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CT Construction Digest Wednesday August 31, 2022

Stamford-based SoundWaters blames supply chain issues for construction delays on new $8M Harbor Center

Ignacio Laguarda

STAMFORD — The staff at SoundWaters had hoped to open a new $8 million center this summer, but due to construction delays, the new marine education center will likely swing open its doors in late fall.

Supply chain issues are to blame for the delays, said Leigh Shemitz, president of SoundWaters, the Stamford-based nonprofit organization that focuses on protecting Long Island Sound through advocacy and education,

In particular, the elevator for the new building took longer than expected to acquire and deliver to the site. The project managers experienced delays in getting electricity to the building, and the elevator vendor they were using wouldn’t set up an order until the power was on, Shemitz said.

“Each delay builds on the other one,” she said.

But the delivery date is now set, and the elevator should be installed in September.

The rest of the building is complete, she said, and an array of solar panels have been fully installed.

“We’re at a really good place, save for the elevator,” Shemitz said.

The building, a new state-of-the-art harbor education hub called the Cohen SoundWaters Harbor Center, is one piece of a larger project meant to create public access to Stamford Harbor and the Sound.

As part of the larger project, the access road to the property will be replaced by one that lines up with Congress Street and will extend to the new center, where a parking lot will be built. Near the water, a crumbling parking lot and old chain-linked fence will be switched out for sand dunes and a small beach area with new wetland tree plantings.

Once complete, the revamped park and waterfront will create a rare access point to the Sound for residents of the Waterside neighborhood.

Once the elevator is installed, the building should qualify for a certificate of occupancy and could technically open. But construction of a new adjacent parking lot, a city project, has yet to begin.

The work on the lot will begin in two to three weeks, with a completion date in about December, according to Domenic Tramontozzi, senior construction manager for the city. While that lot under construction, the existing lot near the Sound will be available for parking.

Once the new 12,000-square-foot center opens, SoundWaters will be able to expand its offerings.

The center will house three programs: Young Mariners, which teaches young students life skills through sailing; Harbor Corps, which offers maritime job skills training for young adults; and Research Intensive, a college-level marine research program for high school students. The center will also include launch access for SoundWaters’ fleet of sailboats, and publicly available kayaks and paddleboards.

The organization also has a location at the historic Holly House on Cove Island, which will remain after the new center officially opens.

For more information on SoundWaters, visit soundwaters.org.

Connecticut new housing permits hit a 17-year high for July

Luther Turmelle

The number of new housing permits issued in Connecticut last month hit its highest July level in 17 years, officials with the state’s Department of Economic and Community Development said Tuesday.

There were 743 housing units approved last month in the state. That represents more new housing permits than were issued in May and June combined.

One factor for the surge in new housing permits came from multi-family residential construction, which includes both apartments and condominiums, said Bob Wiedenmann, owner of Sunwood Development in Wallingford, a new home builder.

Of the 743 new units issued permits, nearly 73 percent were for developments of five or more units.

Another factor was an unusually large number of new housing permits in Bridgeport.

More than half the new housing units that were approved overall came from the Park City, where officials approved 423. New Haven had the next largest amount of new housing activity, with 58 units approved.

“If you subtract the number of permits issued in Bridgeport, the July numbers would be the lowest amount of new housing activity this year,” Wiedenmann said.

Even with the surge in new housing permits, the total number of new housing permits issued during the first seven months of this year was 3,037 units, he said. That’s the lowest number of new housing units issued permits during the same period since 2011, according to Wiedenmann.

Donald Klepper-Smith, an economist with DataCore Partners, said housing is one of the few economic indicators “that has held up pretty well” this year in Connecticut.

“Transportation oriented housing along the Interstate 95 corridor has seen greater demand,” Klepper-Smith said. “That would explain the number of units approved in Bridgeport and New Haven.”

Going into the fourth quarter of this year, Klepper-Smith said he expects upward pressure on housing affordability in Connecticut because of a series of interest increases by the Federal Reserve.

“It takes a while for policy changes to be reflected in consumer behavior,” he said. “Higher housing prices are going to be baked into the cake for the next couple of years as a result.”

New housing permits are considered a key economic indicator because moving into a new house or apartment is usually accompanied by purchases of big ticket items like appliances or electronics.

Wilton receives over $8 million for bridge projects

J.D. Freda

WILTON — The town will receive more than $8 million in combined federal and state aid for the rehabilitate two bridges off of U.S. Route 7.

