As a follow-up to our July post on New Jersey state budget problems threatening public construction projects, the political fight over funding New Jersey’s Transportation Trust Fund (“TTF”) finally ended on September 30, 2016. Governor Chris Christie and the legislature agreed to a compromise whereby the TTF will be reauthorized for eight years and funded with an additional 23 cent per gallon gas tax, for a total funding of $2 billion per year. As part of the compromise, the estate tax will be phased out by 2018, the sales tax will be reduced by 3/8th of a point, and other credits and deductions will be added to the NJ tax code.
The question of when contractors can remobilize to suspended construction projects remains open. Further, the issue of responsibility for the demobilization and remobilization costs is sure to be a hotly contested issue. Indeed, the New Jersey Department of Transportation (“NJDOT”) has denied contractors’ change order requests seeking payment for demobilization costs on the basis that the project’s delay is a non-compensable delay under the NJDOT Standard Specifications (“Standard Specifications”).
To assist impacted contractors, several trade organizations filed declaratory judgment actions, seeking a declaration from the New Jersey Superior Court that the project’s delay is compensable under the Standard Specifications. Such a declaration could pave the way for contractors to more easily recover costs incurred as a result of a project’s suspension. However, because these lawsuits only pertain to the interpretation of the Standard Specifications as to whether the delay is compensable or non-compensable, each contractor will independently need have to prove its damages and that the costs are recoverable under its contract.
We will monitor these lawsuits and continue to report on the legal ramifications from the TTF work suspensions.
