News
Despite Headwinds, H.V. Officials Forecast Strong Construction Market Through 2022
By JOHN JORDAN – April 26, 2022
CHESTER, NY — Let’s hope our top elected officials in the Mid-Hudson Valley are right at reading the winds of fortune in their respective communities. Their recent forecasts given to contractors and leaders of organized labor indicate building and construction will continue to prime the region’s economy in 2022 as the nine-county area emerges from the COVID-19 pandemic.
These county officials also heard from the heads of organized labor with an impressive project list of both public and private work projects that are breaking ground this year or already under construction that should keep their union members working on job sites.
Both politicians and building trades representatives noted that escalating costs due to the rapid rise in inflation could impact project work in 2022 and lead to some delays.
The meeting, held in late March at the Glenmere Mansion in Chester, NY drew more than 50 leaders from the public and private sector to the eighth annual joint labor-management coalition called the Hudson Valley Construction Industry Partnership (HVCIP). Making presentations at the session were Rockland County Executive Ed Day, Orange County Deputy County Executive Harry Poor, Dutchess County Executive Marcus Molinaro and Ulster County Executive Pat Ryan.
The program was moderated by John Cooney, Jr., executive director of the Construction Industry Council of Westchester & Hudson Valley, Inc., of Tarrytown. Alan Seidman, executive director of the Construction Contractors Association of Newburgh, NY, also supported the event.
Both politicians and building trades representatives noted that escalating costs due to the rapid rise in inflation could impact project work in 2022 and lead to some delays.
Rockland County Executive Day began by noting that road conditions in some sections of the region are “horrible.” He said, “One would think that the one thing you can do is make sure the roads are paved and are decent. The roads are horrible. And I know it is not the DOT. We have professionals there; they do a great job. It’s not the workers, it’s not the management, it’s a failure by the state to fund.”
Mr. Day continued, “There is no reason why with the (federal infrastructure funds) being thrown around right now in the budget process they cannot come up with the basic thing that Sen. Alfonse D’Amato ran on and won on if I recollect—potholes. The roads should be pristine.”
Mr. Day said Rockland’s long-awaited, $30-million-plus Highway Department garage project should be completed this year, adding that the bonding necessary for the construction of the $8-million Hi-Tor Animal Shelter has been approved and construction will begin this year. The county also plans to move forward with improvements to the county’s Fire Training Center.
One concern moving forward is higher costs, he said, noting that rising inflation and costs pressures that have resulted “are creating a major issue right now.” While the county is meeting with the building trades to maintain and improve Project Labor Agreements, he said that bids are beginning to come back that are way above county project estimates.
“What I would urge us all to consider is that I recognize the increased cost scenario, I get it, but please give some thought to what happens when you over-project and when you over-cover your possibilities,” Mr. Day related. What may happen is the county rejects all bids and reassess its project priorities, he noted.
Regional Roundup
Rockland County
- Hi-Tor Animal Shelter
- Fire Training Center
Dutchess County
- Justice and Transition Center
- $18 million to $20 million in road projects.
- New Homeless Shelter
Orange County
- Regionwide Improvements with IIJA funding, including 33 miles of road paving
- New Medical Examiner’s facility
- ADA improvements and asbestos removal at county buildings
- OC Airport in Montgomery upgrades and improvements
- East Main St. in Middletown drainage and improvements
Ulster County
- County Operations Center
- New facility for mental health and addiction treatment
- Crisis Stabilization Center
- Advocating to save the Castle Point Veteran Affairs facility
Dutchess County Executive Molinaro also pointed to rising project costs as a concern in 2022. The largest county capital construction project in its history—the $154-million Dutchess County Justice and Transition Center—is underway. He also said between $18 million to $20 million in road paving projects are going out to bid in the next several months.
Mr. Molinaro noted that bids went out on that project three years ago and the job is $25 million under budget. He said that if the job went out to bid today it would probably run approximately $60 million or $70 million over budget. The county will also embark on the construction of a new homeless shelter utilizing mostly federal funds.
He noted that inflation has impacted the county’s plan to improve Dutchess Stadium and that for many of its projects, bids have come in about 60% over county projections. He said these bids that are factoring in increased material and labor costs will slow down the county’s capital program. Mr. Molinaro believes the nation is heading towards an inflation-fueled recession in the next 12 to 24 months.
Orange County Deputy County Executive Porr said that the county will be receiving approximately $70 million in one-shot federal revenues. “Our attitude or philosophy has been that the best thing to do with one-shot revenues is to invest them in capital projects and that is what we intend to do,” he told the attendees.
The Neuhaus Administration plans to build a new $20-million Medical Examiner’s facility. Bids on that project are expected to go out in June. He also noted that the county has a serious bidder for a portion of the former Camp LaGuardia property in Chester/Blooming Grove that would involve the development of a warehouse building totaling approximately 900,000 square feet.
The county will be paving approximately 33 miles of roads in 2022 and will also embark on ADA improvements and asbestos removal at county buildings; a host of park upgrades, improvements at the Orange County Airport in Montgomery as well as drainage and road work on East Main Street in Middletown and other road, bridge and infrastructure projects throughout the county.
Ulster County Executive Ryan said the county will be receiving $34.5 million in federal funding. “I think Ulster County is really on fire and exploding right now…I grew up in Kingston and I have never before seen the momentum and the energy and the positivity, the capital, the talent. Young people whom I grew up with and who left are starting to come back to all parts of Ulster County, he said.
The major county government project at the moment is the development of a new state-of-the-art County Operations Center. Ulster County will also be building a major capital project in connection with its renewed commitment to mental health and addiction services. The county also just put out to bid a Crisis Stabilization Center. Major private projects in Ulster County include redevelopment work at the former IBM site outside of Kingston valued at approximately $200 million and a new marijuana distribution facility at a former factory site in Ellenville. He also asked for support for the county’s efforts to save the Castle Point Veteran Affairs facility, which has been recommended for closure, but is in need of significant improvements.
Stephen J. Reich, Financial Secretary/Treasurer of the Rockland County Building and Construction Trades Council, said there are a number of significant private projects moving forward that were not expected, including a Data Center venture in Orangeburg and upcoming site work on a Jehovah Witness Multimedia Center in Ramapo in anticipation for construction on this large-scale project.
Public work includes several New York State Thruway jobs in the offing, but he termed prospects for NYSDOT work as weak.
