In December 2020, the United States Department of Transportation (DOT) amended the small business size limit under the Disadvantaged Business Enterprise (DBE) program (section 1101(b) of the Fixing America’s Surface Transportation (FAST) Act (Pub. L. 114-94, Dec. 4, 2015).  The rule, which goes into effect on January 13, 2021, increases the DBE gross receipts cap (averaged over the firm’s previous three fiscal years) to $26,290,000 for Federal Highway Administration (FHWA) and Federal Transit Administration (FTA) related work. This inflationary-based adjustment is an increase over the prior gross receipts cap of $23,980,000 enacted in 2015. The effect of this rule, which is “not considered a significant economic impact on a substantial number of size entities”, is to allow “some small businesses to continue to participate in the DBE programs by adjusting for inflation.” This adjustment should provide relief for some DBEs that were close to exceeding the limits from 2018-2020.
Continue Reading DBE Gross Receipts Cap Adjusted for Inflation

Below is an excerpt of an article published in Healthcare Facilities Today on January 11, 2021.

“The current health crisis has healthcare institutions altering their approach to facility design and construction. Equity investors and contractors are also ready to familiarize themselves with healthcare construction. While opportunities abound, certain legal considerations are of paramount importance for

Pacta sunt servanda, i.e., agreements must be kept. This applies in both good economies and bad.

Companies considering a modification of their business operations to offset lower revenue must be mindful of existing commercial contracts. Implicit in almost every New York agreement is a covenant of good faith and fair dealing in the course of performance. Output and requirements contracts are an exception, however. With an output contract, the parties agree that the seller will sell all the goods or services it may produce to a buyer in exchange for the buyer’s agreement to purchase them. A requirements contract obligates the buyer to purchase what it needs or requires from a seller in exchange for the seller’s promise to supply the buyer.

Where an agreement is neither an output nor a requirements contract, then both parties have continuing obligations throughout the term. The defenses of “impossibility” and “frustration of purpose” excuse performance in only the rarest of circumstances. What may seem like an obvious obstacle may not meet the threshold. A company that fails to understand the nature of its agreement or is unfamiliar with the applicable case law is exposed to significant monetary penalties. As a leading New York case has made clear, this counts for real estate development and hotel contracts as well.
Continue Reading Repurposing Real Estate Development to Counter Weakened Demand: Know the Risks Before Terminating Contracts

This month the NYC Landmarks Preservation Commission celebrated its 55th anniversary. Also this month, since the issuance of the emergency orders stemming from the COVID-19 public health crisis, the agency is scheduling its first public hearing using the Zoom teleconferencing platform. The hearing will be held on Tuesday, April 21, at 9:30 a.m., and can be viewed live on the LPC’s YouTube channel.

The public can even participate in the hearing by following the instructions.
Continue Reading Landmarks Preservation and the Economy During COVID-19

As the Coronavirus has encapsulated the world, government go-aheads to construction firms are welcome relief to the industry. Lenders’ collective reaction to the current economic concerns is another matter. Future financing is always imperative to ensure ongoing construction as well as new projects.

Government responses are changing by the day, but the Federal Reserve (the Fed) has acted decisively and thoroughly in response to the economic threats following the Coronavirus outbreak. Staying true to its Congressional mandate to “promote maximum employment and stable prices, along with its responsibilities to promote the stability of the financial system,” the Fed has devised numerous strategies to meet the persistent demand for redemptions and infuse money into the market. It has cut interest rates to zero, coordinated with other central banks to encourage purchases of the U.S. dollar, committed to purchasing an unlimited amount of U.S. Treasury’s and mortgage-backed securities, and explicitly encouraged banks to reduce their reserves held against demand deposits (by eliminating entirely reserve requirements).
Continue Reading The Federal Reserve’s Powers to Pave the Way for Continued Development and Construction Through COVID-19

Property development companies regularly create single-purpose entities (SPE) to acquire new real estate for development, construction or renovations. SPEs are often comprised of only a few members, and no assets beyond the property itself, and are considered “closely-held” companies.

