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12.12.18

Rolling Back Davis-Bacon Wage Requirements?

HUD has eliminated the requirement to use Davis-Bacon wages in PBRA transactions in RAD Component II (Rent Supp / RAP and Mod Rehab conversions), according to HUD Notice H-2018-11 / PIH-2018-22, published in the Federal Register on December 11, 2018
Are more changes to come?  This change is limited to Rent Supp, RAP and Mod Rehab RAD conversions using PBRA, and does not extend to public housing conversions or PBV conversions.
 
Prior to this change, HUD had required all RAD Component II transactions, PBV and PBRA, to follow the March 9, 2015 Federal Register Notice requiring Davis-Bacon wages for all projects that constitute “development” within 18 months, prior or after, HAP contract execution.  That notice defines “development” as “work that … alters the nature or type of housing units in a PBV project, reconstruction, or a substantial improvement in the quality or kind of original equipment and materials,” but not “replacement of equipment and materials rendered unsatisfactory because of normal wear and tear by items of substantially the same kind.”  Many industry professionals believed this standard to be a substantial expansion from the previous standard, which only required Davis-Bacon wages if an AHAP was necessary because units needed work to meet HQS standards or new construction was contemplated. 
RAD participants are eagerly awaiting Revision 4 (Rev-4) of the RAD Notice, which will set forth the requirements for RAD for PRAC.  The recent notice does not mention RAD for PRAC, so participants will need to wait for Rev-4 to see if this limit on Davis-Bacon wages will apply in the RAD for PRAC context as well. 

Tags: HUD, RAD