Virginia Real Estate, Land Use & Construction Law : Virginia Construction Lawyers & Attorneys : Bean Kinney & Korman Law Firm : VA Real Estate, Land Use & Zoning

The New York times reported this week that the "Coalition for Fair Forest Certification" has filed a complaint with the Federal Trade Commission claiming that the Forest Stewardship Council has engaged in unfair and deceptive trade practices. According to the report, the main thrust of the complaint centered on FSC's higher levels of preserved land in the United States compared to other areas of the world placing the US at a disadvantage. The complaint further alleges that the USGBC LEED system is anticompetitive because it currently only accepts FSC certified wood products as approved for the LEED program applicable credit. While the Coalition does not have a website, it is widely believe that the Sustainable Forest Initiative (SFI) and other timber industry players are part of the coation.

This complaint is the latest salvo in what is an increasingly ugly struggle over certified wood. As reported at Dead Tree Edition in September, ForestEthics previously filed complaints against SFI. The first complaint with the Internal Revenue Service  requested that SFI's tax exempt status be revoked. The second complaint with the FTC  alleged unfair and deceptive trade practices. ForestEthics claimed that SFI was in essence deceptively postured as an independent non-profit, but instead was an industry shill funded almost entirely by timber industry interests. ForestEthics further alleged that SFI's representations on the quality and chain of custody of SFI certified lumber were false.

These complaints are set against the backdrop of the USGBC's currently pending proposed changes to its certified wood credit. USGBC has conducted its first public comment period regarding opening the wood certification process to other standards.  Some individuals and organizations have raised concerns, including our own Jon Kinney, that the FSC certification may discourage smaller landowners from participating in the FSC certification program due to its extensive reporting and expense. SFI in turn has raised the point that the limited number of FSC certified producers in the United States translates to creating a market for overseas wood products that are shipped long distances. This naturally runs contrary to the LEED system preference for local products and materials to reduce carbon footprint and use of energy where appropriate.

Even before this latest round, SFI has been accused of being an exercise in "greenwashing". In response to the FTC complaint, the President for FSC's United States operations stated, "They're attempting to put a green label on status quo practices ... FSC will fight that. Otherwise, the value won't be there and we will all lose."  Architecture Week takes the analysis a big step forward this month and details a series of 2007 mudslides in Washington that "destroyed significant swaths of mountain habitat, caused hundreds of millions of dollars in property damage, and downed an estimated 140,000 truckloads of timber."  The kicker: the forests were managed by Weyerhauser who conducted extensive clear-cutting which is alleged to be the a main or contributing cause of the mudslides. Weyerhauser in turn claims that extreme weather was the culprit. The credibility of SFI rating and approval is implicated in the mudslide cases because SFI stamped approval on many of the same lands prior to the mudslides. Despite these concerns, SFI has sought and obtained approval for the SFI standards from the American Standards Institute (ANSI) for inclusion in the National Green Building Standard.

Picking one standard over another, or even more particularly excluding all standards except the FSC approval, exposes USGBC to some legitimate scrutiny and criticism. This is particularly true where the program participation costs may exclude many players in the timber industry and who may conduct their operations in an extremely sustainable way. Nevertheless, this appears to be another example where USGBC has started the reaction process and is considering alternatives in response to criticism. Regarding the merits of the FTC complaint by the "Coalition", it is hard to see how a valid complaint can be stated that participation in a completely voluntary rating program operates as a restraint on trade.  What do you think?

(Thanks for our friends Imad Naffa and Shari Shapiro for passing the NYT link on Twitter yesterday!)

Image by Rene Ehrardt

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Scott McCaffrey of the Arlington Sun Gazette reported yesterday morning that the Arlington Professional Firefighters and Paramedics Association has filed the necessary paperwork (click here to view the Certificate of Receipt and Acceptance Local Referendum and the Statement of Petitioner for Local Referendum) with the Circuit Court for Arlington County to begin the petition process for a ballet referendum to change the system of government in Arlington County from a County Manager form of government to a County Board form of government.  Apparently, the Arlington Coalition of Police is planning on backing the petition as well.

The Code of Virginia authorizes counties to change from one optional form of government to another optional form after approval by voter referendum. This requires: (i) a court order allowing the referendum, (ii) that the court order state the question that will appear on the ballot, (iii) the election must be held within a reasonable period of time after the request, and (iv) that the court has to set the election date.

