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.