In just a few days, a new law (Local Law No. 1 of the City of New York for the Year 2013) will take effect in New York City aimed towards increasing participation of Minority-Owned Business Enterprises (MBEs), Women-Owned Business Enterprises (WBEs) and Emerging Business Enterprises (EBEs) in City procurement.  Some of the major changes include:

  • Elimination of the $1 million cap on program-eligible contracts;
  • Stronger enforcement mechanisms to ensure that increased participation goals are met; and
  • Enhanced government oversight to ensure that M/W/EBEs are targeted for higher value contracts with the City of New York.

While the City’s various departments and agencies will be subject to increased accountability, participating contractors will also be subject to more onerous recordkeeping and reporting requirements.  Contractors interested in utilizing M/W/EBEs should monitor the website of the Small Business Services (SBS) for prospective solicitations, access the City’s Online Directory of Certified Businesses and avail themselves of the SBS’s other resources for companies doing business with the City.

For a more detailed account of the new law, read New York City’s New Law to Enhance Participation by M/W/EBEs (pages 4-5).

If you are a Contractor performing residential home improvement work in New Jersey, a recent case clarifies that you may be subject to Consumer Fraud Act claims even when your contract is fraud2.jpgwith a homeowner who serves as a “general contractor” on the project. In fact, such a contract is not only subject to the Consumer Fraud Act, but also to the Contractor’s Registration Act, and the Home Improvement Practices regulations adopted by the New Jersey Division of Consumer Affairs.

What Is The Consumer Fraud Act?

In 1960, the New Jersey Legislature enacted the Consumer Fraud Act “CFA”, (N.J.S.A. 52:17B-124; N.J.S.A. 56:8-3 ) to address consumer complaints regarding fraudulent construction practices in the market place. The CFA provides, among other things, that a successful homeowner who proves fraud be allowed to “treble” his damages against unscrupulous contractors and recover attorney’s fees. Since 1960, New Jersey Courts have held that the CFA should be “construed liberally in favor of consumers.”

If You Contract With A Homeowner – Even One Who Acts As The “General Contractor” On A Project – The CFA Applies

This month, the Superior Court of New Jersey rejected a contractor’s argument that a homeowner acting as a “general contractor” could not bring a claim under the CFA. In so doing, the Court pointed to the direct contractual relationship between the parties and concluded that “even if the plaintiff could be viewed as a general contractor with respect to the improvements to his home, he was entitled to the protection of the CFA in his dealings with contractors who performed [home] improvements.” This recent decision means that prudent contractors must assume that the CFA applies whenever a contract is entered into with a homeowner – even sophisticated homeowners who serve as their own general contractors.

Although the recent case focused primarily on the CFA, it addressed other consumer protections and serves as a reminder that New Jersey contractors must comply with all Home Improvement Practices Regulations (Administrative Code at N.J.A.C. 13:45A-16.1 et seq.). Also, as many contractors are aware, compliance with New Jersey’s Contractor’s Registration Act of 2004 is essential. The Contractor’s Registration Act requires every home improvement contractor to register with the Division of Consumer Affairs prior to performing work.

The Court acknowledged “the seriousness with which the legislature approached the perceived problems in [the home improvement] industry” and noted that such seriousness was reflected in the expansive language of the applicable laws as well as in the remedies – such as treble damages – that the consumer protection statutes afford.

As many in the industry are aware, Maryland became the first state to fully adopt the International Green Construction Code (IGCC) when Governor Martin O’Malley signed HB 972, effective March 1, 2012. In response to our IGCC blog post on this issue, authored by Lane Kelman, readers raised a multitude of questions that highlight a vast amount of confusion regarding the legislation. The questions range from the impact on the construction industry to the interpretation and application of the House Bill. A number of the issues that have been raised necessarily call into question the clarity of the legislation and, in turn, create legal issues. Some of the questions that have been raised are:

  • What does the adoption of the IGCC mean for Maryland in the short and long term?
  • Does House Bill 972 give a Local Maryland Jurisdiction the alternative of adopting the IGCC in addition to the Maryland Building Performance Standards?
  • If a Local Maryland Jurisdiction adopts the IGCC, is compliance mandatory?
  • What does the legislation mean for developers and contractors?
  • Is Maryland’s HB reflective of a national trend?
  • Look for upcoming Blog posts on this important issue.

