CDBG-DR requires housing providers, housing developers, and contractors to comply with federal labor provisions, including Davis-Bacon and Related Acts (DBRA). This includes paying federal prevailing wage rates on covered projects. The guidance in this section will assist grantees to understand the federal labor standards requirements under DBRA.

Under Section 110(a) of the Housing and Community Development Act of 1974 (HCDA), laborers and mechanics employed by contractors and subcontractors on construction work “financed in whole or in part” with CDBG assistance must be paid not less than wages determined to be prevailing on similar construction work in the locality by the Secretary of Labor in accordance with the Davis Bacon Act (40 U.S.C. 3141 et seq.). In the following cases, Davis-Bacon prevailing wage requirements do not apply: to construction work prime contracts of $2,000 or less, to bona fide volunteers where procedures and requirements of 24 CFR § 70 are met, to force account work by employees of the grantee, to non-construction activities like storm debris removal, to demolition that is not followed by construction, to equipment installation costs so long as they do not exceed 13% of the total equipment cost, or to the rehabilitation, reconstruction, and demolition of residential property containing fewer than eight units.

Property is defined as one or more buildings on an undivided lot or on contiguous lots or parcels, which are commonly-owned and operated as one rental, cooperative or condominium project. Examples of 8 or more unit properties include:

• 5 townhouses side-by-side which consist of 2 units each.

• 3 apartment buildings each consisting of 5 units and located on one tract of land.

• 8 single-family (not homeowner) houses located on contiguous lots and operated as a single rental property.

When CDBG-DR assistance is provided to a project, but not utilized in construction costs, Davis-Bacon prevailing wages are not applicable. An example would be projects where CDBG-DR assistance is only utilized for land acquisition, soft costs, professional fees, and anything non-construction related. If construction work is ongoing when an application for reimbursement or financing of construction costs is submitted, then Davis-Bacon prevailing wage rates are applicable.

Under regulations of the Department of Labor (DOL) at 29 CFR §1.6 (g), where Federal assistance is not approved prior to contract award (or the beginning of construction if there is no contract award), Davis-Bacon wage rates apply retroactively to the beginning of construction and must be incorporated retroactively in the contract specifications. However, if there is no evidence that the owner intended to apply for the CDBG-DR assistance prior to the contract award or the start of the construction, HUD may request that DOL allow prospective, rather than retroactive, application of the Davis-Bacon wage rates. DOL may allow prospective application of Davis-Bacon requirements where it finds that it is necessary and proper in the public interest to prevent injustice or undue hardship and it finds no intent to apply for the federal assistance before contract award or the start of construction. The CDBG-DR grantee should contact its CPD representative and a HUD Labor Relations Specialist for assistance if such a situation arises. HUD Labor Relations Contact information.

For activities that are subject to Davis-Bacon requirements, the CDBG-DR Grantee must carry out implementation, monitoring, enforcement, and reporting activities that are specified in HUD Handbook 1344.1 Rev 2, Chapter 1, Section 1-5.B. Additional resources on Davis-Bacon can be found on the
HUD Exchange website.