On December 3, Jennifer Horn and Maria Panichelli presented the second webinar in their core construction curriculum series for Women Impacting Public Policy and Give Me 5%. The presentation, entitled “Best Practices in Construction,” covered suggested best practices for before, during, and after conclusion of a construction project, in the context of both state and federal jobs. The presentation provides tips on contracting, documentation, compliance, and claims prevention strategies. Start implementing business practices that make the difference between a profitable construction project and one that exposes your company to financial risk now! Check out: “Give Me 5: Best Practices in Construction,” here.

Jennifer M. Horn is a Partner at Cohen Seglias and a member of the Construction Group. She concentrates her practice in the areas of construction litigation and real estate.

Maria L. Panichelli is an Associate in the firm’s Federal Practice Group.

Jennifer Horn, Partner in the Construction group of Cohen Seglias is speaking on Comparative Analysis of Critical Construction and Design Provisions Between Mid-Atlantic States at Providence Engineering in Lancaster, PA, on Tuesday, January 14th.

For an increasing number of construction related entities – including design professionals – survival in the current economy has meant expansion of both geographic and substantive work area comfort zones. Those who cross geographic borders; however, must understand how different construction laws change with the State.

This program will analyze how state law changes throughout the Mid-Atlantic region, with a focus on payment statutes. In particular, we will analyze the differences in private prompt payment acts, the enforceability of pay-if-paid and pay-when-paid clauses, mechanics’ liens issues, statutes of limitations, and the enforceability of notice provisions in construction contracts. This audience directed map based program simplifies the important construction contract provisions that make a difference.

The lunch & learn seminar will cover topics including:

  • Recognition of Critical Provisions Common to Most Construction/Design Contract Regardless of Applicable State/Federal Law
  • Understanding of Several Industry Construction Contracting Trends
  • Understanding Differences and Similarities Between Other Critical Construction Provisions For PA, NJ, VA, DE and NY
  • Understanding Key Bonding Principals and Comparing State Bond Acts

Cal Beyer, Vice President of Construction Solutions at  Murray Securus, will also address industry trends and hot topics for the design professional.

For more information on this AIA accredited program, contact Kerstin Isaacs at kisaacs@cohenseglias.com.

Flood insurance.jpgIn January, Governor Chris Christie signed an Executive Order and proposed emergency regulations to guide the rebuilding process after Superstorm Sandy in flood prone areas of New Jersey.   Before the storm, the building code and flood-proofing regulations in the state were based on flood maps adopted by the New Jersey Department of Environmental Protection (“the Department”) in the 1970’s and 1980’s.  Unfortunately, these maps underestimated the 100-year flood elevations by anywhere from one to eight feet.  The Federal Emergency Management Agency (“FEMA”) is in the process of reevaluating its flood maps for New Jersey. One of the changes, which will have a widespread effect, is the adoption of FEMA’s 100-year flow rate maps, including advisory, proposed or effective mapping. Owners and their contractors rebuilding in New Jersey will need to consider FEMA’s most recent maps (the “New Maps”), regardless of whether the map at issue is considered to be final and approved.  All of these maps are available on FEMA’s website.

The Executive Order and the emergency regulations propose the following for construction in flood-prone areas:

  • A building is substantially damaged if the cost of restoring it to its original condition would equal or exceed 50% of the market value of the structure before the storm damage occurred.
  • An individual permit for reconstruction of a home that has suffered substantial damage due to the storm may not be issued by the Department unless the lowest floor of the home is constructed or modified such that it is set at least one foot above the elevation set by the New Maps.
  • The “lowest floor of a building” only includes a space which may be used for permanent or temporary occupation and does not include a crawl space, entryway and or garage if it is used for building access, parking or storage.
  • The Department may issue an individual permit for reconstruction of a commercial building that has suffered damage due to the storm that is not set at least one foot above the elevation set by the New Map map if an architect or engineer certifies that the building will be constructed in accordance with flood-proofing requirements.
  • The regulations also permit, for the first time, that commercial buildings be “wet flood-proofed.” Wet flood-proofing allows for flood waters to move freely in a building without damaging the structural integrity of the building.
  • When a property owner plans to rebuild, a permit need not be sought from the Department as long as the “footprint” of the building is not increased by more than 300 square feet, the lowest floor of the building is built at least one foot above the elevation set by the New Map, any basement or ground floor garage is not used for habitation, and the building is not moved closer to any large body of water or into a floodway. This will save the owner the cost of a permit fee.

