Build On This! tag:buildonthis.com,2008://1 2008-04-21T16:45:05Z Movable Type 3.34 Legislative Update: Criminal background checks to be required on employees and contractors who work in school districts. tag:buildonthis.com,2008://1.120 2008-04-14T21:05:05Z 2008-04-21T16:45:05Z H.B. 190 (eff. Nov. 14, 2007) – Requires private contractors who work with a school district for a “regular period of time” to run background checks on all employees assigned to a district building or project. Public owners are beginning... BDB H.B. 190 (eff. Nov. 14, 2007) – Requires private contractors who work with a school district for a “regular period of time” to run background checks on all employees assigned to a district building or project. Public owners are beginning to rely upon this newly enacted statute to require private contractors to obtain fingerprints and request both an Ohio Bureau of Criminal Identification and Investigation (“BCII”) and an FBI records check prior to assigning employees to work on district projects. Further, the background check must be repeated every five years for each employee, and private contractors hired by school districts must pay the cost of these checks. The new law, R.C. 3319.391, requires a criminal background check for any person, other than people transportation operators, who is: (1) Hired to work in a school district, educational service center or chartered non-public school; and (2) In any position that does not require a “license” issued by the state board of education. This definition can be applied broadly, to include groundskeepers, construction workers and others who enter school property to perform services. Pursuant to R.C. 3319.381(A)(2), an employee is ineligible to work on a school district project if that employee has ever been convicted of or plead guilty of an offence listed in R.C. 3319.39(B)(1). There is currently a movement aimed at adding an exception that would apply to private contractors that will not have access to children when performing work on a school district project. But currently, the law is in effect and applies to all private contractors on school district projects. Employees who were hired prior to the effective date of the law and who were not previously required to have background checks will have to be checked by September 5, 2008, as recently established by the Ohio Department of Education. Case Summary: Local hiring preferences can result in withdrawal of federal funds on a city project City of Cleveland v. State of Ohio, et al., 2007 WL 4123743 (C.A. 6 (Ohio)) tag:buildonthis.com,2008://1.119 2008-04-14T20:51:51Z 2008-04-14T20:59:39Z Summary: When federal funds are involved on a local project, the local municipality needs to be very cautious when attempting to institute local hiring preferences. Courts will most likely side with the decision made by the federal agency provided that... BDB Summary: When federal funds are involved on a local project, the local municipality needs to be very cautious when attempting to institute local hiring preferences. Courts will most likely side with the decision made by the federal agency provided that decision is not arbitrary or capricious.]> Case: The issue before the Court was whether a city can mandate a certain percentage of city residents as workers on a road improvement project that is partially funded by federal money. The answer is “yes,” provided the city’s ordinance does not violate federal law or regulations. In preparing a bid package for a local project, the City of Cleveland included reference to its Lewis Law, a city ordinance that requires 20% of the work on the project to be performed by city residents. Upon reviewing the bid package, Ohio Department of Transportation advised the City that failure to remove the Lewis Law language would lead to the withdrawal of federal funds, as the City’s local hiring preference requirement violated certain federal laws. The City altered the bid package by removing reference to the Lewis Law. However, subsequently, the City’s contractual agreement with contractor incorporated the Lewis Law’s requirements. As a result, the applicable federal agencies withdrew their federal support. The City filed suit seeking a declaration that the application of the Lewis Law did not violate federal laws. Although the Court of Appeals agreed with the City that the substance of the Lewis Law itself did not violate federal law, the Court ultimately denied the City’s request reasonably that the withdrawal of funds was authorized under the discretion conferred by the federal agencies involved and by 23 U.S.C. §112(b), which prohibits contract requirements that are not expressly set forth in the advertised bid specification. ]> Ohio Legislature Approves Eminent Domain Bill tag:buildonthis.com,2007://1.115 2007-06-28T16:09:56Z 2007-06-28T16:14:38Z The Ohio General Assembly approved a bill placing limits on the government's authority to take property for economic development purposes and governor Strickland is expected to sign the bill into law, reports the Columbus Dispatch. The bill includes a requirement... David Lindner Columbus Dispatch. The bill includes a requirement that at least 70 percent of properties in a targeted area be deemed "blighted" before the government can take the land. A companion constitutional amendment failed to garner the votes needed to appear on the November ballot.]