Such a court order may be obtained by a petition filed with the appropriate circuit court and must be signed by at least ten percent of the voters of the county (as determined by the number of voters registered on January 1 of the year of certification of the petition); however the Commonwealth of Virginia Board of Elections suggests obtaining signatures from an additional five percent of the voters to ensure there are no questions about having obtained the necessary number of signatures. All the signatures must be obtained and the petition re-filed with the Circuit Court within nine months of the original filing.

As most people in Arlington County know, under the County Manager form of government each County Board Member is elected “at large”, the County Board members elect their own chairperson, and instead of there being an independent executive branch of government, the County Board hires an “at will” County Manager as the County’s executive officer. 

Under the County Board form of government being proposed, the major difference is that there would be a Board of County Supervisors consisting of one member elected from the county at large and then one member would be elected from each magisterial or election district in the county once election districts are drawn. However, the board would continue to elect its chairman from its membership.

Also, pursuant to the proposed County Board form of government, there would not be a County Manager, but rather the Board of County Supervisors would hire an “at will” County Administrator which would serve with less powers than a County Manager, with many of the former County Manager’s authorities being exercised by the members of the Board of County Supervisors.

Some commonly acknowledged shortcomings of the County Manager form of government, including lack of normal checks and balances between separated branches of government, have been what has been perceived as the disenfranchisement of minority interests in Arlington County political processes and concern about an exclusive, perpetual one-party system.

Proponents of the current County Manager form of government laud its capacity to maintain continuity of County-wide objectives and believe that it enables county government to actually get things done without the political interruptions you would find in a system of district fiefdoms or another more classic system of checks and balances between branches of government.

It remains to be seen whether this petition is in response to budget decisions being made and a deal will be worked out in that context, or whether it goes in another direction.

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Construction cases by their nature tend to involve a lot of facts, witnesses, and documents.  They also tend to involve multiple parties, legal issues and arguments, and strategic procedural and motions practice.  By their nature, these realities mean that construction cases can involve quite a lot of legal work and can be expensive to try.

There are several things that clients in construction cases, and indeed all legal matters, can and should do to help themselves.  Following these tips can not only streamline the effort undertaken by the lawyer and thus reduce expenses, but also can help to present your matter in the most effective manner and produce better results:

1. Be organized.  Handing your lawyer a tabbed binder of documents instead of a disheveled pile of documents means less time reviewing and understanding your care.
2. Be responsive.  When your matter is analyzed or litigated in fits and starts because you do not respond, that effort tends to always require retreading old ground ramping up again.
3. Do your homework.  A corollary to No. 2, if you are to obtain documents, information, or provide assistance, understand that your efforts are important to timely and efficient handling of your matter.
4. Make decisions.  Once there is sufficient information and analysis to make informed choices, it is time to decide.  Failing to pick often not only removes the need or chance to choose, but it translates to expensive lost effort without advancing your matter.
5. Understand time is money.  Even with all the discussion about alternative fee billing, this will always be true.  I know and understand that client communication is critical.  Clients should know and understand that the more we communicate, particular on rehashing prior discussions or decisions (see No. 4 above), the more expensive the case gets.

 Image by Brookenovak

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In one corner, we have the firefighters and sprinkler manufacturers arguing that sprinkler installation in homes and townhouses will save lives and reduce property damage. In the other corner, we have the home builders arguing that adding a sprinkler requirement is piling on more costs on an already battered industry without appreciable benefits. This debate has raged on the national stage for the last several years and now continues on the state level accross the country.

The National Association of Home Builders strongly objected to sprinkler requirements for single family construction as part of the International Residential Code. NAHB relied upon a 2007 study that the average cost for a 2,200 square foot home would be $5,573. According to Michael Toalson of the Home Builders Association of Virginia, the actual cost is $6,700 per home when financing costs and brokerage commissions are added in. These estimates stand in contrast to reports produced by the U.S. Fire Administration which estimates he costs at $2,200-$3,300.

As with the question of costs, the parties have very different views of the safety impacts of sprinklers. The National Fire Protection Agency estimates that the death rate per fire in homes with sprinklers is 80% lower. NFPA further estimates property damages per fire as 45-70% lower. NAHB and its affiliates have countered by indicating that these statistics include older homes without smoke alarms. According to the NAHB, the survival rate is nearly 99.5% in homes with smoke detectors and the incremental safety impact does not justify adding substantial costs on an already burdened industry.

