Articles Posted in Real Estate

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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.

 

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On March 13, 2020, Wyoming Governor Mark Gordon signed House Bill 74 (HB 74) into law. After the Governor signed HB 74, it became House Enrolled Act 60. HEA 60 allows utilities and other power plant owners to replace retiring coal and natural gas electric generation plants with small modular nuclear reactors (SMRs).

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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).

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The SEC has provided conditional regulatory relief regarding filing deadlines and has issued guidance regarding annual meetings to assist public companies impacted by COVID-19. In “COVID-19: Q&A for Public Companies,” colleagues Davina K. Kaile, Gabriella A. Lombardi, Christina F. Pearson and Stanton D. Wong addresses some of the most frequently asked questions of public companies on how to navigate the challenges posed by COVID-19.

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California Governor Gavin Newsom has declared a state of emergency and, pursuant to his broad authority under the California Emergency Services Act and other statutory provisions, has issued Executive Orders suspending or modifying the effect of certain state statutes and regulation in response to COVID-19, and authorizing the commandeering of property needed for the response. In “California Executive Power and Industrial Facilities in the Wake of COVID-19,” colleagues Michael S. McDonough and Christopher W. Smith provide an overview of the recent updates and rulings on California’s facilities and operations.

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In California, localities led the way with mandates, but the governor’s Executive Order has left confusion in its wake on the extent to which local rules are preempted. In “California State and Local COVID-19 Orders,” colleagues Robert A. James, Brian E. Finch, Callie A. Bjurstrom and Amanda G. Halter provide an overview of the recent updates and rulings.

 

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On Saturday, March 21, 2020, New York Governor Andrew Cuomo issued Executive Order No. 202.8 (EO 202.8) requiring all nonessential employees to stay home, effective at 8 p.m. Sunday, March 22, 2020, through April 19, 2020. Any business not in compliance with the order is subject to civil fines and mandatory closures. There will also be restrictions placed on civilians, though specific enforcement measures for those provisions have not been specified. Colleagues Brian E. Finch and Amanda G. Halter summarize the terms under EO 202.8 in the alert “New York State on PAUSE: New York State Shuts Down All Nonessential Businesses to Combat COVID-19.”

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iStock-487677302-300x200If 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.

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In times of uncertainty, every enterprise should undertake a stress test of its supply chain and manage the risks accordingly. The responses to this outbreak are evolving so rapidly that most communications should be expressly based on the state of knowledge on the day and at the hour they are issued. In the alert “Supply Chain Coronavirus Impacts: Force Majeure and Beyond,” colleagues Robert A. James, and James Campbell provide a comprehensive overview to review the impact coronavirus has on the entire supply chain.

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Pillsbury colleague David F. Klein outlines four key points to keep in mind when reviewing various insurance policies during the coronavirus pandemic in the alert, “COVID-19 Insurance Checklist.”