PARTNERS v. DEPARTMENT OF INDUSTRIAL RELATIONS










Filed 12/21/10



CERTIFIED FOR PUBLICATION



IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

AZUSA LAND PARTNERS, Plaintiff and Appellant, v. DEPARTMENT OF INDUSTRIAL RELATIONS, Defendant and Respondent.

B218275 (Los Angeles County Super. Ct. No. BS117259)

APPEAL from a judgment of the Superior Court of Los Angeles County, James C. Chalfant, Judge. Affirmed.
Allen Matkins Leck Gamble Mallory & Natsis, Patrick A. Perry and Nancy S. Fong for Plaintiff and Appellant.
Paskerian Block Martindale & Brinton, Robin C. Martindale and Caleb J. Brinton IV for Rancho Mission Viejo as Amicus Curiae on behalf of Plaintiff and Appellant.
Cox, Castle & Nicholson, John S. Miller, Jr. and Dwayne P. McKenzie for California Building Industry Association as Amicus Curiae on behalf of Plaintiff and Appellant.
Vanessa L. Holton, Anthony Mischel and Christopher Jagard for Defendant and Respondent.
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Azusa Land Partners (ALP) appeals from a judgment denying its petition for writ of mandate. (Code Civ. Proc., § 1085.) ALP seeks to vacate a determination by respondent Department of Industrial Relations (Department) that a planned community project is a “public work,” as defined by Labor Code section 1720,^[1] and subject to prevailing wage laws applicable to public improvement work performed by private contractors as a condition of regulatory approval for their construction projects. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Factual background
Petitioner and appellant ALP is the owner and developer of a master planned community known as the Rosedale Project (Project). The Project is located on over 500 acres of land in the City of Azusa (City) previously owned by the Monrovia Nursery Company (Monrovia Nursery), ALP’s predecessor-in-interest. The Project involves the potential development of over 1,200 homes, about 50,000 square feet of commercial construction, and public infrastructure and improvement work. To obtain approval for the Project, Monrovia Nursery agreed to conditions imposed by the City to perform certain public infrastructure and improvement work, including the construction of a public school and adjoining park, freight under-crossings, sanitation district facilities, and backbone and in-tract street, bridge, storm drain, sewer, water/reservoir, dry utilities, park and landscaping improvements for the cities of Glendora and Azusa. These conditions are memorialized in a May 27, 2004 Development Agreement between the City and Monrovia Nursery.
In August 2005, the City and ALP entered into a Funding and Acquisition Agreement (Acquisition Agreement), to provide for partial funding of required public facilities through Mello-Roos bonds. Pursuant to the Acquisition Agreement, the City agreed to establish a Community Facilities District) to sell special (Mello-Roos) tax bonds to be used to pay for the design, planning, engineering, installation and construction of certain facilities eligible for public financing (the Eligible Facilities). ALP was to construct the Eligible Facilities, which would be owned, operated and maintained by the cities of Azusa or Glendora, the Azusa Unified School District or the Metropolitan Transit Authority, pursuant to a series of agreements (the Funding Agreements) between ALP and these public entities.^[2] The Eligible Facilities are identified in “Exhibit A” to the Acquisition Agreement.
The Funding Agreements refer to “Publicly Financed Facilities,” as the subset of Eligible Facilities which will actually be built using proceeds of Mello-Roos bonds. According to ALP, the Publicly Financed Facilities were not identified in the Acquisition Agreement because it was not known at the time that agreement was executed specifically which Eligible Facilities would be constructed using Mello-Roos bonds. The Publicly Financed Facilities were subsequently identified in a modification to the Acquisition Agreement (Exhibit B), executed between the City and ALP in 2007, after the Mello-Roos bonds were issued.
On June 5, 2006, after consolidated special elections, the City authorized the creation of Community Facilities District No. 2005-1, Rosedale (CFD), approved a bond indebtedness of up to $120 million to be incurred by the CFD, and authorized the City Clerk to record a notice of a special tax lien on real property located within the CFD.^[3] The county collects special taxes in the same manner as ad valorem property taxes, and the proceeds are transferred to CFD’s fiscal agent, Wells Fargo Bank. All public infrastructure and facilities required as a condition of approval of the Project (the Eligible Facilities) were eligible for CFD funds. The fiscal agent distributes the funds. The City manager and finance director must approve payment to ALP of any Mello-Roos bond proceeds.
