract.5
       Owner began the Project in early 2019 and completed it in November 2020.
The building is presently occupied by five commercial tenants.
                                     2. Procedural History
       After completion of the Project, Owner wrote to the Department of Labor and
Industry’s Bureau of Labor Law Compliance (Bureau),6 describing the two phases

       5
        Section 5 of the Act provides: “Not less than the prevailing minimum wages as determined
hereunder shall be paid to all workmen employed on public work.” 43 P.S. § 165-5 (emphasis
added).

       6
           The Bureau is participating in this appeal as an intervenor.

                                                   3
of the Project and requesting the Bureau’s opinion on the Act’s applicability. In its
letter to the Bureau, Owner explained its bifurcation of the Project into historical
work and general work as follows:

      Our rationale for separating the RACP scope from the non-RACP scope
      centered on the distinction costs [of] historic rehabilitation work on the
      exterior and portions of the interior (roofing, painting, masonry, tin
      ceilings, etc.) from the rest of the building (HVAC, electrical, etc.). We
      were required to follow strict public guidelines concerning historic
      preservation standards and reasoned it was a logical use of RACP as a
      package of work distinct from the general building renovations whose
      precise scope would be determined by a variety of then-unidentified
      commercial tenants. Thus, because of the public benefits of historic
      rehabilitation and the ability to clearly demarcate this work from the
      balance of tenant-driven improvements, we focused the RACP work on
      the historic aspects of the [P]roject.

      In order to maintain the logical demarcation throughout the
      construction process[,] we took three administrative steps – we put in
      place separate construction contracts for the RACP and non-RACP
      scope, we separated the total [P]roject scope in a way that ensured no
      sub[]contractor was providing both RACP and non-RACP work, and
      we required from the general contractor certified pay[]roll
      documentation to track prevailing wage payments to contractors
      working on RACP[-]identified scope.

R.R. at 170a.
      On February 4, 2021, the Bureau issued a determination that all work
performed on the Project was subject to the Act’s requirements, stating: “The Act
covers the construction work on the Project in its entirety and prevailing wages must
be paid to the workers.” Id. at 173a (emphasis added). After reviewing the statutory
language and relevant Pennsylvania Supreme Court precedent, the Bureau
concluded:

                                          4
      There is simply no logic to declar[ing] that there is a line of demarcation
      between a contract to include the historical restoration work and a
      contract to perform other construction tasks. All of this construction
      work is equally necessary to convert the Project [in]to commercial
      space.

      An attempt to separate historical restoration work is an obvious attempt
      to create artificial construction phasing warned about in [500 James
      Hance Court v. Pennsylvania Prevailing Wage Appeals Board, 33 A.3d
      555 (Pa. 2011)]. Accordingly, since there [are] public dollars being
      used to finance construction for the Project, then the Act covers the
      entire Project.

Id. (emphasis added).
      On April 5, 2021, Owner filed a grievance with the PWAB challenging the
Bureau’s determination. On August 31, 2021, the parties submitted stipulations of
fact and requested an evidentiary hearing, which was held on November 30, 2021.
After the filing of post-hearing briefs, the parties presented argument before the
PWAB on May 16, 2022.
      On June 14, 2022, the PWAB entered its Final Decision, finding that the Act
applied to the entire Project and denying Owner’s grievance. The PWAB concluded
as follows:

              While [Owner’s] accomplishments on the Project are
      commendable, we do not agree that it can avoid prevailing wage
      coverage for the entire Project. In this matter, [Owner] fails to meet its
      burden of establishing a prima facie case that the Act is not applicable.
      First, it did not show “[a] strong and logical . . . demarcation between
      [the] shell and fit-out work” that would constitute “major, commonly-
      appreciated construction milestones.” Second, it fails to meet its
      burden to show that the two contracts’ financing arrangements were
      transacted by different entities or, at least, were significantly
      differentiable from each other.

                                          5
              If [Owner] had established a prima facie case, then the
       evidentiary burden would have shifted to the Bureau to establish the
       applicability of the Act. In this matter, the Bureau would have met this
       burden because it established that all prongs of the “public work”
       definition are met for this Project; most importantly, that the Project
       meets the third element of “paid for in whole or in part” by public
       funds. The work performed in both contracts constituted part of the
       shell and fit-out portions. Furthermore, the public funding was
       dependent on the costs of both projects and would not have been
       available but for the inclusion of the general construction contract costs.