- Todd Diorio, president of the Hudson Valley Building and Construction Trades Council, cited a host of major projects in the Hudson Valley including a $300-million mental health facility, the marijuana distribution facility in Ulster County, the redevelopment of the IBM project in Ulster County and major hospital projects that will be undertaken by Westchester Medical Center at its facilities throughout the region.
“The outlook for the Hudson Valley (in 2022) looks good,” Mr. Diorio said. “
Mr. Diorio also acknowledged the impending retirement of Mike Gaydos, Recording Secretary of the Hudson Valley Building and Construction Trades Council, who also serves as Business Manager of Ironworkers Local No. 417 in Wallkill, NY.
“I get a lot of the credit sometimes running the Building Trades, but I have been fortunate to work with some really good officers over the years,” Mr. Diorio said. “Mike Gaydos has been with me since day one and he is not one of those guys who takes all the credit, but he’s always been there and has always had my back. Mike you are going to be missed.”
Gov. Earmarks Up to $1B for Rt. 17 Expansion
By JOHN JORDAN – April 26, 2022
ALBANY — The most consequential economic development project for the mid-Hudson Valley region in decades is not a major corporate relocation, a large lease deal or a new massive warehouse developed by a national e-commerce giant. Instead, it will be a major infrastructure project that will surely facilitate mega deals like those mentioned above in the coming years.
Advocates for the expansion of Route 17 in Orange and Sullivan counties learned on April 9 that their efforts had borne fruit as Gov. Kathy Hochul—in touting her $32.8
billion, five-year capital plan for the New York State Department of Transportation—noted that the state would earmark up to $1 billion of the capital plan to “accelerate the conversion of the Route 17 corridor in Orange and Sullivan counties to Interstate 86, fueling transformative levels of economic growth in the region and improving quality of life by alleviating congestion.”
The New York State Department of Transportation is now expected to begin the environmental study on the Route 17 expansion project based on a final report from the New York State Department of Transportation’s Route 17 Planning and Environmental Linkage (PEL) Study group released in November 2021. The PEL report recommended the state move forward with an environmental review of a General Use Third Lane in each direction on Route 17 in Orange and Sullivan counties that could, if built as one major project, cost anywhere from $650 million to $1.27 billion. The PEL Study Group also called for a study of interchange upgrades be undertaken at exits in Orange and Sullivan counties and that improvements be made in the region to improve connectivity to existing transit.
While Gov. Hochul had called for NYSDOT to begin the environmental review process in her State of the State message earlier this year, her announcement earlier this month of a funding commitment of up to $1 billion is seen by project advocates as a major victory.
“We thank Gov. Kathy Hochul and the State Legislature for making Route 17 a priority for investment,” said 17-Forward-86 Coalition co-chair Maureen Halahan, president and CEO of the Orange County Partnership. “This project will improve mobility and safety in the region by making much-needed upgrades to Route 17. It’s been a long road to this point, and we’re overjoyed to see this project finally move forward now that the necessary resources have been allocated.”
17-Forward-86 is a coalition of industry, trade and civic representatives that has been advocating for adding an additional travel lane along Route 17 to convert the corridor to Interstate 86 in Orange and Sullivan counties. The Construction Industry Council of Westchester & Hudson Valley, Inc. and the Building Contractors Association of Westchester & the Mid-Hudson Region were one of the founding members of the organization.
John Cooney, Jr., Executive Director of the CIC, said of the governor’s announced funding commitment: “The CIC and the 17 Forward-86 Coalition thank the governor and the NYS DOT for their forward commitment to funding the critical conversion of Route 17 to I-86 in Orange and Sullivan counties.”
Marc Baez, President and CEO of the Sullivan County Partnership, added, “We are grateful to the governor and our local, state and federal lawmakers—and to the thousands of stakeholders working with us to see this project become a reality. Baez, who is co-chair of the 17-Forward-86 coalition, added, “This is good news for our residents, visitors, first-responders and all those who travel Route 17. We now have the chance to improve safety on this corridor and ensure sustainability for generations to come.”
According to the final PEL Study Group report, the scope of the construction of the General Use Third Lane beginning at Exit 131 in Harriman (Orange County) to Exit 103 (Rapp Road) in Monticello in Sullivan County would determine the cost of the project.
Option 1, which involves using the basic existing footprint of the roadway and shoulders to accommodate a third lane in each direction would cost $385 million to $470 million for the Orange County stretch of roadway and another $265 million to $325 million in Sullivan County.
Under Option 2, which would involve widening the existing roadway to accommodate the third lane expansions in both directions so that most of Route 17 would conform to federal Interstate standards, the costs would escalate. For the Orange County section, the cost would run between $615 million to $750 million, while the Sullivan County component’s cost ranges from $425 million to $520 million.
The PEL Study Group did not recommend one option over the other and also while listing interchanges in Orange and Sullivan counties that could be upgraded, it did not issue any specific recommendations, although it did point out those with the greatest need.
The study indicated the cost of the interchange upgrades in Orange County could run from $135 million to $175 million and in Sullivan County from $43 million to $144 million.
Improvements to Connectivity to Existing Transit projects are projected to cost between $1 million to $1.5 million in Sullivan County and $9 million to $10 million in Orange County.
While study group officials have stated at previous virtual public workshops that the full project would likely not move forward all at once due to funding constraints and other factors, the report listed the total project cost involving the construction of the General Use Third Lane, interchange improvements and improvements to connectivity to existing transit projects would run from $529 million to $935 million in Orange County and $309 million to $665.5 million in Sullivan County.
The Route 17 expansion will qualify for some federal funding. However, it is likely that the overall project would be done in phases and based on the report it appears work would begin on a stretch of the roadway in Orange County.
“As previously noted, NYSDOT will determine the logical termini and specific project limits of the General Use Third Lane Alternative in the future, following careful consideration of existing and projected traffic congestion, public and agency input, and available funding,” the report stated. “Based on this Route 17 PEL Study, the area of greatest need appears to be between Exits 120 (NY Route 211 – Wallkill) and 131 (Woodbury), a distance of approximately 22 miles, and the segment of the corridor that is projected to experience the highest levels of congestion in the year 2055.”
The 17-Forward 86 coalition recently hosted a rally at the Galleria at Crystal Run in the Town of Wallkill with local, state and federal representatives to urge Gov. Hochul and state legislators to commit construction funding as part of the NYSDOT capital plan by using part of the more than $5 billion in additional funding earmarked for New York State under the federal Infrastructure Investment and Jobs Act.
