SIP: Feds clear up a rule that could break the program p2

4/23/2015 | Real Estate Blog

While we cannot recommend it, we have to admit that ignorance is, at times, bliss. There are some things that we are much better not knowing, things beyond the old “sausage and lawmaking” adage. One of those things is the meaning of the federal regulations that guide the Storefront Improvement Program here in Philadelphia.

As we explained in our last post, SIP reimburses businesses along certain commercial corridors for improvements to their storefronts. It is hard to be a vibrant neighborhood if the street is just one crumbling façade after another. New awnings, fresh paint, minor repairs, even more carefully planted window boxes can go a long way to making a place inviting. Neighborhood businesses may get by with just locals for customers, but they will thrive if they can attract customers from other parts of the city.

SIP’s funding comes from the federal government, and the program has hummed along for years under the mistaken belief that it one law in particular did not apply. In 2014, the mistake was discovered and corrected, and the program may suffer as a result.

The Davis-Beacon Act was passed in the early days of the Great Depression as a way to protect union jobs, according to the Institute for Justice. During the Depression, of course, construction workers were not at all scarce; immigrants and blacks were more than willing to work for lower wages, and builders were more than happy to pay less.

The government’s response was to require that “mechanics and laborers” involved in any construction project funded in any way by the federal government would be paid the “prevailing wage.” The Department of Labor sets the prevailing wage, just as it imposes “rigid” job classifications — again, according to the IJ — and procedures. And, yes, there is a lot of paperwork, too.

The hassle doesn’t stop there, either. We’ll continue this next week.

Sources:

Philadelphia Generocity, “How Federal Guidelines are Stunting Storefront Improvement Program (SIP),” Alex Vuocolo, April 13, 2015

Institute for Justice, “Litigation Backgrounder – Removing Barriers to Opportunity: A Constitutional Challenge to The Davis-Bacon Act,” Scott Bullock and John Frantz, accessed April 17, 2015