Boston Mayor Martin J. Walsh first limited construction in the City of Boston to essential work on March 17. This pause in non-essential construction has been extended indefinitely by order of the Boston Public Health Commission on April 24. On April 27, Mayor Walsh confirmed that he will not re-open the City on May 4, the date the Commonwealth is scheduled to re-open (Massachusetts Governor Charlie Baker extended his stay-at-home order on April 28 to May 18). In “City of Boston, Massachusetts Extends Construction Moratorium,” partner Paul Shapses discusses how non-essential construction is not presently permitted in Boston, but draft best practice guidelines and an associated contractor certificate identify the way forward for owners and contractors.
The Federal government issued an advisory list of essential critical workers, including workers doing certain types of construction, but deferred to states and local governments to implement any orders. In “Construction During COVID-19: Is It Essential?,” colleagues Laura Bourgeois LoBue, Matthew D. Stockwell, Andrew M. Argyris and Elizabeth J. Dye address that there is no “one-size-fits-all” approach to how governments are handling construction.
The impact of COVID-19 on construction projects continues to evolve as an increasing number of are issuing orders suspending construction. While complying with obligations in the face of a project being shut down, parties should not lose sight of actions that will best position them when construction resumes. In “So the Government Shut Down Your Construction Project—What Next? colleagues Matthew Stockwell and Laura Bourgeois LoBue discuss the legal issues that may come into play in the event of a COVID-related shutdown.
The global effect of the Coronavirus disease (COVID-19) is still unknown, and the progress of many large-scale construction projects has been affected by “Shelter in Place” orders, although some states and localities have classified construction projects as “essential.” Just last Friday, New York shut down all construction, with few exceptions.
Due to pressure from construction workers, officials, and some construction workers having tested positive for COVID-19, the Empire State Development Corp. (acting on behalf of Governor Cuomo) has frozen all construction in New York today, with the exception of work on hospitals and health care facilities, transit facilities, roads and bridges, affordable housing and homeless shelters.
As a result, commercial construction and condominium projects are on hold, with the exception of work that must be completed to prevent unsafe conditions. Until now, construction has been considered “essential” in New York.
Naturally, this will cause delays and have financial impacts on owners and contractors alike. Contractors will need to secure their sites, document additional costs incurred, and determine the rights they have with regard to payment, delays, and suspension of work in accordance with their contracts. Contractors are also likely to face claims from downstream subcontractors. Owners will have to also review their contractual rights, particularly with regard to suspensions and the circumstances under which the owner may suspend without an increase in the contract sum. Owners in most cases will suffer a loss of revenue and increased interest and soft costs as a result of the suspension, and should look for sources to recover those losses, including business interruption or civil authority insurance coverage.
We are monitoring for further developments, and will be posting more information on this and other similar suspensions and how owners and contractors can protect themselves, shortly.
In a letter ruling published March 16, 2020, the Tennessee Department of Revenue concluded that a contractor’s purchase of materials and equipment for use in the construction and installation of a new steam production facility at a federally owned manufacturing plant was exempt from Tennessee sales and use tax. Tenn. Letter Rul. No. 20-02 (issued Feb. 10, 2020).
If the coronavirus pandemic continues to spread in the United States as it has in other countries, drastic expansions of hospital and quarantine facility capacity are likely to be necessary. In the hard-hit Seattle area, several temporary facilities are already under construction, including a 200-bed temporary quarantine and isolation center built on a soccer field. China’s response to the initial outbreak in the city of Wuhan demonstrates how rapidly authorities can add capacity in an emergency.
Surprisingly, heretofore, English law provided no clear answer to this seemingly straightforward question, and inconsistent case law over the past century has left a trail of confusion. Given the widespread use of English law in international construction contracts, this uncertainty had gone on far too long.
The good news is that drafters of construction contracts throughout the world can now have a well-deserved good night’s sleep courtesy of the English Court of Appeal’s March 2019 decision in Triple Point Technology, Inc. v PTT Public Company Ltd  EWCA Civ 230.