“As New York State continues to rebuild, we must seize opportunities to get our local economy back on track,” said Greg Lalevee, business manager, IUOE Local 825, and member of the 17-Forward-86 Coalition. “One of the surest ways to do that is to get people to work and to attract investments here in Orange and Sullivan counties. Infrastructure plays a key role in all of this and upgrading the Route 17 corridor will go a long way toward helping our region recover and prosper. The construction project itself will create good-paying jobs and the end result will be a safer and more efficient means of transportation for all residents and visitors in the Hudson Valley.”
Mount Vernon to Receive $168M to Address Long-Standing Water Infrastructure Problems
MOUNT VERNON, NY — New York State reported on April 15 it would be making a $150-million investment and a three-way partnership between the City of Mount Vernon, State of New York and Westchester County to immediately advance work to address longstanding water infrastructure and related public health challenges that have plagued the City of Mount Vernon for decades.
At an event at Mount Vernon’s City Hall, Gov. Kathy Hochul also announced the immediate launch of the $7-million “Third Street Sewer Project,” that, when complete, will ensure reliable wastewater service for 500 nearby households currently served by temporary pumps and a makeshift system staged in the street to ensure adequate wastewater collection.
The State’s Environmental Facilities Corporation will also provide $8 million to fund emergency repairs and jump start long-term planning for future projects, including lead pipe replacement. Funding includes a $5-million interest-free emergency loan and a $1-million grant to survey lead service
lines in the city and to develop a replacement plan. EFC will also dedicate $2 million for engineering consultant services to accelerate work.
Additionally, Mount Vernon, DEC and EFC have committed to undertake an asset management program that will inventory, assess and track the city’s clean water infrastructure and help create a plan to fund and maintain Mount Vernon’s water quality infrastructure over the long-term.
The Governor’s Office of Storm Recovery will supplement the public infrastructure improvements with a $3-million PILOT program to mitigate environmental hazards and make resiliency upgrades to private property. Participating homes will be eligible for rehabilitation of damaged pipes, replacement of lead service lines, and other needed environmental remediation. Those funding awards bring the total investment to $168 million.
The state, city and Westchester County signed a Memorandum of Understanding that is seen as a critical step to Mount Vernon resolving longstanding violations of the Clean Water Act under a Federal Consent Decree.
The state-county-city partnership memorialized in the MOU will expedite priority projects, as well as outline roles, responsibilities, and available funding for the city-wide effort. The agreement formalizes the three-way partnership between the City of Mount Vernon, Westchester County, and the New York State Department of Environmental Conservation, representing multiple state agencies, including the use of $7 million in Clean Water Infrastructure Act funds to immediately launch engineering, design, and construction of the Third Street Sewer Project. Work on projects across the city will take place in phases over five to seven years after a comprehensive assessment of the city’s current infrastructure.
In December, the governor announced a $10-million Water Quality Improvement Project (program grant award from DEC to Mount Vernon that will improve water quality in the Hutchinson River by upgrading one portion of the city’s municipal wastewater outfalls to prevent the discharge of raw sewage. This grant advances work required by the Federal Consent Decree with the city. The NYSDEC also awarded a $75,000 Non-Point Planning Grant to support the mapping of Mount Vernon’s municipal separate storm sewer systems to prevent polluted runoff from affecting local communities and the environment. In addition, EFC provided two Engineering Planning Grants totaling $200,000 in 2021. Additional state investments to help address Mount Vernon’s wastewater infrastructure challenges include a $1.6 million WQIP grant awarded in 2016.
$8B of Econ. Impact from Green Energy Power Lines Moves Forward with PSC OK, Producing 5.0K MWs
ALBANY — The New York State Public Service Commission earlier this month approved contracts with Clean Path New York LLC for its Clean Path NY project and H.Q. Energy Services Inc. for its Champlain Hudson Power Express project to deliver clean, renewable solar, wind and hydroelectric power from upstate New York and Canada to New York City. The two contracts are expected to generate more than $8 billion in economic development activity for New York State.
Since the closure of the Indian Point Nuclear Power Plant, which generated 2,000 megawatts of power, New York State has set a goal of achieving 70% of state energy from renewable resources.
The state’s first-of-its-kind renewable energy and transmission projects are projected to deliver up to $5.8 billion in overall societal benefits statewide, including greenhouse gas reductions and air quality improvements, and $8.2 billion in economic
The City of New York has agreed to purchase a portion of the renewable attributes generated by the two projects, thus helping to make the scale of these projects possible while creating the opportunity to reduce the cost impact of these projects by up to $1.7 billion to all other ratepayers.
development across the state, including investments in disadvantaged communities. Further, when built these projects will help protect against volatile fossil fuel price fluctuations and stabilize long-term energy costs.
CONSTRUCTION NEWS has previously reported that both projects have committed to Project Labor Agreements and paying prevailing wages. The 1,250 MW CHPE involves the construction of an underground and underwater transmission line spanning approximately 339 miles between the Canada–U.S. border and New York City. Clean Path NY comprises a 175-mile state-of-the-art transmission line, 3,800 megawatts of new in-state solar and wind power, and New York Power Authority’s (NYPA) existing Blenheim-Gilboa Pumped Storage Power Plant, a hydroelectric facility that will strengthen the reliability and resiliency of the project.
As the largest transmission projects contracted for New York State in the last 50 years, these projects will reduce the city’s reliance on fossil fuel-fired generation by more than 50% in 2030. The announcement accelerates progress to exceed New York State’s goal for 70% of the state’s electricity to come from renewable sources by 2030 on the path to a zero-emission grid by 2040 as outlined in the Climate Leadership and Community Protection Act.
The contract awards were bolstered by the City of New York’s confirmation that it will join in these landmark awards by agreeing to purchase a portion of the renewable attributes generated by the two projects. This will help make the scale of these projects possible while creating the opportunity to reduce the cost impact of these projects by up to $1.7 billion to all other ratepayers.
The NYS Office of General Services has also committed to entering into a contract with the New York State Energy Research and Development Authority (NYSERDA) for Tier 4 RECs associated with the energy used by state agencies and departments located in New York City.
