The New York State Department of Taxation and Finance, Office of Counsel, Advisory Opinion Unit recently issued an opinion concerning the application of sales tax on the installation, rental and dismantling of temporary pedestrian walkways (sidewalk sheds) on capital improvement projects. A taxpayer had posed two questions for an advisory opinion, (1) are such sales taxable when the compensation is stated as a lump sum for the rental and the service combined, and (2) would the tax be applicable if the rental and installation charges were separately stated on invoices?
Last January we reported on an expansion of public design build programs in New York as a result of legislation arising out of Governor Cuomo’s budget for 2012. At that time, New York expanded the number of agencies that were permitted to utilize design build procurement from two to five. Now with the Governor’s proposed 2013 Budget, the design build method will be made available to virtually all state entities, with the only exceptions being the New York City university and New York State university systems.
Of perhaps even greater interest is the current proposed legislation’s introduction of “design build finance” as an available capital procurement method. This device, which may entail use of private and public funds, or perhaps a combination of same, will be available to the same broad range of state public entities as design build will be.
Both procurement methods will follow the two-tier system involving short listing proposers to an RFQ followed by a selection based on best value to the state.
The Governor of the State of New York announced today that a team of artists and designers has been appointed to review and provide recommendations concerning the evaluation of bids submitted by three design-build ventures for the replacement of the Tappan Zee Bridge. The Members of the Bridge Design Aesthetic Team include: Jeffrey Koons, Artist; Richard Meier, Architect; Thomas P. Campbell, Director of The Metropolitan Museum of Art; Alison Spear, Architect; Keith Brownlie, Bridge Designer; and Thomas Wermuth, Director, Hudson River Valley Institute and Vice President of Academic Affairs and Dean of Faculty, Marist College.
The full review team consists of over 35 additional professionals including government officials, community representations, local officials as well as technical advisors representing various disciplines including geotechnical, infrastructure, construction estimating, construction management, planning, environmental, financial, structural, transportation and traffic, roadway, public relations, and legal.
The review team is to make recommendations to the Governor that can include recommendation of one of the bids, authorize negotiations with one or more bidders, or authorize a request for a best and final offer from one or more bidders.
The biographies of all review team members can be found here.
A trial court in New York recently was faced with questions concerning the amount of damages a contracting party, Citibank, was entitled to because of the failure of its contractor to procure insurance. (See Spector v. Cushman & Wakefield, 2012 N.Y. Misc. LEXIS 2794; 2012 NY Slip Op 3155U (Sup. Ct. N.Y. Co.)) Citibank sought all expenses incurred in connection with an underlying personal injury action, i.e., the amount of any settlement or judgment and reasonable attorneys’ fees, because Citibank was a self-insured party. In addressing damages, the court noted that New York’s highest court has held that, where a party intended to be insured by its contractor has its own insurance nonetheless, the measure of damages is limited to out-of-pocket expenses such as premiums and any additional costs incurred, including deductibles, co-payments and rate increases in the party’s insurance. (Inchaustegui v. 666 Fifth Avenue Limited Partnership, 96 N.Y.2d 111, 725 N.Y.S.2d 627 (2001)) However, that decision acknowledged that where the party was left uninsured, it could recover “the full amount of the underlying tort liability and defense costs.” (Id. at 114) In this recent June 2012 trial court decision, the court granted Citibank’s summary judgment motion for defense costs because it was self-insured.
Notice of claim requirements in construction contracts are standard and often the cause of bad news to contractors pursuing claims for additional costs. However, these clauses can be, though not always, two-way streets. As a reminder to owners that notice of claim requirements under the AIA General Conditions apply equally to owners as to contractors, a trial court in New York recently dismissed a claim for defective work against a plumbing contractor because it was not the subject of a previous notice of claim.
A New York State court judge in Albany rejected a Department of Transportation (DOT) requirement of a Project Labor Agreement (PLA) on a highway project on Route 17 in the Town of Wallkill, Orange County. In an Article 78 proceeding, which challenges the determinations of a public administrative agency, a non-union low bidder on the DOT project, who refused to enter into a PLA negotiated by the DOT and made a part of the bid documents, challenged the award which ignored its bid and went to the second bidder at an added cost reported to be $4.5 million. Because the DOT failed to demonstrate that the use of the PLA advanced the interests of the State’s public bidding statutes, the petition was granted. Barring an appeal, which is expected, the DOT will be required to re-bid without the PLA requirement.
For those who have been following the developments in the false claims arena, you no doubt have that lingering thought that one of your or your client’s claims will inevitably attract a response that everyone loathes and fears – it’s a false claim! For those of you who don’t — watch out! So, I and Nicole Woolard, an associate in the Construction Group, sat down with Patrick McGeehin, CPA, of FTI Consulting to get his suggestions on best practice recommendations for avoiding federal and other public agency false claim allegations.
Design-Build project delivery has gained ground recently in New York. In a sweeping budget deal last month (December 2011), including provisions restructuring the personal income tax code, New York authorized certain state agencies to utilize design-build for road, bridge and other capital projects in excess of $1.2 million. The agencies benefitting from the deal include the Department of Transportation, Office of Parks, Recreation and Historic Presentation and the Department of Environmental Conservation. Awards are to be made on a “best value” basis to bidders from a prequalified list.
Effective this month, the State of Texas joins the list of states with both anti-indemnity and anti-additional insured statutes. In legislation signed last summer by Gov. Rick Perry but not effective until January 1, 2012, Texas — previously viewed by construction law practitioners as a permissible venue which it came to risk shifting and indemnification — joined the now long list of states prohibiting clauses in construction contracts requiring indemnification of indemnitees for their negligence. Moreover, in so doing, Texas also joined the small but growing list of states prohibiting additional insured requirements – such as requirements in subcontracts requiring subcontractors to add contractors, construction managers and owners as additional insureds to the subcontractors’ policies. Other states on that list include: Colorado, Kansas, Montana, New Mexico, Oklahoma, Oregon and Utah.