> Ohio Legislature Considers Homeowners' Association Law tag:buildonthis.com,2007://1.113 2007-06-26T18:16:32Z 2007-06-26T18:22:37Z Real estate attorney David Lindner reports that the Ohio General Assembly is now considering H.B. 220, which would establish Ohio's first planned community law. The proposed law would clarify and expand the powers of homeowners' associations. Check back for further... David Lindner H.B. 220, which would establish Ohio's first planned community law. The proposed law would clarify and expand the powers of homeowners' associations. Check back for further updates as the bill proceeds through the legislative process.]> Flats Eminent Domain Case Nearly Settled tag:buildonthis.com,2007://1.112 2007-06-18T23:02:32Z 2007-06-18T23:06:33Z The Cleveland Plain Dealer reports that developer Scott Wolstein, the Cleveland-Cuyahoga County Port Authority, and all but one property owner have reached a settlement in the eminent domain case pending in the Cuyahoga County Probate Court. Owner James Kasouf refused... David Lindner The Cleveland Plain Dealer reports that developer Scott Wolstein, the Cleveland-Cuyahoga County Port Authority, and all but one property owner have reached a settlement in the eminent domain case pending in the Cuyahoga County Probate Court. Owner James Kasouf refused to settle, arguing that his property is worth substantially more than he was offered in settlement. The trial will resume on August 1 to resolve his claim.]> Ohio Senate Passes Restrictions on Eminent Domain tag:buildonthis.com,2007://1.111 2007-06-01T15:41:36Z 2007-06-01T15:48:42Z The Ohio Senate passed a pair of measures yesterday that could severely limit the power of a city to take property for economic development. The first measure provides a definition for the term "blight," which is a prerequisite for a... David Lindner Click here for additional information from the Plain Dealer.]> Eminent Domain Battle over Cleveland's Flats Project Is Heading to Trial tag:67.15.211.14,2007:/~buildont//1.110 2007-05-09T14:02:34Z 2007-05-14T14:02:55Z The Cleveland-Cuyahoga County Port Authority is suing to take nine properties by eminent domain for a planned redevelopment project by developer Scott Wolstein. The case will be heard in Cuyahoga County Probate Court and several weeks of testimony are expected,... Cleveland Plain Dealer. If the court finds that the taking is justified, the value of the properties will be determined by a jury. Opponents contend that the use of eminent domain in this case is not for the benefit of the public, but for the benefit of a private developer. Proponents argue that the redevelopment of the run-down east bank of the Flats will benefit the entire city.]> Ohio Supreme Court to Hear Minority Bidding Case tag:67.15.211.14,2007:/~buildont//1.109 2007-05-03T14:01:54Z 2007-05-14T14:02:19Z The Supreme Court of Ohio will determine whether the city of Cincinnati can bypass low bidders on a construction project in favor of small and minority owned businesses, reports the Cincinnati Enquirer. Cleveland Construction sued the city after its low... Cincinnati Enquirer. Cleveland Construction sued the city after its low bid was rejected in favor of a higher bid from a contractor that used small business and minority subcontractors.]> South Euclid Prevails in Eminent Domain Dispute tag:67.15.211.14,2007:/~buildont//1.108 2007-05-01T14:01:15Z 2007-05-14T14:01:39Z The Cleveland Plain Dealer reports that Cuyahoga County Probate Judge John Donnelly ruled in favor of the city of South Euclid, which sought to obtain a portion of the Cedar Center shopping center for redevelopment. Four tenants contested the city's... Cleveland Plain Dealer reports that Cuyahoga County Probate Judge John Donnelly ruled in favor of the city of South Euclid, which sought to obtain a portion of the Cedar Center shopping center for redevelopment. Four tenants contested the city's right to take the property. The city will now proceed with selecting a developer to rehabilitate the South Euclid portion of the shopping center.]> Public Contractors Beware tag:67.15.211.14,2007:/~buildont//1.107 2007-04-30T14:00:12Z 2007-05-14T14:00:46Z By James Simon and Donald Leach In late 2006, the Ohio General Assembly passed H.B. 694, a sweeping reform of Ohio’s campaign finance laws that affects all public contractors and design professionals. This new law severely constrains public contractors’ and... James Simon and Donald Leach In late 2006, the Ohio General Assembly passed H.B. 694, a sweeping reform of Ohio’s campaign finance laws that affects all public contractors and design professionals. This new law severely constrains public contractors’ and design professionals’ ability to make political contributions to officeholders that award bid or unbid public contracts valued over $500. Its impact is not limited to construction related contracts as affected public contracts include all those let by the state, state agencies and political subdivisions, including local governments and appointed boards, agencies and commissions. H.B. 694 imposes harsh sanctions, including criminal prosecution and contract rescission, for contractors that violate its limits. The provisions of H.B. 694 affect all contributions made after January 1, 2007. Under the new law an officeholder (and all boards, agencies or commissions the officeholder appoints) cannot award a public contract if the officeholder received campaign contributions exceeding $1,000 during the preceding two years from an individual owner, member, partner, 20% shareholder or professional corporation shareholder of a public contractor. The limit includes contributions by owners’ spouses and minor children.]