Court Opinion

ID: 9583539
Source: CourtListenerOpinion
Date Created: 2023-08-21 22:39:37.255744+00
Date Added: 2024-06-11T13:39:03.778939
License: Public Domain

MATTHEWS, Justice,
with whom MOORE, Chief Justice, joins, dissenting.
I.
While I do not mean to minimize the difficulty of devising a test to determine whether the Little Davis-Bacon Act applies to a construction project, I am concerned that the five-factor approach adopted in today’s opinion gives very little guidance as to how future cases should be decided. Persons involved in a project in which the state will or may participate will encounter serious difficulties in attempting to predict whether the Act will apply to their project. The approach may deter building projects in which the state participates alongside private business by making these projects too expensive. The five-factor approach may also engender unnecessary litigation.
In my view, focusing on two factors, the nature of ownership of the building or work and the nature of use of the building or work, is all that is needed for a proper decision in most cases. Only when these two factors point in opposite directions do other factors have to be considered. Further, I think that requiring consideration of five unweighted factors in all cases tends to make it difficult to distinguish hard cases from easy cases. Finally, I am concerned that the opinion sets up deciding whether there is “significant state involvement” as the goal of the five-factor approach, whereas the statutory goal of any analysis should be to determine whether a project constitutes “public construction,” or a “public work[].” See AS 36.05, AS 36.95.010(3).
II.
The result of today’s opinion is not compelled by our prior case law. The multiple factor approach used in the opinion is purportedly derived from our decision in Alaska State Federation of Labor v. State, Department of Labor, 713 P.2d 1208 (Alaska 1986). However, Federation does not prescribe a multi-factor test. It does discuss factors similar to the factors used in today’s opinion. But it does not say which of those factors are important and which are not, and it does not state that a totality of the circumstances test should determine whether the Act applies. Rather, it merely rejects a series of argu*338ments that were made in favor of applying the Act in that case which correspond to the factors used in today’s opinion. Id. at 1210-11.
III.
In my view, focusing on the reason that the Act does not apply to all construction projects helps in making an informed choice as to the types of projects to which the Act should apply.
Alaska’s Little Davis-Bacon Act is based on the federal Davis-Bacon Act, which was passed in 1931. In Universities Research Ass’n v. Coutu, 450 U.S. 754, 773-74, 101 S.Ct. 1451, 1462-63, 67 L.Ed.2d 662 (1981), the United States Supreme Court explained that the purpose of the Davis-Bacon Act was to prevent contractors from lowering wage rates in local labor markets by importing cheap labor. The Court stated,
The Act was “designed to protect local wage standards by preventing contractors from basing their bids on wages lower than those prevailing in the area.” Passage of the Act was spurred by the economic conditions of the early 1930’s, which gave rise to an oversupply of labor and increased the importance of federal building programs, since private construction was limited. In the words of Representative Bacon, the Act was intended to combat the practice of “certain itinerant, irresponsible contractors, with itinerant, cheap, bootleg labor, [who] have been going around throughout the country ‘picking’ off a contract here and a contract there.”
Id. at 773, 101 S.Ct. at 1463 (citations omitted). The Court did not explain who the “cheap, bootleg labor” were, where they came from, or why Congress felt that it was fair to benefit local labor at the expense of the “cheap, bootleg labor.” The history of the Act indicates that the cheap laborers were mainly Southern Black workers who were used by contractors in the North to work on federal projects.1 For this reason and others, the Davis-Bacon Act has been criticized as harming minorities and being motivated by racism. See John P. Gould & George Bittlingmayer, The Economics of the Davis-Bacon Act: An Analysis of Prevailing Wage Laws 8-9, 62-63 (1980); Kenneth M. Roberts, Labor Law — The Davis Bacon Act, Another Setback for Labor: Building & Construction Trades’ Department v. Donovon, 10 J.Corp.L. 277, 279 (1984).
Merely because the federal Davis-Bacon Act may have roots in protectionism and prejudice does not mean that its Alaska counterpart was enacted for similarly questionable motives. Knowledge of this history does, however, counsel against an easy assumption that this is legislation whose beneficent public purpose is so apparent that it is necessarily entitled to a broad construction.
Our case law states that “[t]he fundamental purpose of Little Davis-Bacon is to assure that employees engaged in public construction receive at least the prevailing wage.” City & Borough of Sitka v. Construction & Gen. Laborers Local 942, 644 P.2d 227, 232 (Alaska 1982). This statement of purpose does not without further analysis help to determine whether a particular project should be treated as public construction under the Act. Figuring out whether the Act should apply in this case requires discovering what special characteristics public construction has that justify a prevailing wage law covering workers in public construction but not workers in private construction.