Under the Acquisition and Funding Agreements, ALP is obligated to perform the public improvement work required by the City as a condition of approval of the Project even if the actual cost of that infrastructure construction exceeds the amount of bond funds authorized to pay for the public improvement work performed. That scenario has been borne out. The total cost of construction of all the Eligible Facilities is approximately $146 million. The CFD issued approximately $71 million in Mello-Roos bonds, the proceeds of which were used to fund construction of the Publicly Financed Facilities. The remaining $76 million in required public improvements must be constructed at private expense.
Administrative proceeding
In October 2005, an administrative inquiry was filed requesting the Department investigate and issue a determination as to whether the entire Rosedale Project constituted a “public work” under section 1720, subject to the prevailing wage mandates of section 1771.^[4] In response, ALP argued the Project was not a public work, but simply a private development project as to which the City lacked a proprietary interest, but as to which it required construction of certain public improvements as a condition of approval. ALP also asserted that although it was obligated and intended to pay prevailing wages for the public improvements actually financed with the proceeds of Mello-Roos bonds, it was not required to do so for the construction of any infrastructure improvement for which it did not receive Mello-Roos financing.
In October 2007, the Department issued a public works coverage determination (Determination). The Determination found that the entire Project constituted a public work within the meaning of section 1720, subdivision (a)(1). According to the Determination, payment of Mello-Roos bond proceeds to ALP, a private developer, for the construction of public facilities and infrastructure improvements constituted a payment of public funds. (§ 1720, subd. (b)(1).) Because the Project was funded, in part, through public funds, it satisfied the definition of a “public work” under subdivision (a)(1). However, the Determination also found the Project satisfied the exemption of subdivision (c)(2), which provides that only those public infrastructure improvements required as a condition of regulatory approval are subject to the prevailing wage requirements, so long as the public funds contributed to the Project do not exceed the cost of construction of the required public improvements. Accordingly, the Determination held that ALP was required to comply with prevailing wage laws only as to that portion of the Project involving construction of public improvements required as a condition of the City’s approval of the Project.
ALP filed an administrative appeal as to the portion of the Determination that held that all public infrastructure improvements required as a condition of approval are subject to prevailing wage requirements, even if those improvements are not funded through the proceeds of Mello-Roos bonds.
In July 2008, the Department affirmed its initial Determination by a Decision on Administrative Appeal. The Decision held that (1) the proceeds of the Mello-Roos bonds are public funds for purposes of the prevailing wage law; (2) because the Project is partially funded using proceeds of Mello-Roos bonds, the entire Project is a public work; (3) the cost of the portion of the Project funded by proceeds from the Mello-Roos bonds did not exceed the cost of construction of all public infrastructure improvements required as a condition of regulatory approval of the Project; and (4) all public infrastructure improvements are subject to the requirement of payment of prevailing wages, whether or not constructed using public funds.
Proceedings in the trial court
In October 2008, ALP filed the instant petition seeking a writ of mandate (Petition).^[5] (Code Civ. Proc., § 1085.) Following substantial briefing and two lengthy hearings, the trial court denied the Petition. The court agreed with the Department’s Decision. It found that: (1) Mello-Roos bond proceeds are public funds; (2) the Project is a “public work” within the meaning of subdivision (a)(1); and (3) under subdivision (c)(2), all public improvement work required as a condition of regulatory approval is subject to the prevailing wage law, not merely those discrete portions of public improvement work performed on the Project actually paid for with public funds. The court rejected ALP’s assertion that subdivisions (a)(1) and (c)(2) need not even be analyzed because subdivision (a)(2), which applies to public work performed for an “improvement district” (i.e., the CFD), is more specific and on point and, under that subdivision, only those public improvements actually funded by the proceeds of Mello-Roos bonds are public works.
Judgment was entered in favor of the Department. ALP appeals.^[6]
DISCUSSION
This appeal raises three questions. We must determine whether: (1) the trial court erred by conducting its analysis under section 1720, subdivision (a)(1), rather than subdivision (a)(2); (2) the proceeds of Mello-Roos bonds are “public funds,” under section 1720; and (3) if Mello-Roos bonds are “public funds,” all construction of public improvements required as a condition of regulatory approval is subject to prevailing wage law, including public infrastructure constructed at private expense.
