Connecticut Appellate Court Recognizes Cardinal Change Doctrine for the First Time

Changes are made to the scope of work on construction projects every day. In some cases, the contract party being asked to accept these changes is reluctant to do so, viewing the changes to be so substantial as to result in a scope of work radically and materially different than what it originally agreed to perform. Faced with these circumstances, the decision to refuse to perform the extra work and walk away from the project can be a tempting one.

The “cardinal change doctrine” is a tool available to address these situations. The doctrine provides that, when changes are made to a contract which are so disproportionate to the original scope of a contractor’s work that they constitute an abandonment of the original agreement by the other party, the contractor is relieved of further performance obligations. Continue Reading

Boston Issues New COVID-19 Guidelines Applicable to All City-Permitted Projects

In an effort to prepare to restart construction on suspended projects after imposing pandemic-related restrictions on construction deemed nonessential, the City of Boston recently issued its revised “Temporary Guidance for Construction in the City of Boston,” which took effect on April 27, 2020.

Last week, the City indicated that this new policy is effective for active permitted projects, and for all future permit applications moving forward, including Alterations, Amendments, Erect Building, Use of Premises, Short Form, Electrical (Temp Service, Low Voltage, Fire Alarm, and general), Plumbing, Gas, Sprinkler, Sheet Metal and Trench permits. Continue Reading

Time to Reconsider Permitting Use of Drones for Development and Construction in Dense Urban Areas?

COVID-19’s severe impact on some major metropolitan areas has been attributed to their density, infrastructure and inherent difficulty with “social distancing.” This same challenge with social distancing has led to either mandatory or pressured shutdowns of construction projects throughout many states and metropolitan areas. Meanwhile, and particularly during the shutdowns, building-safety mandates require that some people still physically be at the projects to ensure ongoing compliance – especially important where a half-complete project can result in its own safety problems. Simultaneously, to complete new real estate transactions, investigations of sites must still be performed for due diligence data.

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Landmarks Preservation and the Economy During COVID-19

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

Ongoing Impacts of the Coronavirus Pandemic on Construction Projects in Major Markets

As we began to describe on March 18, the economic impacts of the ongoing coronavirus/COVID-19 pandemic on the construction industry are becoming more severe as the pandemic continues and spreads. Substantial uncertainty remains, however – as of the date of this post, the “peak” of the pandemic in New York, Connecticut, and Massachusetts is expected to occur (depending on which reports you read) in mid-April, late-April or May, respectively. It appears increasingly likely that proactive, protective measures in these states, along with their restrictive effects on the economy and construction activity, will continue through the end of April and into May. Continue Reading

New York Clarifies “Emergency” and “Essential” Construction

Following Governor Cuomo’s order and the Empire State Development (ESD) guidance on March 27, 2020, which provided that all “non-essential construction” except “emergency construction” must shut down, this week the Commissioner of the New York City Department of Buildings issued clarification about the terms “emergency” and “essential” construction (the “Bulletin”). Continue Reading

New York Construction Building Owners Assume New Roles and Responsibilities in Wake of Construction Shutdowns

With many New York City construction projects deemed non-essential, owners find themselves with partially completed work coupled with legal obligations to maintain the safety of the property. The temporary shutdown shifts responsibilities (and liability) for maintaining the safety of the property and the public to the owner. From maintaining permits to weekly inspections and weather protection, owners are now tasked with numerous roles and responsibilities more typical of those of a general contractor. Failure to understand and address these requirements places the owner at risk of noncompliance and potential delays when work is ready to resume if for example, permits have lapsed or areas of the site are no longer code compliant. The full New York City Building Department bulletin (the Bulletin) issued last week provides guidance to owners and contractors regarding the minimum requirements for maintaining construction and demolition sites when operations are suspended. Continue Reading

Government Approval: When It’s Not a Sure Bet

Excerpt of a contributed article published in the New York Law Journal on March 31, 2020.

Last month’s court decision ordering the removal of potentially as many as 20 floors of a high-rise building (The Committee For Environmentally Sound Development v. Amsterdam Avenue Redevelopment Associates, Sup. Ct., N.Y. Co., Index No. 157273/2019) shook the local development community. How can the issuance of a construction permit by one branch of government be invalidated because of community opposition? And when can a developer rely upon final determinations of the Board of Standards and Appeals (BSA)?

Subscribers can read the full article here. If you are not a subscriber, view the article here.

Much of New York Construction is Now Also “on PAUSE”

Although Governor Cuomo put “New York State on PAUSE” a week ago, at that time, “construction” was not specifically exempted from his Executive Order and the Empire State Development’s (ESD) guidance on what businesses were subject to the 100 percent workforce reduction. Yet, pursuant to a further directive from the Governor, on March 27, 2020, the ESD updated its guidance to explicitly state that “[a]ll non-essential construction must shut down except emergency construction, (e.g. a project necessary to protect health and safety of the occupants, or to continue a project if it would be unsafe to allow to remain undone until it is safe to shut the site).” (Emphasis added.) See: https://esd.ny.gov/guidance-executive-order-2026.

The ESC provides several examples of “[e]ssential construction,” and advises that for project sites falling within that category, or for sites qualifying as “emergency non-essential construction,” the Executive Order’s 10-point policy requires, as explained in the ESC guidance, “maintaining social distance, including for purposes of elevators/meals/entry and exit.” (See also 10 Point Plan.) The ESC warns that “[s]ites that cannot maintain distance and safety best practices must close and enforcement will be provided by the state in coordination with the city/local governments. This will include fines of up to $10,000 per violation.”

The ESC guidance excludes from the definition of “construction work” “a single worker, who is the sole employee/worker on a job site.”

The Federal Reserve’s Powers to Pave the Way for Continued Development and Construction Through 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

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