NYSERDA will also offer renewable attributes from these projects for voluntary purchase, finally enabling the many New York City organizations with interest in switching to clean energy (but who have been unable to do so on-site due to practical constraints) to go on 100% renewable with confidence. The government commitments and likely potential for additional private sector purchases are expected to significantly reduce the statewide utility ratepayer impact of implementing the CLCPA and Tier 4 program.
The PSC’s October 2020 order adopted a Tier 4 program as part of the PSC’s Clean Energy Standard with the purpose of increasing the penetration of renewables into New York City, and directed NYSERDA to conduct a Tier 4 solicitation. In January 2021, NYSERDA issued a Tier 4 renewable energy solicitation seeking projects that can cost effectively and responsibly deliver renewable energy to New York City, an area of the state that relies on aging fossil fuel-fired generation.
The selected projects are expected to deliver 18 million megawatt-hours of clean energy per year, or more than a third of New York City’s annual electric consumption, from a diverse and resilient clean generation portfolio including onshore wind, solar, and hydroelectric power, backed by energy storage, from upstate New York and Quebec. Combining these projects with the existing contracted portfolio of offshore wind projects connecting directly into New York City, turns the page on the city’s energy history, increasing resilience and reliability while significantly improving air quality, state officials noted.
With approval of the contracts, NYSERDA payments will commence for each respective project once the project has obtained all required permits and approvals, has completed construction, and is delivering power to New York City, which is expected to begin in 2025 for the fully permitted CHPE project and 2027 for the CPNY project.
New York City Mayor Eric Adams said, “Not one but two new transmission lines will be built to bring clean renewable energy from the north into New York City—a feat that has not occurred at this scale in decades. I’m proud of the city’s commitment to purchase 100% of its electrical need from these lines, catalyzing others to do the same.”
As a component of these landmark deals, Hydro-Quebec will purchase electricity from the planned Apuiat wind farm, developed by the Innu communities in Quebec, as well as enter into a partnership with the Mohawk Council of Kahnawà:ke for joint ownership of the line in Québec that will connect to the Champlain Hudson Power Express.
“Today’s vote is a win for New York and moves forward a project that will create thousands of in-state jobs, reduce harmful pollutants, and invest nearly $189 million in protecting our environment, our neighborhoods, and our planet—all while delivering renewable, reliable, power,” said Transmission Developers CEO Donald Jessome. “It is also a testament to forward-looking public officials who put forward bold clean energy targets and community leaders, environmental advocates, business and labor leaders, academics, and New Yorkers who studied the project and voiced their support for it—the PSC clearly heard and considered all these voices.”
Key benefits of these projects include:
- The projects will deliver up to $2.8 billion in public health benefits resulting from reduced exposure to harmful pollutants—including avoided premature deaths, reduced asthma-related hospital visits, and lost workdays due to illness.
- The projects will create approximately 10,000 family-sustaining jobs statewide with $8.2 billion in economic development investments, helping accelerate the state’s economic recovery from COVID-19. The project developers have also committed to prevailing wage and project labor agreements to ensure quality, good-paying jobs for New Yorkers.
- The two projects committed to investing a combined $460 million in community benefit funds to create pathways to green energy jobs, support public health, advance capital improvement projects, realize habitat restoration and improve the environmental footprint of buildings in disadvantaged communities.
Combined, the projects are expected to reduce greenhouse gas emissions by 77 million metric tons over the next 15 years, the equivalent of taking one million cars off the road over this time period.
The two Tier 4 approved contracts combined will result in significant societal benefits up to $5.8 billion. The contracts include an index REC structure to help cushion customers against spikes in energy prices so when electricity prices rise the Tier 4 program costs go down. The average statewide bill impact for the typical residential customer will be approximately 3%, or $3 per month beginning once the projects are in operation.
In addition, these new underground transmission lines will avoid, minimize, and mitigate environmental damages including impacts on sensitive species and habitats and be resilient in the face of extreme weather. Both projects are required to go through the PSC’s Article VII permitting process, which includes a full review of the need for the project and any environmental impacts of the siting, design, construction, and operation of major transmission facilities in New York State. CHPE has received its Article VII permit, and CPNY will begin the process.
The CPNY and CHPE projects will add to New York’s existing robust pipeline of large-scale renewable energy, comprised of nearly 100 solar, land-based wind, and offshore wind projects totaling 11,000 megawatts of clean power—enough to power over five million New York homes when completed.
Attorney's Column
Court Rebuffs Claim For ‘Payment Over Mechanic’s Lien’
By THOMAS H. WELBY, P.E., ESQ. and GREGORY J. SPAUN, ESQ.
This column has often reminded those in the construction industry that the statutory remedy of a mechanic’s lien is a powerful tool that enables unpaid contractors, subcontractors and suppliers to seek payment directly from property owners who may be strangers to the contractual relationship from which the payment obligation arises. Because of the power of this tool, there are also protections in the Lien Law for owners, such as the insulation from being made to pay for the same improvement twice, which is why it is necessary for a plaintiff in a lien foreclosure action to establish the pool of monies available to pay lien claimants (the “lien fund”).
A similar protection is that a property owner who has not yet been served with the mechanic’s lien cannot be held liable for making payments in good faith to other contractors before that owner receives notice of the lien. The converse of this protection is that an owner who has been served with a mechanic’s lien cannot use subsequent payments to deplete the lien fund, and will not have the “good faith payment” defense available upon the foreclosure of the lien.
However, in the recent case of Crisafulli Bros. Plumbing & Heating Contractors, Inc. v Pirri Builders, LLC, when an inventive subcontractor sought to transform that defense into an affirmative claim in a lawsuit, an appellate court held that the Legislature never intended to create yet another type of claim other than the lien foreclosure claim, and it rebuffed the attempt to invent the new one.
Background
In early 2017, Pearl Enterprises entered into a contract with Pirri Builders to serve as the general contractor for a renovation project in Albany, NY. In March of 2017, Pirri entered into a subcontract with Crisafulli Brothers Plumbing and Heating Contractors for the HVAC and plumbing scopes of work. Crisafulli claimed that it performed its work without objection (but without payment), and as a result was owed a total of $164,708.19. Crisafulli filed two mechanic’s liens, one in October 2018, and the other in January 2019. After being served with these liens, Pearl made two payments, totaling $227,502.00, to Pirri—not Crisafulli.