1. Standard of review
“In conducting our review, we must exercise our independent judgment in resolving whether the project at issue constituted a ‘public work’ within the meaning of the [prevailing wage law].” (City of Long Beach v. Department of Industrial Relations (2004) 34 Cal.4th 942, 949 (Long Beach), citing McIntosh v. Aubry (1993) 14 Cal.App.4th 1576, 1583–1584 (McIntosh).) Where, as here, the facts are undisputed, and the purely legal issues involve the interpretation of a statute an administrative agency is responsible for enforcing, we exercise our independent judgment “taking into account and respecting the agency’s interpretation of its meaning.” (Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1, 7–8; State Building of Construction Trades Council of California v. Duncan (2008) 162 Cal.App.4th 289, 304 (Duncan).) The agency’s interpretation is “‘one of several interpretive tools that may be helpful. In the end, however, “[the court] must . . . independently judge the text of the statute.”’ [Citation.]” (Long Beach, at p. 951; see also Williams v. SnSands Corp. (2007) 156 Cal.App.4th 742, 753 [administrative agency’s interpretation does not bind judicial review, but it is entitled to consideration and respect].)
2. California’s prevailing wage law, and Mello-Roos bond financing.
a. Prevailing wage law
California’s Prevailing Wage Law (PWL) (§§ 1720–1861) was enacted in 1931, contemporaneous with enactment of its federal counterpart, the Davis-Bacon Act (codified at 40 U.S.C. §§ 3141–3148). Prevailing wage laws were enacted in response to economic conditions resulting from the Depression, when the oversupply of labor due to the virtual cessation of private construction was exploited by unscrupulous contractors to win government contracts. (See Universities Research Assn. v. Coutu (1981) 450 U.S. 754, 774 [101 S.Ct. 1451, 67 L.Ed.2d 662].)
It is the expressly stated legislative policy in California “to vigorously enforce minimum labor standards in order to ensure employees are not required or permitted to work under substandard unlawful conditions or for employers that have not secured the payment of compensation, and to protect employers who comply with the law from those who attempt to gain competitive advantage at the expense of their workers by failing to comply with minimum labor standards.” (§ 90.5, subd. (a); see also § 90.3.) Several specific goals are subsumed within this general objective: “‘to protect employees from substandard wages that might be paid if contractors could recruit labor from distant cheap-labor areas; to permit union contractors to compete with nonunion contractors; to benefit the public through the superior efficiency of well-paid employees; and to compensate nonpublic employees with higher wages for the absence of job security and employment benefits enjoyed by public employees. [Citations.]’ (Lusardi [Construction Co. v. Aubry (1992)] 1 Cal.4th [976,] 987 (Lusardi).)” (Long Beach, supra, 34 Cal.4th at p. 949; see also Duncan, supra, 162 Cal.App.4th at p. 295.) “‘The overall purpose of the prevailing wage law is to protect and benefit employees on public works projects. [Citation.]” (Long Beach, at p. 949.) The PWL is a minimum wage law. (Reyes v. Van Elk, Ltd. (2007) 148 Cal.App.4th 604, 612.) As such, it is liberally construed to further its purpose. (Long Beach, at p. 950.)
The PWL is fairly straightforward in operation. Subject to exceptions not relevant here, prevailing wages must be paid for “construction work” on “public works” projects of $1,000 or more. (§§ 1771, 1771.5, 1771.55, 1771.7, 1771.75, 1771.8, 1771.9.) “Public works” are broadly defined. They include “[c]onstruction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part out of public funds, . . . [and] . . . work performed during the design and preconstruction phases of construction. . . .” (§ 1720, subd. (a).) The project may involve privately owned property that will remain in private hands, but which will be leased to the state or a political subdivision. (§ 1720.2.) Prevailing wage requirements do not apply to work done by a public agency’s own employees. (§ 1771.)
