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The RFP is out for the replacement for the Tappan Zee Bridge. Before you decide that you want to submit a bid, let me break the bad news to you: Unless you’re one of the four shortlisted firms who made it through the qualifications stage, which you can see here you’re a day late and a dollar short. Tappan Zee Bridge.jpg
(No surprises on the list; the consortia are headed by Bechtel, Dragados, Fluor and Kiewit.) Here’s worse news: If you’re hearing this for the first time now, you’re probably living under a rock. This old bridge is nearing the end of its lifespan.

So, they’re building a new one. We’ve been following this project here at Gravel2gavel and we’ve been waiting to see the RFP. Whenever someone will be building an iconic project, it’s always interesting to see the details. Now we can, here.

Some observations, after the jump.

A few quick observations, starting with timing. There’s been a lot of talk lately about infrastructure investment in this country, but the New York State Thruway Authority’s actions are speaking louder than most anyone else’s words. According to their schedule, proposals are due July 27, the Authority will select a proposal in September and issue a Notice to Proceed in October.

Section 1.11 of the Instructions to Bidders requires the Proposers to sign a confidentiality and non-disclosure agreement before the Authority sends any RFP documents. This is strange because we’re not Proposers here at Gravel2gavel, but we managed to pull down the RFP documents which are publicly available and re-broadcast them to the world.

Now that I’ve been a bit snarky, I’ll concede that the publicly available documents are redacted in certain places including — not surprisingly — parts that you’d be really interested in, such as pages 123 and 124 of Appendix I, which is all about Existing and Future Requirements for Intelligent Transportation System Elements.

Back to timing. One way the Authority has been able to speed the project along is to issue a Design Build RFP. In order to do that, the Authority is taking advantage of new regulations that allow for environmental reviews of a design build project.

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Earlier this month the Department of Energy announced a 6 year, $180 million initiative to boost the Nation’s wind power capabilities. Starting with $20 million this year, the DOE will spend the money on up to four innovative offshore wind energy installations across the United States. The DOE says the initiative will help move the U.S. closer to harnessing the estimated 4,000 gigawatts of power that could be generated from wind in the Atlantic and Pacific oceans, the Gulf of Mexico, and the Great Lakes.

The money will be allocated through a competitive solicitation and will be awarded to a consortia with representatives from developers, equipment suppliers, researchers and marine contractors. Awarded funds can be used to fund up to 80 percent of the project design costs and 50 percent of the installation costs. The deadline for Letters of intent is March 30 and applications are due on May 31, 2012.

For the press release click here. For information and application details, visit The DOE website here.

More after the jump.

The DOE’s program was announced just days after a new obstacle arose to one high-profile offshore project. Dominion Resources Inc., wrote a letter to the Department of the Interior to oppose the creation for a right of way in favor of the Atlantic Wind Connection (AWC) project. The AWC project would install a power transmission line or backbone from New York to Virginia to which offshore wind farms would connect in order to carry the power to customers on the East coast. We previously reported on the AWC project here.

Dominion’s objection was, in part, based on the concern that by granting the right of way under the current circumstances would unfairly advantage AWC at the expense of other, and perhaps better, transmission projects. In Dominion’s view, the transmission line should follow, not precede the issuance of off-shore wind farm leases.

More information regarding the growing dispute can be read in this Daily Press article. You can find more more information regarding AWC here.

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“Does an insurance broker, after procuring an insurance policy for a developer on a construction project, owe a duty to apprise a subcontractor that was later added as an insured under that policy of the insurance company’s subsequent insolvency?”

In this issue of first impression in California, the Fourth District Court of Appeals said “no.”  Pacific Rim Mechanical Contractors, Inc. v. Aon Risk Insurance Services West, Inc. — Cal.Rptr.3d —-, 2012 WL 621346 (Cal.App.4 Dist.).