Crisafulli sued both Pearl and Pirri. As against Pearl, it not only sued to foreclose the mechanic’s lien, but it also asserted a cause of action for “payment over mechanic’s lien,” based on Pearl’s two post-lien payments to Pirri. Pearl moved to dismiss the “payment over lien” claim, arguing that it did not exist under New York law.
Decision
The motion court dismissed the “payment over lien” claim, and the appellate court affirmed. In doing so, the court reviewed the plain language of the statute and found that, at best, it provided a safe harbor provision against liability for payments made before the property owner had notice of the mechanic’s lien, and not a separate claim. Under such a reading, the “payment over lien” theory could only be a contractor’s defense against an owner’s attempt to use the safe harbor provision to reduce the lien fund.
Comment
The mechanic’s lien provided for under the Lien Law is a powerful tool. However, as a remedy that was not available at common law, it is read strictly so as to not give greater rights than the legislature intended. Accordingly, because the legislature did not clearly provide for the additional claim for the “payment over lien,” the court properly declined to create the claim by judicial fiat.
As a practical matter, Crisafulli had already started a lien foreclosure action, which, upon the facts presented, appears sufficient to enforce Crisafulli’s rights to payment. The safe harbor provision of the lien law—which Pearl was well outside—already exposed Pearl for making the subject payments after having had knowledge of Crisafulli’s lien. While it is understandable for a contractor to want to bring every weapon to bear in order to collect monies owed, in an attempt to create a claim that did not exist, the only thing that this subcontractor did was to buy itself motion practice, and an expensive trip to the Appellate Division.
P.S.- If you are served with a lien, think twice before writing out any checks. Protect yourself.
About the authors: Thomas H. Welby, an attorney and licensed professional engineer, is General Counsel to the Construction Industry Council of Westchester and the Hudson Valley, and is the Founder of, and Senior Counsel to the law firm of Welby, Brady & Greenblatt, LLP, with offices located throughout the Tri-State/Greater Metropolitan Region. Gregory J. Spaun, General Counsel to the Queens and Bronx Building Association, and an attorney and a partner with the firm, co-authors this series with Mr. Welby.
Construction NEWS
PHOTO GALLERY
Hudson Valley Construction Management & Labor Discuss Outlook, Opportunities & Challenges in 2022
50 members of the contracting community and labor gather with counties’ top elected officials on March 29 at Glenmere Mansion in Chester, NY.
Pictured above starting top left moving clockwise:
Ulster County Executive Pat Ryan
Stephen J. Reich, Financial Secretary/Treasurer of the Rockland County Building and Construction Trades Council
Alan Seidman, executive director of the Construction Contractors Association Hudson Valley in Newburgh
Dutchess County Executive Marcus Molinaro
Orange County Deputy County Executive Harry Porr III
Rockland County Executive Ed Day
L. Todd Diorio, president of the Hudson Valley Building and Construction Trades Council
Longtime union official Michael Gaydos, who serves as business manager of Iron Workers L.U. 417 and recording secretary of the Hudson Valley Building & Construction Council
New ’23 State Budget Includes $33B for Transportation, $4.2B Environmental Bond Up for Vote in November
ALBANY — While construction advocates were hoping for more funding due to record federal investment in infrastructure, New York State’s FY 2023 Budget does feature a record $32.8 billion for transportation infrastructure, and a more than $4-billion environmental bond act to go before voters this November.
The following are some of the highlights of the state budget in terms of funding for the construction and building industry sectors.
Transportation Funding
The FY 2023 Budget includes a $32.8 billion, five-year capital plan for programs and proposed projects administered by the New York State Department of Transportation.
Under the enacted transportation capital plan, direct support for local roads and bridges increases to more than $6.1 billion over the five-year period, an increase of
Under the enacted transportation capital plan, direct support for local roads and bridges increases to more than $6.1 billion over the five-year period, an increase of nearly $2.5 billion (69%), including the doubling of funding available through the BRIDGE NY program and the new Operation Pave Our Potholes initiative.
nearly $2.5 billion (69%), including the doubling of funding available through the BRIDGE NY program and the new Operation Pave Our Potholes initiative.
The governor highlighted a host of major projects that will be funded under the five-year capital plan, including earmarking up to $1 billion for the expansion of Route 17 in Orange and Sullivan counties (See story on page 1).
Other notable large-scale transportation projects that will receive funding under the five-year NYSDOT plan include two major jobs in the Bronx. One project under construction seeks to revitalize a section of the South Bronx by reconstructing the Bruckner Sheridan Interchange at Hunts Point. This project, currently in construction by the New York State Department of Transportation, will transform neighborhoods in the South Bronx by correcting the planning mistakes of the past by prioritizing health and safety. The construction of the new highway interchange; entrance and exit ramps; and rehabilitation of the Bruckner Viaduct will reduce commercial truck traffic in local residential areas; improve mobility, operations and safety; and mitigate poor air quality and harmful emissions in the South Bronx, one of the communities with the highest asthma rates in the nation. This project will also support the sustained growth of the Hunts Point Food Distribution Center, which provides up to 60% of the produce, meat and fish consumed by New York City residents and visitors, by providing direct access to the campus. The Hunts Point Distribution Center employs more than 6,000 workers. In addition, the project will construct a new 1.5-mile shared-use path providing a connection to the 138th Street bike path heading to Randall’s Island, Manhattan and Bronx River Greenway. The enacted budget includes $550 million toward the final phase of construction. All phases of this project are scheduled to be completed in the fall of 2025.
The NYSDOT plan will also fund a study for covering a portion of the Cross-Bronx Expressway. In partnership with New York City, the new state capital plan includes resources to begin a study that will assess the feasibility of decking sections of the Cross Bronx Expressway. The assessment will consider alternatives for reconnecting communities severed by construction of the viaduct to create new open public spaces, enhance bicycle and pedestrian safety along local streets, and reduce the harmful impacts of noise, air and heat pollution adjacent to the expressway. This assessment represents a critical step toward removing unjust physical and economic barriers to residents of the Bronx, state officials noted.
Clean Energy Infrastructure, Climate Resiliency Funding
The FY 2023 budget will authorize an additional $1.2 billion for the landmark Clean Water, Clean Air, and Green Jobs Environmental Bond Act, bringing the total investment to $4.2 billion. In addition to the Bond Act, the budget contains a record $400 million Environmental Protection Fund to support climate change mitigation projects, improve agricultural resources, protect our water sources, advance conservation efforts, and provide recreational opportunities for all New Yorkers, as well as a $500-million investment to develop the state’s offshore wind supply chains and port infrastructure. The initiative will create 2,000 jobs in a growing industry, while helping to make New York the offshore wind capital of the country for years to come.
