Shifting of funds cancels need to pay prevailing wages

The Watertown City Council has sidestepped a federal law that would have forced developers to pay workers renovating downtown's Franklin Building prevailing wage rates.

Neighbors of Watertown, the nonprofit agency coordinating the renovation, has obtained about $7.8 million from a variety of federal, state and private sources for the project, including $375,000 from the Department of Housing and Urban Development.

Those funds are covered by the Davis-Bacon Act, a law that requires employers to pay the local prevailing wage to construction workers on federally financed projects.

"There was a significant impact, having to pay the prevailing wage," Neighbors Executive Director Gary C. Beasley said.

"It's not something we could have taken that kind of impact on."

Mr. Beasley said that he estimates Neighbors would be forced to spend an additional $500,000 on prevailing wages.

However, he estimated that figure to be about $800,000 in an August meeting with Sen. Hillary Rodham Clinton, D-N.Y., and was unable Monday night to verify the difference between actual wages being paid and the prevailing wages required under the law.

"It would have subjected the whole project to those rates, " he said. "We don't know the exact cost because we would have needed to reprice the job."

Neighbors is renovating the former YWCA building into a combination of bottom-floor commercial spaces and upperfloor apartments. Demolition began in December and the final cost of paint is expected to be dry in June 2010.

Commercial areas will range from 800 square feet to 2,000 square feet. Some of the larger rooms – such as the filled-in pool can be partitioned to accommodate multiple tenants.

Rooms on the upper floors will be renovated into 17 apartments that range in size from 650 square feet to 1200 square feet.

With little discussion, city lawmakers agreed Monday night to shift the federal funds from a "construction" line item to another for housing rehabilitation architectural services and other soft coasts," to bypass the law.

The council also revised agreements with the Watertown Local Development Corp., which is providing loans for commercial tenants, to change the available uses for the loans.

Instead of allowing "buildouts," the funds will be used to finance equipment, inventory, working capital and other expenses incurred by tenants of the building, city Planning and Community Development Coordinator Kenneth A. Mix wrote in a memo to the council.