In 2009, the California legislature amended Section 143 of the Streets and Highways Code and greatly expanded availability of the public-private partnership (“P3”) as a mechanism to finance transportation infrastructure projects. In early 2010, under the authority of the newly amended Section 143, the California Department of Transportation (“CalTrans”) began to implement part of the Presidio Parkway Project (“Project”) as a P3.
Continue Reading Public Private Partnership Upheld For Construction of Presidio Parkway
Infrastructure
Developers Must Pay Prevailing Wages for Privately Financed Public Infrastructure
By Bram Hanono and Greg Woodard
California Labor Code sections 1720 et seq. (the Prevailing Wage Law) ("PWL") require employers (including developers and contractors) engaged in public works projects to pay the prevailing wage to their employees if the project is "paid for in whole or in part out of public funds." The Second Appellate District Court of Appeal recently ruled that private developers must pay prevailing wages for the construction of all public improvements in connection with a development project if public funds are used to finance any part of the public improvements, even if the remaining public improvements are paid for with private funds. The California Supreme Court declined to hear the developer’s appeal. Therefore, developers and contractors could face increased project costs as a result of this case.
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Modified Total Cost Method of Proving Damages: Approved For California Public Works
By Edward B. Lozowicki and Bram Hanono
Dillingham-Ray Wilson v. City of Los Angeles, 182 Cal.App.4th 1396 (opinion modified by 106 Cal.Rptr.3d 691, (April 16, 2010, No. B192900))
In Dillingham-Ray Wilson v. City of Los Angeles, the California Court of Appeal signaled its holding in the first sentence of its opinion: "The City of Los Angeles (City) obtained millions of dollars worth of construction work that it does not want to pay for." The City argued it was absolved of any obligation to pay the contractor, Dillingham-Ray Wilson (DRW), pursuant to Public Contracts Code sections 7105 and 7107 and Amelco Electric v. City of Thousand Oaks (2002) 27 Cal.4th 228 on the theory that they dictate a method of proving contract damages, a method DRW said was impossible under the circumstances. The Court disagreed because "section 7107 [sic] and Amelco impact the measure of damages, not the method of proving them . . . ." The Court also held that the modified total cost method of proving damages is permissible in California.
Continue Reading Modified Total Cost Method of Proving Damages: Approved For California Public Works
General Contractors’ Liability to Subcontractors’ Employees On Public Infrastructure Projects
As residential and commercial construction markets evaporate and contractors fight for survival, new opportunities are appearing in the form of public infrastructure projects. The federal government is pouring money into public infrastructure and construction projects, to the tune of about $143 billion in total. Of that total, about $14 billion is designated for the California market. In addition, the State continues to fund projects from Proposition 1B and 1C bonds, and gas tax revenues. Much of the money will fund infrastructure projects awarded by the state and local government agencies. These new opportunities, however, come with new risks. One such risk is a general contractor’s liability for its subcontractors’ unpaid or under-paid employees on public infrastructure projects.
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New California Law Prohibits Retention on CalTrans Transportation Projects
California has enacted a new law, Senate Bill 593, which prohibits CalTrans from withholding retention from progress payments to contractors on transportation projects. CalTrans has implemented this law by changing its Standard Specifications to delete the customary retention requirement. The official announcement from CalTrans states:Continue Reading New California Law Prohibits Retention on CalTrans Transportation Projects