> Further, an officeholder (and all boards, agencies or commissions the officeholder appoints) cannot award a public contract to a contractor or design professional if the officeholder received campaign contributions exceeding $2,000 during the preceding two years from all of a public contractor’s partners, members, 20% shareholders (of a general corporation), or professional corporation shareholders (including owners’ spouses and minor children), and any “affiliated PAC.” The burden of proving compliance with H.B. 694 rests on the contractor or design professional. Before being awarded a public contract, the contractor or design professional must certify compliance with H.B. 694. False certifications are punishable as fifth degree felonies. The same limits apply from the award of a contract until one year after its completion. Further contributions over the limits after the award of a contract can result in fines and rescission of the contract. Under H.B. 694, seemingly nominal support of an officeholder from a contractor or design professional or their owners can disqualify the contractor and design professional from receiving public contracts or may result in the loss of already-awarded contracts. Therefore, it is important for every contractor and design professional involved in public construction to closely monitor the political contributions it makes and the contributions made by its owners and any affiliated PAC. 1997 “No Damage for Delay” Clause Upheld by the Ohio Supreme Court tag:67.15.211.14,2007:/~buildont//1.106 2007-04-26T13:58:45Z 2007-05-14T13:59:35Z Construction law and business litigation attorney Mark F. Craig reports that the Ohio Supreme Court upholds a “no damages for delay” clause in Dugan & Meyers Constr. Co., Inc. v. Ohio Dept. of Adm. Servs., 2007-Ohio-1687. Plaintiff Dugan & Meyers... Dugan & Meyers Constr. Co., Inc. v. Ohio Dept. of Adm. Servs., 2007-Ohio-1687. Plaintiff Dugan & Meyers (“D&M”) was terminated on a public project at the Ohio State University and was assessed liquidated damages for 188 days of delay in completion, apportioned between D&M and three subcontractors. D&M brought suit in the Court of Claims to recover its cost overruns, alleging that the additional costs were due to inaccurate plans and specifications provided by the public owner. The referee in the Court of Claims agreed, finding that under the 1918 U.S. Supreme Court decision, Spearin v. United States, D&M was entitled to rely on the accuracy of owner-provided plans and specifications. The Court of Claims agreed with the referee’s recommendations and granted judgment in favor of D&M. ]> The state appealed to the 10th District Court of Appeals, who reversed the judgment on the basis that all of D&M’s cost overruns were a direct result of delays on the project, which were precluded by D&M’s failure to give contractual notice, thereby waiving any damages arising from the delay. The Court of Appeals also held that D&M failed to provide competent evidence of actual damages. The Ohio Supreme Court affirmed the 10th District’s ruling, holding that the “no damage for delay” clause was enforceable because the contract clearly provided that “time is of the essence” and provided a specific procedure to be followed in the event of a delay, which was not followed by D&M. The Court noted that the contract pre-dated the “Fairness In Contracting Act” of 1998 in which the Ohio State Legislature made such clauses void and unenforceable as against public policy in most instances. R.C. 4113.62(C). The 1998 legislation includes specific language stating that its provisions do not apply “to any contracts, agreements, or understandings entered into before the effective date of this act.” The Court also noted that Spearin involved the existence of a site condition that precluded completion of the construction project and distinguished this case on the basis that “the case before us concerns the allocation of damages flowing from delay in completion of a construction project due to plan changes.” “[W]e decline the opportunity to extend the Spearin Doctrine from job-site-condition cases to cases involving delay due to plan changes.” Cleveland City Council Not Likely to Change Tax Abatement Program tag:67.15.211.14,2007:/~buildont//1.104 2007-04-19T13:53:05Z 2007-05-14T13:57:25Z Cleveland City Council is likely to renew the current residential tax abatement program, rejecting Mayor Jackson's proposal to limit the term of the abatements, reports the Plain Dealer. The Mayor favors reducing most abatements to seven years from 15, with... Plain Dealer. The Mayor favors reducing most abatements to seven years from 15, with 12 year abatements for environmentally-friendly design. Many developers believe the abatement program is essential to building new housing in Cleveland.]