March 2012 Archives

LEEDing to Injury?

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Could LEED certification of new buildings cause increased injury rates for construction workers? Matthew Hallowell, an assistant professor in the Civil, Environmental and Architectural Engineering Department at the University of Colorado at Boulder, thinks so. A recent set of articles authored by Hallowell and several co-authors published or in review by the Journal of Construction Engineering and Management analyzed LEED credits and conducted field research on the hazards related to constructing buildings that will be registered under the LEED system. The articles found that twelve LEED credits contribute to increased hazards for construction workers. According to the author's research, these hazards for construction workers include:

- A 24% increase in injuries resulting from slips and falls while installing heavy solar panels on roofs painted white in order to reflect sunlight;

- A 36% increase in cuts and abrasions when entering recycling dumpsters to retrieve improperly discarded materials;

- An increase in falls when green roofs are installed by landscaping contractors not accustomed to working at height; and

- An increase in falls when workers spend increased time at height installing sky lights to provide day lighting or performing time-intensive wiring for lighting sensors.

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"Build as Much as We Can, as Fast as We Can, Until It's All Done!" - P3s and Colorado's FasTracks Program

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By Pillsbury Winthrop Shaw Pittman

Colorado's Regional Transportation District ("RTD"), the public transit provider for the Denver Metro area, is hopeful that public-private partnerships, including unsolicited P3 bids, will accelerate the completion of the FasTracks program. FasTracks, a voter-approved transit expansion program aimed at better connecting the Denver Metro area, includes 122 miles of commuter and light rail, 18 miles of bus rapid transit service, 21,000 new parking spaces, redevelopment of Denver's Union Station and redirected bus services.

With the mantra, "Build as much as we can, as fast as we can, until it's all done," FasTracks is inviting P3 proposals. On its website, RTD asserts that it plans to utilize P3s to implement many of the FasTracks projects, including the light rail extension along Interstate 225. In fact, in a recent press release explaining its plans for the Northwest Rail Line, RTD stated that several FasTracks projects are already being funded and built by P3s, including the Eagle project, which consists of a segment of the Northwest Rail Line, the East Rail Line, and the Gold Line.

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Maryland moves to modernize its Public Private Partnership law.

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Maryland's Lt. Governor Anthony Brown led a joint executive and legislative commission to make recommendations for modernizing Maryland's statutory framework for P3s. The Commission's work led to legislation, designated as SB358/HB576, that passed the House of Delegates this week and is expected to pass the Senate in the coming days. The primary goal of the legislation is to address Maryland's critical infrastructure needs through expertly structured public-private partnerships. The various Maryland departments that oversee capital projects found that increased use of P3s could contribute as much as $315 million to the State's capital budget and create perhaps as much a 4,000 jobs.


Jeffrey Gans, a partner in Pillsbury's Construction practice and among those leading Pillsbury's P3 practice, testified in support of the bill before both Houses in the Maryland General Assembly. "The availability of capital is the most often recognized benefit of a public-private partnership. But as important, is the fact that once the legislation takes effect, Maryland will have at its disposal the ingenuity and entrepenurial spirit that is the life blood of the free market." Mr. Gans' testimony was in specific reference to the language in the legislation that permits unsolicited P3 proposals to be made to any State agency authorized to enter a P3. "The expertise of the best best and the brightest the market has to offer will be motivated to find innovative and profitable solutions to Maryland's infrastructure needs," Gans said.


All Risk Property Insurance -- Is damage caused by Chinese Drywall Covered

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Can anyone claim that they read their homeowner's insurance policy before they had a claim to submit? That's what I thought. I don't know whether Larry Ward read his before he had a claim, but he's read it now, and so have several judges and numerous lawyers. Based on a recent decision from the U.S. Court of Appeals for the Fourth Circuit, the judges and clerks of the Virginia Supreme Court will be reading it too.

Ward submitted a claim to his property insurance carrier when he discovered that his new home was suffering damage from Chinese Drywall. The carrier denied his claim and filed a declaratory judgment action in federal court for the Eastern District of Virginia (the "Rocket Docket" for those not familiar with it). The district court granted summary judgment in favor of the carrier and Ward appealed. The Fourth Circuit did not affirm or reverse. Instead, the court concluded that the case involved unsettled questions of Virginia law, and certified the question to the Virginia Supreme Court.

More, after the jump.

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Leaning Tower of...Washington DC?

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According to this article by Ben Nuckols, a team of surveyors is in town. They are here to figure out if the Washington Monument shifted or sunk during the 5.8-magnitude earthquake that hit our Nation's capital in August of last year. Although the monument is structurally sound, it will remain closed until August 2013 for repairs. The surveyors' preliminary results are expected in two weeks.

