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| Construction in New York Limps Forward Despite Shutdown Order | Construction in New York Limps Forward Despite Shutdown Order |
| (about 20 hours later) | |
| Development has ground to a halt across New York City. Or has it? | Development has ground to a halt across New York City. Or has it? |
| After initially deeming all construction workers essential employees as coronavirus inundated the city, New York State reversed course on March 27 and ordered work stopped at most construction sites until at least the end of April. | After initially deeming all construction workers essential employees as coronavirus inundated the city, New York State reversed course on March 27 and ordered work stopped at most construction sites until at least the end of April. |
| Included in the order were several important exceptions. “Essential” projects — like hospitals and homeless shelters — were allowed to go forward, according to rules established by an executive order from Gov. Andrew M. Cuomo. But in a city where construction projects often fall into several different categories, and where the real estate industry still has clout despite its struggles, the stop-work order has been met with confusion and resistance. | Included in the order were several important exceptions. “Essential” projects — like hospitals and homeless shelters — were allowed to go forward, according to rules established by an executive order from Gov. Andrew M. Cuomo. But in a city where construction projects often fall into several different categories, and where the real estate industry still has clout despite its struggles, the stop-work order has been met with confusion and resistance. |
| On Friday, the city’s Department of Buildings, which is responsible for implementing the governor’s directive, released an interactive map showing all of the ongoing “essential” projects around the city in an effort to help distinguish the essential from the nonessential, and warned that “noncompliance will lead to a violation and fines of up to $10,000.” | On Friday, the city’s Department of Buildings, which is responsible for implementing the governor’s directive, released an interactive map showing all of the ongoing “essential” projects around the city in an effort to help distinguish the essential from the nonessential, and warned that “noncompliance will lead to a violation and fines of up to $10,000.” |
| But even as developers publicly say that keeping contractors healthy and curbing the coronavirus’s spread is the priority, some are privately complaining that the patchwork of new rules is a mess. And many are busily trying to make their case to officials that their projects, whether condos or rentals, serve a vital interest and should be exempt from the shutdown. A day after the order took effect, the buildings department had received more than 900 such appeals, a spokesman said. | But even as developers publicly say that keeping contractors healthy and curbing the coronavirus’s spread is the priority, some are privately complaining that the patchwork of new rules is a mess. And many are busily trying to make their case to officials that their projects, whether condos or rentals, serve a vital interest and should be exempt from the shutdown. A day after the order took effect, the buildings department had received more than 900 such appeals, a spokesman said. |
| “There’s a feeling that not everybody is being treated the same,” said Steve Kliegerman, the president of Halstead Property Development Marketing, which works with many developers. “You’re hearing, ‘Why is it fair that they can continue and I can’t?’” | “There’s a feeling that not everybody is being treated the same,” said Steve Kliegerman, the president of Halstead Property Development Marketing, which works with many developers. “You’re hearing, ‘Why is it fair that they can continue and I can’t?’” |
| One building type included on the “essential” list, for example, is affordable housing — a much broader category than it appears. Since most large rental projects offer at least some below-market-rate units, which allow them to win tax abatements, luxury developments that may not seem like affordable housing are greenlighted, too. All told, more than 300 affordable projects can continue, according to the buildings department. | One building type included on the “essential” list, for example, is affordable housing — a much broader category than it appears. Since most large rental projects offer at least some below-market-rate units, which allow them to win tax abatements, luxury developments that may not seem like affordable housing are greenlighted, too. All told, more than 300 affordable projects can continue, according to the buildings department. |
| Condos, which tend to be market-rate, don’t appear as able to exploit loopholes. Over the past few days, workers at condo sites have been tying down lumber and checking water pumps to prepare for extended closures that could hurt a floundering residential sector. But developers are testing out exceptions for them as well. Some condo sites squeeze rental units, including affordable ones, among their for-sale apartments. One such project, Waterline Square, a three-towered project from GID Development Group on Manhattan’s Far West Side, is still moving forward, according to the new buildings department map. | Condos, which tend to be market-rate, don’t appear as able to exploit loopholes. Over the past few days, workers at condo sites have been tying down lumber and checking water pumps to prepare for extended closures that could hurt a floundering residential sector. But developers are testing out exceptions for them as well. Some condo sites squeeze rental units, including affordable ones, among their for-sale apartments. One such project, Waterline Square, a three-towered project from GID Development Group on Manhattan’s Far West Side, is still moving forward, according to the new buildings department map. |
| Developers of rental housing may be best positioned to maintain business as usual during the shutdown, because many large rental projects under construction had plans to offer some affordable-housing units. The units allow the developers to take advantage of property-tax abatements created by 2017’s Affordable New York state housing program. Under the program, tax breaks are typically awarded when 30 percent of the units in a building are made available for below-market-rate rents. | Developers of rental housing may be best positioned to maintain business as usual during the shutdown, because many large rental projects under construction had plans to offer some affordable-housing units. The units allow the developers to take advantage of property-tax abatements created by 2017’s Affordable New York state housing program. Under the program, tax breaks are typically awarded when 30 percent of the units in a building are made available for below-market-rate rents. |
