Our agency owns a mixed use residential building. There are six residential units and two commercial units. We are planning renovations in excess of $2,000 which will be funded with CDBG. Does Davis-Bacon apply because although there are less than eight residential units it is a mixed use building?
Date Published: May 2015
The Davis-Bacon applicability threshold for residential property is 8 or more units. For mixed use property, there is no unit threshold except that, if the entire rehabilitation is clearly limited to the residential portion, the residential threshold applies. However, if the commercial space is also rehabilitated, Davis-Bacon would apply. It should be noted that some states have labor laws that may also apply to CDBG-funded construction projects. If federal and state laws differ, you must comply with the more stringent of the two. For additional information, view the HUD Handbook 1344.1 Second Revision. Please review Chapter 3 of the Handbook for information on wage rate decisions and compliance for mixed use projects.