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Real Estate & Construction News Round-Up (03/08/23) – Updates on U.S. Mortgage Applications, the Inflation Reduction Act, and Multifamily Sector

March 20, 2023 — Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law Blog
This week’s round-up explores the cooling housing market and plummeting mortgage applications, potential tax-savings as a result of the 2022 Inflation Reduction Act (IRA), and new developments in the multifamily sector.

Rising interest rates are impacting affordability and cooling the U.S. housing market, driving mortgage applications to lowest levels in decades. (Nicole Friedman, The Wall Street Journal)
A number of companies are going all out to entice workers back to the office, and as new data on New York City emerges, upscale offices might help do the trick. (Emily Peck, Axios)
For real estate developers and investors across the U.S., tax-saving opportunities are popping up as a result of the Inflation Reduction Act of 2022. (David Harlan & Laura Theiss, Dallas Business Journal)

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Reprinted courtesy of Pillsbury's Construction & Real Estate Law Team

The Ghosts of Baha Mar: How a $3.5 Billion Paradise Went Bust

January 06, 2016 — John Lippert & Dawn McCarty – Bloomberg
Beyond the tropical waters, across palm-fringed sands and behind locked gates, looms Baha Mar -- the largest and, at $3.5 billion, priciest resort in the Caribbean. Here, no one frolics pool-side, pina colada in hand, or hits irons on the Jack Nicklaus golf course. No slot machines jingle-jangle in the casino. The Flamingo Bar, the Brasserie des Arts and the Cartier boutique lie dark. On this bright October morning in the Bahamas, all 2,200 guest rooms are empty. The quiet is almost spooky here on the outskirts of Nassau, where the waterscape frills of nearby Paradise Island give way to the vast ghost-resort that is Baha Mar. Just how the place ended up like this -- in a bankruptcy so colossal that it’s jeopardizing the Bahamas’s credit rating -- is the biggest business story to hit this Caribbean nation for as long as anyone here can remember. It stretches far beyond the white beaches and across time zones, to none other than the State Council of China. Reprinted courtesy of John Lippert, Bloomberg and Dawn McCarty, Bloomberg Read the court decision
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Quick Note: Expert Testimony – Back to the Frye Test in Florida

December 19, 2018 — David Adelstein - Florida Construction Legal Updates
Expert testimony (opinions) – very important testimony in construction disputes. Whether it is a delay claim, an inefficiency claim, a defect claim, etc., expert testimony plays an invaluable role in construction disputes. Construction attorneys work closely with expert witnesses to ensure that an expert helps render an opinion to support their client’s burden of proof (including damages) or an affirmative defense. Read the court decision
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Reprinted courtesy of David Adelstein, Kirwin Norris
Mr. Adelstein may be contacted at dma@kirwinnorris.com

Park Avenue Is About to Get Something It Hasn’t Seen in 40 Years

February 05, 2015 — David M. Levitt – Bloomberg
Sometime next week, a metal frame will go up around the blocky brick tower at Manhattan’s 425 Park Ave., designed to protect pedestrians from falling objects. It’s a prelude to the building’s demise. In about three years, if all goes according to plan, the site will have a new Norman Foster-designed skyscraper more than twice the height of the existing one. The replacement would be the first new office building in almost four decades on what the developer, David Levinson, called New York’s “grand boulevard of commerce.” Read the court decision
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Reprinted courtesy of David M. Levitt, Bloomberg

Should CGL Insurer have Duty to Defend Insured During Chapter 558 Notice of Construction Defects Process???