              . . . . [Owner’s] sole purpose of dividing the Project into two parts
       was to avoid the RACP’s public funds from paying for a considerable
       portion of the construction costs. Moreover, [Owner] only separated
       the Project after it found out that the RACP amount “was substantially
       less than what [Owner] hoped for.” While we attribute no malicious
       intent in [Owner’s] attempt to circumvent the Act, the [PWAB] finds
       the work and financing of both contracts require prevailing wage
       payments to the workers.

PWAB Final Decision, 6/14/22, at 22-23 (internal citations omitted) (emphasis
added). Owner now petitions this Court for review.7
                                           Analysis
       On appeal, Owner asserts that the PWAB erred in concluding that the entire
Project was covered by the Act. Owner asserts that it demonstrated a strong and
logical demarcation between the historical work and the general work on the Project
and that because Owner used RACP funds only for the historical work, it was
required to pay prevailing wages only to those workers. We disagree.

       7
         Our review of the PWAB’s decision is limited to determining whether its findings of fact
are supported by substantial evidence, whether constitutional rights have been violated, and
whether its determination is in accordance with law. PSP NE, LLC v. Pa. Prevailing Wage Appeals
Bd., 292 A.3d 1175, 1178 n.2 (Pa. Cmwlth. 2023); Section 704 of the Administrative Agency Law,
2 Pa. C.S. § 704.

                                               6
      Section 5 of the Act mandates the payment of prevailing minimum wages to
all workers employed on “public work.” 43 P.S. § 165-5. Section 2(5) of the Act
defines “public work” as follows:

      “Public work” means construction, reconstruction, demolition,
      alteration and/or repair work other than maintenance work, done under
      contract and paid for in whole or in part out of the funds of a public
      body where the estimated cost of the total project is in excess of twenty-
      five thousand dollars ($25,000), but shall not include work performed
      under a rehabilitation or manpower training program.

43 P.S. § 165-2(5) (emphasis added). The policy underlying the Act is to protect
workers “employed on public work projects from substandard pay by ensuring that
they receive prevailing minimum wage.” Pa. Nat’l Mut. Cas. Ins. Co. v. Dep’t of
Lab. & Indus., Prevailing Wage Appeals Bd., 715 A.2d 1068, 1072 (Pa. 1998) (Penn
National).
      Our Supreme Court has explained that “to constitute ‘public work’ four
elements must be satisfied: (1) there must be certain work; (2) such work must be
under contract; (3) such work must be paid for in whole or in part with public funds;
and (4) the estimated cost of the total project must be in excess of $25,000.” Id. at
1074; see also Lycoming Cnty. Nursing Home Ass’n, Inc. v. Dep’t of Lab. & Indus.,
Prevailing Wage Appeals Bd., 627 A.2d 238, 242 (Pa. Cmwlth. 1993) (“The
definition [of] ‘public work’ does not require that a ‘public body’ must be directly
involved with the project; only that the project must be paid for in whole or in part
with public funds.”). Importantly, “all elements of the definition must be satisfied
for work to constitute ‘public work.’” Penn National, 715 A.2d at 1074 (emphasis
added). Because the Act is a remedial statute, any exceptions to prevailing wage
coverage must be narrowly construed. Borough of Youngwood v. Pa. Prevailing
Wage Appeals Bd., 947 A.2d 724, 731 (Pa. 2008).

                                          7
       The only disputed issue in this case is whether the work at issue was “paid for
in whole or in part with public funds.” Penn National, 715 A.2d at 1074.8 Owner
asserts that it paid for the historical work with RACP grant funds and paid for the
remaining work, “which was the fit-out of the building for modern-day tenants,”
with private funds. Owner Br. at 15. In response, the Bureau asserts that Owner
“failed to show a strong and logical demarcation between the two phases of the
Project” as required by our case law, and, therefore, the entire Project was subject to
the Act’s requirements. Bureau Br. at 7.
       As the parties acknowledge, the leading cases on this issue are Penn National
and 500 James Hance Court. In Penn National, our Supreme Court considered
whether the construction of a new headquarters building for Penn National, a private
insurance company, was public work under the Act. To encourage Penn National to
remain in the City of Harrisburg (City), the City and an authority entered into a
development agreement with Penn National to prepare a site for the eventual
construction of a new building in the City. Penn National, 715 A.2d at 1069. Under
the agreement, the City was responsible for demolition and site preparation,
including asbestos removal. Once site preparation was complete, the City would
convey the property to Penn National, which would be responsible for the project’s
construction.
       Relevant to this appeal, a key issue in Penn National was “whether the Act
applie[d] to the entire . . . building project because public bodies initially paid for
the asbestos removal portion of site preparation.” Id. at 1073. Noting the “unique”
factual circumstances of the case before it, the Supreme Court determined:

       8
          It is undisputed that the Project was “certain” and “under contract” and that “the total
[P]roject [was] in excess of $25,000.” Penn National, 715 A.2d at 1074.