A quick background: developer (Bosa) engaged insurance broker (Aon) to obtain insurance for a project in downtown San Diego.  Through Aon, BOSA created an OCIP from Legion.  Under the OCIP, Legion provided liability insurance to every contractor and subcontractor on the project.  Bosa later subcontracted with Pacific Rim (PacRim), who became an enrolled party on the OCIP.  After the project was complete, Legion became insolvent.  And apparently subcontractor PacRim was the last to find out. 

Six years after the project was completed, when the homeowner’s association filed a lawsuit for construction defects, a series of cross- and counterclaims followed.  At issue in this appeal were PacRim’s claims against Aon and Bosa begging the question:  who should have notified PacRim that the OCIP insurer became insolvent?

Insurance Broker’s Duty?

Turning first to the insurance broker, the court held that Aon had no duty to inform PacRim of Legion’s insolvency.  Under well-settled California law, insurance brokers owe a limited duty “to use reasonable care, diligence, and judgment in procuring the insurance requested by an insured.”  The court declined to create and impose on the insurance broker a new legal duty of notification after the policy is procured.  According to the court, PacRim’s claims against Aon failed as a matter of law because “PacRim’s claims are based entirely on the allegation that Aon failed to satisfy a duty that California law does not recognize.”

The court rejected PacRim’s argument that public policy considerations warranted imposing such a duty on Aon.  Noting that other states have enacted statutes imposing such a duty on brokers – and California has not – the court agreed with Aon that it should remain the province of the Legislature.

The court further observed that PacRim was not merely seeking to impose a “narrow duty” on insurance brokers to notify insureds when the broker has actual knowledge of insurer’s insolvency.  Instead, PacRim asked the brokers to notify an insured of “any adverse changes in its financial condition.”  This would necessarily include a duty of monitoring insurers and would present uncertainty as to when the broker’s duty arises.  This would fundamentally change the relationship between brokers and their insureds – a step the court refused to take.

The court cited to a California Insurance statute and noted that “if anyone had a duty to inform PacRim of Legion’s insolvency, it was Legion.”  For obvious reasons, pursuing Legion for violating this statute would have likely been a dead end for PacRim.  In a brief two paragraphs, the court agreed with the lower court that Bosa breached its contractual duty to inform PacRim of Legion’s insolvency. 

California Stands its Ground

In a lengthier portion of the opinion, the court rebuffed PacRim’s assertion that the court should “join with every other state to consider the issue by recognizing an insurance broker’s duty to share its actual knowledge of the insurer’s insolvency with the insured.”  First, the court cited examples of other states that have refused to impose such a duty on a broker after it procured the insurance policy.  Further, the court distinguished the cases that PacRim cited, because in almost all of those cases, the plaintiff insured was the broker’s client.  Here, Bosa was Aon’s client – PacRim was not.  Accordingly, the court declined to follow the out-of-state authority.

Why is This Important to You?

Back to our original question: where does that leave you if you find yourself in a position of needing to rely on your insurer, only to find out your insurer is insolvent?  At the risk of stating the obvious, you will be in the best position if you have advanced notice of your insurer’s pending insolvency.  That way, you can do like PacRim alleged it would have done – procure alternate insurance.  But since you may not always (or ever) have such advance notice, you need to find another way to protect yourself.  Because – at least in California – you cannot rely on your insurance broker to notify you of adverse changes in your insurer’s financial condition.

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Often on a construction project an insurer will point to the conduct of one insured contractor to exclude coverage for a different insured contractor under the same policy. Inevitably the innocent contractor points to the Separation of Insureds provision, which is a common provision in many insurance policies, to argue that each insured must be treated as the only insured and, therefore, the conduct of one should not impact coverage for another. A fight then ensues over the scope of the provision.

A recent Seventh Circuit decision provides further support for separation of insured principles. In St. Paul Fire & Marine Ins. Co. v. Schilli Transp. Servs., No. 11-2307 (Feb. 13, 2012), the court held that multiple named insureds on the same policy were not jointly and severally liable to pay the basket deductible. Rather, each insured was liable only for the deductible arising from claims specifically brought against it.