We will continue to report on the answers to these questions as the answers are clarified in the legislation. In the meantime, please contact Lane Kelman or Jennifer Horn with questions.

If you are a contractor bidding on public projects in New Jersey, a recent NJ case sheds light on an aggregate rating requirement which, if violated, could cause your bid to be disqualified.

What Are Aggregate Rating Requirements Under NJ Law?

Most NJ contractors who bid on public projects are aware that their company’s “Aggregate rating” refers to “the limit of the dollar value of all contracts, public and private, that a firm may perform at any given time.” [insert link] Importantly, “[a] firm shall not be awarded a contract which, when added to the backlog of uncompleted construction work …[the value of which] would exceed the firm’s aggregate rating.” But are subcontractors considered “firms” that will be held to the “aggregate rating” requirements set forth in the regulation? That answer is a resounding “yes,” according to the recent NJ Superior Court Appellate Case.

If Your Subcontractor’s Aggregate Rating Limit Would Be Exceeded Upon Award of the Contract, Your Bid Could Be Disqualified

Recently, the Superior Court of New Jersey, Appellate Division, rejected a contractor’s claim that its subcontractor was exempt from the aggregate rating requirements discussed above.

For a detailed discussion of the recent New Jersey case, please read the attached PDF.

The recent decision means that prudent contractors must pay attention to their subcontractor’s ratings to insure that the aggregate limit will not run afoul of the legal guidelines.

Impact Moving Forward

In light of the Court’s decision, contractors bidding on public projects should be diligent in ensuring that their subcontractors rating limits will not throw off the aggregate rating calculation upon award of the subcontract. Contractors should be aware that such violations may cause their bids to be disqualified. In turn, subcontractors should also take precautions to avoid liability for errors which cause bids to be rejected, and the potential for resulting claims for damages.

Last week, Pennsylvania’s House Labor and Industry Committee considered PA House Bill 1602  (HB 1602). Construction industry experts, including Cohen Seglias’ own Jason A. Copley, critiqued the bill in testimony presented at a televised public hearing. If approved, HB 1602 would require additional notice provisions and reduce a claimant’s time to file a lien from six to four months.

What is HB 1602?

Under HB1602, any subcontractor, contractor, or second tier subcontractor who fails to provide the newly proposed Notice of Furnishing within 20 days after first performing work or rendering services or material at the property could forfeit its lien rights. The Notice of Furnishing requires disclosure of, among other things, the estimated price of the labor, materials, and tools furnished. If approved, HB 1602 would also require owners, owner’s agents, and/or general contractors to file and post at the property a Notice of Commencement disclosing the true owner of the property, among other things.

Possible Effects on the Construction Industry

House Bill 1602 has negative implications for the construction industry as a whole because:

1. The lien law exists to protect all contractors and make sure that they get paid for work when unscrupulous owners fail to pay their bills. Making any changes that curtail those rights must only be done with great caution and to correct a “wrong” resulting from the current law. In this regard, the reduction of time to file from six to four months works to the detriment of both subcontractors and general contractors in that it would inadvertently increase the number of lien filings and prevent the amicable resolution of claims as parties rush to satisfy the shortened deadline.

2. Some subcontractors and second-tier contractors, that the lien law is designed to protect, will likely unwittingly forfeit their lien rights for the labor and materials they supply on projects by failing to satisfy the new Notice of Furnishing requirement.

