Ursinus Coll. v. Prevailing Wage Appeals Bd.

280 A.3d 1113

URSINUS COLLEGE, Petitioner

v.PREVAILING WAGE APPEALS BOARD, Respondent

No. 828 C.D. 2021

Commonwealth Court of Pennsylvania.

Argued June 22, 2022

Decided August 4, 2022

Catherine E. Walters, Lemoyne, for Petitioner.

Ashley B. Goshert, Harrisburg, for Intervenor Pennsylvania Department of Labor and Industry, Bureau of Labor Law Compliance.

Richard J. De Fortuna, Philadelphia, for Intervenor International Brotherhood of Electrical Workers, Local Union No. 98.

BEFORE: HONORABLE RENÉE COHN JUBELIRER, President Judge, HONORABLE PATRICIA A. McCULLOUGH, Judge, HONORABLE ANNE E. COVEY, Judge, HONORABLE MICHAEL H. WOJCIK, Judge, HONORABLE CHRISTINE FIZZANO CANNON, Judge

OPINION BY JUDGE WOJCIK

Ursinus College (Ursinus ) petitions this court for review of the order of the Pennsylvania Prevailing Wage Appeals Board (Board) that reversed the decision of the Department of Labor and Industry, Bureau of Labor Law Compliance (Bureau), and concluded that the construction project undertaken by Ursinus (Project) was "public work" under Section 2(5) of the Pennsylvania Prevailing Wage Act (Act)¹ because it was "paid for in whole or in part out of the funds of a public body." The public body here, the Montgomery County Higher Education and Health Authority (Authority), issued bonds to finance the Project. This dispute was brought before the Board when the International Brotherhood of Electrical Workers, Local No. 98 (IBEW) filed a grievance under the Act, alleging that the Project was public work subject to the Act, and seeking relief for its members in the form of prevailing wages for the Project work already completed.² Several amici³ join with Ursinus to seek reversal of the Board's decision, arguing that the Board committed an error of law when it concluded that the Project was public work, when no Authority funds were used to pay for the Project, the Authority never held, disbursed, or guaranteed any Project funds, and the Authority was not reimbursed in any way from public funds, but merely served as a conduit for Ursinus ’ funding of a private Project.

Ursinus presents three issues for our review: whether the Board erred in concluding that the Project was subject to and covered by the Act; whether the Board erred in finding that the process by which the Project was funded somehow converted the exclusively private funds used to pay for the Project into "funds of a public body" and the Project into "public work" when no funds ever passed through or otherwise touched the Authority or any other public bodies; and whether the Board's retroactive award of prevailing wages to workers on the Project over three years after the Project was completed should be upheld when the Board's award was a novel interpretation of the Act, and the Bureau determined the Act did not apply to the Project. After careful review, we reverse the Board's decision that the Project was public work subject to the Act. Because the Project is not subject to the Act, we do not reach the question of the Board's retroactive award of prevailing wages.

The relevant facts as found by the Board, based on the parties’ stipulations, are as follows. The IBEW is a labor organization that represents workmen under the Act. Reproduced Record (R.R.) at 183a. Ursinus is a private, non-profit college. The Authority was created under the Municipality Authorities Act of 1945 (MAA),⁴ and is authorized to issue bonds for projects conducted by eligible educational institutions, including Ursinus. R.R. at 183a. In 2016, Ursinus ’ board authorized Ursinus to pursue certain construction projects, including the Project, and to borrow up to $23 million to pay for a portion of the Project. Id. The Authority approved a resolution to issue the bonds for the Ursinus Project. Id. The Board included as exhibits the various bond documents including the Loan Agreement between Ursinus and the Authority (Loan Agreement), the Trust Indenture between The Bank of New York Mellon Trust Company, N.A. (Trustee) and the Authority (Trust Indenture), and the Bond Purchase Agreement between the RBC Capital Markets, LLC (Underwriter) and Ursinus (Bond Purchase Agreement). Id. at 184a.

The Authority sold the bonds to the Underwriter. R.R. at 184a. The Underwriter paid the purchase price of the bonds to the "order of" the Authority, as reflected in the closing statements. Id. The bond transaction documents reflect the following steps in the transaction: the Authority sold the bonds to the Underwriter; Ursinus paid costs, fees, and expenses for the transaction; the Trustee deposited the bond Board, 570 Pa. 96, 808 A.2d 881 (2002) (Penn National II), to stand for the proposition that, if the funds used by Ursinus for the Projectproceeds into a project fund from which the Trustee disbursed project costs to Ursinus ; Ursinus paid debt service on the loan to the Trustee; the Trustee deposited Ursinus ’ payments into a bond fund held by the Trustee; and the Trustee paid the bondholders directly from the bond fund. Id. at 184a-85a. The construction work on the Project exceeds $25,000, and the work to be performed on the Project is all under contract with Ursinus. Id. at 185a.