St. Paul issued insurance to Schilli Transportation, Atlantic Inland Carriers, Inc. and WVT of Texas, Inc., and several other companies involved in the freight and trucking business. The policy required St. Paul to defend any claim or suit for bodily injury or property damage made or brought against any insured, even if any of the allegations of such claim or suit were groundless or fraudulent. The limits of coverage under the policy were $1,000,000 per accident subject to a $100,000 deductible.

The payment of the deductible was addressed in the “Repayment of Expenses” provision. This provision, which was included in the policy as part of the “Basket Deductible Endorsement,” provided that although St. Paul would be responsible to pay all expenses to settle a claim or suit, the insured would be responsible for the amount of expenses within the deductible. Specifically, the policy provided that “[y]ou agree to repay us up to this deductible amount for all damages caused by any one accident, as soon as we notify you of the judgment or settlement.” “You” was defined as the “insured named here, which is a CORPORATION.” The policy then listed Schilli Transportation, along with eight more companies, including Atlantic and WVT.

Over the course of the policy period, six different claims were asserted under the policy, all of which St. Paul defended and settled. Of the six claims asserted, only two exceeded the $100,000 deductible. Three of the six claims arose from the liability of Schilli Transportation. One claim arose from the liability of Atlantic. Another arose from the liability of WVT. The sixth claim arose from the liability of both Schilli Transportation and Atlantic. After payment of the claims and related expenses, St. Paul sent Schilli Transportation invoices for the amounts, up to the $100,000 deductible, it advanced in defending and settling each case. St. Paul argued that as a named insured under the policy, Schilli Transportation was jointly and severally liable for reimbursement of the deductible for all six claims. According to St. Paul, a position with which the District Court agreed, the policy clearly defined “you” as all corporations specifically listed as named insureds. Therefore, “all of the listed corporations [were] liable under the repayment of expenses provision,” and could be held jointly and severally liable for payment of the deductible.

On appeal, the Seventh Circuit reversed. The court ruled that although it agreed that St. Paul has valid claims against one or more of the insureds for the deductible amounts St. Paul spent to settle and defend the claims in question, it did not agree that the insureds were joint and severally liable for the deductible. The court explained that the manner in which the named insureds are listed in the policy creates an ambiguity as to whether they are to be considered jointly or separately for purposes of defining “you.” One reasonable interpretation, the court found, was to interpret the definition of “you,” which was defined as “a Corporation” followed by the listing of the names of nine individual corporations, to mean each corporation will be treated individually. Another reasonable interpretation, advanced by St. Paul, was that “you” refers to all corporations listed. Therefore, an ambiguity existed and the language would be interpreted against St. Paul, as the drafter, and in favor of the insureds.

The court relied on the “Separation of Protected Persons” clause to find additional support for its holding. This clause, which provided that St. Paul would apply the insurance agreement “to each protected person named in the Introduction as if that protected person was the only named one there; and separately to each protected person,” created further ambiguity as to whether defendants were jointly and severally liable for the deductible payments. The court recognized that although separation of insured provisions are typically applied in the context of coverage, rather than in the payment of deductibles, there is nothing in the language that prohibits such an application. Therefore, at the very least, the provision creates further ambiguity as to whether all named insureds are jointly and severally liable for each other’s claims.

St. Paul Fire & Marine Ins. Co. v. Schilli Transp. Servs. provides further support for separation of insured principles, applying the rule beyond the context of coverage to the payment of deductibles.

The complete opinion can be accessed here.

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On March 8, 2012, the Indiana Finance Authority (IFA) issued a RFQ to design, build, finance, operate and maintain a tolled bridge facility and associated roadway and facilities (the “East End Crossing”) through a public-private partnership agreement. If this piques your interest, the Statements of Qualification are due April 9, 2012.