According to the regulations, building owners who seek to comply will qualify for assistance from FEMA to help cover the cost of the work associated with complying with the regulations.  Since the new FEMA maps will likely place more properties in flood zones than before the storm, while other properties will be placed in more severe flood zones, flood insurance premiums will rise substantially for some New Jersey property owners.  But, FEMA anticipates that property owners who chose to comply when rebuilding could see their flood insurance premiums drop by more than 200%.

Have an opinion?

The regulations were adopted via an Executive Order, but will become permanent after an abbreviated comment period from the public.  A public hearing on these proposed regulations is scheduled for Thursday, March 7, 2013 at 5:30 pm at the City of Long Branch Municipal Building, Council Chambers, 344 Broadway 2nd Floor, Long Branch, New Jersey 07740.

Jonathan A. Cass is the Chair of the Insurance Coverage & Risk Management Group at Cohen Seglias Pallas Greenhall & Furman PC. He has extensive experience representing insureds and insurers in insurance coverage disputes.

Jennifer R. Budd is an Associate at Cohen Seglias Pallas Greenhall & Furman PC and a member of the Construction Group.

By: Daniel E. Fierstein and Jennifer M. Horn

Banks do not typically loan money if they can not be assured “priority” status over any other encumbrances that may arise. “Priority” in this context refers to the order in which various encumbrances, such as mortgages or mechanic’s liens, are paid off from the sale proceeds. As such, a question arises: what entity jumps to the front of the line when both a mortgage and a contractor-filed mechanic’s lien are present?Mortgage.jpg

In the case of Commerce Bank/Harrisburg, N.A. v. Kessler, the Superior Court was presented with a question concerning priority under the Pennsylvania Mechanics’ Lien Law. This is the second contractor/subcontractor-friendly opinion of 2012 – the first being the Bricklayers case.

Commerce Bank/Harrisburg, N.A. v. Kessler

In Commerce Bank, Stephen and Lisa Kessler (the “Kesslers”) contracted with Michael Ricker (the “Contractor”) to build a luxury home in Harrisburg, in October 2006. In January 2007, the Kesslers contracted with Commerce Bank for a construction loan of up to $435,000.00 with an open-end mortgage. The Contractor broke ground on the project in October 2006, and Commerce Bank recorded the mortgage in January 2007.

The Kesslers failed to make payments to the Contractor and mortgage payments to Commerce Bank, which prompted the Contractor to file a mechanics’ lien claim on the property and obtain a judgment against the Kesslers. This also prompted Commerce Bank to file a mortgage foreclosure action and obtain a judgment against the Kesslers.

In 2010, Commerce Bank and the Contractor asked a trial court to suspend the foreclosure sale of the property and determine which party enjoyed priority over the other in connection with their respective judgments against the Kesslers. The trial court concluded that the Contractor’s lien enjoyed priority over Commerce Bank’s mortgage, and the Superior Court considered the issue on appeal.

Under the Pennsylvania Mechanics’ Lien Statute, for projects that involve new construction (as opposed to alteration or repair), a contractor’s lien takes effect for purposes of priority as of the date when the commencement of work is visible. However, a contractor or subcontractor’s lien becomes subordinate to an open-end mortgage when the proceeds of the loan are used to pay for the cost of completing construction.

The Decision

Despite the fact that an open-end mortgage was in place, the Superior Court concluded that the Contractor’s lien enjoyed priority over Commerce Bank’s mortgage because not all of the proceeds from the mortgage were specifically used to cover the cost of construction. In other words, the Superior Court decided that if proceeds from an open-end mortgage are used to cover non-construction items such as closing costs, old mortgages or unpaid taxes, the open-end mortgage will not enjoy priority over a contractor or subcontractor’s mechanics’ lien where visible construction commenced prior to the lender’s recordation of mortgage.

The Impact

This decision could have a significant impact on construction lending in Pennsylvania because, as discussed above, banks do not typically loan money if they cannot assure priority over any other encumbrances that may arise. This decision technically means that a lender’s priority over a contractor or subcontractor’s mechanics’ lien could be defeated if the contractor or subcontractor can demonstrate that at least one dollar of the proceeds from a construction loan were used to pay for expenses that are not considered costs of completing construction.

Ultimately, this issue remains unresolved because Commerce Bank has asked the Superior Court to reconsider its decision, and could seek to appeal the matter to the Supreme Court of Pennsylvania if it remains unsatisfied with the Superior Court’s decision.

Daniel E. Fierstein is an Associate in the Construction Group of Cohen Seglias and focuses his practice on construction law.

Jennifer M. Horn is Senior Counsel at Cohen Seglias and a member of the Construction Group. She concentrates her practice in the areas of construction litigation and real estate.