| Many projects that are forced to wind down are doing so slowly. While that might frustrate those worried about public health, developers say that the gradual pace, which is permitted under the state order, is important to ensure that sites don’t become hazards. | Many projects that are forced to wind down are doing so slowly. While that might frustrate those worried about public health, developers say that the gradual pace, which is permitted under the state order, is important to ensure that sites don’t become hazards. |
| At Rose Hill, a 123-unit condo from Rockefeller Group in Manhattan’s NoMad neighborhood, contractors continued to mill behind dark-green fences this week, tackling a punch-list of tasks before walking away, including the dismantling of a tower crane, a previously scheduled task that had taken on new urgency. | At Rose Hill, a 123-unit condo from Rockefeller Group in Manhattan’s NoMad neighborhood, contractors continued to mill behind dark-green fences this week, tackling a punch-list of tasks before walking away, including the dismantling of a tower crane, a previously scheduled task that had taken on new urgency. |
| “Aside from folks working to oversee the safe shutdown of the site, we’ve followed orders and ceased construction,” said Meg Brod, a Rockefeller senior vice president. The $300 million project, at 30 East 29th Street, is supposed to open this fall. | “Aside from folks working to oversee the safe shutdown of the site, we’ve followed orders and ceased construction,” said Meg Brod, a Rockefeller senior vice president. The $300 million project, at 30 East 29th Street, is supposed to open this fall. |
| At the XI, a two-towered condo complex with 236 apartments near the High Line, where 800 construction workers are employed, work continued last week despite the order from Albany. Questions remain about whether construction should stop at the full-block site, even though it contains a 137-room hotel. Hotels have been deemed an essential construction type because they can serve as housing for medical workers. | At the XI, a two-towered condo complex with 236 apartments near the High Line, where 800 construction workers are employed, work continued last week despite the order from Albany. Questions remain about whether construction should stop at the full-block site, even though it contains a 137-room hotel. Hotels have been deemed an essential construction type because they can serve as housing for medical workers. |
| Updated August 6, 2020 | |
| “We are in dialogue with agencies about what work can continue past this week,” said Ziel Feldman, chairman of HFZ Capital Group, the XI’S developer. “It’s all about the health of the individual worker. If the powers that be think it’s unsafe for people to continue working, then of course, that’s everybody’s priority.” | “We are in dialogue with agencies about what work can continue past this week,” said Ziel Feldman, chairman of HFZ Capital Group, the XI’S developer. “It’s all about the health of the individual worker. If the powers that be think it’s unsafe for people to continue working, then of course, that’s everybody’s priority.” |
| Regular patrols of construction sites, to prevent fires and other safety hazards, are also permitted, lawyers say. But if developers of nonessential projects are caught, for example, hoisting I-beams into place, they face fines and a stop-work order that police could enforce. | Regular patrols of construction sites, to prevent fires and other safety hazards, are also permitted, lawyers say. But if developers of nonessential projects are caught, for example, hoisting I-beams into place, they face fines and a stop-work order that police could enforce. |
| Under state order, construction sites are urged to enforce social distancing in elevators and during lunch breaks. One developer who spoke anonymously to discuss a sensitive issue, said he was uncomfortable requiring construction workers to leave their homes and come to sites that can be crowded and unsanitary. Others are trying to strike a balance between business interests, housing needs and public health. | Under state order, construction sites are urged to enforce social distancing in elevators and during lunch breaks. One developer who spoke anonymously to discuss a sensitive issue, said he was uncomfortable requiring construction workers to leave their homes and come to sites that can be crowded and unsanitary. Others are trying to strike a balance between business interests, housing needs and public health. |
| “We are hopeful that we will be able to keep construction in motion at key projects that have an affordable component, but only if it’s in the best interest of the city and the safety of its citizens,” said Mitchell Moinian, a principal of the development firm Moinian Group, in a statement. Mr. Moinian is currently codeveloping PLG, a 467-unit rental in Prospect Lefferts Gardens, Brooklyn, where 141 units in the building, about 30 percent, are affordable. | “We are hopeful that we will be able to keep construction in motion at key projects that have an affordable component, but only if it’s in the best interest of the city and the safety of its citizens,” said Mitchell Moinian, a principal of the development firm Moinian Group, in a statement. Mr. Moinian is currently codeveloping PLG, a 467-unit rental in Prospect Lefferts Gardens, Brooklyn, where 141 units in the building, about 30 percent, are affordable. |
| Also hanging over the shutdown are questions about whether projects — which are still on the hook for taxes, insurance and loan interest payments — can financially sustain a long pause. Banks typically don’t release construction funds until developers complete certain elements, like the foundation or steel structure, and missing deadlines can endanger loans, lawyers say. | Also hanging over the shutdown are questions about whether projects — which are still on the hook for taxes, insurance and loan interest payments — can financially sustain a long pause. Banks typically don’t release construction funds until developers complete certain elements, like the foundation or steel structure, and missing deadlines can endanger loans, lawyers say. |
| “Force majeure” clauses in lending agreements, usually invoked when materials run late, can protect developers against delays, said Eric Orenstein, a lawyer with Rosenberg and Estis. But those clauses often allow for only 90-day breaks, he said, and developers have probably used up some of those days already. | “Force majeure” clauses in lending agreements, usually invoked when materials run late, can protect developers against delays, said Eric Orenstein, a lawyer with Rosenberg and Estis. But those clauses often allow for only 90-day breaks, he said, and developers have probably used up some of those days already. |
| If New York’s shutdown, which followed similar orders in San Francisco and Boston, does end soon, projects should be able to absorb the setbacks, Mr. Kliegerman of Halstead said. But that is far from assured. “Spirits are reasonably high,” he added, “but everyone is nervous about how long this will last.” | If New York’s shutdown, which followed similar orders in San Francisco and Boston, does end soon, projects should be able to absorb the setbacks, Mr. Kliegerman of Halstead said. But that is far from assured. “Spirits are reasonably high,” he added, “but everyone is nervous about how long this will last.” |
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