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Dating back to Hammurabi’s code in the early fourth millennium B.C., continuing through the development of the U.S. Constitution, and still present in today’s professional culture, a dominant theme has arisen: before any process involving participation of multiple individuals or entities with differing goals can be successfully administered, a fixed set of rules should be adopted by all participants. The construction industry is no different; before a construction project is designed and construction work commences, the “rules” of the project must be agreed upon. The “rules” guiding the performance and obligations of the players in a construction project are found in the various contracts among the owner, design professionals, contractor and subcontractors.

All too often in the construction industry, the “game” begins before the rules are set; the owner meets with the design professional to discuss the schematic design process, the engineers begin incorporating their work into the architect’s drawings, and the contractor orders long-lead items, lines up his subcontractors, and frequently begins site work excavation, all before a single contract has been executed. Unfortunately, it has become quite common in the industry for owners and contractors, and contractors and subcontractors, to agree orally upon the project price and scope, then start working before many of the remaining important issues are agreed upon and reduced to writing in a formal contract. See, e.g., Carvel Co. v. Spencer Press, Inc., 708 A.2d 1033 (Me. 1998); Roberts & Schaefer Co. v. Hardaway Co., 152 F.3d 1283 (11th Cir. 1998). While the performance of such work may lead to an enforceable oral contract, the risks inherent to all parties in “playing the game” with an unknown set of rules may be significantly reduced by mutual written agreement on issues such as insurance coverage, liability (including indemnification), termination procedures, damages, delays, claims, change order procedures, allocation of risks and responsibilities, warranties, fees and payment procedures (including proper invoicing, retention, timing, schedule of values), dispute resolution mechanisms, risk of loss, and scheduling.

Problems with Unwritten Contracts

Many times, usually on a smaller projects, the parties are content with agreeing on the price and scope through informal discussion. One party promises to pay, and the other promises that it will perform. This type of oral agreement is enforceable as an express oral contract. Lucas v. Constantini, 469 N.E.2d 927 (12th Dist. Clermont County, Ohio 1983). Basic hornbook law states that if there is a meeting of the minds as to an offer, acceptance and consideration, then a contract is formed, whether written or oral. In the absence of a statute stating otherwise, oral agreements in the construction context are enforceable. Some states’ consumer protection statutes may require contractors to provide written construction contracts. Dudley v. Wyler, 647 A.2d 90 (Me. 1994) (applying statute requiring contractor to provide written contract to homeowner). Both parties are content with this oral contract arrangement until problems arise; it is when the parties are at each other’s throats that they begin to understand the importance of reducing the business terms to writing. Given the pace of construction deadlines and pressures, there may well be unavoidable times when work may commence while contract negotiations are yet to be finalized. In those instances, the parties are well-advised to execute a brief “early-start agreement,” which addresses the most important issues. An early start agreement should include: the scope of the work to be completed under the early start agreement, price, payment, insurance, standards for performance of the work, authorization for the contractor to begin the work, an understanding that the agreement does not constitute an award of the entire construction contract, and a date certain by which the parties will either execute the complete contract, terminate their relationship, or amend the early start agreement duration. This preliminary agreement, however, is no substitute for a formal contract.

No party to a construction project benefits from construction work performed prior to contract execution. Owners lose much of their negotiating leverage by permitting construction to commence before obtaining a signed contract. Once construction work starts, most owners are loathe to replace contractors, a fact of which contractors are all too aware. Negotiations occurring after construction begins take a decidedly different flavor than those taking place prior to commencement of the work. Owners lose the ability to obtain the benefit of the bargain for pricing and other key terms such as insurance requirements, change order procedures, Many owners require prior written approval of all change order work. Without a signed contract, an owner may be obligated to pay for change orders and extras which it would not have approved. and dispute resolution procedures. See, e.g., Brooks & Co. General Contractors v. Robinson Contracting, Inc., 257 Va. 240 (1999) (finding that the arbitration clause in the negotiated, but unsigned, AIA contract was not enforceable). Even written agreements to agree later on a guaranteed maximum price means that the owner loses bargaining leverage. Once subcontractors have begun a project, subsequent pricing from those subcontractors may well be inflated by the lack of competition, leading to an unnaturally high guaranteed maximum price. Indeed, owners also risk problems with construction loan lenders, who may threaten to pull the project financing in the absence of a written contract.