                                                8
      The circumscribed role of the City in the building project was to prepare
      and deliver vacant land. Once the City completed its contracts for
      asbestos removal and demolition, and conveyed the property to [Penn
      National], its limited involvement in the development of the property
      ceased altogether. The City will evidently not be a party to any post-
      conveyance construction contract. Other than possible state financing
      addressed in issue three below, no post-conveyance construction
      contracts will be paid for in whole or in part with public funds.

Id. (emphasis added).
      In rejecting the PWAB’s assertion that the “total project” must be deemed
public work under the Act because the asbestos removal was paid for with public
funds, the Supreme Court held:

      [T]he term “total project[]” is referred to in the definition of “public
      work” only in the context of establishing a monetary threshold which
      excludes from coverage of the Act[] projects costing less than $ 25,000.
      We do not interpret this prong to confer public work status to work
      which otherwise fails to satisfy the other three elements of the definition
      of “public work.” Rather, all elements of the definition must be satisfied
      for work to constitute “public work.”

      Nothing in [S]ection 5 of the Act[, 43 P.S. § 165-5,] mandates that an
      entire construction project be covered by the Act. On the contrary,
      [S]ection 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 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 which satisfies the four-
      element definition of “public work.”

Id. (emphasis added).
      The Supreme Court held that the asbestos removal portion of the project – the
only portion funded by public monies – was “public work” under the Act, but “the
[subsequent] construction work did not constitute public work.” Id. In other words,
“under the distinct facts of th[e] case[,] the entire . . . building project [was] not

                                          9
covered by the Act simply because asbestos removal was deemed to be public work.”
Id. (emphasis added). However, because the record lacked evidence regarding
possible state financing for the construction phase of the project, the Court remanded
the matter to the PWAB to determine whether such financing also triggered coverage
under the Act. Id. at 1075.9
       Thirteen years later, in 500 James Hance Court, our Supreme Court
considered whether the construction of a charter school building was “public work”
subject to the Act. The project was divided into two phases: the construction of the
building (the “shell”) and the interior, or “fit-out,” of the building for use as a charter
school. 500 James Hance Court, 33 A.3d at 558. The fit-out was financed by a non-
profit foundation that received bonds issued by a public authority. The construction
of the building’s shell was privately funded. Id.
       On appeal, the Bureau argued that the developer had “artificially bifurcated”
the construction project to avoid paying prevailing wages for the entire project. Id.
at 567. The developer argued, among other things, that bifurcation of shell and fit-
out work “is a common business practice” and that “applying . . . 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.” Id.
       After reviewing the evidence of record, as well its prior ruling in Penn
National, the Supreme Court determined:

       9
         In a subsequent appeal following remand, the Supreme Court ultimately concluded that
the building’s construction was partially funded by public funds and, therefore, required payment
of prevailing wages under the Act. See generally Pa. State Bldg. & Constr. Trades Council, AFL-
CIO v. Prevailing Wage Appeals Bd., 808 A.2d 881 (Pa. 2002).

                                               10
      [T]here can be as strong and logical a demarcation between shell and
      fit-out work relative to commercial premises as there is between site
      preparation and ensuing structural construction. There is no dispute
      that interior construction in commercial premises is often tailored to the
      specific needs and interests of the occupant, and, thus, that the lessee
      may desire greater participation and supervision over fit-out
      construction. Therefore, we reject the Bureau’s position that the
      latitude accorded in Penn National . . . to legitimately phased
      construction does not apply to the demarcation between shell and fit-
      out construction of commercial premises. Although Penn National . . .
      should not be read to authorize artificial construction phasing bearing
      no independent business justification, its rationale by its terms extends
      to major, commonly-appreciated construction milestones, such as the
      completion of site preparation or of a commercial building’s shell. In
      this regard, it appears undisputed that bifurcation of an office building
      into a shell and its fit-out is an industry practice which may allow for
      the creation of a generic exterior, with prospective tenants retaining the
      ability to tailor the interior for their needs.