September 01, 2016 — David Adelstein – Florida Construction Legal Updates
Does a CGL insurer have a duty to defend its insured-contractor during Florida Statutes Chapter 558 notice of construction defects pre-suit process? This answer is currently undecided and will be up to the Florida Supreme Court to decide. (It is on appeal stemming from a federal district court saying that an insurer does not have a duty to defend its insured-contractor in the 558 process based on the definition of the word “suit” in the CGL policy.) Why is this an important issue? The 558 pre-suit notice of construction defects process is designed to facilitate an avenue for construction defect lawsuits to get resolved without having to file a lawsuit or, at least, have issues narrowed before a lawsuit needs to be filed. (Check here for a summary of the 558 process.) It requires pre-suit notifications so that implicated parties can become aware of the defects and have an opportunity to inspect the defects / damage, test the defects / damage, and respond to the notice of construction defects; it provides an avenue for beneficial pre-suit discovery. Through participating in the 558 process, the contractor and/or design professional (and those downstream from them) can: (i) offer to remedy the defect, (ii) settle the defect, whether through money or a combination of money and repairs, (iii) dispute the defect, or (iv) advise that available insurance proceeds will be determined by its liability insurer. See Fla. Stat. s. 558.004. Read the court decision
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Reprinted courtesy of David M. Adelstein, Kirwin Norris
Mr. Adelstein may be contacted at dma@kirwinnorris.com

Netflix Plans $900M Facility At Former New Jersey Army Base

January 23, 2023 — The Associated Press (Wayne Parry) - Bloomberg
(AP) -- Netflix said Wednesday it plans to build a state-of-the-art production facility at a former Army base at the Jersey Shore that will cost more than $900 million, and create thousands of jobs. The subscription video streaming company will pay $55 million for a 292-acre site on the former Fort Monmouth military base in Eatontown and Oceanport. The California-based company plans an additional $848 million worth of investments in 12 sound stages and for other uses related to the film industry. “We’re thrilled to continue and expand our significant investment in New Jersey and North America,” said Ted Sarandos, the company's co-CEO and chief content officer. “We believe a Netflix studio can boost the local and state economy with thousands of new jobs and billions in economic output, while sparking a vibrant production ecosystem in New Jersey.” Read the court decision
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Reprinted courtesy of Bloomberg

Preparing Your Business For Internal Transition

October 14, 2019 — Stephen P. Katz, Esq. - ConsensusDocs
When is it right to start thinking about succession planning and preparing a construction company for transition? Many would agree – in concept, at least – that serious thought regarding succession and transition planning should begin at a company’s inception and be revisited throughout its lifecycle, but as a practical matter, it is frequently not part of the mindset when growing a business. This article explores issues that construction company owners should consider in order to achieve smooth transition of ownership and control. We will address three critical questions:

What happens to the business when an owner retires;
In the event an owner(s) become disabled; and,
Unplanned exit/owner pre-deceases her/his exit from the company

Owners who do not plan carefully for transition are often faced with the less than appealing option of liquidating their business for much less than its value, or by closing the business with no return upon that event. However, those who plan carefully can realize the value of their life’s work, pass the business to the next generation and see their legacy continue. Read the court decision
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Reprinted courtesy of Stephen P. Katz, Esq., Peckar & Abramson, P.C.
Mr. Katz may be contacted at skatz@pecklaw.com

Comparative Breach of Contract – The New Benefit of the Bargain in Construction?

October 26, 2020 — Steven Hoffman - Florida Construction Law News
Ask most Florida Construction Law practitioners, and you will likely hear that liability may not be apportioned in “pure” breach of contract cases via the Comparative Fault Act, section 768.81, Florida Statutes (the “Act”). If a material breach is a “substantial factor” in causing damages, the breaching party must answer for all damages that were reasonably contemplated by the parties when they formed the contract. Claimants argue that matters of contract should be governed strictly by the agreement, and risk can be controlled by negotiated terms, including waivers and limitations. Defendants complain that construction projects are collaborative, multi-party affairs, and strict application of contract principles leads to harsh results for relatively minor comparative fault for the same or overlapping damages. The notion of apportioning purely economic loss contract damages based on comparative fault is not new. Since April 2006, Florida has been a “pure” comparative fault jurisdiction with limited exceptions. Prior to the amendment, tort liability for non-economic damages was purely comparative, but liability for economic damages was typically a combination of joint and several liability with an additional exposure based on comparative fault. Read the court decision
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Reprinted courtesy of Steven Hoffman, Cole, Scott & Kissane
Mr. Hoffman may be contacted at Steven.Hoffman@csklegal.com

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