The budget also helps protect public health and advances environmental and economic restoration by extending and enhancing New York’s successful Brownfield Cleanup Program and includes an additional $500 million in clean water infrastructure funding, bringing the state’s total clean water investment to $4.5 billion since 2017.
$25 Billion Housing Plan
The budget will advance a comprehensive $25-billion, five-year housing plan that tackles systemic inequities by creating and preserving 100,000 affordable homes, including 10,000 homes with support services for vulnerable populations. The plan also electrifies an additional 50,000 homes as part of the state’s plan to electrify 1 million homes and make another 1 million electrification-ready. Funding includes $5.7 billion in capital resources, $8.8 billion in state and federal tax credits and other federal allocations, and $11 billion to support the operation of shelters and supportive housing units and to provide rental subsidies.
Some of the key highlights of the state housing plan include:
- $1.5 billion for the creation and preservation of supportive housing that provides individuals and families that need supportive services and are experiencing homelessness or housing insecurity with the on-site resources they need to thrive and live independently;
- $1 billion for new construction of multifamily affordable housing to help individuals and families find new opportunities to live affordably;
- $450 million to preserve existing multi-family rental housing that will serve to strengthen existing affordable housing across the state and allow individual and families to remain stably housed;
- $400 million to advance homeownership opportunities across the state, especially in historically underserved markets, and to give low-income families the opportunity to have the dream of first time homeownership;
- $300 million for senior housing to help older New Yorkers age in place safely in homes that meet their health needs in the communities they love;
- $250 million for an electrification fund to improve energy efficiency in low-income housing units;
- $220 million for Mitchell-Lama developments across the state to preserve affordability and make important long-term capital improvements as well as the creation of permanently affordable homeownership;
- $200 million to preserve public housing outside New York City—this housing often serves the lowest-income New Yorkers and is in need of capital investment; and
- $105 million to preserve rural rental properties, and mobile and manufactured home parks.
The FY 2023 Enacted Budget will also address several additional key housing priorities such as $350 million in capital improvements for the New York City Housing Authority and $100 million for the Housing Our Neighbors With Dignity Act to convert vacant commercial properties and distressed hotel properties across the state. Another $85 million in funding will help bring current accessory dwelling units across the state—including basement apartments, garage units, and backyard cottages—into code compliance and improve safety for these alternative housing options.
Safety Watch
Companies Must Maintain Proper Work Rules and Processes For the Loading and Unloading of Materials
By COSTAS CYPRUS, ESQ.
When it comes to the loading and unloading of building materials, the case of Secretary of Labor v. 84 Lumber Company shows the importance and need to have in place proper Work Rules that are adequately communicated to and known by employees for their safety and the safety of others.
The ALJ in this Texas case found that the no OSHA safety standard was violated in this instance where the lumber company had in place proper Work Rules that had been communicated to its employees— rules to never allow people to work under elevated loads or pass under the elevated loads of forklifts given the substantial evidence of employee training and the facts in this matter.
The Respondent, 84 Lumber Company (“84 Lumber”), was a vendor of building materials, primarily lumber, to contractors for construction projects with multiple stores nationwide. The 84 Lumber store in Houston, TX, contracted with BLS Trucking for the delivery of this store’s customer orders to respective jobsites. The same number of BLS drivers (between 7-10 generally) were assigned to work at the store. 84 Lumber had a “Work Rule” in place that instructed and communicated to its employees to not let anyone ever work under the elevated loads or pass under the elevated loads of forklifts.
84 Lumber employees would prepare and assemble the order into different bundles or loads of lumber. The next phase would involve an employee known as the dispatcher who would operate a forklift to load the lumber bundles onto the BLS trailer.
At the time of the accident, BLS’s drivers were instructed to remain at the side of the truck, away from the operating path of the forklift, while the dispatcher operated the forklift and thus well outside the 180-degree radius comprising the “zone of danger” of an active forklift. Once a bundle was loaded onto the dispatcher’s forklift, the dispatcher would approach the BLS truck trailer and lower the bundle down to approximately four inches above the truck bed. At this point, the dispatcher would put the forklift in “neutral” and activate the safety brake. Following this, either the dispatcher, or the dispatcher with the assistance of the BLS driver, would, if necessary, place wooden dryers (to make it easier to insert the forks of the forklift under the bundle) under the slightly elevated bundle.
The workers placed the dryers while standing on the ground to the side of the truck bed by sliding them under the slightly elevated bundle. Given the location of the bundle over the bed of the truck trailer, the workers passed behind the stationary forklift to place the dryers on either side of the bundle. Thus, at no point would the placement of dryers cause the dispatcher or the BLS driver to pass under either the forks of the forklift or the slightly elevated bundle (of about four inches) over the truck bed.
The circumstances leading to the underlying accident involved a BLS driver who, after waiting between the semi-truck and the truck’s trailer while bundles were being loaded, approached the dispatcher and asked him if he could move a bundle to the other side of the truck bed so that the “strap could match up.” At this point in time, the BLS driver was standing in front of the front wheel of the trailer. The dispatcher obliged and loaded the requested bundle onto the forklift and then began to back away from the trailer. As the forklift was about two to three feet from the trailer the BLS driver “out of nowhere” ran underneath the forks of the forklift and the elevated bundle and told the dispatcher to get another “bite” on the load.
The dispatcher yelled at the driver at least three to four times to get out from underneath the elevated bundle and also honked the horn, but the driver did not listen and instead kept telling the dispatcher to back-up. The dispatcher continued backing up fearing that an abrupt stop would cause the bundle to fall or the forklift to topple. After a matter of seconds, the bundle fell off the forklift onto the BLS driver, killing him.
OSHA investigated and issued a citation based on the belief that 84 Lumber did not have a process in place to inspect or enforce its work rule. During the proceeding, BLS’s supervisor acknowledged that BLS trained its drivers to never work under a forklift’s forks or suspended loads, and both BLS’s supervisor and 84 Lumber’s manager stated this work rule was common in the industry because of the obvious dangers.