WashMon1.jpg For people living in an area not prone to having earthquakes, it was quite a jarring experience. In fact, one of my colleagues went as far as to take cover under his desk while yelling warnings to our entire floor, but that is beside the point. One can only imagine the thoughts racing through the minds of the employees and tourists in the Washington Monument at the time. Some of the reactions of the people - as well as the damage from the interior - were captured by video camera installed inside the Monument. You can watch videos at the 500 foot level from three different views on the National Park Service website.

Let's all hope the surveyors' findings do not reveal the Washington Monument is tilted as a result of last year's earthquake. Although, even if the obelisk remains in perfect position, I may just keep my feet planted on the ground after watching those videos!

Photo Credit: Samer Farha

Tappan Zee Replacement -- Which came first, the RFP or the PPP?

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Tappan Zee Bridge.jpgWhen we posted yesterday about the RFP for the Tappan Zee Bridge replacement, we perhaps missed the most important aspect of the Instructions to Bidders: No Obligation to Award. (It's on page 40, for those keeping track.) Usually this sort of provision is a safety valve. Here, it might be more. The owner apparently still doesn't know where the money will come from. Bloomberg is reporting that a bill is working its way through the New York Legislature to allow Public Private Partnership funding for . . . the Tappan Zee Bridge Replacement.

The Tappan Zee replacement: Bidders must design to last 100 years, but do they have to design it to survive the rapture?

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The RFP is out for the replacement for the Tappan Zee Bridge. Before you decide that you want to submit a bid, let me break the bad news to you: Unless you're one of the four shortlisted firms who made it through the qualifications stage, which you can see here you're a day late and a dollar short. Tappan Zee Bridge.jpg
(No surprises on the list; the consortia are headed by Bechtel, Dragados, Fluor and Kiewit.) Here's worse news: If you're hearing this for the first time now, you're probably living under a rock. This old bridge is nearing the end of its lifespan.

So, they're building a new one. We've been following this project here at Gravel2gavel and we've been waiting to see the RFP. Whenever someone will be building an iconic project, it's alway interesting to see the details. Now we can, here.

Some observations, after the jump.

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The Yin and Yang of offshore wind power

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Earlier this month the Department of Energy announced a 6 year, $180 million initiative to boost the Nation's wind power capabilities. Starting with $20 million this year, the DOE will spend the money on up to four innovative offshore wind energy installations across the United States. The DOE says the initiative will help move the U.S. closer to harnessing the estimated 4,000 gigawatts of power that could be generated from wind in the Atlantic and Pacific oceans, the Gulf of Mexico, and the Great Lakes.

The money will be allocated through a competitive solicitation and will be awarded to a consortia with representatives from developers, equipment suppliers, researchers and marine contractors. Awarded funds can be used to fund up to 80 percent of the project design costs and 50 percent of the installation costs. The deadline for Letters of intent is March 30 and applications are due on May 31, 2012.

For the press release click here. For information and application details, visit The DOE website here.

More after the jump.

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What if Your Insurer Goes Bankrupt and No One Tells You?

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"Does an insurance broker, after procuring an insurance policy for a developer on a construction project, owe a duty to apprise a subcontractor that was later added as an insured under that policy of the insurance company's subsequent insolvency?"

In this issue of first impression in California, the Fourth District Court of Appeals said "no."  Pacific Rim Mechanical Contractors, Inc. v. Aon Risk Insurance Services West, Inc. --- Cal.Rptr.3d ----, 2012 WL 621346 (Cal.App.4 Dist.).

A quick background: developer (Bosa) engaged insurance broker (Aon) to obtain insurance for a project in downtown San Diego.  Through Aon, BOSA created an OCIP from Legion.  Under the OCIP, Legion provided liability insurance to every contractor and subcontractor on the project.  Bosa later subcontracted with Pacific Rim (PacRim), who became an enrolled party on the OCIP.  After the project was complete, Legion became insolvent.  And apparently subcontractor PacRim was the last to find out. 

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Separation of Insureds Applies to Deductible Payments

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Often on a construction project an insurer will point to the conduct of one insured contractor to exclude coverage for a different insured contractor under the same policy. Inevitably the innocent contractor points to the Separation of Insureds provision, which is a common provision in many insurance policies, to argue that each insured must be treated as the only insured and, therefore, the conduct of one should not impact coverage for another. A fight then ensues over the scope of the provision.

A recent Seventh Circuit decision provides further support for separation of insured principles. In St. Paul Fire & Marine Ins. Co. v. Schilli Transp. Servs., No. 11-2307 (Feb. 13, 2012), the court held that multiple named insureds on the same policy were not jointly and severally liable to pay the basket deductible. Rather, each insured was liable only for the deductible arising from claims specifically brought against it.

