The District is moving a long-running regulatory clash with the U.S. Department of Labor to a courtroom after a series of rulings that threaten to add $20 million in underpaid wages to the cost of a major mixed-use project.
The D.C. government's lawsuit, filed in federal court, is tied to the CityCenterDC project, a 2.5 million square foot development that's under construction on the site of the former convention center.
Regulators contend that because the District is leasing its land to developers and will later receive benefits like tax revenues and jobs for residents, a 1931 law governing wages for "public works" projects applies to the project's construction.
But the District argues that the project's private underpinnings -- it's being privately financed, constructed, occupied and operated -- make it exempt from the Davis-Bacon Act, and it warned that the Labor Department's decision could threaten existing projects elsewhere in the city.
"There are many other projects in D.C. that are privately financed that may result in incidental tax and employment benefits for the city, but that does not convert them into public buildings or public works," D.C. Attorney General Irvin Nathan said in a statement.
The dispute has been brewing since 2009, when a labor union said that Davis-Bacon's mandate for "prevailing wages" should apply.
The Labor Department initially rejected the union's entreaty, but a senior official reversed that ruling in 2011.
An administrative appeals board upheld the reversal in April, prompting the District's lawsuit.
"While we recognize the private economic benefits the project achieves, the private aspects do not subordinate the public benefits of CityCenterDC, a project envisioned by, negotiated for, contracted for, and constructed and maintained directly by authority of the District," the panel wrote.
Although the CityCenter project is expected to open later this year, the litigation could drag on far longer. If the District loses its case, workers who handled the project could receive back pay.
for the Labor Department said its staff "will be working with lawyers at the Department of Justice to defend the decision of the [review board.]"
Hines, the project's lead developer, declined to comment on the litigation.