3. The current Mechanic’s Lien Law is intended to protect contractors and promote economic growth by providing needed protection to contractors who provide labor and materials on projects. It is counterintuitive to the law’s purpose to restrict its scope and application by requiring notice prior to a dispute. Also, since the amendments in 2009, no floodgate has opened with respect to the filing of liens. Therefore, there is no economic or governmental interest to support an amendment to more narrowly tailor the application of the current version of the Mechanic’s Lien Law.

4. The potential for a general contractor’s forced “double payment” (once to the subcontractor and again to a supplier or sub-subcontractor) should be otherwise avoided by limiting the liability of general contractors in relation to the amount they have already paid under a contract, similar to the defense owners enjoy pursuant to Section 1405 of the current Mechanic’s Lien Law. In addition, a “fund” could be established by an amendment to set up a trust fund mechanism like exists in New Jersey, which would provide for unpaid second-tier subcontractors to receive a pro rata distribution of unpaid funds.

5. Only 21 states have currently enacted legislation similar to the notice provisions proposed in HB 1602. Also, given that Pennsylvania law already offers other avenues of protection for owners and general contractors, the additional protections proposed by HB 1602 are unnecessary.

Cohen Seglias will continue to monitor HB 1602 and any amendments. If you have any questions about HB 1602 or the June 13, 2011 public hearing, please contact Jason Copley at jcopley@cohenseglias.com or Jennifer Horn at jhorn@cohenseglias.com, 215-564-1700.

Pennsylvania:

PNC Financial Services Group (PNC) is moving its headquarters to Pittsburgh. PNC, which is the largest bank in Pennsylvania, plans to build a $400 million “green” office structure in downtown Pittsburgh, which will create 2,500 construction jobs. The new skyscraper, which is to be about 40 Stipmall.jpgstories high and 800,000 square-feet, will be PNC’s largest building in Pittsburgh. Currently plans include 300 underground parking spaces and street level retail. The building will be complete with green rooftops.

Maryland:

Maryland’s National Harbor is adding a “$100 million retail outlet as part of a plan by its developers to expand the convention and resort complex into a one-stop shop for visitors.” The outlets, to be built on 40 acres of land, are expected to house 80 designer stores.

The National Harbor is quickly on the way to becoming a must-see attraction. The National Children’s museum has announced plans to relocate to the harbor . Plans to break ground on a new 140,000 square-foot building to house the museum are expected to start later this year.

New Jersey:

New Jersey’s Xanadu Mall is about to get a $1.5 billion face lift. New Jersey Governor Chris Christie announced plans to renovate and expand the mall, including a “recladding of its multicolor exterior.” Refurbishing the mall, a 2.4 million square-foot structure, will create over 9,000 construction jobs. Christie who had previously dubbed the mall the states “ugliest” building, has also announced a name change to the structure. Going forward the new mall will be known as “American Dream Meadowlands.”

 

Post office.pngEarlier this week, Philadelphia’s Historic Preservation Alliance hosted its Eighteenth Annual Achievement Awards, where individuals and organizations were honored for significant contributions to historic preservation.

Congratulations to the following recipients of Special Recognition Awards:

  • Nicholas L. Gianopulos, PE, received the James Biddle Award for lifetime achievement in historic preservation;
  • Scott Wilds received the Public Service Award for preservation in the public interest;
  • Germantown Friends School received the Rhoda and Permar Richards Award for service to the Preservation Alliance in connection with the popular Old House Fair;
  • Unkefer Brothers Construction Company received the Board of Directors Award for exceptional contributions to historic preservation; and
  • Amerimar Enterprises, Inc. received Special Recognition for stewardship of The Wanamaker Building.

The Community Action Award Recipients were The Callowhill Neighborhood Association for organizing community support for the Church of the Assumption, The Township of Delanco, New Jersey for preservation of the Zurbrugg Mansion, and Nathaniel Guest and the Pennhurst Memorial and Preservation Alliance for organizing community support for Pennhurst State School and Hospital.

For a complete review of the program and list of Grand Jury award recipients, see the attached brochure. Congratulations to all award recipients!