By: Jason Tomasulo

A number of outlets including Infrastructure Investor and the Washington Post are reporting the announcement by the Obama Administration of 14 projects that will be expedited through the permitting and environmental review processes. Several of the projects are located on the East Coast including:

  • A new Tappan Zee Bridge in New York (estimated to be $5.2 billion);
  • A 14-mile rail transit line (Baltimore Red Line) connecting suburban areas west of Baltimore to downtown Baltimore, the Inner Harbor and Fells Point areas, and the Johns Hopkins Bayview Medical Center Campus; and
  • A mixed-use property (City Market at ‘O’ Street, District of Columbia) comprising 400 market-rate residential units, 16,000 square feet of retail space and a 57,000 square feet supermarket.

Jason Tomasulo is senior counsel in the Construction Group of Cohen Seglias Pallas Greenhall & Furman, PC. He focuses his practice on construction law and government contracts.

By: Jennifer M. Horn On September 14th, Lancaster General Health (LGH) is set to break ground on the new Ann B. Barshinger Cancer Center. LGH.jpg According to the press release from the LGH, the 70,000 square foot, $44 million center will, “bring medical oncologists, radiation oncologists, surgeons and other cancer specialists together in one location…The Suzanne H. Arnold Center for Breast Health will be integrated into the two-story cancer center.” Stand out features of the new cancer center include:

  • A new radiation wing, considered the “hub of technology,” with the latest diagnostic and treatment technologies available;
  • Infusion therapy/chemotherapy suites configured with patient comfort in mind;
  • A conference and education center with the most advanced technology and connectivity; and
  • A tranquil Healing Garden with a natural landscape where patients, families and friends can find a quiet space between treatments.

Philadelphia based architecture firm Ballinger designed the center and Benchmark Construction Co. Inc. is set to manage the project. Jennifer M. Horn is Senior Counsel at Cohen Seglias and a member of the Construction Group. She concentrates her practice in the areas of construction litigation and real estate.

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.”

 

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.

It is hard to dispute that the past three years have been difficult for West Virginia’s construction industry, and so far 2011 hasn’t seen much improvement. Employment in the construction industry is down approximately 10% this year over last year, according to The Contractors WVA.jpgAssociation of West Virginia Executive Director Mike Clowser, “We don’t see a lot of improvement for 2011. We’re hoping to see a greater upturn in 2012.”

Clowser pointed out there are areas of growth in West Virginia, including Morgantown (West Virginia University) and Fairmount (High Tech Corridor), where contractors and construction crews are working non-stop. But he says the Eastern Panhandle, once a hot bed of construction, and many other areas of the State, still haven’t recovered from the housing bust and the recession.

However, there have been several recent signs of improvement in the West Virginia construction industry, mostly in the infrastructure, education and energy sectors. These include:

  • The U.S. Department of Agriculture awarded more than $1 million for water and sewer projects in Logan and Putnam counties. The funds are part of an $840,000 grant and $230,000 low interest loan. The projects will replace sewer collection lines for certain customers and also build new lines to serve hundreds of additional households. The Department of Agriculture awarded the loan through its rural-development program, which provides funding to rural communities across the country for infrastructure projects.
  • Developers are ready for groundbreaking at the Mingo County site of the proposed TranGas Development Systems, LLC coal-to-gasoline plant. The $4 billion Adams Fork Energy plant, which will be the largest of its kind in the world and the first of its type in the United States, will produce 756,000 gallons of gasoline from coal each day. Construction is expected to take four years and create 3,000 construction jobs.
  • Acting Gov. Earl Ray Tomblin’s administration has doubled the number of low-traffic roads the state highway department intends to pave in 2011. According to the Department of Transportation spokesman Brent Walker, a new $11 million program, called the Secondary Road Renovation Program, will target roads that are traveled by 500 or fewer vehicles per day. Last year, before the secondary roads program existed, the state paved about 450 miles of low-traffic roads. “It’s our hope that we’ll be able to repair, fix and pave about 1,000 miles around the state that would not normally be a part of the paving program,” said Walker.
  • New River Community and Technical College intends to construct a $13.5 million administration building on its Raleigh County Campus. The college unveiled plans for the 55,000-square-foot building Friday. New River says it’s also going to renovate an 18,000-sqare-foot building on its Greenbrier Valley Campus in Lewisburg.

In West Virginia’s case, the numbers may not be showing the whole picture. While construction is down 10% from last year, there are a number of new construction projects planed throughout the state that may be the key to turning things around.

Cohen Seglias attorney Robert Ruggieri contributed to this post.

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.