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The East End Crossing: Indiana Plans to Take Advantage of its P3 Enabling Statutes

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By Pillsbury Winthrop Shaw Pittman

On March 8, 2012, the Indiana Finance Authority ("IFA") issued a RFQ to design, build, finance, operate and maintain a tolled bridge facility and associated roadway and facilities (the "East End Crossing") through a public-private partnership agreement. If this piques your interest, the Statements of Qualification are due April 9, 2012.

The East End Crossing will largely be a bridge across the Ohio River that will connect Clark County, Indiana and Jefferson County, Kentucky. A piece of the larger Ohio River Project, the East End Crossing will help improve cross-river transportation needs in the greater Louisville-Southern Indiana region.

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The First Step to Dispute Avoidance: Execute the Contract BEFORE Work Commences

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Dating back to Hammurabi's code in the early fourth millennium B.C., continuing through the development of the U.S. Constitution, and still present in today's professional culture, a dominant theme has arisen: before any process involving participation of multiple individuals or entities with differing goals can be successfully administered, a fixed set of rules should be adopted by all participants. The construction industry is no different; before a construction project is designed and construction work commences, the "rules" of the project must be agreed upon. The "rules" guiding the performance and obligations of the players in a construction project are found in the various contracts among the owner, design professionals, contractor and subcontractors.

All too often in the construction industry, the "game" begins before the rules are set; the owner meets with the design professional to discuss the schematic design process, the engineers begin incorporating their work into the architect's drawings, and the contractor orders long-lead items, lines up his subcontractors, and frequently begins site work excavation, all before a single contract has been executed. Unfortunately, it has become quite common in the industry for owners and contractors, and contractors and subcontractors, to agree orally upon the project price and scope, then start working before many of the remaining important issues are agreed upon and reduced to writing in a formal contract. See, e.g., Carvel Co. v. Spencer Press, Inc., 708 A.2d 1033 (Me. 1998); Roberts & Schaefer Co. v. Hardaway Co., 152 F.3d 1283 (11th Cir. 1998). While the performance of such work may lead to an enforceable oral contract, the risks inherent to all parties in "playing the game" with an unknown set of rules may be significantly reduced by mutual written agreement on issues such as insurance coverage, liability (including indemnification), termination procedures, damages, delays, claims, change order procedures, allocation of risks and responsibilities, warranties, fees and payment procedures (including proper invoicing, retention, timing, schedule of values), dispute resolution mechanisms, risk of loss, and scheduling.

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Thirty Stories in Fifteen Days!

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Jonathan Kaiman of the Los Angeles Times reported recently on a developer, Broad Sustainable Building, that constructed a thirty-story building in Changsha, China, in 15 days (not including the foundation and tenant improvements) with the help of extensive prefabrication. The fascinating time-lapse video of the construction of the building is here on YouTube and has received several million hits.

According to the Times, the company contends its speedy construction methods are both safer and more economical, since most of the work is done in a factory and jobsite time is significantly reduced. The article notes that the company is looking to take its construction methods overseas, possibly even to the United States. Whether the company can overcome the building and labor code obstacles it would likely face in the U.S. remains to be seen, but keep an eye out for vacant lots that turn into skyscrapers overnight.

Perspectives on Real Estate Newsletter (Spring 2012 Edition)

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The 21st edition of Pillsbury's Newsletter: Perspectives on Real Estate features articles on green leasing, mineral rights, avoiding contstruction project failures and California's post redevelopment agency landscape. Articles include:

The Spring 2012 Edition of Perspectives on Real Estate is edited by: Laura Hannusch, Peter Freeman, Christine Roch and Noa Clark and can be downloaded in its entirety by clicking here.

The Tappan Zee Bridge: Hey brother, can you spare 60 billion dimes?

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By Pillsbury Winthrop Shaw Pittman

You could be forgiven if you've missed some of the news concerning the new Tappan Zee Bridge project. This project is very much on Governor Cuomo's front-burner and is moving right along at an impressive pace. Here is the Reader's Digest version of some (relatively) current events.

In February, four groups consisting of the usual suspects were short-listed to design and build the new span. In a strage twist of fate, one of the short-listed groups includes Dragados which now employs the same Chris Ward who reportedly butted heads with Gov. Cuomo during his time as the Executive Director of the Port Authority.

Meanwhile, back in Albany, the State engaged consultant Jeffrey A. Parker & Associates, Inc. to figure out how to pay the $6 billion price tag. The State has requested $2 billion from the Federal Department of Transportation pursuant to the Transportation Infrastructure Finance and Innovation Act (TIFIA). So, assuming the feds allocate the requested $2 billion (a better bet than an Atlantic City slot machine given President Obama's slection of the new bridge as one of fourteen projects to receive accelerated environment review - and Mr. Cuomo's political affiliation), Mr. Parker must close a $4 billion fuding gap. The administration has mentioned using pension fund investments, bonds and toll revenues. But, unless I missed something, nobody has offically suggested toll increases - yet.