As the facts of this case illustrate, the prevailing wage required by Little Davis-Bacon is higher than that which will be paid by at least some cost-conscious owners and contractors. The purpose of the Act is thus to establish a wage floor which increases the income of workers in public construction. It is a “minimum wage law designed for the benefit of construction workers.” United *339States v. Binghamton Constr. Co., 347 U.S. 171, 178, 74 S.Ct. 438, 442, 98 L.Ed. 594 (1954), quoted in Fowler v. City of Anchorage, 583 P.2d 817, 822 n. 9 (Alaska 1978). With regard to this purpose, the natural question is why the Act does not apply to all construction, public and private. The likely answer is that attempting to apply the Act to private construction would discourage some private construction, which, in turn, would hurt the construction workers whom the Act is intended to benefit. Presumably, this is not a problem with public construction, because the level of public construction is determined by the needs of the public and by political considerations, and is not dependent on the profit motive.
This suggests that projects built with a for-profit motive, especially those that are in competition with projects which are purely private in every sense, should not be included within the statutory term “public construction.”
IV.
A review of the published opinions of the Alaska Attorney General reveals some of the enormously diverse circumstances in which questions concerning the application of the Act arise. I give only a few examples here and indicate the conclusion of the Attorney General:
March 14,1991
Does the Act apply to a contract awarded by the state for the clean-up of contaminated dirt on private land?
No. The clean-up was not associated with an identifiable public construction project and the property was not intended for public use.
1991 Informal Op.Att’y Gen. 201.
April 18,1986
Does the Act apply to weatherization contracts paid for by the state for improving “low-income homes”?
No. The property improved is privately owned and not publicly used. (This opinion reversed an opinion of December 30, 1985, which concluded that the Act probably did apply to weatherization contracts because the state and political subdivisions were the contracting parties.
1985 Informal OpAtt’y Gen. 539.)
1986 Informal OpAtt’y Gen. 321.
July 3,1984
Does the Act apply to a contract between a borough and an oil company under which the oil company agreed to construct a natural gas pipeline paid for by the borough to an industrial center? The oil company will own the pipeline subject to a two-year option in the borough to acquire ownership of the pipeline if it can obtain the necessary permits during that period.
Yes. Even though ownership may remain in private hands, the contract is directly with a public entity. The provision of gas to the industrial center will serve the interest of the general public and the borough hopes ultimately to own the pipeline.
1984 Informal Op.Att’y Gen. 33.
December 21,1983
Does the Act apply to a construction contract between a rural electrification association (not a state agency or instrumentality) and a contractor for the construction of a substation and transmission line using state funds? The line and substation are necessary for the utilization of a state hydro-electric project but are not currently owned by the state.
Yes. The project “involves the undertaking or provision of traditional government facilities, services, or activities” and thus is covered by the Act because the transmission line and substation are needed to utilize the state-owned hydro-electric project. Further, the author of the Attorney General’s opinion “understand[s]” that the line and substation eventually will be owned by the state.
1983 Informal OpAtt’y Gen. 450.
June 9,1983
Does the Act cover the Alaska State Housing Authority in general and specifically with respect to construction of a senior citizen housing project in Fairbanks?
Alaska State Housing Authority is covered as a state agency. Concerning the senior citizen housing project the Act does *340not apply because of an exemption (AS 18.55.110) which applies where federal funding would be jeopardized as it would for the Fairbanks project because HUD regards the state’s prevailing wage rates under the Act to be “excessive.”
1983 Informal Op.Att’y Gen. 421.
May 23,1983
Does the Act cover a state grant to the Alaska Native Brotherhood for the construction of a meeting hall?
No. The uses to which the building will be put are not the type that are traditionally provided by government. (This conclusion was subsequently affirmed in Federation, 713 P.2d 1208).
1983 Informal Op.Att’y Gen. 395.
March 11,1983
Does the Act apply to designated grants to private nonprofit corporations to construct buildings such as a daycare center, a “human services complex,” and a public works facility?
The answer depends on the nature of the particular project. If the project involves “the undertaking or provision of traditional government facilities, services, or activities it is covered by the Act ... [hjowever, if the work contracted out is not like that traditionally carried out or provided by government, it is not covered. ...”
1983 Informal OpAit’y Gen. 235.
I think that a review of these examples illustrates the imprudence of substituting the rubric “significant state involvement” for “public construction.” The clean-up contract (1991 Informal Op.Att’y Gen. 201), the weatherization contracts (1986 Informal Op.Att’y Gen. 321), and the designated grants (1983 Informal OpAtt’y Gen. 235), all seem to be completely publicly funded — it would be impossible to say that they are lacking in significant state involvement. Yet, because of the private nature of the use and ownership of the property involved in each case, it seems difficult to argue with the conclusion that the projects do not involve public construction.