Contractors similarly run risks by foregoing written contracts. One major risk is obvious: not being paid or incurring steep legal fees to recover for work performed without a contract. In addition, many business terms in the owner-contractor agreement are “flowed-down” into the contractor-subcontractor agreements. Contractors who begin work without executed contracts with the owner take the chance that their agreements with subcontractors will not be in harmony with the requirements set forth in their subsequently negotiated contracts with owners. Moreover, many contractors rely on subcontractor bids and estimates when preparing their own bids, only to find out that, upon being awarded the project and providing the owner with the names of all trade subcontractors, the subcontractor will not honor its bid and seeks more money to perform the necessary work. See Pavel Enter., Inc. v. A.S. Johnson Co., Inc., 674 A.2d 521 (Md. 1006) (finding that a general contractor was not entitled to enforce a subcontractor’s bid where there had been no detrimental reliance or contractual relationship formed despite the subcontractor’s knowledge that the owner had relied upon the subcontractor’s bid in submitting its own bid).

Key Terms for the Written Contract

Prudent owners, contractors and design professionals will nevertheless put the full scope of their agreement in writing. Reducing the agreement to writing should clarify the parties’ respective understanding of the business terms. As the understanding is written down, one or both of the parties may identify issues not previously addressed, and they may also identify differences which were not apparent during their negotiations. Putting the agreement in writing also helps preserve the parties’ understanding. Once a disagreement arises, memories of conversations may become biased, conveniently forgotten, or altered regarding issues that should have been reduced to writing. A written contract executed prior to performing work will greatly assist in avoiding disagreements and misinterpretations based on hazy and selective memories, as well as changed circumstances. Moreover, a properly prepared construction contract should aid in the administration of the project. A thoroughly written and well thought out construction contract anticipates the various types of issues that may arise on the project. An oral agreement may provide mutuality on the basic scope and price of work, but does not provide the rules that will govern the completion of the project within the budget and schedule. Without adequately addressing the rules prior to work on the project, the parties will be hard-pressed to resolve even basic day-to-day project procedures without delaying the project and increasing costs to both the contractor and the owner. Some important terms, and their relevance to the various parties to a construction contract, are set forth below.

The Contract Amount- The contract sum or guaranteed maximum price, as well as general conditions costs and categories, should be agreed upon prior to performance of any work on the project. From the owner’s point of view, the contract should also address allocation of “subcontractor buy-out savings,” or the difference between subcontractors’ bids and the actual amount of the contractor-subcontractor contract after negotiation. The savings realized from the contractor-subcontractor negotiations may be shared between the owner and contractor or, in some cases, used as a basis for reducing the guaranteed maximum price. If the construction documents are not complete prior to commencement of the work, the contract should clearly provide for the method by which the parties will arrive at the actual cost (usually by a written modification to the contract). As set forth above, this approach may still result in an inflated guaranteed maximum price due to the contractor’s and subcontractors’ awareness of the lack of competition. Alternatives and unit prices, if applicable, should be set forth in the contract along with their effect on the contract price. Failure to agree upon pricing prior to performance of work can subject an owner to receipt of invoices greater than anticipated, while the contractor may find that the owner refuses to pay the full requested amount. Such problems must be avoided if the project is to be completed on time and within the budget.