Despite the NAHB objections, the International Code Council introduced sprinkler requirements into IRC and then voted unanimously to reject NAHB’s appeal in December 2008. Since that time, the debate has moved to the individual states where the IRC is analyzed and adopted into state building codes. This process is on-going in Virginia and the sprinkler issue continues to provoke intense dispute.

Pro-sprinkler advocates may have received a recent boost with the recent report from PrinceGeorge’s County, Maryland. That report indicates that from 1992-2007 , there were 101 fire deaths and 328 civilian injuries in single family and townhomes without sprinklers while those with sprinklers had zero fatalities and only six civilian injuries. Calli Schmidt of NAHB has replied that, “According to the United States Fire Administration, there were NO reported fatalities in the state of Maryland in homes that were equipped with working hardwired, interconnected smoke alarms between 2002 and 2006”.

The discussion is on-going in Virginia where the last round of sprinkler subcommittee meetings in September, 2009 failed, not surprisingly, to produce a consensus as reflected in its report. The next meeting is scheduling for December 3, 2009 and we will keep everyone posted with further developments on this important issue. (Hat tip to our friend Imad Naffa for sending us the recent Prince George’s County Maryland survey information. Imad has recently written a nice sprinkler guide).

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In the recent case of Burdette v. Brush Mountain Estates, LLC, the Virginia Supreme Court tackled head on what it takes to convey an easement. Burdette acquired two parcels of land by deed, which stated that the conveyance was “made subject to all easements, reservations, restrictions and conditions of record affecting the hereinabove described property,” and referred to a boundary line adjustment plat that was recorded in the land records. The plat depicted a fifty-foot easement traversing both parcels and this notation” ‘50’ PRIVATE EASEMENT FOR INGRESS, EGRESS AND PUBLIC UTILITY FOR THE BENEFIT OF [Brush Mountain’s property], IS HEREBY CONVEYED.”

Brush Mountain owned an adjacent parcel to the east of Burdette’s property. Brush Mountain submitted a request to rezone its parcel. To develop its property, Brush Mountain would need to rely on the easement for access. When Burdette discovered Brush Mountain’s plans, Burdette filed a complaint for declaratory judgment against Brush Mountain, contesting the existence of the easement.

In analyzing whether an easement must be conveyed by a deed or will, the Court began with Virginia Code Section 55-2, which states “No estate of inheritance or freehold or for a term of more than five years in lands shall be conveyed unless by deed or will.” In holding that an easement is not an estate in land, the Court concluded that Section 55-2 was not applicable.

The Court then turned to the language in the deeds and the plat, siding with Burdette that those documents did not contain the necessary words to convey an easement. First, the “subject to” language in the deed was merely boiler plate and did not specify a particular plat. Second, the plat did not show the full extent of the burden imposed by the easement because the easement spilled over into property not included in the survey and was identified only in a note. Third, Brush Mountain was in essence a stranger to the deeds.

The moral of the story is that, if you want to convey an easement, be as clear as possible about your intent. Details matter! Specify the plat directly on the face of the deed. Incorporate the plat, and show the full extent of the easement on the plat. And include all related parties in the deed.
 

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A recent reminder e-mail from ABC-Metro Washington highlighted that the licensing regulations for the District of Columbia have changed dramatically.  Traditionally, the District of Columbia only required that home improvement contractors have a license.  That has changed.  The Department of Consumer and Regulatory Affairs now requires that general contractors and construction managers have licenses as well.  The District has imposed a series of classes of licenses that each cap the maximum value of a single project until Class A is reached which has no cap.  Each class has varying insurance requirements.

The new requirements apply to not just residential, but all commercial, industrial, governmental and other jobs.  The imposition of license requirements on construction managers is certainly of note.  We have heard of regulatory bodies taking the view that owner's representatives who are not actually in the contractual food chain and not self-performing work did not need a license.  The District has eliminated this argument.

Those performing work in the District absolutely need to take this regulatory framework seriously.  The law in the District of Columbia is notoriously harsh on unlicensed contractors and basically holds that any contract entered into by an unlicensed contractor where the contractor receives "advance payments" is void and unenforceable.  "Advance payments" are described as any payments before completion of the job. 

In holding that the contracts are void, this means that an owner can accept the value of the work, have a perfectly performed job, refuse to pay, and the contractor has no remedy.  Wait ... it gets worse ... the owner actually has a legal right to compel disgorgement of all funds paid to the unlicensed contractor!  If you are even thinking about doing work in the District, do yourself a favor and get the license.

