OFFICIAL OPINION No. 28

OFFICIAL OPINION No. 28 Prevailing Wage Act-Industrial Develop111e11t Authority 1. An industrial development authority, created pursuant to the Industrial and Commercial Development Authority Law of August 23, 1967, P.L. 251, as amended, 73 P.S. §371 et seq., is a "public body" within the meaning of the Prevailing Wage Act of August 15, 1961, P.L. 987, 43 P.S. §165-1 et seq. 2. Where an industrial development authority proposes to construct a manufac- turing plant with funds derived exclusively from a mortgage executed by the authority to a lending institution and repaid entirely from rent due under a long term lease from the authority to a private business corporation, which the authori- ty will assign to the lending institution, the construction project is covered by the Prevailing Wage Act. Hon. Paul J. Smith, Secretary Department of Labor and Industry Harrisburg, Pennsylvania Dear Secretary Smith: Harrisburg, Pa. June 6, 1974 You have asked us two questions with respect to the applicability of the Pennsylvania Prevailing Wage Act of August 15, 1961, P.L. 987, as amended, 43 P.S. §165-1 et seq. to industrial development authorities created pursuant to the Industrial and Commercial Development Authority Law of August 23, 1967, P.L. 251, as amended, 73 P.S. §371 et seq. (1) Is an industrial development authority a "public body" within the meaning of the Prevailing Wage Act? 98 OPINIONS OF THE ATTORNEY GENERAL Section 5 of the Prevailing Wage Act requires that: Not less than the prevailing minimum wages as deter- mined hereunder shall be paid to all workmen employed on public work. (43 P.S. §165-5). "Public work" is defined by the Act to mean "construction, reconstruction, demolition, alteration and/or repair work other than maintenance work, done under contract and paid for in whole or in part out of the funds of a public body where the estimated cost of the total project is in excess of twenty-five thousand dollars ($25,000), but shall not include work performed under a rehabilita- tion or manpower training program." 43 P.S. §165-2(5). "Public body" is defined to mean "the Commonwealth of Penn- sylvania, any of its political subdivisions, any authority created by the General Assembly of the Commonwealth of Pennsylvania and any instrumentality or agency of the Commonwealth of Penn- sylvania." 43 P.S. §165-2(4). An industrial development authority is defined by the Industrial and Commercial Development Authority Law to mean "a public instrumentality of the Commonwealth and a body politic and cor- porate, created pursuant to this act." 73 P.S. §373(1). It is clear, therefore, that an industrial development authority is a "public body" within the meaning of the Prevailing Wage Act. (2) Where an industrial development authority proposes to con- struct a manufacturing plant with funds derived exclusively from a mortgage executed by the authority to a lending institution and repaid entirely from rent due under a long term lease from the authority to a private business corporation which the authority will assign to the lending institution, is the construction project covered by the Prevailing Wage Act? It would seem clear from the above question that the proposed project is a construction project in excess of $25,000. The only issue needing clarification is whether the funds involved are "in whole or in part ... funds of a public body." On this issue, you have informed us that the interest on the above loan will be tax-free in accordance with state and federal law. furthermore, in order to comply with the provisions of such law, it 1s abundantly clear that the funds involved must bej}ublic funds which will further a public purpose. See Basehore v. ampden In- dustrial Development Authority, 433 Pa. 40, 47 (1968). This would be true regardless of whether, as here, the project were financed by revenue bo.nds floated by the Authority. Given these facts and given the undisputed fact that the funds will be borrowed by the Authority for which it will pledge its credit and must repay in the event of default by the private business corporation, we conclude, OPINIONS OF THE ATTORNEY GENERAL 99 and you are hereby advised, that a construction project financed and carried out as described a hove is covered by the Pennsylvania Prevailing Wage Act.1 Very truly yours, Mark P. Widoff Deputy Attorney General Israel Packel Attorney General