There has been a growing trend in New York construction defect lawsuits in which boards of managers of newly-constructed condominiums that have sued the sponsor-developer-SPEs also name the SPE’s individual members as defendants. The plaintiffs rely on New York’s Debtor & Creditor statute Article 10, referred to as the “Uniform Fraudulent Conveyances Act” (UFCA). The UFCA authorizes “claw-backs” of money and other asset transfers as a remedy for some creditors.

Effective April 2020 in New York, after 95 years, the Uniform Voidable Transactions Act (UVTA) will replace the UFCA. The new statute will contain modified definitions and clearer criteria for which transactions may be unraveled. The question is whether this will reshape the courts’ understanding of sponsor-developer-SPEs’ equity financing arrangements, which by their nature have created a conflict with the UFCA.
Continue Reading Will Claims Against Closely-Held Condominium Developers Be Thwarted by New York’s Newly-Adopted Uniform Voidable Transactions Act?

Our readers may recall that Public Act No. 15-28 was signed by the Governor back in 2015, subjecting the State of Connecticut and its political subdivisions to a statute of limitations for asserting actions and claims arising out of “construction-related work.” The law became effective as of October 1, 2017. “Construction-related work” is defined in the Act to include the design, construction, construction management, planning, construction administration, surveying, supervision, inspection or observation of construction of improvements to real property. Notably, it applies not only to the State, but also its subdivisions such as cities, towns, and other entities like school districts.

The limitations period set forth in the Act is 10 years from the date of substantial completion of a given improvement. The 10 year limitations period applies going forward to improvements to real property substantially completed on or after October 1, 2017. For improvements substantially completed before October 1, the limitations period runs to October 1, 2027. Prior to the Act, the State and its political subdivisions were generally not subject to any statutes of limitations for such claims due to the legal doctrine of nullum tempus occurrit regi, which provides that a state is not subject to statutes of limitations unless it specifically consents to be. Literally translated, it means that “no time runs against the king.”
Continue Reading Tic Toc Tic Toc: The Clock Is Running on Construction and Design Claims by the State of Connecticut Beginning October 1, 2017

On July 28, 2017 Governor Baker approved a home rule petition proposed by Mayor Walsh which changed a Massachusetts law so that a skyscraper could be built over the Winthrop Square garage in Boston, Massachusetts. Obtaining the Governor’s approval of House Bill 3749 was a tremendous challenge that the developer, Millennium Partners has now overcome moving one step closer to the construction of the project.

The incumbent Secretary of State, William Galvin, who also serves as chair of the Massachusetts Historical Commission urged the Governor to veto the bill stating in a July 24, 2017 letter: “It is the conclusion of the Massachusetts Historical Commission that the construction of this building at its proposed height would do great damage to historic buildings included on the National and State Registers of Historic Places, including the State House, public parks, and private residences.”
Continue Reading What’s Next for the Winthrop Square Development Project?

There has been a law on the books in Massachusetts since 1990 restricting the construction of tall buildings that would cast what some might view as unsightly shadows over the Boston Common and Public Garden.  With no open space remaining for ground up construction in downtown Boston, developers are looking build a 775 foot residential tower that undoubtedly would cast a shadow over the Common and Public Garden in violation of that law; and are thus seeking to change the law.  On June 27, 2017, Massachusetts legislators delayed a vote to waive the law. William Galvin, incumbent  Massachusetts Secretary of State, asked lawmakers to delay their vote by two weeks so that his office can study the legislation. Secretary Galvin also oversees the Massachusetts Historic Commission.

The proposed 775-foot tower was named by the developer Winthrop Square. According to the Friends of the Public Garden, a park nonprofit advocacy group,  the tower, if built would violate the existing shadow laws for 264 days of the year on the Boston Common and 120 days on the Public Garden.
Continue Reading A Shadow Cast Over Boston’s Building Boom