Image by Laura Padgett

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As a follow up from an earlier blog post discussing tax amnesty programs in the Washington Metropolitan area, Nancy Trejos's article in the Washington Post today discussed Maryland's tax amnesty program that extends until October 30 and Virginia's program that gives residents until December 5.  The District of Columbia has also approved a tax amnesty program, but has not yet announced the relevant dates.  There's no better time than the present if you owe any back taxes!

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Cash flow and payment related issues continue to be of critical importance on construction projects. We recently posted on Basics of Mechanics Liens in Virginia, Maryland and the District of Columbia. We now turn to basic terms relating to notifications and required actions for payment bond claims in Virginia, Maryland and the District of Columbia. This discussion relates to public projects which are governed by statutory requirements for issuance of payment bonds and claims under those bonds. Private projects sometime have bonds as well; however, the terms of the bonds themselves would generally govern on bond claims on commercial projects. As with the mechanic's lien article, thanks go to Juanita Ferguson, a construction litigator at the firm whose upcoming newsletter article on liens and bonds forms the backbone of this post.

One important point to emphasize is that contractors and subcontractors have the right to file mechanic’s liens if they are not paid on projects involving privately owned property. This is not true on public projects. Instead, the federal government passed the Miller Act requiring payment protection on public contracts as payment security. The various states followed suit by passing their own “Little Miller Act” statutes which we cover here.

Virginia

How much is the bond? For all public projects in excess of $100,000.00, the amount of the main contract.

When is notice required? Anyone who has a contract with the general contractor does not need to transmit notice. Anyone who has a contract with a subcontractor must give notice to the general contractor within 180 days of the last date that work was performed or materials were provided for which payment is claimed.  

Is my project covered? If the project is $100,000.00 or less, the project is not covered unless required by the Commonwealth, county, or city responsible for the project.

When do I file a lawsuit? Suit must be filed more than 90 days after the last day that labor is performed or materials are provided but within one year after the date on which the claimant last performed labor or provided materials.

Maryland

How much is the bond? 50% of the total amount due under the main contract.

When is notice required? Anyone who has a contract with the general contractor does not need to provide notice. Any person having a contract with the subcontractor or a sub-subcontractor must provide written notice to the general contractor within 90 days of the last date of providing labor or materials.

Is my project covered? With the exception of highway projects, contracts for less than $100,000.00 are excluded.

When do I file a lawsuit? Suit must be filed more than 90 days after the last day that labor is performed or materials are provided but within one year after the state or municipality accepts the work performed under the primary contract.

District of Columbia

How much is the bond? One half of the total amount due under the terms of the main contract.

When is notice required? Any person who has a contract with the general contractor does not need to provide notice. Any person having a contract with the subcontractor must provide written notice to the general contractor within 90 days of the last date of providing labor or materials.

Is my project covered? If the project is less than $100,000.00 the bond may be waived.

When do I file a lawsuit? Suit must be filed more than 90 days after the last day that labor is performed or materials are provided but within one year from the last date that labor is performed or materials are provided.
 

A comparison of the jurisdictions reveals that the statutes are thus similar, but not identical, on timing requirements in particular.  As we move forward, we will delve into some of the nuances related to mechanics liens and payment bond claims in more detail.

Image by Ian Britton courtesy of FreeFoto.com

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We are pleased to invite our readers to a seminar on October 29, 2009, The “Other” Kind of Contracting: Best Practices for Government Sales Success. As active members of Associated Builders and Contractors – Metro Washington Chapter, we are very pleased to have the opportunity to speak at this ABC-Metro Washington event.

The seminar is geared towards providing information and an overview on the front end acquisition and procurement process for government contracts. In addition to my speaking on contract procurement, bids and bid protests, and other related legal matters, other speakers will include the accounting firm of Aronson & Company and the insurance brokerage firm of Rutherfoord speaking on acquisition, applicable federal regulations, bonding and small business programs in addition to accounting, insurance and bonding practices relative to government contracts.

When:  October 29, 2009
              Registration 8:00 am - 8:30 am
              Seminar 8:30 am - 10:30 am

Where: Aronson & Company
              805 King Farm Boulevard
              Suite 300
              Rockville, MD 20850

Price:    Complimentary

You can register for the seminar here. Please feel free to contact me if you have any other questions.