The wide variety of fact situations illustrated by these examples counsels against an attempt to devise an all-purpose test to determine when a project is public construction. Still, I think that focusing on what seem to be the two most important factors rather than the five referred to in today’s majority opinion should be dispositive in most cases. The factors to which I refer are (1) the nature of the intended use of the public work or building and (2) the nature of the ownership of the public work or building.
I select these two factors for the following reasons. Asking whether the nature of the intended use is public or private in character focuses on the “public” aspect of the statutory terms “public construction” and “public works.” See AS 36.05, AS 36.95.010(3). Further, intended public use seems to be a sine qua non for the application of the Act in the two cases we have decided, Sitka, 644 P.2d 227, and Federation, 713 P.2d 1208, in the fact situations on which the Attorney General’s opinions are based,2 and in the opinions of other state courts referred to in today’s opinion.
Focusing on public ownership of a work or building directs the analysis to the central, though not exclusive, meaning of the statutory term “under contract for the state.” See AS 36.95.010(3). In Sitka and Federation the presence or absence of public ownership is consistent with the results reached. Thus, in Sitka, the project was publicly owned and the Act applied, and in Federation the project was privately owned and the Act did not apply. This pattern, however, does not hold in all of the state cases referred to in today’s opinion. In industrial development agency eases projects are publicly owned subject to long-term leases to private businesses. This form of ownership exists to facilitate financing with tax exempt bonds and is held not to require application of prevailing wage statutes. See Daniels v. City of Fort Smith, 268 Ark. 157, 594 S.W.2d 238, 239-41 (1980); Zickuhr v. Bowling, 97 Ill.App.3d 534, 53 Ill.Dec. 65, 423 N.E.2d 257 (1981); Gregory v. City of Lewisport, 369 S.W.2d 133, 135-36 *341(Ky.1968); Erie County Indus. Dev. Agency v. Roberts, 94 A.D.2d 532, 465 N.Y.S.2d 301 (1983), aff'd, 63 N.Y.2d 810, 482 N.Y.S.2d 267, 472 N.E.2d 43 (1984); Penfield Mechanical Contractors, Inc. v. Roberts, 119 Misc.2d 105, 462 N.Y.S.2d 393 (N.Y.Sup.), aff'd, 98 A.D.2d 992, 470 N.Y.S.2d 1021 (1983), aff'd, 63 N.Y.2d 784, 481 N.Y.S.2d 72, 470 N.E.2d 870 (1984). In these eases, private use of the project was of overriding importance. Referring to the fact situations presented in the Attorney General’s opinions, whether ownership is or is expected to be public is consistent with the results reached in all of the cases except for the designated grants case (1983 Informal OpAtt’y Gen. 235) where despite private ownership, public use was held to control.
Where a project is one in which the two factors, nature of use and nature of ownership, coincide, whether or not to apply the Act can be easily resolved. If a building is intended for a use which is traditionally associated with government and it is government-owned, the contract to build the building should clearly come within the terms of the Act. A state-owned building used for state offices, a municipality-owned building used for a school, and state- or municipality-owned airports or roads are just a few of the numerous examples that fit in this category. Similarly, where the use of a building is one which is not traditionally associated with government and the building is privately owned, I suggest that the Act clearly should not apply even if there is significant state funding. Examples would include construction with state funds of a privately owned building to be used as a meeting place for a private organization,3 or a contract between the state and a contractor to improve the energy efficiency of a privately owned building used as a private home.4
The difficult cases are those where there is private ownership, but a traditionally public use, or public ownership, but a traditionally private use. An example of the former might include a privately owned building which is subject to a long-term lease to the state for a public use which was entered into prior to construction.5 Examples of the latter would include a state-owned budding which the state has acquired merely for investment purposes but the use of which is private in nature,6 or where the state acquires by or in lieu of foreclosure a structure dedicated to private uses which must be rehabilitated. These are cases where the factors of ownership and use point in opposite directions. In order to decide whether the projects in such cases are “public construction” additional analysis wdl be needed.7
V.
I view the project in this case as one in which the use and ownership factors coincide. Both indicate that the construction of the *342Comfort Inn is not within the coverage of the Act.
The Comfort Inn is used as a hotel. It is available for use to hotel patrons in a manner which is not at all different from any private hotel and it is in competition with other hotels. Its use is, inarguably, private.8
The ownership factor also weighs against application of the Act. The Alaska Railroad Corporation holds a minority ownership position, forty percent, in Inn-Vestment Associates of Alaska, the partnership which owns the Comfort Inn. I consider that minority ownership on the part of the state does not satisfy the public ownership factor for two reasons. First, AS 36.95.010(3) defines “public construction” as construction “under contract for the state,” and the partnership is not an alter ego of the state. Second, minority shares in enterprises are typically acquired for investment — profit-making—reasons.9
For the above reasons, I conclude that the construction of the Anchorage Comfort Inn was not “public construction” or a “public work” to which the Act applies. Both the use and the ownership of the project indicate that the Act should not apply.

