Court of Appeal clarifies “home rule” provision in context of prevailing wage disputes: Palm Springs Promenade, LLC v. Dept. of Industrial Relations

In Palm Springs Promenade, LLC v. Dept. of Industrial Relations,          Cal.App.5th           (Jun. 17, 2025), the Court of Appeal (Fourth Appellate District, Division One) clarified the definition of a “municipal affair” under the “home rule” provision of Cal. Const., art. XI, § 5(a), holding that a development predominantly financed and managed by a private entity does not qualify as such.

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The City of Palm Springs, a charter city, entered a 2011 agreement with Defendant, a private developer, for a downtown property development. The city contributed approximately 25% of the total cost. Pursuant to the former § 7.06.030 of Palm Springs’ Municipal Code, which exempted public projects from the Prevailing Wage Law (PWL), the developer paid construction workers less than the prevailing wage. However, in 2018, the Department of Industrial Relations (DIR) determined the project was subject to the PWL, a determination affirmed after an administrative appeal in 2020. Defendant then sought a writ of mandate, which the trial court denied. Defendant appealed.

The Court of Appeal affirmed the denial of the writ of mandate. As a threshold matter, it concluded that the project met the definition of “public works” under Lab. Code § 1720(a)(1) and was thus subject to the PWL unless superseded by the city’s home rule authority. Applying the framework from State Building & Construction Trades Council of California v. City of Vista (2012) 54 Cal.4th 547, the Court of Appeal found that the project was not a “municipal affair” under Cal. Const., art. XI, § 5(a). This was because the developer, not the city, provided the majority of the project’s funding, selected the contractors, and owned and managed most of the improvements. Consequently, the court did not need to consider the remaining factors outlined in Vista.

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