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We have recently discussed the need for construction industry players to know the basics of liens and bonds. We have also examined one case example of what can go wrong in mechanic’s lien matters by examining the failed Granby Tower project in Norfolk. Expanding on this thread, we will now turn to laying out some of the basics in our local jurisdictions for filing mechanic's liens. Thanks in particular to Juanita Ferguson, another construction litigator in our firm, whose upcoming newsletter article on liens and bonds formed the framework of this post.

Virginia:

1. Who can file? All persons performing labor or providing materials for a construction project
2. What is filed? A Memorandum of Mechanic’s Lien must be recorded in the land records where the property is located. With the exception of parties in privity with the owner, claimants need to transmit a notice to the owner and file that notice as well. Finally, the claimant must subsequently file a “Bill to Enforce” which is a lawsuit enforcing the mechanic’s lien
3. When is it filed? No later than 90 days after the last day of the month that work was last performed or materials were provided, and in no event no later than 90 days after completion of work on the project. The Bill to Enforce must be filed within six months of recordation of the Memorandum of Lien.

Maryland

1. Who can file? All persons performing labor or materials for a construction project
2. What is filed? Subcontractors must file a Notice of Intent to Lien in the Clerk’s office of the Circuit Court where the property is located. The first notice required for a general contractor is the Petition to Establish Mechanic’s Lien. Subcontractors are also required to file a Petition in order to enforce the lien.
3. When is it filed? A general contractor must file a Petition within 180 days of completion of the work or delivery of materials. A subcontractor must file a Notice within 120 days after performing work or providing materials.

District of Columbia

1. Who can file? Any person having a contract with the owner or the general contractor (note the difference here compared to Maryland and Virginia)
2. What is filed? A Notice of Mechanic’s Lien is filed at the office of the Recorder of Deeds in Washington, DC. In addition to filing, subcontractors must serve the Notice on the owner of the property. In order for any contractor to enforce the lien, a Complaint must be filed.
3. When is it filed? The Notice must be filed within 90 days after the project is completed or terminated, whichever is earlier.
    

Needless to say, while this is a handy guide on deadlines, there are plenty of issues, questions and nuances embedded in these several declarative sentences.  Mechanic's lien practice is highly technical and an area of law fraught with danger.  I would suggest this is definitely a subject matter where clients are well advised to stay away from at home remedies unless they are willing to risk their entire claims.

Image:  From the Luna Commons, part of the David Rumsey Map Collection

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In case you missed it, Arlington County's Rosslyn-Ballston corridor made the NY Times on Thursday.  The article, entitled "An Oasis of Stability Amid a Downturn", provides how well Arlington County is weathering the current real estate market as compared to other locations of the country.   The article cites Arlington's 8.6% office vacancy rate against the national average of 18.3% (and the second lowest retail vacancy rate out of the 23 major markets surveyed), and attributes these relatively low vacancy rates to the corridor's well-planned, transit-oriented mix of uses and proximity to the nation's capitol, public transit/Metro system, and the County's ability to attract and retain a number of federal agencies and universities in the County.

It is true that the major key to Arlington's success has been its proximity to the federal government, and that it is a natural location for expansion of density outside of the District of Columbia (Arlington actually being originally planned as part of DC), but it is great to read about the truly excellent foresight the County has exercised over the years to ensure this potential was not lost and directed to other localities in the region.  Arlington really is a unique market that deserves special attention, particularly during economic downturns.  In fact, Arlington experienced similar resilience during the Great Depression.

I am very happy to see Arlington get the recognition it deserves.  One quote hit the nail on the head: "'[t]here’s a lot of tremendous economic fundamentals in place' in the corridor..." 

And to top it all off, Virginia was just named the "Best State for Business" by Forbes.com. for the fourth year in a row.

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We have previously discussed the New York Times article criticizing the Leadership in Energy and Environmental Design (LEED) rating systems developed by the U.S. Green Building Council (USGBC) for its arguable lack of translation to improved energy efficiency.  We also discussed energy codes and their interplay with LEED and ongoing reporting.  More recently, similar concerns were raised with respect to performance of LEED certified buildings at Dartmouth College (hat tip to Rich Cartlidge who wrote a nice piece on this topic with an ensuing series of good comments). Stephen Del Percio of Green Real Estate Law Journal has similarly analyzed the 2007 reports from the University of Massachusetts that found various LEED certified buildings used significantly more energy than anticipated under applicable modeling used for the LEED certification process.