The director of the Department has the responsibility to determine the general prevailing wage according to statutory criteria. (§ 1770.) The prevailing wage rates are fixed for each category of worker on a public works project, and those rates are used by public entities soliciting bids for the project. (§§ 1773, 1773.2.) The Department is vested with authority to render opinions as to whether “a specific project or type of work” requires compliance with the PWL. (Cal. Code Regs., tit. 8, § 16001, subd. (a)(1); Lusardi, supra, 1 Cal.4th at pp. 988–989.) The ramifications for developers, contractors and others who find themselves in violation of the PWL are significant: they may be subject to prevailing wage and penalty assessments and fines, disciplinary action, claims and/or suits by unpaid workers (§§ 1194, subd. (a), 1741, 1742.1, subd. (a), 1774, 1775), claims by contractors whose bids are rejected and who suffer damages from submitting bids that are not accepted due to the successful bidder’s violation of the PWL (e.g., the second lowest bidder on a public works project), criminal prosecution (§§ 23, 1750, 1777), and willful or repeat violators may be barred from bidding or working on public works projects for up to three years. (§ 1777.1, subds. (a), (b); see Duncan, supra, 162 Cal.App.4th at p. 296; Road Sprinklers Fitters Local Union No. 669 v. G & G Fire Sprinklers, Inc. (2002) 102 Cal.App.4th 765, 775–779; Violante v. Communities Southwest Development & Construction Co. (2006) 138 Cal.App.4th 972, 979.)
The overarching issue before us is whether the Project constitutes a “public work” following the enactment of SB 975 in 2001, which amended section 1720, and how broadly the prevailing wage obligations apply to the Project. If section 1720 is considered straightforward in operation, analytically, it is anything but. As one court aptly said, the statute “is hardly a triumph of the drafter’s art.” (Duncan, supra, 162 Cal.App.4th at p. 308.) The analysis of section 1720, to determine whether a particular construction project constitutes a “public work” subject to the prevailing wage requirements “starts with subdivision (a), which defines ‘public works’” to mean construction “‘done under contract’ and ‘paid for in whole or in part out of public funds,’” and subdivision (b), which enumerates what is meant by the latter clause. (Id. at p. 309.) Each portion of the definition must be assessed. At the outset, Duncan observed that the word “means,” as used in section 1720 subdivisions (a) and (b), is “one of limitation, not enlargement.” (Id. at p. 309.) Subdivision (c), a “true hodgepodge,” specifies a number of situations that may be excluded or exempted from subdivision (a)(1)’s “paid for in whole or in part” out of public funds “depending on the circumstances.” (Id. at pp. 309–310.)
Judicial construction of section 1720 is not accomplished by examining bits and pieces of a statute, but only after a consideration of all of its parts in order to effectuate the Legislature’s intent. (Duncan, supra, 162 Cal.App.4th at p. 310; Coalition of Concerned Communities, Inc. v. City of Los Angeles (2004) 34 Cal.4th 733, 737.) “In the rare case, widening the analytical aperture brings additional difficulties: ‘Statutory language which seems clear when considered in isolation may in fact be ambiguous or uncertain when considered in context.’ [Citation.]” (Duncan, at p. 310.) This is one of those cases. We cannot look at the provisions of section 1720 individually, because various subdivisions address the same subject, namely, what is meant by “construction” as it relates to the subdivision (b) definition of what constitutes a public work “paid for in whole or in part out of public funds,” and how much of the work performed is subject to prevailing wage requirements.
b. Section 1720
Under the PWL, “prevailing wages” must be paid to nongovernmental employees employed on “public works” performed by private contractors. (§ 1771.) “Public works” are defined in pertinent part in Labor Code section 1720, subdivision (a) as:
“(1) Construction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part out of public funds . . . . For purposes of this paragraph, ‘construction’ includes work performed during the design and preconstruction phases of construction including, but not limited to, inspection and land surveying work.
“(2) Work done for irrigation, utility, reclamation, and improvement districts, and other districts of this type. . . .
“(3) Street, sewer, or other improvement work done under the direction and supervision or by the authority of any officer or public body of the state, or of any political subdivision or district thereof . . . .”^[7]
Under 1720, subdivision (b), “paid for in whole or in part out of public funds” is defined as all of the following:
“(1) The payment of money or the equivalent of money by the state or political subdivision directly to or on behalf of the public works contractor, subcontractor, or developer.
“(2) Performance of construction work by the state or political subdivision in execution of the project.
