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LOS ANGELES-Democratic Gov. Gray Davis must decide by this weekend whether to sign a controversial “living wage” law that is championed by pro-Davis construction trade unions but hotly opposed by affordable-housing advocates who helped the governor get elected.

Currently, California law requires contractors to pay their non-union construction workers union-level wages only if their project involves direct subsidies from the government–such as an outright grant or zero-interest loan. But the new bill would broaden the law to include projects that merely involve rental subsidies, property-tax deferrals or even waivers that allow the builder to avoid a few hundred dollars in permit fees.

The bill was pushed through the state Legislature by powerful construction trade unions, who say the measure will ensure that union members get their fair share of work. And even if a contractor chooses against using unionized help, trade officials say, the law would benefit all of a project’s workers by ensuring that they get union-level wages.

Conversely, housing advocates for poor and moderate-income Californians–plus related groups that also have been among the governor’s biggest supporters–fought the measure as it wended its way through the Legislature. They say it could add 30% to the cost of building an affordable-housing development, thereby draining their already-scarce resources and forcing them to cancel many projects that are already in the development pipeline.

The Los Angeles County Community Development Commission, which oversees most affordable-housing initiatives in the LA area, is among more than two dozen municipal housing agencies across the state that also oppose the plan. If Davis signs the bill, CDC spokesman Calvin Naito says, it will add $80 million to the projects that the CDC alone has in various stages of development–and the combined impact on locally-run housing agencies across the state would almost certainly run into hundreds of millions of dollars.

Davis hasn’t given any public indication of whether he’ll approve or veto the controversial measure. Calls made by GlobeSt.com to the governor’s Sacramento office weren’t returned.

Ironically, a loophole in California’s constitution may spare Davis from having to decide whether to veto the measure or sign it: If he simply does nothing, the measure will automatically become law.

By allowing the measure to become law without his signature, Davis could boast of the bill’s passage when he seeks union support for his 2002 re-election campaign. But at the same time, the governor could also avoid the wrath of housing advocates by pointing out that he had refused to sign the measure even though it had become state law.

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