In the midst of all this discussion of failed energy performance of LEED buildings, it makes sense to take statistical note of the changes from LEED 2.2 for New Construction to LEED 3.0 for New Construction. These changes appear to reflect an awareness and understanding that energy efficiency is critical to not only measuring the true sustainability of a LEED certified project, but also is key to USGBC and LEED maintaining credibility. A simple numerical comparison of LEED 2.2 and LEED 3.0 reveals a change in focus:

The relative redistribution of credits has resulted in a greater number of points allocated towards carbon footprint, efficient water and energy usage and the provision of alternative transportation options for workforces. A greater importance is placed on sustainable sites, water efficiency and energy and atmosphere. A greater number of points are now focused on sustainable sites credit two, development density and community connectivity and credit four, alternative transportation. While the methodology for compliance with these credits remains largely the same, the increased number of points available for them is evidence of growing relative importance.

For water efficiency, a new prerequisite requires each LEED project to reduce water use by at least 20 percent. Under LEED NC 2.2, a 20 percent reduction would have earned a credit point.  The threshold for attaining credit three, water use reduction, has increased by 10 percent compared to the previous version.

In energy and atmosphere, the points allocated to credit one, optimize energy performance, expanded from a maximum of 10 points to a maximum of 19 points. Similarly, the available points available for the remaining credits have been increased. The relative percentage weighted similarly demonstrates a shift in focus to increase the emphasis on energy efficiency:

It is clear from the above, plus the previously reported requirements for energy reporting as part of minimum project requirements, that the USGBC was already moving towards an increased focus on the need for energy efficiency improvements as part of LEED. It remains to be seen whether these efforts will succeed or whether LEED has suffered on-going credibility damage as its certification plan comes under the spotlight of scientific and journalistic scrutiny.

As a LEED AP and human being, I am all in favor of a relevant and successful program that makes a difference. As a construction litigator and business attorney, I am concerned that the LEED structure will start (or has started) to suffer from the natural human temptation towards self-perpetuation and amalgamation of resources, influence and power. In both capacities and finally as a blogger, I am not sure it is entirely fair to pile on LEED on the energy question in particular given the statistical demonstration that USGBC is trying to shift increased focus towards energy efficiency and energy reporting. It seems to me the discussion should be about how to improve energy efficiency and energy modeling accuracy rather than trying to discredit LEED.

Editorial Note: This article is adapted in part from a recent article titled "Shades of Green".  This article was co-authored by me and Ela Kapusta, LEED AP. This article is made available as a reprinting from Commonwealth Contractor, September 2009, a publication of the Associated Builders and Contractors - Virginia Chapter (all rights reserved). 

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I don't know how many people out there have been paying attention, but the General Assembly made an interesting addition to Virginia's historic preservation statute (VA Code Section 15.2-2306) this past spring.  Prior to this addition, Section 15.2-2306.A.1. of the Code of Virginia used to allow a locality to adopt or amend its zoning ordinance to designate historic districts and landmarks, to create a historic review board to administer the historic ordinance, and to require that alterations or development in historic districts must be approved by the historic review board.

However, the General Assembly has now added the following sentence to 15.2-2306.A.1. (click this link to see the actual text of the bill):

"A governing body may provide in the ordinance that the applicant must submit documentation that any development in an area of the locality of known historical or archaeological significance will preserve or accommodate the historical or archaeological resources."

This seemingly innocent addition, which at first glance appears to simply require additional documentation by property owners or developers in historic districts, hides some extremely broad grants of authority to localities.  First, this new sentence requires a property owner or developer to "preserve or accommodate" historical resources and to document how they will achieve this "accommodation".  In the hands of a locality, requiring a private property owner to "accommodate" historic resources has the potential for a lot of things.  What a locality could possibly demand as an "accommodation" I fear is limited only by our collective imaginations.

Second, note that this new sentence does not impose these new requirements only on historic districts or landmarks that have been legally designated through a public process.  These new requirements apply instead to "...an area of the locality of known historic... significance..."  So who gets to decide where these “areas” are and what their boundaries will be? Who gets to decide what is historically significant and what is not? Are we talking about areas around historic districts? This modification has expanded the reach of this statute beyond legally designated historic districts and landmarks to potentially undesignated and undefined “areas” of significance.  In a commonwealth nearly four hundred years old, this can get pretty dicey.

