A business wants to apply for an infrastructure loan/grant to create a road to a building that is not built yet. The building will be paid for by the business and the business will create 15 jobs. The business wants to use the building as match/leverage for the infrastructure. The jobs will be in the building once it is built. Are the match funds from the private business that will be used to build the building considered part of the CDBG project and therefore Davis-Bacon is required on the construction of the building? Or because the private business is paying for the construction of the building not CDBG funds for that activity – is Davis-Bacon exempt?
Date Published: May 2015
The construction of a road using a CDBG infrastructure loan is subject to Davis-Bacon labor standards if the cost of construction is $2,000 or more, regardless of whether it is financed partially or completely with CDBG funds. If the CDBG activity is one large construction contract covering both the building and the road, then Davis-Bacon labor standards will apply to the construction of the building. Even though CDBG is not being used for the building construction part of the project, CDBG funds are used as a funding source for the entire project (the building and road combined), thus cross-cutting requirements like Davis-Bacon apply to the entire project.
Additional information regarding Davis-Bacon labor standards can be found in the Basically CDBG Guide, Chapter 16: Labor Standards.