Is construction picking up throughout the Mid-Atlantic region? Here are just a few summaries of headlines for Maryland, Delaware and Pennsylvania

Maryland:

As of March 2011, construction projects in several Maryland counties continue to increase, and Mid-Atlantic.jpgconstruction contracts “were up 55% when compared to the same month in 2010.” For the first quarter, future construction contracts reached $272M.

These statistics include Anne Arundel, Baltimore, Carroll, Harford, Howard and Queen Anne’s,counties in Maryland . The commercial projects included, but were not limited to, the construction of commercial, manufacturing, educational, religious, administrative, recreational, hotel, and dormitory buildings.

Delaware:

Delaware Governor Jack Markell spoke to Delaware business leaders on May 4, 2011 proposing how to spend the projected surplus above the $3.4 billion operating budget he proposed in January.

Ideally, Markell wants to spend $135 million of a projected $320 million budget surplus “on one-time construction projects to stimulate the economy” through a new initiative, the Building Delaware’s Future Now fund.

Some of the projects Markell suggests committing funds to include:

  • $40 million for a new jobs infrastructure fund to pay for road and sewer improvements for getting new companies to relocate to Delaware;
  • $40 million for the state’s Transportation Trust Fund;
  • $35 million for the preservation of historic buildings, the capital complex in Dover and state parks facilities;
  • $10 million for investing in affordable housing projects; and
  • $10 million for open space preservation.

Pennsylvania:

Pennsylvania has been awarded $40M, from the US Department of Transportation, for additional rail lines, leading from Philadelphia to Harrisburg. The funds come as part of the $2.4B that Florida Governor Rick Scott declined. Erin Waters, spokesperson for the Pennsylvania Department of Transportation (PennDOT) said the “upgrade would shave another 7 to 9 minutes from the travel time between Harrisburg and Philadelphia,” by improving the switch and signal network in Harrisburg.

No timeline has currently been released for this project.

Also in Pennsylvania, the Commonwealth Financing Authority approved $172M to fund 160 water infrastructure projects, in 51 counties, through the H2O PA program.

The H2O PA program provides “grants for flood control projects, construction of drinking water, sanitary sewer and storm sewer projects and high hazard or unsafe dam projects.”

For a complete list of projects and their descriptions please visit www.newpa.com.

For an increasing number of contractors, survival in the current economy has resulted in the need to find and secure work in other states. The migration of contractors to neighboring states is apparent throughout Jobs.pngthe country. Besides the work itself, benefits of an expanded geographic footprint include a broader client base, thereby creating mutually beneficial relationships.

For a complete breakdown on which states are seeing the biggest increases in cross border work, please visit, The Construction Blog, which is a dedicated to construction software technology.

Construction Technology Facilitates an Expanded Geographic Footprint

Recent advances in technology are accelerating the migration of contractors to neighboring states. Such technology includes, but is not limited to:

  • Online Plan Rooms – This software aids contractors looking for jobs across state lines. A contractor can browse by project type, trade or location to find upcoming construction projects.
  • Bid Management Software – This program acts like a “virtual broker” and assists contractors in the bidding process, by connecting buyers with sellers.
  • Web Based Project Management Software – This technology allows for real time monitoring of construction projects.
  • Onscreen Takeoff and Cost Estimating – This tool allows contractors to build cost estimates for projects happening in other states.
  • Building Information Modeling (BIM) – BIM brings a project to life, through 3D, 4D and 5D models.

Contractors seeking an expanded geographic footprint should be aware of the upgraded technology as a means of facilitating work across borders.

New Jersey Turnpike officials recently announced that they expect to advertise approximately $800 million in Turnpike related construction projects to be completed by February 2012. The projects will include road widening, bridge deck, resurfacing, sign structures, and other types of road upgrades. Next year, New Jersey Turnpike officials anticipate advertising approximately $1 billion in similar work.

For a complete list of planned projects, please click here.