“(3) Transfer by the state or political subdivision of an asset of value for less than fair market price.
“(4) Fees, costs, rents, insurance or bond premiums, loans, interest rates, or other obligations that would normally be required in the execution of the contract, that are paid, reduced, charged at less than fair market value, waived, or forgiven by the state or political subdivision.
“(5) Money loaned by the state or political subdivision that is to be repaid on a contingent basis.
“(6) Credits that are applied by the state or political subdivision against repayment obligations to the state or political subdivision.”
Subdivision (c) specifies the situations that may be excluded—or included—from the definition of “paid for in whole or in part out of public funds.” One exception is relevant here. It states:
“(2) If the state or a political subdivision requires a private developer to perform construction, alteration, demolition, installation, or repair work on a public work of improvement as a condition of regulatory approval of an otherwise private development project, and the state or political subdivision contributes no more money, or the equivalent of money, to the overall project than is required to perform this public improvement work, and the state or political subdivision maintains no proprietary interest in the overall project, then only the public improvement work shall thereby become subject to this chapter.”
c. Mello-Roos bond financing
We adopt the trial court’s succinct description of the purpose and application of the Mello-Roos Act. “The Mello-Roos Act (Gov. Code, § 53311 et seq.) was promulgated to provide an alternative for financing public facilities in developing areas. Any local agency may establish a CFD to provide for and finance the cost of eligible public facilities. Subject to approval of a 2/3 vote of the electorate in the CFD, a local agency may issue bonds for the CFD and may levy and collect a special tax within the CFD to pay the bonds. The city council acts as the legislative body of the CFD. The city has the obligation to pay the principal and interest on each of the bonds issued. The bonds are considered ‘special obligations of the city payable solely from net special tax revenues . . . .’ [Citation.] The tax is levied against the real property within the CFD’s geographic boundaries. [Citation.] Although unpaid taxes constitute a lien on the real property, they do not constitute a personal indebtedness of any landowner, the developer, or any future property owner. When the developer sells the individual parcels of land that have been developed into homes, the tax obligation shifts from the developer to the home owner; the developer is under no further obligation to pay taxes on that property. The special tax is collected by the county treasurer-tax collector in the same manner as ad valorem property taxes, and the proceeds are transferred to the CFD’s fiscal agent. [Citation.] The fiscal agent then distributes the tax money as specified by the various funding agreements.” [Citation.] “The Mello-Roos Act was enacted for the express purpose of providing ‘an alternative method of financing certain public capital facilities and services, especially in developing areas and areas undergoing rehabilitation.’ (Stats. 1982, ch. 1439, § 1, p. 5486.)” (Friends of the Library of Monterey Park v. City of Monterey Park (1989) 211 Cal.App.3d 358, 376.)
Against this statutory backdrop, we turn first to ALP’s argument that section 1720, subdivision (a)(2) is the controlling provision for purposes of determining how much of the Project is subject to the PWL.
3. The determination under section 1720, subdivision (a)(1) does not render subdivision (a)(2) superfluous.
The trial court found the entire Project was a “public work,” i.e., construction done under contract and “paid for in whole or in part out of public funds,” because some portion of the Project is publicly funded using proceeds of Mello-Roos bonds. ALP maintains this interpretation of section 1720, subdivision (a)(1) renders subdivision (a)(2) superfluous. ALP insists only those portions of the Project performed for and paid for by the CFD constitute public works subject to the prevailing wage law. Specifically, ALP argues: subdivision (a)(2) defines “public works” as “[w]ork done for irrigation, utility, reclamation, and improvement districts, and other districts of this type.” Some infrastructure work performed by ALP on the Project (the Publicly Financed Facilities) was paid for with proceeds from Mello-Roos bonds issued by the CFD. The CFD is an improvement district.^[8] Therefore, ALP is subject to the requirements of the PWL as to, but only as to, the public improvement work actually performed for the CFD. According to this logic, one need not even look to subdivision (a)(1) to analyze whether the entire Project is a “public work” under subdivision (a)(1), because subdivision (a)(2) is directly on point and controls the analysis.