Scope of Work- An improper, or nonexistent, description of the scope of work is all too often a precursor to disputes. For the owner, the concern is that all work required for a properly completed project is described in the contract documents and included in the contractor’s obligations. The contractor, however, is concerned that there are no surprises are inserted in the contract documents which were not included in his bid or evaluation of the project. Also, the contractor should be concerned with responsibility for coordination between the contractor’s work and the work of others, some of whom may be engaged directly by the owner. An oral agreement in which this concept is not addressed is a recipe for disaster. A very specific scope of work, usually drawn from the owner’s request for proposals and the contractor’s proposal, is a key to completion of the project on time and within budget.

Allocation of Risks- In every construction project, problems arise which were unknown to the contracting parties at the beginning of the project, including subsurface conditions, environmental conditions, concealed conditions, force majeure delays, design errors, material and labor shortages, price increases, site security, subcontractor and/or trade defaults. Although the actual nature and presence of each of these conditions is unknown at the time of contracting, it is reasonable to expect that some will arise. Indeed, the parties would be well-served by including provisions addressing these unforeseen issues. The general rule is that the party in the best situation to minimize each particular risk is the party who will bear that risk. Owners feel that the contractor should bear the risk for differing site conditions, errors and inconsistencies in the drawings, and many other delays. Contractors, on the other hand, frequently argue that the risks should be equitably apportioned. Discussion of these principles, and negotiation prior to execution of the contract, is crucial to a harmonious relationship resulting in an on time and within budget project.

Termination- The contract should clearly spell out the parties’ termination rights. Without contract termination provisions, the parties must rely on common law which, generally, permits termination in the event that the other party beaches the contract in a material manner. The contractor is normally provided the right to terminate and/or suspend its work only in the event that the owner fails to pay undisputed amounts after notice and an opportunity to cure. In some cases, the contractor will request the right to suspend its obligations and/or work in the event that that the owner is not diligently pursuing the project. The owner will usually reserve the right to terminate the contractor for either cause or convenience. The distinction in the two lies in the owner’s payments to the contractor. In a termination for cause situation, the owner will look to the contractor for damages incurred in completing the project. In the termination for convenience context, the contractor will want to be paid its entire profit for the project as “lost opportunity” costs. Termination provisions should also include the notion that failure to utilize a party’s termination rights does not equate to a waiver of the right to terminate in the future. The post-termination procedures should also be addressed, including the contractor’s obligation to assign subcontracts to the owner so that the project may be completed.

Payment Provisions and Procedures- The provisions in the contract that determine payment procedures, including retainage and the release thereof, progress and final payments, partial and full mechanics’ lien waivers, invoice documentation requirements, contractor’s schedule of values, payment for materials stored off-site, and payment timing are crucial to dispute avoidance, as nothing may cause acrimony between parties more than a dispute over payment or the lack thereof. Payment calculations and procedures for work performed pursuant to change orders should also be addressed.

Indemnity- Construction contracts typically require the contractor to indemnify the owner for injury to person and property damage on the project arising from the contractor’s work. Many owner’s require broader indemnification. Most states have promulgated anti-indemnification clauses which usually prohibit an owner from requiring the contractor to indemnify the owner for the owner’s sole acts of negligence, and the contractor from requiring indemnification from his subcontractors for the contractor’s sole negligence. Owners may also request that contractors indemnify them for loss of use, although this can become a deal-breaker for some contractors. The agreements usually hinge on the availability of insurance coverage for the requested indemnification. Prudent counsel will review the law applicable in the jurisdiction in which the project is located prior to drafting indemnification provisions.

Completion- The contract should define precisely what is meant by “substantial completion.” This date is much more significant than the date of actual “final completion,” since courts will focus on substantial completion in order to determine the relative rights of the parties in the event of a delay. Many construction contracts place substantial completion as the date upon which the architect issues a certificate of substantial completion. Others tie the date in with obtaining a certificate of occupancy.