Those two bridges — on Honey Hill Road and Cannon Road — are part of a greater Wilton capital plan that is anticipated to cost an estimated $22.7 million in total to rehabilitate the town’s inventory of 29 bridges.

The process will take shape over a number of years, with the Honey Hill and Cannon Road bridges likely to start construction in 2025, according to the town. Preliminary design work began in June.

“Based on initial concepts when preparing the grant application, the value of work for Honey Hill Bridge is approximately $3,500,000,” said Frank Smeriglio, the chief in Wilton’s Department of Public Works. “The value of work for Cannon Road Bridge is $4,650,000.”

The Town of Wilton will receive at least 80 percent reimbursement from the federal government for all phases of each bridge project, Smeriglio said. Those phases include the design, rights-of-way and construction work.

Remaining funds will come from the state to cover the full cost of the projects, authorized under the Fixing America’s Surface Transportation Act administered by the Federal Highway Administration and the Connecticut Department of Transportation.

Based on initial concepts for both bridges, Smeriglio said Honey Hill Road’s bridge work includes replacing bridge beams, the bridge deck, asphalt, railings and guiderails.

“Cannon Road Bridge work consists of replacing the bridge,” Smeriglio said, adding this includes replacing the foundation and bridge beams, as well as the bridge deck and railings.

Nearby residents will be made aware of construction schedules and alternate routes to get to Route 7 leading up to the start of the project, officials said.

For now, consultants will continue to analyze what is needed at each site, and the estimate and concurrent grant total will be adjusted accordingly, Smeriglio said.

American School for the Deaf eyes multimillion-dollar W. Hartford campus expansion

Robert Storace

The American School for the Deaf is in preliminary discussions to build two new dormitories on its West Hartford campus that would cater to deaf and hard-of-hearing students, as well as those on the autistic spectrum and with emotional and behavioral issues.

The state Connecticut Health and Educational Facilities Authority announced at its July 20 meeting that the 206-year-old school was planning to borrow $20 million to build the dormitories. M&T/People’s United Bank would be the purchaser of the $20 million direct placement offering. The school is a first-time borrower through the authority, which provides not-for-profit institutions access to low cost debt capital

Jeff Bravin, the school’s executive director since 2014, said the estimated $20 million construction of the two dormitories is part of a master plan that covers the next six years. Part of that plan also includes a brand new museum, Bravin said.

Bravin, who is deaf and spoke through a translator, told the Hartford Business Journal that the project is in the early stages and that the engineering and architectural discussions have yet to take place.

Bravin said the plans are for the new dormitories to meet the needs of the school’s population, including wide open spaces, a sensory room and a lot of visual items.

“Deaf and hard-of-hearing people rely heavily on the visual,” Bravin said. “We will have a lot of technology as part of these buildings. We are focused on the health and safety of our students.”

Bravin said he hopes to break ground in the spring or early summer of 2023 and for occupancy to start sometime in 2024.

 “The school has grown over the past several years and we are looking at more growth and enrollment and that would help pay off the debt,” Bravin said. 

The school currently enrolls about 150 students on campus; 85 students in its birth-to-three program; about 100 students through its online academy; and 200 students through its outreach services programs. It also has a brand new telehealth services program that caters to 12 students, Bravin said.

There are currently three larger and two smaller dormitories on campus. The campus also includes cottages, Bravin said.

The school has students from about 15 states, primarily in the Northeast and also caters to students from five countries, Bravin said.

Bravin said tuition costs range but begin at $35,000 annually. The state of Connecticut, he said, provides some funding for students.

The 25-members of the school’s Board of Directors still must sign off on the plan.

Construction Job Openings Up by 22,000 in July

The construction industry had 375,000 job openings in July, according to an Associated Builders and Contractors analysis of data from the U.S. Bureau of Labor Statistics' Job Openings and Labor Turnover Survey.

JOLTS defines a job opening as any unfilled position for which an employer is actively recruiting. Industry job openings increased by 22,000 last month and are up 38,000 from the same time last year.

Construction workers quit their jobs at a faster rate than they were laid off or discharged for the 17th consecutive month in July.

"Though we may have collectively experienced peak inflation, it is poised to remain unusually elevated for months to come," said ABC Chief Economist Anirban Basu.

"Many factors will keep prices high, including energy crises in Europe and China as well as a dearth of available skilled workers. Today's JOLTS release is receiving considerable attention because many hoped that job openings would decrease for the second consecutive month in July.