Id. at 571-72 (internal citations and footnote omitted) (emphasis added). The
Supreme Court held that the charter school project was “rationally divisible
according to major phases of shell and fit-out construction” and that “[a]s to the
shell, [the developer] established the private character of the funding.” Id. at 576.
Therefore, the Court concluded that the Act applied only to the fit-out phase, which
was paid for with public funds.
      While Penn National and 500 James Hance Court do not set forth a specific
test for determining when prevailing wage coverage applies to multi-phased
construction projects, we are able glean the following principles from these cases.
      In Penn National, our Supreme Court first recognized the possibility that the
Act’s applicability might be limited to a stage or stages of a multi-phase construction
project under certain “unique” factual circumstances. In revisiting this issue in 500
James Hance Court, the Supreme Court explained that when a developer divides a
larger project into multiple, separate contracts – some of which are publicly funded

                                          11
and some of which are not – one or more such contracts may be exempt from the
Act’s coverage if the developer demonstrates a “strong and logical . . . demarcation”
between the work subject to the Act and the work not subject to the Act. Id. at 571
(emphasis added). The Court clarified, however, that Penn National should not be
read to authorize the use of “artificial construction phasing bearing no independent
business justification” in order to avoid prevailing wage coverage. Id. Rather, the
Court explained that Penn National’s rationale applies to “major, commonly-
appreciated construction milestones, such as the completion of site preparation or
of a commercial building’s shell.” Id. at 572 (emphasis added). The Court also
cautioned that “the labels appended to transactional documents do not exclusively
determine the applicability of regulation under the . . . Act, as the potential for
evasion and artifice is too great. Rather, . . . the economic reality of the transaction
should control.” Id. (emphasis added). The Supreme Court cited the following
examples of “rationally divisible” major construction phases: the shell versus fit-out
phases in 500 James Hance Court; the site preparation versus construction phases in
Penn National; and the pre-construction versus construction phases in a California
Supreme Court case in which public funds were used to pay professionals (such as
attorneys and surveyors) involved in pre-construction activities, but the building’s
construction was privately funded. Id. at 571 (citing City of Long Beach v. Dep’t of
Indus. Rels., 102 P.3d 904 (Cal. 2004)).
      The facts of this case, however, do not align with any of these examples.
Owner contends that “[t]he historic renovation of the exterior and the interior fit-out
are the same as the shell and the interior in [500] James Hance Court.” Owner Reply
Br. at 2. However, the Project at issue here is distinguishable from the charter school
project in 500 James Hance Court in a key respect. In that case, there was a

                                           12
discernable separation between two distinct phases of the construction project:
exterior “shell” work and interior “fit-out” work.         Here, however, the record
establishes that the historical renovations encompassed both interior and exterior
work. While most of the historical renovations were performed on the building’s
exterior to restore the facade to its 1927 appearance, many historical renovations
were also performed throughout the building’s interior, including flooring, ceilings,
and carpentry. See Stips. of Fact ¶ 16. The general work contract also involved a
variety of exterior and interior work. See id. ¶ 17. Thus, we conclude that there was
no clear demarcation between the shell and fit-out work in this case, as there was in
500 James Hance Court.
      This case is also distinguishable from the project at issue in Penn National
because in that case, public funds were used only for pre-construction asbestos
removal at the site, prior to any building construction. There was a clear demarcation
between the site preparation and construction phases, which occurred at different
times and were separately financed. Here, however, the historical work and the
general work on the Project were often performed simultaneously, albeit by different
subcontractors, and “there [was] no . . . delineable time where the site preparation or
the shell was completed before the interior fit-out work began.” PWAB Final
Decision, 6/14/22, at 19-20; see Notes of Testimony, 11/30/21, at 62-63.
      We also reject Owner’s assertion that because the historical work required
strict adherence to federal and local historic preservation guidelines, it was divisible
from the remainder of the Project, i.e., the fit-out of the interior space for commercial
use. The record shows that in certifying the Project for historic preservation tax
relief, the Pennsylvania Historical and Museum Commission (Commission)
imposed the following condition:

                                           13
      This approval does not extend to work for tenant fit[-]out of the [first]
      floor commercial space, [the] details of which have not been submitted
      for review and approval. Federal regulations governing this program
      require evaluation of the entire project. This approval may be
      superseded if it is found that the overall rehabilitation does not meet
      the [United States Secretary of the Interior’s (Secretary)] [s]tandards.
      Please submit for review the information regarding any additional
      work as soon as available to ensure conformance of the overall project
      to the Secretary’s [s]tandards.