. During Congressional debate of the bill that became the Davis-Bacon Act, one Congressman stated:
Reference has been made to a contractor from Alabama who went to New York with bootleg labor. That is a fact. That contractor has cheap colored labor that he transports, and he puts them in cabins, and it is labor of that sort that is in competition with white labor throughout the country.
John P. Gould & George Bittlingmayer, The Economics of the Davis-Bacon Act: An Analysis of Prevailing Wage Laws 8 (1980).

. The only exception is the opinion relating to the exemption in AS 18.55.110. See 1983 Informal Op.Att’y Gen. 421.

. See Federation, 713 P.2d 1208.

. See 1991 Informal Op.Att’y Gen. 201, the Attorney General's opinion concerning weatherization.

. See Gregory, 369 S.W.2d at 135-36.

. See AS 37.13.120(g)(16), which permits the Alaska Permanent Fund to own all of a commercial real estate project if the total value of all real estate investments of the fund do not exceed $150 million (if total real estate investments exceed $150 million, equity participation is limited to no more than a sixty-seven percent beneficial ownership interest in any particular project).

. However, case law from other states suggests that the nature of the use of the project is generally the most important factor. See Daniels, 594 S.W.2d at 238-40 (industrial facility backed by public financing not subject to prevailing wage law because it was not for public use); Zickuhr, 53 Ill.Dec. at 67-70, 423 N.E.2d at 259-62 (private warehouse paid for with municipal bonds not for public use and consequently not covered by prevailing wage law); Gregory, 369 S.W.2d at 135 (industrial plant financed by public bonds not subject to prevailing wage statute, since statute "aimed primarily at construction of buildings for public use ”); National R.R. Passenger Corp. v. Hartnett, 169 A.D.2d 127, 572 N.Y.S.2d 386, 388-90 (1991) (construction of railroad line for private rail company not subject to prevailing wage law even though state provided 40% of financing, had right to veto contractors and significant changes in project, and retained contingent reversionary rights); Erie, 465 N.Y.S.2d at 305-06 (printing plant given public financing not "public works” and not covered by prevailing wage law, as "public works” are those projects constructed for public use); Penfield, 462 N.Y.S.2d at 395 (private office and storage facility not public works within meaning of prevailing wage statute because it was not for public use).

. Today's opinion refers to a use factor but discusses public purpose rather than public use in its application of that factor. The existence of a public purpose is of course a requisite for any state spending. Article IX, section 6 of the Alaska Constitution prohibits any appropriation of public money “except for a public purpose.” Consistent with the public purpose clause of our constitution, public money can be spent on private buildings. See Walker v. Alaska State Mortgage Ass'n, 416 P.2d 245, 251-53 (Alaska 1966); DeArmond v. Alaska State Dev. Corp., 376 P.2d 717, 721-22 (Alaska 1962). This does not mean, however, that the uses of the private buildings thus benefitted are in any sense public. The distinction between a public purpose which justifies the expenditure of funds and the public use of a project which justifies application of a prevailing wage law has received judicial recognition. See Daniels, 594 S.W.2d at 240 ("[W]e find no language ... which indicates that the terms 'public purpose' and ‘public use' are synony-mous_"); Zickuhr,- 53 Ill.Dec. at 69, 423 N.E.2d at 261 ("While it seems clear that the city ... will publicly benefit from the employment opportunities afforded by the presence of the new warehouse, and while it is also clear that the provisions of the Bond Act are for a public purpose and benefit, it is just as clear that the actual use of the project is private in nature.”); Erie, 465 N.Y.S.2d at 306 ("The public purpose of the financing scheme must not be confused with the purely private purpose of the venture itself, its structure and its operation.”).

. This rationale seems appropriate, given that the legislature chose not to extend the Act to private projects, probably because the Act would tend to discourage some private projects. See supra § III.