Third, what exactly do they mean by accommodating historical “resources”? Obviously this will apply to preservation of a historic building, etc., but does this mean a developer, in an undefined “area” of historic significance, will be required to make contributions into a historic preservation fund or contribute to some other mechanism deemed by a locality to be a “resource”?

So where are the localities going to go with this new authority they've been granted?  With language as loose as this, I suppose pretty much wherever they want.

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The story of the collapse of the Dallas Cowboys practice facility collapse continues to point towards serious design flaws as the culprit. The National Institute of Standards and Technology press release regarding its report states that the practice facility collapsed, “under wind loads significantly less than those required under applicable design standards”. A full copy of the draft NIST report and accompanying slideshow are quite interesting. The design and construction firm involved in the project has consistently claimed that severe weather conditions were to blame; however, the NIST report expressly concluded that wind speeds at the time of collapse were well below design loads and further that the demands at code required wind loads exceeded the structure capacity of the facility.

The practice facility was a steel frame structure with a tensioned fabric covering. The practice facility collapsed on May 2, 2009 during a windstorm. Twelve people were injured in the collapse, which left a scouting assistant permanently paralyzed and broke the neck of a special teams coach. The video report embedded with this post includes some harrowing footage prior to and during the collapse.

The factual backdrop of this disaster is fairly remarkable in the rapid and extensive dirt exposed relative to the project. As seen from the timeline prepared by The Dallas Morning News (this and the other links are free, sign-up is required), Cover-All Building Systems and its subsidiary, Summit Structures, designed and built the Cowboys practice facility. Cover-all suffered a warehouse collapse in Philadelphia that the Cowboys were aware of prior to hiring Cover-all for the practice facility project in 2003.

Reports following the filing of suit on the Cowboy practice facility matter have pointed to far deeper problems. It appears that the person who handled initial structural calculations on both the Philadelphia and the Cowboys’ facility was a trainee and unlicensed. Cover-all fired the engineering director of the Philadelphia and Cowboys facility projects. The person identified as the lead engineer of the project stated he had little to do with the project, worked for Summit only briefly, and had been hired to build small farm buildings. After the completion of the Cowboys’ project, the engineering director’s successor warned Cover-all management in 2004, "We can't continue to operate this way or we're going to kill somebody."

The Philadelphia collapse eventually resulted in a very large verdict against Cover-all. The Cowboys expressed some concerns regarding their facility and Cover-all eventual reinforced the facility roof, but that obviously was not sufficient to stave off the collapse.

There are a couple takeaways from this horrible event:

• Follow your instincts – if you are worried about your designer or contractor, there are probably good reasons
• Follow up on licenses, codes and inspections – reports indicate that permits were not pulled for the 2008 retrofit work as required
• Get second opinions when reasonable and required
• Know the qualifications and background of key personnel
• Don't assume
• To quote both my wife and Ronald Reagan, Trust but Verify!!

 Image: Copyright Silver Smith, 2009

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As noted in our previous stormwater regulation discussion, The Virginia Soil and Water Conservation Board has been considering amending their regulations.  Per the Virginia Association of Counties, the Board adopted an amended version of the regulations last night.  The extensive amendments will translate to a new public comment period to begin on October 26.  The Board is scheduled to vote on final adoption "sometime around December 9" according the VACO.

Amongst other changes, the VACO reports the following changes to the rule:

• The phosphorus limit was raised from 0.28 ounds per acre per year to 0.45 pounds in areas outside the Chesapeake Bay watershed
• Sites under an acre of disturbed land will be allowed phosphorus run-off of 0.45 pounds per acre per year as opposed to the original blanket 0.28 pounds
• Redevelopment projects required to reduce predevelopment load of phosphorus by 20%
• Local governments can adopt urban development areas permitting 0.45 pounds

It appears from the changes that concerns raised by local governments and the home building industry gained some traction.  It is particularly interesting that the argument that the original structure of the regulations actually encouraged sprawl seems to have taken some root with the urban development districts and using a reduction model for redevelopment projects.  (Hat tip to Andrew McRoberts editor of the Virginia Local Government Law blog for passing along this breaking news yesterday on Twitter).

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Be aware that the procedural requirements of Virginia Code Section 15.2-1246 [pdf] apply to appeals denying claims arising under contracts covered by the Virginia Public Procurement Act, according to the recent case, Viking Enterprise, Inc. v. County of Chesterfield, Record No. 080215 (Jan. 16, 2009) [pdf].