Given the Work Rule in place and circumstances, there was no explicit permission for the BLS’s driver to have stood under the elevated load. However, the Secretary argued the practice of placing dryers under elevated loads as evidence of 84 Lumber’s implicit permission to walk under them. The ALJ disagreed; the evidence showed that the policy in place was that BLS drivers had to wait outside the zone of danger for an active forklift. Dryers were only placed under the load when it had already been lowered three to four inches from the truck bed and from standing on either side of the now inactive forklift, and not on top or below the elevated load.
Although workers were in close proximity to the load, they were not implicitly permitted to be under it. Following the accident, BLS also instituted a new policy requiring drivers to now stand in a designated “muster area,” farther away from the loading area
About the author: Costas Cyprus is an associate attorney practicing construction law and commercial litigation with Welby, Brady & Greenblatt, LLP, in White Plains, NY. He can be reached at 914-428-2100 and at [email protected]. The articles in this series do not constitute legal advice and are intended for general guidance only.
Financial Management
Biden Administration’s 2023 Taxpayer’s Agenda And What It Means for Construction Firms, Owners
On March 28, 2022, President Biden’s Administration released its proposed fiscal year 2023 budget blueprint which contains many notable tax changes. The most notable ones are summarized below and do call for potential tax increases.
Increase of the preferred long-term capital gains and qualified dividends rates to the ordinary income rates for taxpayers with taxable income of more than $1 million.
Observation: The $1-million threshold would be indexed for inflation. Additionally, it appears that the ordinary tax rate would only apply to the long-term capital gains and qualified dividends that exceed the income threshold.
Creation of a so-called “billionaire’s income tax” beginning with the 2023 tax year, which would impose a 20% minimum tax rate on those individuals with assets exceeding $100 million inclusive of unrealized capital gains. Payments of this minimum tax would be treated as a prepayment to be credited against future taxes on realized capital gains, thus avoiding taxing the same amount of gain more than once. Uncredited prepayments may be refunded if unrealized capital gains are significantly reduced in a given year.
Observation: Similar taxes have been proposed over the years, most recently under the Build Back Better plan. The taxing of appreciation of unrealized gains differs substantially from the current income tax framework of taxing realized gains only. Valuations of non-tradable assets, such as real estate, would use the greater of the original or adjusted cost basis. However, there is an “illiquid” election that would apply to those whose tradeable assets make up less than 20% of their wealth in which case the tax would only be imposed on the unrealized gain of the tradeable assets and defer the minimum tax on the remaining assets.
Returning the top individual marginal tax rate to 39.6%.
Observation: Many of the individual tax brackets were lowered beginning in 2018 including the top rate, which was cut from 39.6% to 37%.
Raising the corporate tax rate to 28% from 21%.
Observation: The Tax Cuts and Jobs Act substantially cut the corporate tax rate from 35% to 21%. This was done in an effort to make the U.S. corporate tax rate more competitive with other low-taxing countries thereby curbing corporations from establishing their operations outside the U.S.
Modifications to estate and gift taxes, including limiting the exemption for generation-skipping transfer (GST) taxes and changing the rules for certain grantor trusts.
Observation: The proposal contains many changes targeting this area of taxation. Specifically, a deceased owner of an appreciated asset would realize “a capital gain” at the time of an asset transfer. A GST exemption would apply to direct skips and taxable distributions to beneficiaries no more than two generations below the transferor. Also, remainder interests in a grantor remainder annuity trust (GRAT) would be required to have a minimum value for gift tax purposes of the greater of 25% of the value of the assets transferred to the trust or $500,000 (but not more than the value of the assets transferred).
Taxing carried interest fees earned by hedge fund managers for providing services to a partnership would be taxed as ordinary income rather than capital gains.
Observation: This is another area that has long been the subject of many proposed tax changes and is a known talking point on the campaign trial, but has never come to fruition. Will this be the year that what some call a tax loop-hole be closed?
Imposition of a limit on the deferral of gains from like-kind exchanges of real property to $500,000 for each taxpayer ($1 million for married individuals filing a joint retue return) per tax year.
Observation: The Build Back Better plan contained similar provisions, which would have a drastic impact on many within the construction and real estate industries who use 1031 exchanges to build sizeable real estate portfolios.
Provide the IRS with $14.1 billion in funding of which $798 million will be directed toward improving taxpayer service and $310 million for digital modernization of systems.
Observation: The COVID-19 pandemic only added to the difficulties of the IRS. Millions of tax returns remain unprocessed, including many for carryback refund claims which were to provide much-needed pandemic relief funds for struggling businesses.
Furthermore, the IRS was inundated with unprecedented call volume in response to erroneous notices issued as a result of the processing backup. Antiquated computer systems and the lack of automated phone answering technology also added to the frustration of dealing with the IRS.
As we saw last year, there will undoubtedly be a lot more discussion on Capitol Hill regarding this proposal. The Build Back Better proposal reminded us that no tax change is certain even if one party holds both the White House and Congress.
If you have questions about how such changes could impact your tax position and planning opportunities, reach out to your CPA.
About the author: Phillip Ross, CPA, CGMA is an Accounting and Audit Partner and Chair of the Construction Industry Group at Anchin, Block & Anchin, LLP. For more construction industry thought leadership and content, log on to www.anchin.com.
Economic Outlook
Hudson Valley Economic Growth Perks Up
By MICHAEL PATON
The U.S. economy executed a sharp upward, but partial pivot after an unprecedented contraction created by the COVID-19 pandemic and associated public health measures enacted to slow the infection. After a record 9.0% quarterly drop in second quarter real GDP, the national economy grew 7.5% in the third, leaving GDP 3.4% lower than the fourth quarter 2019 peak identified by the National Bureau of Economic Research.
The commercial real estate market in the northern suburban NYC market experienced stability and even growth amidst the turmoil of the COVID-19 pandemic’s effect on commercial real estate. Westchester’s office leasing in the fourth quarter of 2021 was filled with positive signs, according to a report by Newmark, a commercial real estate advisory company. The Westchester County office market
finished 2021 in a stable position, said Newmark. Leasing activity in 2021 reached 2 million square feet, on par with the county’s pre-pandemic five-year annual average from 2015 to 2019. Demand during the fourth quarter reached a post-pandemic high of 542,000 square feet, enhanced by large deals signed in the East I-287 market and midsize deals in Downtown White Plains. Improved leasing resulted in positive net absorption of 153,750 square feet this quarter and pushed the overall availability rate down to 25.1%, from 25.7% last quarter.
