BREAKING GROUND WITHOUT BREAKING YOUR BUDGET OR THE
BREAKING GROUND WITHOUT BREAKING YOUR BUDGET OR THE LAW Presenters: Brian L. Holman and Rosemary Nunn of Musick, Peeler & Garrett LLP
About Your Presenter Brian Holman 213. 624. 7711 b. holman@musickpeeler. com • Partner in Musick Peeler’s Los Angeles office • Advises and represents charter schools and their affiliates in financing transactions, on corporate structure and governance, and on general corporate and operations matters • Lead or co-lead counsel to borrowers in over $1 billion of charter school financing transactions • Former chair of charter school board of directors www. musickpeeler. com
About Your Presenter Rosemary Nunn 714. 668. 2453 r. nunn@musickpeeler. com • Partner in Musick Peeler & Garrett LLP’s Orange County office. • Practicing construction law for over 20 years • Public works (bid protests, prevailing wage, competitive bidding, etc. ); private works contract negotiations and disputes; construction site accidents/injuries; disputes (bid protests, change orders, delays, defective plans/specs, construction defects); payment and collection issues (mechanics liens, stop notices, performance/payment bond claims, prompt payment laws, bankruptcy or abandonment) • AGC Orange County Board of Directors & Vice -Chair, AGC Legal Advisory Committee
SELECTION OF PROJECT OWNER/CONTRACTING PARTY ØUse of title-holding LLC ØSB 740 issues § Creation of lease structure § Supporting corporations www. musickpeeler. com
TYPES OF CONSTRUCTION FUNDING Ø Tax-exemption or taxable bond financing § Prior adoption of reimbursement resolutions for bond financing Ø New Markets Tax Credits Ø Commercial Construction Loans www. musickpeeler. com
www. musickpeeler. com
TYPES OF CONSTRUCTION FUNDING Ø Public Funds § § § CSFIG funds SB 740 facility funds CSFP Funds Prop 39 efficiency grants General Charter School ADA www. musickpeeler. com
TITLE INSURANCE/LIEN PRIORITY ISSUES Ø Completion of site improvement work Ø Separate contract and separate contractor for each site improvement? Ø Delaying commencement of vertical construction until deed of trust records Ø Lien Waivers and Releases – CA Code www. musickpeeler. com
PUBLIC WORKS/PREVAILING WAGE ISSUES Ø Public Works Requirements § Prevailing wages (always!) § Competitive bidding (sometimes) § Onerous notice, registration, compliance and monitoring § How do you know if these apply to your project? www. musickpeeler. com
www. musickpeeler. com
PUBLIC WORKS/PREVAILING WAGE ISSUES Ø What are Public Works? § Use of Public Funds § Public Ownership § Public use § ANY one of these three prongs can trigger PWL and/or PCC! www. musickpeeler. com
PUBLIC WORKS/PREVAILING WAGE ISSUES Ø What are Public Works (cont. ) Common Charter School Triggers § Public Funds • • CSFIG funds SB 740 facility funds Prop 39 efficiency grants General charter school ADA § Public Ownership • CSFP facilities • School district facilities www. musickpeeler. com
PUBLIC WORKS/PREVAILING WAGE ISSUES Ø Prevailing Wage for Owners § Public Works exceeding $1000 • Regardless of private owner – YES it can apply to your charter school, “private, ” nonprofit LLC! • Funding trigger – Follow the money! – Co-mingling or reimbursement in the future • Maintenance counts • Cannot break apart contracts to avoid www. musickpeeler. com
PUBLIC WORKS/PREVAILING WAGE ISSUES www. musickpeeler. com
PUBLIC WORKS/PREVAILING WAGE ISSUES Ø Prevailing Wage for Owners § DIR registration (both owner and project) § Obtain all applicable PW rates for all classes § Notice requirements • Bid docs, Contracts, post at jobsite § Compliance and monitoring • Owner must confirm all contractors are registered • Owner must ensure PW paid to all laborers - Certified payroll www. musickpeeler. com
PUBLIC WORKS/PREVAILING WAGE ISSUES Ø Prevailing Wage for Owners § Penalties against Awarding Body under Lab Code 1773. 3 • Failing to timely submit project info to DIE, entering into a contract with • Contracting with unregistered contractor • Allowing unregistered contractor to work onsite • Failure to ensure contractor complying § $100 per day, per violation; debarment for willful violations www. musickpeeler. com