Compliance With The Schedule- Timely completion of the project may be the single most important issue to owners. When a completion date is critical, owners will not be satisfied with merely a right to recover damages in the event that the project is delayed. Owners want to have mechanisms in place which will provide them with comfort that the project is proceeding as planned, such as permitting them to monitor the progress of the work and to require the contractor to stay on schedule. Many owners engage a separate construction manager as the owner’s representative to monitor the project on a day-to-day basis, including compliance with the budget and schedule. Owners normally require the contractor to maintain a schedule and update the schedule as the construction project continues. Failure to meet the requirements of the schedule may permit the owner to withhold payment or to require the contractor to accelerate work at no additional cost to the owner in order to rehabilitate the schedule. Alternatively, the owner may have the right to take over some or all of the work or terminate the contract.

These are but a few, but also the most important, clauses in a construction contract which should be agreed upon prior to the performance of any work on the project. Many of these important clauses will not be applicable to a construction project unless the parties agree on them. As a practical matter, such agreement should be reduced to a written contract. No party to a construction contract benefits by a delay in doing so.

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Jonathan Kaiman of the Los Angeles Times reported recently on a developer, Broad Sustainable Building, that constructed a thirty-story building in Changsha, China, in 15 days (not including the foundation and tenant improvements) with the help of extensive prefabrication. The fascinating time-lapse video of the construction of the building is here on YouTube and has received several million hits.

According to the Times, the company contends its speedy construction methods are both safer and more economical, since most of the work is done in a factory and jobsite time is significantly reduced. The article notes that the company is looking to take its construction methods overseas, possibly even to the United States. Whether the company can overcome the building and labor code obstacles it would likely face in the U.S. remains to be seen, but keep an eye out for vacant lots that turn into skyscrapers overnight.

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The 21st edition of Pillsbury’s Newsletter: Perspectives on Real Estate features articles on green leasing, mineral rights, avoiding construction project failures and California’s post redevelopment agency landscape. Articles include:

The Spring 2012 Edition of Perspectives on Real Estate is edited by: Laura Hannusch, Peter Freeman, Christine Roch and Noa Clark and can be downloaded in its entirety by clicking here.

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You could be forgiven if you’ve missed some of the news concerning the new Tappan Zee Bridge project. This project is very much on Governor Cuomo’s front-burner and is moving right along at an impressive pace. Here is the Reader’s Digest version of some (relatively) current events.

In February, four groups consisting of the usual suspects were short-listed to design and build the new span. In a strange twist of fate, one of the short-listed groups includes Dragados which now employs the same Chris Ward who reportedly butted heads with Gov. Cuomo during his time as the Executive Director of the Port Authority.

Meanwhile, back in Albany, the State engaged consultant Jeffrey A. Parker & Associates, Inc. to figure out how to pay the $6 billion price tag. The State has requested $2 billion from the Federal Department of Transportation pursuant to the Transportation Infrastructure Finance and Innovation Act (TIFIA). So, assuming the feds allocate the requested $2 billion (a better bet than an Atlantic City slot machine given President Obama’s selection of the new bridge as one of fourteen projects to receive accelerated environment review – and Mr. Cuomo’s political affiliation), Mr. Parker must close a $4 billion funding gap. The administration has mentioned using pension fund investments, bonds and toll revenues. But, unless I missed something, nobody has officially suggested toll increases – yet.

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On February 21, 2012, the AGC announced that construction employment remains below peak levels in 329 out of 337 metro areas.

Not surprising, the hardest hit metro areas all took great advantage of the housing boom until the economic recession wiped out the demand – Phoenix-Mesa-Glendale, AZ, Lake Havasu City-Kingman, AZ, Riverside-San Bernardino-Ontario, CA, Las Vegas-Paradise, NV, and Chicago-Joliet-Naperville, IL experienced the greatest declines in construction employment as compared to peak levels. Although it appears that the housing industry is finally on the rebound, there are so many available homes and condominiums in these areas that a return to heavy residential construction is still years away.

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