AD Quality Auto 360p 720p 1080p Top articles1/5READ MOREWalnut’s Malik Khouzam voted Southern California Boys Athlete of the Week TELACU representatives requested that $1.3 million in federal HOME funds be exchanged for $1.05 million from the 20 percent “set aside” funds — the portion of property tax increment money that by state law must be used for low/moderate-income or senior housing. The federal Davis-Bacon Act of 1931 requires that any federally assisted construction projects over $2,000 must pay a local prevailing wage to on-site workers. However, state law SB975, passed in 2001, allowed an exemption from prevailing wage requirements when a project uses set-aside funds. “We found out when you mix federal funds of any kind with other funds, you must pay the going rate,” said Ruben Lopez, the city’s director of Community Development. “We didn’t know at the time we signed the original contract that prevailing wage was a factor when using the HOME dollars. So (TELACU) said they were willing to take less in assistance and borrow more in private funds in exchange for all set-aside money.” Bagwell, however, wondered if any interest had accumulated during the couple of years since the original funding for the project was approved. “They sat on the HUD money for two years,” he said. “That’s a long time. Now they’re asking for a lot more money. The money probably goes into an escrow fund and draws interest. Does the interest go to the city? Or back with the HUD money?” Originally, the project combined federal Section 108 HUD loans with the set-aside funds. But in 2003, the city asked for the Section 108 money back for use on the Whittier Boulevard revitalization project in exchange for HOME funds. TELACU agreed, believing that move didn’t change any development details. According to Michael Lizarraga, TELACU president, TELACU never took possession of the HUD money and knew nothing of any accumulated interest. No construction has begun, since escrow only recently closed on the property. Lizarraga also said the contract never intended to accommodate the costs of prevailing wages. “Because of the political tenor in Montebello right now, people made this about the unions,” Lizarraga said. “We support the unions fully. We never intended for this particular project to be a prevailing wage one. Paying it raises the total cost of the project by about 30 percent and couldn’t be done. The council knew it and the public knew it four years ago. We pay prevailing wage in about 75 percent of our projects, but this was one we couldn’t.” TELACU’s attorney told Lizarraga recently that combining federal and state money for the Plaza project may trigger the Davis-Bacon Act wages, and suggested they ask the city to exchange the HOME Funds for all set-aside funds. “We were unclear about if we’d be subject to the Davis-Bacon wages so we just figured we should try to make it all set-aside funds,” Lizarraga said. “The changes helped us clarify our costs and the city got back $250,000 in HOME money they can use for other projects. We saw it as a win-win situation.” — Pam Wight can be reached at (562) 698-0955, Ext. 3029, or by e-mail at [email protected] local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! MONTEBELLO — Facing anti-union charges, housing developer TELACU Industries secured approval recently from the City Council to change funding sources for their Montebello Downtown Plaza project in order to avoid prevailing wage laws. The Plaza will be constructed at Whittier and Montebello boulevards on part of the land that was owned by Sav-on Drugs. Councilman Bob Bagwell accused TELACU of circumventing prevailing wage laws by switching funding from a mix of federal and state sources to strictly state funds — a move that would allow the company to pay on-site workers less than the standard rate for similar jobs. “They wanted to get out of the federal portion of the funding because that meant they would have to pay a prevailing wage,” Bagwell said.