R.R. at 122a (emphasis added); see id. at 124a (imposing the same condition). In
other words, in order to determine if the Project conformed to historic preservation
standards, the Commission’s review was not limited to certain facets of “historical”
restoration, but encompassed the “overall” Project, including “tenant fit[-]out” of the
interior spaces.
      Unlike the shell/fit-out phases in 500 James Hance Court and the site
preparation/construction phases in Penn National, all of Owner’s contracted work
on the Project was of the same nature and for the same purpose: to renovate the
interior and exterior of the building for future commercial use. Both the historical
and general work contracts also had the same project manager, architect, and general
contractor. Owner’s attempt to bifurcate the renovation work in this case into
“historical” and “general” phases cannot be viewed as “major, commonly-
appreciated construction milestones, such as the completion of site preparation or of
a commercial building’s shell.” 500 James Hance Court, 33 A.3d at 572; see also
id. (“[T]he labels appended to transactional documents do not exclusively determine
the applicability of regulation under the . . . Act, as the potential for evasion and
artifice is too great.”). As the PWAB found, “the fit-out work was not contracted
for by a separate entity or tailored for a specific tenant, the actual work done on the
Project’s shell and fit-out was significantly co-mingled between the two contracts,

                                          14
and work under both contracts was not divisible by the type of work performed or
dependent on completion dates of either phase.” PWAB Final Decision, 6/14/22, at
20.
       Because the exceptions to the Act must be narrowly construed, we are
reluctant to deny prevailing wage coverage to workers on the Project absent a “strong
and logical” demarcation between “major, commonly-appreciated construction
milestones,” which is lacking here. In so ruling, we are mindful of the remedial
purpose of the Act, as described by our Supreme Court:

       [T]he Act imposes a duty upon every public body ([Section 4 of the
       Act, ]43 P.S. § 165-4), every contractor and subcontractor performing
       public work ([Section 6 of the Act, ]43 P.S. § 165-6), and the Secretary
       of Labor and Industry ([Section 7 of the Act, ]43 P.S. § 165-7) to
       implement by different means the specific mandate of the Act that
       “[n]ot less than the prevailing minimum wages as determined
       hereunder shall be paid to all work[ers] employed on public work.” 43
       P.S. § 165-5. There could be no clearer mandate from the General
       Assembly that for all public works projects under contract exceeding
       $25,000, prevailing wages are to be paid to the workers on those
       projects . . . .

Borough of Youngwood, 947 A.2d at 730-31 (bold in original; italics added).
       We conclude that Owner failed to establish a strong and logical demarcation
between the historical and general work phases of the Project and, therefore, the Act
applies to the entire Project.10

       10
           Before this Court, Owner also argues that the PWAB exceeded its authority in
determining that Owner failed to meet the requirements for an RACP grant, as that determination
rests solely with the Office of the Budget. See Owner Br. at 14; Owner Reply Br. at 2-3. The
PWAB, however, made no such finding. Rather, the PWAB found, based on the evidence of
record, that the grant money Owner received “was dependent on the costs of both projects and
would not have been available but for the inclusion of the general [work] contract.” PWAB Final
Decision, 6/14/22, at 23. In any event, we need not reach this issue because, regardless of which
(Footnote continued on next page…)

                                               15
                                         Conclusion
       We conclude, based on the evidence of record, that Owner failed to establish
a strong and logical demarcation between the historical work and general work
phases of the Project, despite its attempt to bifurcate them. The PWAB correctly
found that the historical renovations and general renovations were sufficiently
intertwined for purposes of prevailing wage coverage. Accordingly, we affirm the
PWAB’s Final Decision.

                                             __________________________________
                                             ELLEN CEISLER, Judge

cost figures Owner used to obtain the grant money, it is undisputed that Owner ultimately received
$750,000 in RACP grant funds and used those funds to pay for what it categorized as “historical”
renovations on the Project, which totaled $810,582. Despite Owner’s attempt to demarcate the
historical work and general work phases of the Project, we conclude that prevailing wage coverage
applies to the entire Project, for the reasons stated above.

                                               16
           IN THE COMMONWEALTH COURT OF PENNSYLVANIA

22 S. 40th Street Owner LLC,      :
                   Petitioner     :
                                  :
      v.                          : No. 689 C.D. 2022
                                  :
Pennsylvania Prevailing Wage      :
Appeals Board,                    :
                  Respondent      :

                                ORDER

      AND NOW, this 13th day of October, 2023, the Final Decision of the
Pennsylvania Prevailing Wage Appeals Board, dated June 14, 2022, is hereby
AFFIRMED.

                                  __________________________________
                                  ELLEN CEISLER, Judge