The $1.2 trillion Infrastructure Investment and Jobs Act (IIJA) is poised to change how the United States views and implements public-private partnerships (P3s). At a high level, the IIJA encourages public entities to consider P3s and incentivizes private entities to engage in the P3 market by dismantling roadblocks that have prevented the widespread adoption of P3s in the U.S. — including by removing government red-tape, increasing the availability of federal funding, and delivering much needed technical expertise and guidance to successfully execute P3s. In this article, the first in a series, we explore (1) the doubling of private activity bonds, (2) a P3 technical assistance program for government agencies, (3) TIFIA driven value-for-money analyses, (4) the streamlining of important environmental reviews, and (5) the creation of a government reporting feedback loop on P3 projects.

On February 28, the New York Senate passed Bill S8430A to amend New York’s Real Property Actions and Proceedings Law Section 881. The current version of Section 881, enacted in 1968, offers a developer judicial recourse when an owner or lessee of a neighboring building refuses access that a developer needs to improve or repair its own building. This judicial recourse comes in the form of a temporary license for access. Section 881 provides limited guidance on how or when courts will issue these temporary licenses, stating only that a “license shall be granted by the court in an appropriate case upon such terms as justice requires.” Over the years, New York courts have filled in the contours of Section 881, providing additional rules for what temporary licenses may cover and when they may be granted. These cases address topics, ranging from required liability insurance to compensation for a landowner’s loss of quiet enjoyment of their property.

Virginia has joined the ranks of states that ban “pay-if-paid” clauses. Contingent payment clauses, like “pay-if-paid” and “pay-when-paid” clauses, protect contractors: A contractor need not pay its subcontractors or suppliers until the owner pays the contractor.

On March 2, the New Mexico House of Representatives unanimously approved House Bill 213, which would allow public agencies to enter into P3 agreements to facilitate public infrastructure and broadband projects. The public infrastructure component covers the construction or improvement of public transportation facilities or public transportation other than toll roads. The bill sets out required steps that public agencies must take before entering a P3 agreement, such as conducting a public hearing for the proposed P3 project and undertaking a cost-benefit analysis on using a P3 in comparison with traditional public partner-managed projects. The bill also creates a public-private partnership board, consisting of six senior state officials and five members of the public appointed by the New Mexico legislature to review and approve P3 projects costing over $10 million. Many of the bill’s requirements mirror those associated with obtaining federal funding under programs like the Transportation Infrastructure Finance and Innovation Act (TIFIA). The bill currently sits with the New Mexico Senate Judicial Committee for further consideration.

In All Seasons Landscaping, Inc. v. Travelers Cas. & Sur. Co. of Am., a Connecticut court considered for the first time whether the performance of warranty work tolls the statute of limitations on payment bond claims. The court ruled that it does not. It dismissed subcontractor All Seasons Landscaping, Inc.’s (ALS’s) bond claim because ALS admitted that it last performed non-warranty work on the project more than one year before filing suit, meaning the statute of limitations barred its claim.

Industrial Steel Construction, Inc. v. Lunda Construction Company, 33 F.4th 1038, 1041 (8th Cir. 2022)

This federal case relates to the construction of a bridge over the Mississippi River between Iowa and Illinois. The state of Iowa hired Lunda Construction Company (Lunda) as the general contractor for the project, which contracted Industrial Steel Construction, Inc. (ISC) to fabricate the structural steel for the bridge. A breach of contract dispute arose between Lunda and ISC that resulted in an arbitration pursuant to the contractual dispute resolution provisions. The arbitrator ruled entirely in favor of Lunda, including awarding Lunda its attorneys’ fees and expert costs, and requiring ISC to reimburse Lunda for its half of the cost of the arbitration.

2700 Bohn Motor, LLC v. F.H. Myers Construction Corp., 338 So.3d 500 (La. Ct. App. 2022).

This case involved the restoration of an old building in New Orleans. Fire broke out, resulting in a loss that was paid by the owner’s builder’s risk insurance. The builder’s risk carriers — subrogated to the rights of the owner — then sued the prime contractor, its subcontractor, and sub-subcontractor for negligence.

Practice Recognized for Major Deals, Litigation Wins in 2022

NEW YORK – For the second consecutive year, Troutman Pepper’s Construction Practice Group has been recognized nationally among Law360’s Practice Groups of the Year. The firm was among only four to receive the 2022 Practice Group of the Year designation in the Construction category.

Hanuman Chalisa, LLC v. BoMar Contr., Inc., 2022-Ohio-1111, 187 N.E.3d 1108 (Ct. App.)

Hanuman Chalisa LLC (owner) contracted BoMar Contracting, Inc. (BoMar) to construct a hotel in Columbus, OH. The contract consisted of the AIA A101-2007 and AIA A201-2007. The owner later terminated BoMar, alleging deficiencies in BoMar’s work. The parties disputed whether the owner terminated the contract “for cause” or “for convenience.”

Accreditation: An extract from Thomas Reuters Practical Law. The full document is available at https://content.next.westlaw.com/practical-law/document/I3e46a7343fed11ed9f24ec7b211d8087/Standard-Arbitration-Clause-for-Construction-Contract.

Troutman Pepper Partners Albert Bates and Zach Torres-Fowler published a Thomas Reuters Practical Law guide for drawing construction arbitration clauses.