PUBLIC WORKS/PREVAILING WAGE ISSUES Ø Prevailing Wage for Owners § Do NOT do this alone! • Hire a CM/PM with Public Works Experience • Hire a lawyer to guide you through the Project Manual and compliance issues • “I have bidding and contract documents from a prior, private projects. Can’t I just crib that and save money? ” www. musickpeeler. com
www. musickpeeler. com
PUBLIC WORKS/PREVAILING WAGE ISSUES Ø Competitive Procurement for Owners § Aka public bidding § Public Owner OR § Tied to acceptance of certain public funds • CSFIG • Prop 51 www. musickpeeler. com
PUBLIC WORKS/PREVAILING WAGE ISSUES Ø Competitive Procurement for Owners § Project Manual • • CM/PM, Architect and Lawyer all contribute 2 -3 month lead: IFB can be 400+ pp! District approval Bid protests § Develop written procurement policy § Do NOT do this alone! Failure to comply with laws could result in loss of funding of claims you violated False Claims Act (treble damages) www. musickpeeler. com
AVOIDING APPLICATION OF PUBLIC WORKS REQUIREMENTS Ø Exclusive Use of private money to fund construction project § Private grants § Segregation of funds § Non-governmental loans Ø Use of title-holding LLC as Owner and contracting party www. musickpeeler. com
ARCHITECT AND CONSTRUCTION CONTRACTS Ø Public Works under PCC § Pre-Qual for Architect § Project Manuals for Competitive Procurement § Limited Vendors excused from compliance (testing for lead and abatement, emergency services) § Every other contract must comply with PCC and PWL rules (in addition to CA rules) www. musickpeeler. com
ARCHITECT AND CONSTRUCTION CONTRACTS Ø Private Works: Using industry form contracts (AIA, Consensus. Docs, AGC) versus crafting custom contracts § What's the difference? • My PM just handed me an AIA template. Can't we just use that? • Project Delivery Methods are not created the same: Stipulated Sum, Cost Plus, GMP www. musickpeeler. com
ARCHITECTS AND CONSTRUCTION CONTRACTS Ø Critical clauses for Owners § CSLB license and B&P Code language § Flow down provision § Public works: bidding, prevailing wages, etc. www. musickpeeler. com
ARCHITECTS AND CONSTRUCTION CONTRACTS Ø Critical causes for Owners (cont. ) § Payment under the CA prompt pay statutes • • Progress payments Conditional and unconditional lien waivers and releases Retention Conformity to disbursement provisions of construction loan documents www. musickpeeler. com
www. musickpeeler. com
ARCHITECTS AND CONSTRUCTION CONTRACTS ØCritical clauses for Owners (cont. ) § Timing/Delay • Liquidated damages; standard v. tiered • Early completion bonuses • Delay damages; what is fair? – Time v. money, impact, ripple, extended overhead – No damages for delay clause www. musickpeeler. com
www. musickpeeler. com
ARCHITECTS AND CONSTRUCTION CONTRACTS ØCritical clauses for Owners (cont. ) § Changes in Scope • Change order v. constructive change directive www. musickpeeler. com
ARCHITECTS AND CONSTRUCTION CONTRACTS Ø Default § Define, notice, time to cure § Indemnification under CA law § Bonding around mechanics liens www. musickpeeler. com
www. musickpeeler. com
ARCHITECTS AND CONSTRUCTION CONTRACTS Ø Suspension and Termination § Why suspend? § Termination for cause vs. Termination for convenience • Nuclear option, proceed only when last recourse www. musickpeeler. com
ARCHITECTS AND CONSTRUCTION CONTRACTS Ø Disputes § § § Prosecution of work during ongoing dispute Initial Decision Maker Arbitration v. litigation Attorneys’ fee clause Waiver of consequential damages www. musickpeeler. com
www. musickpeeler. com
ARCHITECTS AND CONSTRUCTION CONTRACTS Ø Contractor’s indemnity and sworn statements for title insurance purposes www. musickpeeler. com
PROGRAM MANAGEMENT AGREEMENTS Ø Retain some control – it’s your money and your exposure on the back end! Ø If you are the hiring entity, draft your contracts. Do not just accept a P. O. the PMA slips you at a meeting Ø If you have a public project make certain your PM has experience creating a Project Manual, knows public procurement and PWL laws, etc. § If there is a bid protest or DIR investigation, you are left holding the bag, penalties and delay www. musickpeeler. com
LEASE TO OWN AGREEMENTS www. musickpeeler. com
www. musickpeeler. com
THANK YOU! Rosemary K. Nunn, Esq. Musick, Peeler & Garrett LLP r. nunn@musickpeeler. com 714. 668. 2453 Brian L. Holman, Esq. Musick, Peeler & Garrett LLP b. holman@musickpeeler. com 213. 624. 7711
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