Court finds that Prevailing Wage Does Not Apply to Connected Construction

Luther L. Liggett, Jr.

The First District Court of Appeals for Hamilton County, Ohio found that Prevailing Wage does not apply to construction of a housing development connected to a parking garage funded in part by a city, when as a matter of fact the parking garage construction was separated under the funding contract.

"The contract clearly indicated that the funds received from the city were to be exclusively used for the parking garage." City of Cincinnati ex rel. Zimmer v. City is Cincinnati, 353 West Fourth Street LLC (C.A. 1st Hamilton), 2010-Ohio-4597.

The court generally affirmed applicability of the Prevailing Wage statutes, Ohio Revised Code §4115.03 through §4115.16, requiring contractors for public improvement projects to pay laborers and mechanics though local wage, when the project is constructed by or benefits a public authority.

But the Court found no factual nexus between the public authority and the housing development connected to the parking garage. "The core issue in this case is what constituted the ‘project‘ for purposes of Ohio's prevailing-wage law. If the ‘project‘ was only the parking garage, then the prevailing-wage law did not apply to the construction of the housing. If, on the other hand, the construction of the parking garage and the housing together made up the ‘project,’ then prevailing-wage requirements applied to the construction of both.”

Of particular interest is that this Court upheld its prior landmark decision in Harris v. Cincinnati (C.A. 1st 1992), 73 Ohio App.3d 163, 607 N.E.2d 15. In that case, Prevailing Wage applied to all construction, because the city and developer entered into a contract where the city maintained a possessory interest in the property, financed the construction in part, and benefited from the construction. In contrast, here the Court reasoned that, "[T]he mere fact that Cincinnati may benefit from the private construction of housing is not, standing alone, enough to make such construction a benefit to a public authority." Zimmer, supra., para. 17.

Interestingly, the developer in this case previously had agreed to pay prevailing wage on the housing. But plaintiffs continued the litigation, seeking attorney fees against the city for not originally mandating payment of Prevailing Wage on the entire project.

For further information, please contact Luther Liggett at 614-229-4423.