The Board made additional findings based on recitals from the resolutions and bond documents in the record as follows. The Loan Agreement recites "[s]imultaneously with the execution, and delivery of this Loan Agreement, the Authority has duly executed and delivered the [Trust] Indenture and issued and sold the bonds." R.R. at 39a, 187a. "The Authority agrees, upon the terms and conditions contained in this [Loan] Agreement, to lend to [Ursinus] the proceeds as provided in the [Trust] Indenture." Id. at 41a, 187a. The proceeds from the sale of the bonds shall be loaned to Ursinus pursuant to Section 3.01 [of the Loan Agreement] and such proceeds shall be paid over to the Trustee for application in accordance with the terms of the Trust Indenture. Id. By resolution dated November 1, 2016, the Authority assigned all rights, title, and interest in the Loan Agreement to the Trustee. Id. at 70a-71a. In consideration of and in repayment of the loan, Ursinus shall make payments to the bondholders. Id. at 43a, 187a-88a.

From the Trust Indenture, the Board recited the following. The Authority is a public instrumentality of the Commonwealth established under the MAA, with the purpose of financing land and buildings for eligible public and private educational institutions. R.R. at 77a, 188a. The Authority authorized and approved the Project for the benefit of Ursinus, and authorized the issuance of $23 million in revenue bonds for the Project. Id. "The Authority has caused the [r]evenues to be paid directly to the Trustee pursuant to the assignment to the Trustee of the Loan Agreement." Id. at 95a.

From the Bond Purchase Agreement, the Board recited the following. Subject to the terms therein, the Underwriter agrees to purchase from the Authority, and the Authority agrees to sell, all of the Authority's bonds for the Project. R.R. at 137a, 189a. Pursuant to the Loan Agreement dated November 1, 2016, the proceeds of the bonds will be loaned to Ursinus for the Project. The Authority has full authority under the MAA to sell, issue, and deliver the bonds to the Underwriter. Id. at 140a, 189a. The Closing Statement, directed to the Trustee on November 22, 2016, dated after the bonds were issued and the funds transferred to the Trustee, directs the Trustee to make disbursements from the Project fund. Id. at 164a-65a, 189a-90a.

The Board then analyzed the relevant precedents, discussed below, and determined, in accord with the parties’ agreement, that the Project satisfied three of the four required elements in Pennsylvania National Mutual Casualty Insurance Company v. Department of Labor and Industry, Prevailing Wage Appeals Board , 552 Pa. 385, 715 A.2d 1068 (1998) ( Penn National I ), and the only area of dispute was whether the Project was paid for in whole or in part with funds of a public body. R.R. at 193a. The Board summarized the parties’ arguments, and was persuaded that because the Project was paid for with loans from the Authority, as per the Loan Agreement, the Project was paid for with funds of a public body. Id. at 196a. The Board interpreted Pennsylvania State Building and Construction Trades Council, AFL-CIO v. Prevailing Wage Appeals Board , 570 Pa. 96, 808 A.2d 881 (2002) ( Penn National II ), to stand for the proposition that, if the funds used by Ursinus for the Project were "at any point in time ‘funds of a public body[,]’ " the Act applies. R.R. at 196a. The Board rejected the Bureau's analysis that because Ursinus must pay back the loan, public funds from the Authority are not "ultimately" being used to pay for the Project. Id. at 198a-99a. The Board reasoned:

Although the Authority may not have directly paid for the [P]roject[ ], Ursinus would not have had this funding stream available but for the existence of the Authority and its coordination of the funding through its statutory powers as a public body. The fact that the funds wound their way through financing processes and contractual relationships with the Trustee and [the] Underwriter does not change the reality that the funds were only available because of the Authority's statutory ability to issue the [b]onds. The proceeds from the [b]ond sale did not lose their character as the "funds of a public body" just because the money journeyed through other nonpublic financial transactions.

Id. at 199a. Thus, the Board concluded that the Project was public work under the Act, and ordered all workers on the Project to be paid the applicable prevailing wage rate as determined by the Bureau. Id. at 200a. Ursinus then filed the instant petition for review.⁵

The following is a review of the relevant case law interpreting Section 2(5) of the Act. In Lycoming County Nursing Home Association, Inc. v. Department of Labor and Industry, Prevailing Wage Appeal Board , 156 Pa.Cmwlth. 280, 627...