Gene Ferrara, President, JMA Consultants
As of 2021, some 14,000 buildings in New York City must have their facades inspected to make sure they comply with Local Law 11. With COVID, of course, the landscape has certainly changed.
Yes, and there are two sides to that — the engineering side and the contractor side. The increase for the engineering fees have gone up dramatically because more work is involved for the inspections. There are more recording techniques, such as doing probes for the brick ties on cavity walled buildings. You have to do a drop on a public right of way every 60 feet. Anytime you have a sidewalk or somewhere where the public can walk down a garage ramp or walk around the building you have to have a drop from top to bottom. It used to be just one drop for the entire building. So I have buildings now in which we may have charged the client $8,000 in the past and now it's coming up to $12,000 or more.
And on the contractor side?
Where it was a $10,000 scaffold drop or a boom truck on one spot, with the probes you now have to put a bridge up if they have to looking inside an area you can't close off. I have one building that spent $12,950 in the last cycle. It's $275,000 this time around. And so I've spoken to other engineering consultants in the industry and it is the same for them. The sticker shock for the client is tremendous.
What about hiring contractors? Are there enough workers around?
All I would say is this. I know there's a reason to extend COVID unemployment benefits to people like bartenders, waitresses and so forth. I get it. But the contractors and all of us cannot get the men back to the sites because they're making more money sitting at home. Demand is back, and you need to let people go back to work. Also, these are not people you just grab off the street and put on a scaffold up in the air. There's almost a hundred hours' worth of training for that person just to get on that rig.
Also, some contractors have increased costs. So we've lost four or five good contracting companies because of COVID and they're not coming back or being replaced.
We understand that contractors' insurance policies aren't what they used to be. How have they changed?
Under New York State’s Labor Law, if anybody gets hurt while working on a building, they can't sue the employer because he has worker's comp. So they go through a third-party lawsuit, which brings in everybody involved in the project, even if they had no responsibilities to supervise or manage it in any way, So insurance premiums go up, up and up.
And recently there have been accidents throughout the city where the insurance did not have all the proper coverage. So people say they have $10 million worth of coverage, but they're not allowed to go beyond six stories. They're not allowed to do certain things that all contractors do in this restoration business, but they provide that certificate of insurance and they don't cover their subcontractors.
How are people dealing with the problem?
Big firms like Douglas Elliman, FirstService, Greenthal, Maxwell Kates and so forth have retained insurance consultants to review the policies and the certificates before the contractors get hired. We've been in touch with a lot of people in the industry and are trying to come up with a good standard insurance policy where you have to meet the minimum requirements that all buildings are looking for.
Given this tough climate, are boards being proactive enough in tackling facade projects and meeting inspection deadlines?
Yes and no. Some long-term clients of mine, who know that when I tell them to hop on something that they need to get going, have taken advantage of that and they got the early pricing. Other buildings, not so much, and there’s serious stick shock. We sent out proposals in October 2020 telling boards how much certain projects would cost. We got bids back in January and February, and those numbers are off by 25% to 30%.
There are a lot of boards who say, "Well, I've got a year to file my report.” I've got two years from now to file my report." But given how long it can take from the time we get that first phone call to inspecting the building and writing the report, it could take a year just to get the job off the ground on a major project. That’s important for boards to know.