CDBG Entitlement FAQ

When do Davis-Bacon requirements apply to construction on residential property?

Date Published: May 2015

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Davis-Bacon applies to the rehabilitation of residential property only if the property contains 8 or more units. Residential property that contains 7 or fewer units is exempt. Although the statute refers to the rehabilitation of residential property, this exemption has been interpreted to include the new construction of residential property containing 7 or fewer units. Typically, single-family homeowner properties are excluded under this exemption.

However, "property" is not limited to a specific building. 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+ unit properties may include:

  • 5 townhouse buildings 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.

The requirement is more clearly explained in HUD Handbook 1344.1 Rev. 2 entitled Federal Labor Standards Requirements in Housing and Urban Development Programs. Appendix II-6 Factors of Labor Standards Applicability provides detailed guidance on Davis-Bacon applicability to various HUD programs.

Tags: CDBG Entitlement Program Davis-Bacon

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