Mitchell Marcus, audit partner at Berdon LLP Accountants and Advisors, noted several recent deals that illustrate how the office sector in Westchester is improving. Those include a lease for 167,270 square feet in Hawthorne for TierPoint; a 105,000-square-foot office lease at 333 Westchester Ave. in White Plains for Amalgamated Life Insurance Company; and a lease for 187,181 square feet for the New York Blood Center at 601 Midland Ave. in Rye, the top lease transaction in Westchester for 2021. The office market has lately been one of Westchester’s strongest sectors.
Turning to the retail market, it has battled great problems, but the sector has shown some signs of life. According to Houlihan Lawrence, a real estate brokerage firm, the fourth quarter of 2021 saw the fundamentals of Westchester retail improve for the second straight quarter, with newly leased space at higher numbers than vacated square footage. Occupancy and lease prices also rose.
Home sales prices continued their surge in the Hudson Valley through 2021, according to a new report from Hudson Valley Pattern for Progress, as reported in the Albany Times Union. The surge is a simple supply-and-demand issue: people are moving to the Hudson Valley in unprecedented numbers and there simply aren’t enough homes for sale to keep up. Every county in the area, except Sullivan, was considered a seller’s market in 2021. A seller’s market, according to the report, is defined as having less than six months of inventory—that is, if no new houses came on the market, all existing stock would sell out in less than six months. The total inventory in the Hudson Valley in 2021 was about half of what it was in 2019. According to the report, Columbia County had 4.1 months of inventory at the end of 2021, a year in which the average sales price jumped nearly 18%. In Greene County, there was only 3.9 months of inventory, with home prices rising almost 20%.
Further south, home prices in Ulster County also jumped nearly 20%, with only 2.8 months of inventory. In Dutchess County, prices rose 15% with 2.1 months of inventory, while in Orange County, prices rose 17%, with only 1.8 months of inventory. The report noted that the average home price increased nearly $50,000 in the last year in the nine-county Hudson Valley region, and that sales prices in the mid- and upper-Hudson Valley were far above their peak during the mid-2000s housing bubble.
The Pattern for Progress report makes note of these national trends, stating that inflation and interruptions in the supply chain are influencing prices, as well as the construction industry still having challenges getting building materials and also dealing with the lack of a workforce, which slows development of both single-family and multifamily homes. The report forecasts that housing prices in the region will continue to rise in 2022, but at a slower rate than in 2021.
A major forecast risk for the economy continues to be the COVID-19 pandemic and the pace of the current efforts to protect the U.S. population against the virus. However, the course of the economic recovery now is also linked to the Federal Reserve’s response to surging inflation. The Russian – Ukrainian war is a new source of uncertainty that can add to inflation and the supply of goods. The enormous loss of lives, jobs and income, and the widespread disruption of human activity from the pandemic will likely result in long lasting changes in consumer behavior and business practices, requiring an indeterminate period of adjustment and recovery. It is too early to tell how inflation fighting and geo political risks will alter the national and local economies.
About the author: Michael J. Paton is a portfolio manager at Tocqueville Asset Management L.P. He joined Tocqueville in 2004. He manages balanced portfolios and is a member of the fixed-income team. He can be reached at (212) 698-0800 or by email at [email protected].
CIC Goes To Bat For Ukraine
Mohegan, Doyle, Bothar, Fleetwash Secure NYSDOT Project Work
The second annual CIC Softball game will be run as a fundraiser for Ukranian Relief. 100% of sponsorships and donations will be turned over to St. Michael The Archangel, a Ukrainian Catholic church in Yonkers, NY. Father Angelo, pastor of St. Michael’s, assures us that 110% of the funds CIC raises will be sent to the Archdiocese of L’viv in Ukraine to be used to help feed 65,000 refugees.
WHERE & WHEN:
The softball game will be played at Pierson Park, along the river in Tarrytown at 2 p.m. on Fri., June 3, 2022.
RULES OF ENGAGEMENT:
Like last year’s game, there will be only seven innings. Each team will field nine players, and each player will bat every inning. Like last year each batter will get only one pitch. Unlike last year, because each company can only send one player, we’ve introduced the unlimited substitution rule.
Therefore, a company can send, for example, three players, whom captains Mark Fante from Darante Construction and Manny Foto from Ecco III will rotate in and out of the game as they see fit.
MORE INFORMATION:
Interested players, sponsors and donors please contact Peter Fiore at [email protected]
Keep the ball in front of you!
LOW BIDS
Mohegan, Doyle, Bothar, Fleetwash Secure NYSDOT Project Work
ALBANY—The New York State Department of Transportation recently announced the selection of four apparent low bidders for work in the New York City and Hudson Valley regions.
Fleetwash Inc. of Fairfield, NJ was the lowest of three bidders at $1,066,470.15 for bridge washing and deck sealings at various locations in Columbia, Dutchess, Orange, Putnam, Rockland, Ulster and Westchester counties.
Bothar Construction LLC of Binghamton, NY was the lower of two bidders at $1,289,753.70 for scour repair project of nine bridges at various locations in Broome, Chenango, Delaware, Schoharie and Sullivan counties.
Doyle Contracting Inc. of Pearl River, NY was the lowest of four bidders at $1,342,508.00 for culvert replacement, Samsonville Road over tributary to the Mombaccus Creek in the Town of Rochester in Ulster County.
Mohegan Associates Inc. of Carmel, NY was the lower of two bidders at $2,147,883.50 for guide rail rehabilitation or replacement at NY Routes 17, 123 and Cross County Parkway at various locations in Orange and Westchester counties.
Vinco, Bhaghiana and Barclay Water Tabbed for Westchester DPW Projects
WHITE PLAINS—The Westchester County Department of Public Works recently reported the selection of three apparent low bidders for work at county facilities.
Vinco Builders LLC of Mahopac, NY was the lowest of six bidders at $1,984,655.00 for Main House Restoration, Muscoot Farm, Somers, NY.
Bhaghiana General Construction, Inc., South Ozone Park, NY was the lowest of 10 bidders at $594,880.45 for masonry repairs, Coachman Family Center at 123 East Post Road in the City of White Plains, NY.
Barclay Water Management, Inc. of Newton, MA was the lower of two bidders at $480,864.00 for countywide water treatment services in Westchester County.