This argument is flawed. First, ALP equates the statute’s requirement that infrastructure work have been “done for” an improvement district, with a requirement that the work must also have been “paid for” by the improvement district. The equivalence is not warranted. In contrast to other provisions at section 1720, each of which explicitly refers to work “paid for” with public funds, subdivision (a)(2) contains no requirement that an improvement district have paid for the work performed on its behalf. (See § 1720, subds. (a)(1), (a)(4) & (a)(5).) We are not at liberty to insert into the statute a term the Legislature chose to omit. Its absence cannot be assumed to be without meaning. “‘“[W]hen the Legislature has carefully employed a term in one place and has excluded it in another, it should not be implied where excluded.”’” (Wasatch Property Management v. Degrate (2005) 35 Cal.4th 1111, 1118; Duncan, supra, 162 Cal.App.4th at p. 312; 2A Singer, Sutherland Statutes and Statutory Construction (7th ed. 2007) § 46:6, pp. 251–252).)
Second, ALP’s argument ignores that the CFD, an independent governmental entity, was initially formed and specifically authorized to facilitate the funding, design, engineering, installation and construction of the public infrastructure and improvements (the Eligible Facilities) required as a condition of governmental approval of the entire Project. The phrase “work done for” in subdivision (a)(2) includes all the infrastructure work performed for the CFD and required by the City as a condition of its approval of the Project, not merely the work for which ALP received funding through the CFD. ALP cannot rely on the January 2007 contractual amendment (exhibit B) to the Acquisition and Funding Agreements, which specifies the subset of the eligible facilities actually paid for using proceeds from Mello-Roos bonds, to reduce or limit its obligation to pay prevailing wages on all the public improvement works. If the requirement that prevailing wages be paid on public works projects obtains, the duty flows from a statutory obligation. It may not be limited or eliminated by contract. (Lusardi, supra, 1 Cal.4th at pp. 987–988; see also §§ 1773.2, 1775, 1776, subd. (g), 1777.)
Also, not all of subdivision (a)(2) is subsumed within subdivision (a)(1). Although the nature of the type of governmental entity for whom the infrastructure work may be performed under subdivision (a)(2) is more limited than the entities for whom work may be done under subdivision (a)(1), the range of tasks covered by (a)(2) is broader. Subdivision (a)(1) requires that: (1) construction, alteration, demolition, installation or repair work be performed; (2) “under contract” (i.e., not by the public entity’s own employees); and (3) the work be paid for wholly or in part out of public funds. Subdivision (a)(2) has no similar limitation as to the type of work that may be performed for improvement districts.^[9] For example, “maintenance” work would constitute public work covered by subdivision (a)(2), but would not be encompassed by the enumerated categories of work identified in subdivision (a)(1). Conversely, the broad range of tasks encompassed within subdivision (a)(2), may only be performed for a specific type of entity, i.e., irrigation, utility, reclamation and improvement districts, and the like. Subdivision (a)(1) contains no similar limitation, so long as the permitted tasks are done under contract and receive at least partial public funding.^[10]
Reclamation Dist. No. 684 v. Department of Industrial Relations (2005) 125 Cal.App.4th 1000 (Reclamation District) illustrates this point. There, the court found that placement of fill on a levee (maintenance work) was subject to prevailing wage requirements. Section 1771 requires payment of prevailing wages on public works, and expressly applies to contracts for maintenance work. Section 1720, subdivision (a)(2) exempts the operations of an irrigation or reclamation district from the definition of “public work.” But the work performed in Reclamation District was periodic maintenance. Such work was not related to the operation of an irrigation or drainage system of an irrigation or reclamation district, the only sort of work exempt under (a)(2). (Id. at pp. 1005–1006.) Under (a)(2)’s broader definition, all work done for an improvement district—even that which would not be covered by the narrower categories listed in (a)(1)—is “public work.” Under this reasoning, with which we concur, subdivision (a)(2) may apply independently to cover some work for an improvement district not otherwise encompassed within subdivision (a)(1)’s enumerated categories. Accordingly, ALP’s assertion that application of subdivision (a)(1) would necessarily subsume application of (a)(2) does not withstand scrutiny. ALP’s argument that subdivision (a)(2) must apply because it is “more specific” to the circumstances at issue rests on the rule of statutory construction that a specific provision relating to a particular subject will govern as against a more general provision relating to a similar subject. (Shewry v. Wooten (2009) 172 Cal.App.4th 741, 747.) But that principle does not apply where, as here, we are called upon to interpret and construe statutory language in the context of an overall statutory scheme. “We do not construe statutes in isolation, but rather read each statute with reference to the entire scheme of law of which it is part so that the whole may be harmonized and retain its effectiveness. . . . [W]e will choose the construction that comports most closely with the Legislature’s apparent intent, and endeavor to promote rather than defeat the statute’s general purpose, and avoid a construction that would lead to absurd consequences.” (Lincoln Place Tenants Assn. v. City of Los Angeles (2007) 155 Cal.App.4th 425, 440.)
