🔒Lawmakers ease prevailing wage requirements on state-backed private development projects

State officials have tentatively approved $8 million for environmental cleanup at an aging riverfront commercial site in Westport, where a developer plans to build a boutique hotel, luxury condos, restaurants, retail space and a marina. But, until recently, development firm White Roan wasn’t certain it wanted the state brownfield funding for the roughly $400 million “Hamlet at Saugatuck” project.

That’s because a prevailing wage requirement attached to Department of Economic and Community Development (DECD) grants would have added up to $40 million in expenses to the development, said Rodrigo Real, a founding principal with White Roan. Now, a recently adopted change in state law promises to loosen those strings for the Westport project, and multiple other major developments in Connecticut. “We were very glad they decided to propose this solution,” said Real, who plans to launch construction of Hamlet at Saugatuck in the second half of this year, pending land-use board approval. “I think it’s a win-win for the state. It will clarify something that had been a gray area and had kept a lot of shovels out of the ground.”

The law

Prevailing wage laws date back to the federal Davis-Bacon Act of 1931, which requires workers on public projects to be paid wages equal to those that “prevail” in their local area. Connecticut eventually adopted its own prevailing wage requirements for public projects. Today, the Connecticut Department of Labor (DOL) sets prevailing wage rates based on union standards, with pay varying by trade and location. For instance, in 2024, plumbers and pipe fitters working on projects in Westport earned at least $49.58 per hour, while roofers made at least $43, according to the DOL. More recently, a provision quietly added to the state budget in 2017 required private projects receiving at least $1 million in grants from the DECD to pay prevailing wages for labor tied to the developments. The state DOL is responsible for determining when and how the rule applies. Developers, land-use attorneys and economic development advocates have complained that, in recent years, the mandate has been applied more broadly — requiring prevailing wage to be paid not just on state-supported clean-up efforts, but also overall construction, increasing development costs by roughly 20%. That, developers and others have said, has undermined the benefits of state grants meant to spur economic growth and affordable housing. Brownfields funding is particularly important because it incentivizes developers to redevelop sites that would likely otherwise lay dormant. Lawmakers partially addressed the issue this past legislative session. The recently adopted two-year, $55.8 billion state budget includes a provision that limits the prevailing wage requirement to only a portion of a private development supported by DECD brownfield grants. State Sen. Joan V. Hartley (D-Waterbury), co-chair of the legislature’s Commerce Committee, said she was a proponent of tweaking the prevailing wage requirement. She noted it was a priority for the state’s Brownfields Working Group, which includes private-sector representatives. The change comes as the state continues to increase funding for cleaning environmental pollution on industrial sites, so that they can be developed for new uses, particularly affordable housing. The two-year budget adopted by lawmakers in June increases annual funding for brownfield cleanups from $35 million to $40 million. The update to prevailing wage requirements will help the state leverage those brownfield dollars to their fullest potential, Hartley said. DECD Deputy Commissioner Matthew Pugliese said the law change means towns, developers, economic development agencies and nonprofits that apply for brownfield grants can be certain of the costs associated with accepting that assistance. “Predictability is going to help private investors understand how they want to proceed on projects, and that will make Connecticut more competitive with neighboring states,” Pugliese said.

Better, not perfect

Avner Krohn, a multifamily developer heavily invested in downtown New Britain, said the legislative update to prevailing wage requirements is “a great start.” However, the change does not affect projects funded through DECD incentive programs unrelated to brownfields, which remain fully subject to prevailing wage requirements, he noted. “This will shake loose some projects,” Krohn said. “It opens up multiple projects. Not as much as we would like to see, but it is a fantastic start. The reality is, projects barely pencil without prevailing wage.”

Ann M. Catino, a partner at law firm Halloran Sage and co-chair of the state’s Brownfields Working Group, was one of the loudest critics calling for a fix to the way Connecticut was applying prevailing wage to state-funded, private projects. “What this legislation does is provide overdue and necessary clarity that prevailing wage will only apply to the funds and activities to be funded by DECD and not to the rest of the project,” Catino said. “It really does bifurcate the vertical development from the rest of the remediation work that needs to be done.” Catino said projects that are awarded brownfield grants might not even have to pay prevailing wage on all portions of the environmental cleanup. If the grant is awarded to fund asbestos abatement, for example, then excavation of contaminated soil might be performed at non-union rates, she said. “It’s definitely an improvement, no question about it, but time will tell how it is applied and interpreted,” Catino said of the legislative update. “But, it’s a major step forward.”