August 2012 Archives

Shutting Down the Construction Project

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When trouble, in the form of adverse changes in financial conditions or the property marketing environment, strikes during the period between construction contract signing and completion of procurement and construction activities, the developer often will have to consider taking the course of action that will maximize value for all stakeholders. Ultimately, it may reluctantly determine that the construction contracts and work should be suspended for some period of time or terminated altogether. Our white paper Shutting Down the Construction Project, updated to include California's mechanic's lien laws effective July 1, 2012, outlines significant issues that an owner should consider when suspending or terminating a California commercial construction project.

Things to consider include providing notice of the suspension/termination, if the contract is suspended, keeping the contract and subcontracts in effect, and closing out the claims exposure. Similar principles apply to projects in other states and projects of a residential, industrial or public nature. As becomes quickly apparent, the laws governing these issues are highly technical and often impose short deadlines for compliance, and also pose signfiicant risk to owners and contractors for non-compliance. To learn more about this, click here to our white paper.

G2G Friday Favorites - Aug 24

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California Condominium Owners Association Bound by Arbitration Provision in CC&R's

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Developers got a significant win in California last week when the California Supreme Court held that an arbitration provision contained in a recorded instrument bound a homeowners association, despite the fact that the homeowners association did not exist when the instrument was recorded and thus had no opportunity to negotiate the provision. The opinion can be found here.

In Pinnacle Museum Tower Association v. Pinnacle Market Development (US), LLC (August 16, 2012) 2012 Cal. LEXIS 7665, a homeowners' association ("HOA") sued the developer of a mixed-use residential and commercial common interest community, alleging construction defects. Prior to selling any units, the developer had recorded a declaration of covenants, conditions, and restrictions ("CC&R's"), which provided that the developer, each individual homeowner, and the HOA, all consented to arbitration under the FAA of any construction-related disputes. Each individual homeowner's purchase agreement specifically noted the homeowner's acceptance of the CC&R's, and the arbitration provision in particular. However, pursuant to California law, the HOA was not actually created until the sale of the first unit.

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G2G Friday Favorites - Aug 16

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The efficiency of the South moves North -- charming, isn't it?

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One of John F. Kennedy's best quotes was noting that "Washington is a city of Southern efficiency and Northern charm." When it comes to Public Private Partnerships, things have turned around in the last 50 years. The South leads the way in P3's with Virginia, Florida and Texas being notable standouts. The conventional wisdom has been that strong unions in northern states would continue to fight against more private involvement in state infrastructure. But the pressures of constrained state budgets are proving too strong.

So, earlier this year we saw Maryland almost pass a new P3 statute (alright, Maryland is South of the Mason-Dixon Line, but it's still a blue state with heavy union activity). Then Pennsylvania actually passed a law, and now New Jersey has entered the fray with a new law targeting colleges.

We'll take a look at the new Pennsylvania and New Jersey laws, after the jump.

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The Green Olympics

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The Olympics are in full swing, with the world's attention on the playing fields and pools dotting the United Kingdom. But how about the venues themselves, how green are they? The London Organizing Committee planned the Games with a green tint, focusing on sustainable principles for everything from stadium construction, food service, and the use of public transportation. Plus, the large number of preexisting venues around the city (tennis at Wimbledon, for example) made some additional construction unnecessary.

Planning for Green - The Organizing Committee took the forward-thinking step of setting up the London Legacy Development Corporation three years ahead of the Games, which has focused on long-term uses of the Olympic venues after the torch is passed to Russia's winter Olympics. The Development Corporation's plans for housing and parks were developed with an eye to rebuilding parts of London, particularly East London. The Organizing Committee even took the extra step of working with the Independent Standards Organization to develop a global standard for sustainable event management, now known as ISO 20121:2012.

Green Building - Venues constructed for the games include a number of innovative green features. The roof of Olympic Stadium, for example, was constructed from unwanted gas pipes from the North Sea and over 40% of the concrete used for construction is made of recycled materials. While the question remains as to whether this much new construction can ever be considered truly sustainable when developed for a single mega-event, the Organizing Committee took great steps to reduce waste. Many Olympic venues that do not have long-term uses were built only to be used for the Games and will then be taken apart and their materials will be reused.

Looks like a tough act to follow for Sochi and Rio.