> New Law Proposed to Require Recording of Deed After Foreclosure tag:67.15.211.14,2007:/~buildont//1.103 2007-03-28T14:13:31Z 2007-04-09T17:07:51Z The Cleveland Plain Dealer reports that state representative Mike Foley has introduced legislation that would require the county sheriff to file a deed following a foreclosure sale to alleviate concerns that some banks intentionally delay filing a deed in order... Cleveland Plain Dealer reports that state representative Mike Foley has introduced legislation that would require the county sheriff to file a deed following a foreclosure sale to alleviate concerns that some banks intentionally delay filing a deed in order to conceal their ownership of the property. The legislation would also require out-of-town lenders to name a local contact for concerns regarding the property.]> Ohio Supreme Court Rules on Use of Appraisal in Tax Valuation Case tag:67.15.211.14,2007:/~buildont//1.102 2007-03-14T16:15:20Z 2007-04-09T17:07:51Z In Strongsville Board of Education v. Cuyahoga County Board of Revision (2007), 112 Ohio St. 3d 309, the Supreme Court affirmed the Board of Tax Appeals’ (BTA) decision to use an appraisal, as opposed to a recent sale lease-back transaction,... 112 Ohio St. 3d 309, the Supreme Court affirmed the Board of Tax Appeals’ (BTA) decision to use an appraisal, as opposed to a recent sale lease-back transaction, to determine the subject property’s tax value. Typically, a recent sale transaction will determine the property’s value for tax purposes, unless the sale is not at arms’ length. Where it is shown that a recent sale was not an arm’s length sale, appraisal evidence can be used to establish the property’s value.]> In Strongsville, the owner was in a dire financial situation and had a balloon mortgage payment due. It decided to sell the subject property to acquire the funds to pay the balloon payment. It still needed to operate on the property, however, so it entered into a sale lease-back agreement with the purchaser of the property for $16 million. The City of Strongsville School District filed a complaint with the Board of Revision (“BOR”), asserting that the true value of the property was $16 million, not the appraised value of $8,326,400. The BOR found the property’s value to be $9.5 million, based on the owners’ appraisal evidence. The Ohio Supreme Court agreed with the BTA that the recent sale lease-back of $16 million did not constitute an arms’ length transaction; therefore, it was not the “true value” for taxation purposes and the appraisal evidence was properly used to determine the value. The Court did not base its decision on the fact that the recent sale was a sale lease-back. Instead, it reached its conclusion by finding the sale was conducted under duress. The Court cited three factors indicating duress on the part of the seller. First, the company’s financial situation was unsteady. Second, the company had an impending balloon mortgage payment and insufficient funds to make it. Third, all the appraisers involved in the case treated the sale as not being an arms’ length sale. Specifically, the Court found that “the need to sell the building was so pressing that [the company] rejected an offer for the property higher than the one ultimately accepted because of the longer time it would have taken to complete the proposed transaction.” Ohio Is Still Leading the Pack in Foreclosures tag:67.15.211.14,2007:/~buildont//1.101 2007-02-23T19:51:53Z 2007-04-09T17:07:51Z The Cleveland Plain Dealer reports that Ohio remains a contender for the top spot when it comes to foreclosures. A recent report lists Cleveland, with one foreclosure for every 40 households, as having the 14th highest foreclosure rate out of... The Cleveland Plain Dealer reports that Ohio remains a contender for the top spot when it comes to foreclosures. A recent report lists Cleveland, with one foreclosure for every 40 households, as having the 14th highest foreclosure rate out of the 100 largest American metropolitan areas. Akron was ranked 16th nationally with one foreclosure for every 43 households. That same report ranked Ohio eighth nationally with one foreclosure for every 59 households. It appears from these new rankings that Ohio is improving its foreclosure rate; however, that may be an illusion. Previously, the Mortgage Bankers Association (“MBA”) gave Ohio the top spot when it comes to foreclosures. However, the methodology the MBA used was different from this recent survey. Regardless, under this most recent survey, Cleveland, Akron, and Ohio’s foreclosure rates are drastically higher than the national average of one foreclosure for every 92 households. And there is no sign of these rates going down according to Cuyahoga County Treasurer Jim Rokakis.