We reject ALP’s invitation to parse the language of subdivision (a)(2) in isolation, disregarding the other subdivisions of section 1720 and the context of the overall statutory scheme to which it belongs. “Labor Code section 1720 embodies the long-standing public policy of California to require employers engaged on public works projects to pay the prevailing wage to their workers if the project is ‘paid for in whole or in part out of public funds.’” (Duncan, supra, 162 Cal.App.4th at p. 294.) ALP is correct that subdivision “(a)(2) must be given meaning separate and apart from 1720(a)(1).” Nevertheless, the fact that some infrastructure is encompassed by more than one subdivision does not negate the viability of either one or the possibility that, in another case, other improvements would be considered public work under one provision, but not both.
4. The proceeds of Mello-Roos bonds are “public funds.”
ALP also contends the Project is not a “public work,” because the proceeds of Mello-Roos bonds are not captured within the definition of “public funds” as that term is defined in section 1720, subdivision (b). We disagree.
a. Mello-Roos bond proceeds are public funds under the plain language of section 1720 and the Mello-Roos Act.
Under the applicable provisions of section 1720, the phrase “‘paid for in whole or in part out of public funds’ means all of the following: [¶] (1) The payment of money or the equivalent of money by the state or political subdivision directly to or on behalf of the public works contractor, subcontractor, or developer. . . . [¶] . . . [¶] (4) Fees, costs, . . . bond premiums, loans, interest rates, or other obligations . . . that are paid, reduced, charged at less than fair market value, waived, or forgiven by the state or political subdivision. [¶] (5) Money loaned by the state or political subdivision that is to be repaid on a contingent basis.” (§ 1720, subds. (b)(1), (4) & (5).)^[11]
Mello-Roos bonds are a form of public financing that also constitute a payment of public funds under the PWL. The funds are paid by the CFD, a public entity, to ALP, a private developer for the construction of public improvements. Mello-Roos bond financing is a payment of public funds under the plain meaning of the statutory language. (See McIntosh, supra, 14 Cal.App.4th at p. 1588 [“‘To determine the intent of legislation, we first consult the words themselves, giving them their usual and ordinary meaning’”].) Under section 1720, subdivision (b), “paid for in whole or in part out of public funds” means: “[t]he payment of money or the equivalent of money by the state or political subdivision directly to or on behalf of the public works contractor, subcontractor, or developer.” (§ 1720, subd. (b)(1).)
A CFD is “defined as ‘a legally constituted governmental entity . . .’” and as such is an independent political body from the City. (Friends of the Library of Monterey Park v. City of Monterey Park, supra, 211 Cal.App.3d at p. 376.) The city council is the City’s legislative body, and the governing body of the CFD. The City’s manager and finance director maintain control over the CFD’s fiscal agent and, pursuant to the Funding Agreements, have sole authority to authorize payment of Mello-Roos funds to ALP. Bond funds held by Wells Fargo on behalf of the CFD are held in the CFD’s public coffers. The City, acting on behalf of the CFD, authorizes expenditures and controls disbursement of those funds. The Rosedale CFD issued bonds and paid ALP approximately $71 million in bond proceeds to perform public infrastructure work. Consistent with the Department’s prior determinations, these funds have all the characteristics of “public funds.” (See PW 93-054 (Tustin Fire Station) (June 28, 1994 [money collected for, or held in coffers of, public agency constitutes “public funds” under § 1720].) Payment by the CFD to ALP is a payment of money or its equivalent from or on behalf of a “governmental entity” to a developer within the plain meaning of subdivision (b)(1).


TO BE CONTINUED AS PART II….

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