In Viking Enterprise, Viking entered into a written contract with Chesterfield County to construct a fire station. The County insisted that Viking had to remove and replace part of a concrete floor. Although Viking believed the floor could be repaired without removing and re-pouring the concrete, it complied with the County’s request and submitted a claim for $86,531 for additional work. The County’s board of supervisors denied the claim on July 25, 2005, and the clerk of the County’s board of supervisors gave Viking written notice of that denial in a letter dated August 2, 2005.

Relying on Virginia Code Section 2.2-4363(E) [pdf] and 2.2-4364(E) [pdf], Viking believed that it merely needed to file suit in Circuit Court within six months of the board of supervisor’s final decision to perfect its appeal. It filed a complaint in Chesterfield County Circuit Court on January 27, 2006. It later non-suited its action and re-filed its complaint on February 13, 2007.

The County argued that Viking failed to comply with Section 15.2-1246, which would require Viking to appeal within thirty days from the date of the board of supervisors’ decision (if Viking had been present at the July 25, 2005 meeting) or within thirty days of service of the clerk’s letter (had Viking not been present at the meeting), and that Viking failed to serve written notice on the clerk and to execute a bond.

The Circuit Court and the Virginia Supreme Court agreed with the County. Because Viking conceded it had not appealed within thirty days of the decision or service of the clerk’s letter, had not served notice of the appeal on the clerk and had not executed a bond, Viking’s appeal was dismissed because it did not comply with Section 15.2-1246.

The Viking Enterprise opinion concludes with the following recap of requirements to perfect an appeal from a county’s disallowance of a claim arising out of a contract covered by the Virginia Public Procurement Act:

[T]he claimant must serve written notice of its appeal on the clerk of the county’s governing body and execute a bond to the county, both within 30 days from the date of either the decision or service of the written notice of the denial, in accordance with Code § 15.2-1246. The claimant must then institute legal action in the appropriate circuit court within six months of the date of the decision denying the claim, in accordance with Code Code §§ 2.2-4363(E) and -4364(E).

Notably, the Court recognized that Section 2.2-4363(E) also allows for an administrative appeal if available, and declined to rule on whether that subsection conflicts with section 15.2-1246. The Court also assumed without deciding that the Virginia Public Procurement Act applied, although Chesterfield County argued that it had enacted an ordinance opting out of the Act.
 

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The construction industry is receiving somewhat mixed economic signals lately. On the good news front, the home building industry which has been mired in recession far longer than the rest of the economy is showing signs of life. Bloomberg reported that sales of new homes climbed in August to a high for the year. The news was tinged with some contrary news that pricing reflected competition from large numbers of foreclosures of existing homes in the marketplace. Bloomberg also reportedly separately that estimates of new home sales for 2010 may increase substantially as well, particularly if Congress extends the tax credit for first-time buyers.

On the other hand, reports on pricing and cost figures in the commercial and government sectors do not appear as rosy. Engineering News Record recently described (subscription only) the “sharp and prolonged decline in construction costs” in our current economy as unparalleled since the Great Depression. In particular, the article by Tim Grogan and Tom Nicholson pointed to year-to-year decreases in construction pricing of 10.8% in the Turner Construction building cost index. Karl Almstead, the vice president of Turner who is responsible for their building index, is quoted in ENR as stating:

This is the largest drop in costs for a given year that we have seen in our index since the Great Depression of the 1930s. Materials prices recently have been fairly level, and labor costs are pretty flat too. It is market conditions that are driving costs down.

In the absence of much activity in the commercial markets, many firms are flocking towards the government contracting arena. Initial reports over the summer indicated that GSA was receiving bids that were as much as 15% lower than expected on projects funded with stimulus dollars. The official GSA press release couched the level at costs 8-10% lower than expected. We are anecdotally hearing of some players bidding jobs below their actual costs simply to try to generate modest cash flow in the short term.

The availability of some increased government funding in a tight market, a highly aggressive bidding environment, and the nature of competitive government low bidding delivery methods collectively appear to create the perfect storm for claims and litigation. This environment leads to a number of conclusions:

• Unreasonably low bids translate to far more change order claims.
• Subcontractors or contractors who cannot profit based on their bids are more likely to fail
• This translates to terminations, defective workmanship, takeovers and claims
• The smart money will sit and wait rather than chase unreasonable numbers
• Our prediction is that we see a huge increase in delay claims, change order claims, and general litigation chaos over the next 2-4 years in the construction industry.

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