The Oregon Court of Appeals recently ruled in a case involving the construction of affordable housing on the site of a former church. The court reversed a previous decision made by the Oregon Bureau of Labor and Industries (BOLI) regarding the applicability of a residential construction exemption to the state's prevailing wage laws. This ruling affects affordable housing developers and could influence future projects across the state.
The case, DEVNW v. BOLI, was filed under docket number A185490. It centers around DEVNW, a nonprofit organization dedicated to creating affordable housing for low-income residents in Oregon. The organization purchased a property that included a church and a parsonage, with the intent to convert the site into affordable apartments. The project involved demolishing most of the church structure while retaining its foundation and exterior walls to maintain the building's historical appearance.
DEVNW sought a determination from BOLI that its project qualified for an exemption from the prevailing wage law, which mandates that contractors pay workers the local prevailing wage for public works projects. BOLI concluded that the project did not meet the exemption criteria because it involved the renovation of a church building, which is not classified as residential construction. This decision prompted DEVNW to appeal, arguing that the project should qualify as residential construction since it involved building new apartments on the site.
The case reached the Oregon Court of Appeals, where the judges examined the definitions and intent behind the residential construction exemption outlined in Oregon law. The court, led by Judge Kamins, ultimately sided with DEVNW, stating that the organization was engaged in the initial construction of housing. The court noted, "the legislature did not intend such a result," referring to BOLI's interpretation that the project did not qualify for the exemption.
The court's ruling emphasized that the definition of "construction" should not be limited to new builds on bare land. Instead, the court argued that the focus should be on the final product, which in this case was the creation of affordable housing. The court stated, "As we understand BOLI’s rule, then, the 'initial construction' of residential construction would mean the initial building of projects included within the 'residential construction' label of the DOL memo, as opposed to the initial building of projects included within the 'building construction' label." This interpretation aligns with the legislative intent to promote affordable housing development.
The impact of this ruling is significant for affordable housing developers in Oregon. It clarifies that projects involving the repurposing of existing structures can qualify for the residential construction exemption, potentially reducing labor costs and encouraging more developers to pursue similar projects. By allowing the use of existing materials from previous buildings, the ruling supports sustainable development practices and could lead to more affordable housing options in communities across the state.
This decision also sets a precedent for how the residential construction exemption will be interpreted in future cases. It signals to developers that they can utilize existing structures in their projects without being penalized under prevailing wage laws, as long as the end goal is to create affordable housing. This could encourage more innovative approaches to housing development, especially in urban areas where land is scarce and costly.
Looking ahead, it remains to be seen if BOLI will appeal this ruling or if there will be any changes to the prevailing wage laws as a result of this decision. There is no indication of related cases pending at this time. However, the ruling could prompt discussions among lawmakers about the need for clearer definitions and guidelines regarding residential construction exemptions, especially as the demand for affordable housing continues to grow in Oregon.