Real estate Weekly B5 Wednesday, June 29, 2011

Construction & DesignStrike could halt $10B in projects, warns REBNY

By Roland liA potential work stoppage

by operating engineers could jeopardize new construction projects worth nearly $10 billion, affecting 11,300 con-struction workers, according to data from the Real Estate Board of New York.

Operating Engineers Local 14 and 15 are seen as the most likely group to strike, in part because of their lucrative, six-figure salaries that developers are seeking to cut.

Operating engineers con-trol movement of personnel and materials and are a crucial part of construction projects, but their contracts expire on June 30.

Local 15 has around 4,800

members, and Local 14 has around 1,600. Major proj-ects that would be affected by a strike include Silver-stein Properties’ trio of World Trade Center towers, whose costs total $3 trillion and in-volve 1,100 workers.

Work could be halted at Extell Development Co.’s $240 million International Gem Tower at 44 West 47th Street and $500 million resi-dential and hotel project at 157 West 57th Street, which is planned to be the tallest residential tower in the city.

Those two projects in-volve some 1,350 construc-tion workers. A stoppage at Forest City Ratner’s $800 million Barclays Center proj-

ect would affect 1,000 work-ers. One site that will likely weather a strike is One World Trade Center, where unions reportedly would not want to be seen as an obstacle to-wards completing the highly symbolic project.

Developers and union of-ficials are currently in discus-sions. The city has declined to become involved, because officials say that the talks are between private groups.

“There’s a lot of hard-working men and women that want to continue to work and a lot of projects throwing a lot of money into the economy that we don’t need to stop,” said Steven Spinola, president of REBNY, told Crain’s.

Public review for the transfer of the six-acre Admirals Row site at the Brooklyn Navy Yard from the federal government to the City of New York got underway lats week

Deputy Mayor for Economic Develop-ment Robert K. Steel and Brooklyn Navy Yard Development Corporation President and CEO Andrew H. Kimball said that, after the transfer, the site will become part of Brooklyn Navy Yard.

BNY Development Corporation, which manages the 300-acre industrial park on be-half of the City, will oversee redevelopment of the site, creating a 74,000 s/f supermarket and 79,000 s/f of retail space and 127,000 s/f of industrial space.

The Department of City Planning certified the project’s land use application, beginning the seven-month-long public review process.

The project is expected to create 500 per-manent retail and industrial jobs and hundreds of additional construction jobs.

“We are thrilled to be one step closer to delivering on our longstanding commitment to create 500 industrial and retail jobs on the Admirals Row and bring access to fresh, affordable produce to the community,” said Andrew H. Kimball, president and CEO of the Brooklyn Navy Yard Development Cor-poration.

“We look forward to gaining input during each step of the process on a project that will incorporate significant historic preservation into a uniquely attractive and sustainable site plan.”

Following completion of the public review process, Brooklyn Navy Yard Development Corporation will issue a request for proposals to select a developer for the project.

If it is approved, the project would break ground in 2012 following the transfer of the

property from the federal government through the National Guard Bureau to the City of New York, which owns the 300-acre Brooklyn Navy Yard property.

The designated developer would en-ter into a long-term lease for the site that now houses 12 dilapidated and unused struc-tures.

The plan includes the restoration of two of the structures — Building B and the Timber Shed — which would be incorporated into the new development.

The development of Admirals Row will con-tinue the expansion underway at the Brooklyn Navy Yard — its largest growth since WWII, adding more than 1.5 million square feet of new space and 2,000 new jobs.

The Yard’s existing four million square feet of space — currently consisting of 40 rentable buildings with more than 275 tenants — is 99% occupied and 5,800 people come to work at the Navy Yard every day, up from 3,600 in 2001.

Review process underwayfor Admirals Row project

Admirals Row will have a supermarket, retail space and 127,000 s/f of industrial space.

DOB ammends insurance regsThe New York City De-

partment of Buildings recent-ly amended its regulations with respect to insurance that must be obtained by builders in order to obtain permits.

The objective, at least in part, was to reduce the City’s exposure to loss when things go wrong on construction sites. The resulting regulation, however, contained require-ments compliance with which was literally impossible.

Left unchanged, the reg-ulation would either have ended the issuance of building permits or would have lim-ited the issuance of permits to those who were able to secure certificates of dubious integrity.

When the situation came

to the attention of the New York State Bar Association, the Construction Law Com-mittee of the Association assembled a Task Force on Construction Insurance to negotiate a solution with the City , headed by construction/insurance attorney Kevin J. Connolly of Anderson Kill & Olick. After the Task Force conveyed its concerns to the City’s Department of Buildings, the Department promptly scheduled a con-sultative meeting and began its own work on a proposed solution.

As originally drafted, the Regulation demanded that the insurance policies lack a “contractual liability ex-clusion,” which means that the insurance company does not cover the policyholder for breaches of contract and the consequences of those breaches. The problem is that substantially all liabil-ity insurance contains this exclusion, because liabil-ity insurance protects against accidents, not breaches of contract. However, there are provisions, known as the “In-sured Contract Exception,” that restore coverage for some indemnity agreements, and it is on that exception rather than the whole exclusion, that the City’s attention needed to be focused.

A second problem stemmed from the City’s insistence that before a construction policy could be cancelled, written notice had to be given to the City. The issue of who is noti-fied of an insurance cancella-tion has been an ongoing one, and it is likely that the last word has not been spoken: but the current state of the market provides for notice only to the “First Named Insured,” and that is the developer, not the City.

Responding promptly to a Task Force enumeration of these problems and recom-mended amendments, on the

evening of June 21, 2011, the Department of Buildings announced its policy in con-nection with the enforcement of the new regulation:

“The Department of Build-ings has fully considered the comments contained in your email and the attached memo-randum regarding Section 101-08 (Required Insurance and Indemnification) of the Department’s Rules, and has decided to take the following action:

(1) The Department will post a notice on its website to the effect that subdivision (d)(1)(i)(E)(1)(3) is clarified in the following way: the words “contractual liability exclu-sion” may be understood as “an Insured Contract Excep-tion no less favorable to the insured than ISO Form CG 00 01 (12/07 ed.).”

(2) The Department will not enforce subdivision (d)(1)(i)(F) beyond what is already required under New York In-surance Law regarding notice of cancellation or termination of general liability insurance policies.”

Kevin J. Connolly, chair of the Insurance Task Force, commented, “The Depart-ment’s announcement accom-plished the urgently-needed changes that were the focus of the State Bar Task Force. We appreciate the speed with which the City responded to this challenge. “

Sorkin to lead ‘super jury’ at WAF

KEVIN CONNOLLY

World Architecture Festival (WAF) has confirmed Michael Sorkin will head-up the ‘super-jury’ at this year’s WAF Awards, to determine which building will be crowned World Building of the Year 2011.

Sorkin is principal of the Michael Sorkin Studio in New York City and one of the most influential architec-tural and urban designers practising today.

Recent projects include planning and design for a sustainable city of 300,000 near Wuhan in China, a

5,000-unit community in Penang, Malaysia, master planning for the Zha Bei district in Shanghai and the design of a town of 40,000 on the Black Sea in Turkey.

Entries for the WAF Awards close July 1.

Joining Sorkin on the super-jury will be: Ben van Berkel, UNStudio, Rotterdam; Jo Noero, Noero Wolff Architects, Cape Town; Odile Decq, ODBC, Paris; and Professor Kongjian Yu, Principal of Turenscape, Bei-jing.