Iowa Case Shows Importance of Commencement, Preliminary Notices in State’s Mechanic’s Lien Law

Sept. 16, 2016

A recent decision by the Iowa Court of Appeals concerning the state’s revised mechanic’s lien law muddies the waters regarding residential construction projects. Among other things, it emphasizes the importance of material suppliers filing notices of commencement (NOCs) with Iowa’s Secretary of State in order to preserve their lien rights for payment of their work.

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New Internal Revenue Services (IRS) Guidance on some P3 Projects

Sept. 16, 2016

The IRS issued in August Rev. Proc. 2016-44, which expands private developers’ ability to take part in some types of long-term facility management agreements financed with tax-exempt bonds, like public-private partnership (P3) projects. Importantly, this can be done without jeopardizing the tax-exempt status of the bonds, as long as specific conditions are met, said attorney Michael Bradshaw Jr., of Butler Snow LLP in Memphis, TN.

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Connecticut Reduces Retainage

Sept. 16, 2016

Connecticut has passed a law that reduces retainage requirements—money withheld from an interim payment by an owner or contractor to pay at a later time— from 10% to 7.5% on all state construction projects and further reduces it to 5% halfway through the job.

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Higher Regulatory Costs Boost Median Prices for Single-Family Homes in the Pacific Region

Sept. 14, 2016

The median price for single-family homes that were started in 2015 cost about 60% more per square foot in the West than the national average, thanks in part to high and expanding regulatory costs, according to a recent survey by the National Association of Home Builders (NAHB).

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Ready-Mix Concrete Suppliers Weary of New CA Law Mandating Payroll Certification

Sept. 9, 2016

A new law in California meant to ensure that workers who deliver ready-mixed concrete to public jobs in the state receive prevailing wages is adding an extra level of administrative burden to ready-mix concrete suppliers that already provide such wages.

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What’s Going on With Weak Residential Construction Spending?

Sept. 7, 2016

Private residential construction spending has been fairly weak of late—0.3% rise in July’s spending mostly came from increased allocations on home improvements—even as new home sales and single-family homebuilding have been increasing. The situation is made more confusing because residential construction employment also has been on the rise, notedMark Vitner, senior economist with Wells Fargo.

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Construction Jobs Fall in July, but Industry Remains Busy

Sept. 2, 2016

Losses in the nonresidential and heavy and civil engineering sectors contributed to a net decline of 6,000 construction jobs in August, according to the Bureau of Labor Statistics and Associated Builders and Contractors (ABC).

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Suppliers Need to Perfect Payment Rights as Repairs Begin after LA Flooding

Sept. 2, 2016

Recent catastrophic flooding in Louisiana with an estimated millions in damages has displaced thousands of people from their homes and other properties. As the community embarks on the long road to normalcy, suppliers tied to repair and restoration projects should take special care to timely secure their mechanic’s lien rights for private projects or payment bond rights for public projects.

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Construction Spending is Up in July, Year-Over-Year

Sept. 1, 2016

Total construction spending at a seasonally adjusted annual rate of $1.15 trillion in July essentially remained unchanged from June and is about 1.5% higher than it was the prior July. Construction spending for the first seven months of the year amounted to $647.7 billion, about 5.6% above what it was for the same period a year ago, the Commerce Department said Thursday.

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Construction Cost Mostly Down, Volatility Ahead

Aug. 31, 2016

Construction costs, including for labor, material and equipment, fell again in August and led the IHS PEG Engineering and Construction Cost index into contraction territory. The index value for August was 45.4, down from 49.8 in July, as the current materials/equipment price index also dropped under the neutral reading to 47.5, IHS Markit said. Seven out of 12 categories tracked in the index fell in August and reflected falling prices. Only ready-mix concrete and wire and cable had rising prices in August, while fabricated structural steel, transformers and electrical equipment had neutral readings. “The drop in the materials/equipment sub-index highlights what we think will be a central feature of the pricing environment over the second half of the year: volatility,” said John Mothersole, research director at IHS Pricing and Purchasing. “Although U.S. growth looks solid over the rest of 2016, Chinese manufacturing activity looks unsustainably strong. Its eventual slowdown coupled with a U.S. interest rate hike in December will create headwinds for commodity markets and softening conditions in materials and equipment markets in the months ahead.” The subcontractor labor index dropped significantly to 40.5 from 48.2 in July, marking the fourth straight month below the neutral mark, IHS Markit said. The Midwest and South saw notably soft labor costs; the Northeast stayed steady; and costs rose in the West. “Despite tight construction labor markets, subcontractor rates have shown softness over the past four months,” said Emily Crowley, senior economist at IHS Pricing and Purchasing. “Driving this downturn is the decline in oil and gas investment, particularly in the U.S.” - Nicholas Stern, editorial associate

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