"That did not come to pass," said Basu. "Economywide job openings bounced back in July and remain more than 60 percent above pre-pandemic levels. According to ABC's Construction Confidence Index, the share of contractors who expect to increase their staffing levels over the next half year remains elevated but has declined in recent months. As long as the supply of labor remains inadequate to meet the demand for workers, the industry will continue to experience upward wage pressures."

The Dotted Line: Recession fears spur uptick in terminations for convenience

Joe Bousquin

This feature is a part of “The Dotted Line” series, which takes an in-depth look at the complex legal landscape of the construction industry. To view the entire series, click here.

With talk of a pending recession growing louder by the day, owners have increasingly been pulling the plug on projects, attorneys say. While the uptick hasn’t been severe – yet – it has been noticeable by many.

“Right now, the termination trend is being driven by cost increases and volatility,” said Jade Davis, a construction attorney at law firm Shumaker, Loop & Kendrick.

“A lot of people thought stabilizing material costs would help with price volatility, but supply chain issues have continued,” Davis said. 

Higher interest rates, as the Federal Reserve has waged war against historically high inflation, have compounded the issue.

“The quick increase in interest rates has resulted in several owners putting their projects on hold,” said David González, general counsel at South Florida-based contractor ANF Group. While he says he hasn’t experienced stoppages among his firm’s clients, he has seen it happening elsewhere.

When owners pull the plug on projects, they typically do so via a termination for convenience clause, which is built into most construction contract templates, including those available from the American Institute of Architects. Termination for convenience clauses are overarching language that typically let owners, and in some cases contractors, walk for any reason they see fit.

“The case law provides that under termination for convenience, the contract can be terminated for any reason, or no reason at all,” said attorney Josh Spitalnik, owner of the Spitalnik & Spitalnik law firm in Roslyn, New York.

Shoring up projects

Attorneys say contractors should carefully navigate their contracts and take steps to prepare for unilateral terminations, should they become more prevalent.

“I suspect that as the labor shortages continue, construction material prices increase and bank lending tightens, more jobs will be stopped mid-stream,” said Carol Sigmond, a partner at New York City-based Greenspoon Marder. “Contractors should take the long view – have a strategy in place to work with owners to shut the jobs down in a safe and lawful manner, while also trying to obtain fair compensation for work performed.”

Doing so starts with knowing what’s in your contract. For example, while most contract templates include termination for convenience clauses, they also give contractors the ability to recoup “lost profits,” the gains the contractor would have had if it worked the job to completion.

But owners’ attorneys will often try to strike those terms upfront.

“As the attorney for a GC or sub, I always try to make sure they get lost profits on uncompleted work,” Spitalnik said. But, “it’s often difficult, especially when there’s an experienced construction attorney on the other side.”

What contractors can reasonably expect to recover, however, are costs that have already been incurred, as well as “demobilization” expenses they take on to stop work in midstream.

“You should have provisions that you’re paid for work performed, reasonable costs to demobilize and the cost of material and equipment already purchased for the job,” Spitalik said.

Who’s left holding the bag?

In the current supply chain environment, however, where many contractors have been ordering materials months in advance to ensure they have supplies when needed, that can introduce additional risk.

“Downstream contracts can be greatly impacted because many contractors and subs buy out the materials and cannot return them,” said Brad Shefrin, a partner in the Denver office of Hall Booth Smith.

For that reason, contractors should make sure they stay on top of invoicing and getting change orders approved before work gets done.

“The way to best protect yourself is to ensure the owner is up to date with all payments and consistently process change orders,” Spitalik said. “You do not want to be in a situation where you have done extra work, then the contract is terminated for convenience, and no one wants to pay.”

The cost to owners

As a GC, it’s also a good idea to put some language regarding termination fees into your contract, to make terminating for convenience less palatable for owners.
“For owners, a termination for convenience almost always comes during difficult financial times,” said Cleveland, Ohio-based Tucker Ellis partner Seth Wamelink. “Owners often underestimate what their termination for convenience costs will be.”
One way to make it less of an attractive option for owners who are already stressed about making their project pencil out is to ensure there are termination fees in a contract, as well as the lost profits component for contractors.
“That may disincentivize the owners from terminating in the first place,” said David Fine, a partner at Worcester, Massachusetts-based law firm Mirick O’Connell.