Covering 28 acres, Hudson Yards is the largest construction project in the New York, since the building of Rockefeller Center. With estimated costs of $20 billion, the plans include 18 million square feet of commercial and residential space, more than 100 retail stores, approximately 4,000 residences, 14 acres of public open space, a 750-seat public school and a 200-room hotel.
As the centerpiece of the project, two platforms are being constructed on stilts over 30 active tracks, three rail tunnels and the tunnel for Amway’s Gateway project. Various office, retail and residential towers will then sit on top of the platforms.
“It’s hard to imagine ever getting an opportunity to work on anything this grand or contribute this much to the city in one single project,” says Kenneth H. Lazaruk, a partner at Duane Morris, and a construction lawyer, representing the Related Companies and Oxford Properties Group in their development of the rail yards. “I love New York. I love building in New York. It’s a thrill every day to see this.”
“This area was referred to as the last dead zone or Dead Avenue, and it’s unbelievable,” says Meghan DiPerna, special counsel, also at the law firm Duane Morris, representing Related and Oxford. Referring to the residents, commercial tenants, and commuters who will be living and working in Hudson Yards in the next five to 10 years she adds, “It’s really going to change the vibe of the city.”
Due to the unusual demands the Hudson rail yards project posed, the team devised some innovative ways of doing business.
Instead of using standard forms published by the American Institute of Architects, the attorneys prepared their own construction documents and created special contracts to accommodate the unusually complex underlying requirements.
For example, Long Island Rail Road regulations required keeping the trains running while the platforms and buildings were being built. The Metropolitan Transportation Authority requirements limited when any track outages could take place. Plus, there were different insurance and indemnity demands, and the need for holding the MTA harmless if a situation of liability arose.
With a project of this scope, the lawyers determined the most effective insurance. Related and Oxford purchased an owner-controlled insurance program, in which contractors enrolled, instead of bringing their own insurance to the table. “The idea is you cut down on costs and cut down on all the claims between the different parties because you have one wrap-up program insuring the whole project,” says DiPerna.
Due to the scale of the project, Related and Oxford set up their own in-house construction company, named Hudson Yards Construction, to manage the work. They gave seasoned contractors including Tishman and Tutor Perini different parts of the job to manage, from procurements to monitoring work. This construction management method was far less common at the time. However, in just the handful of years since Lazaruk and DiPerna initially assisted in setting up such a contract structure, they have seen other developers take similar actions.
The size of the project also required taking special precautions to ensure availability of materials.
“Seeing the high rise of construction in the city, and the limited number of tower cranes, Related and Oxford purchased their own tower cranes to ensure they would have them for all of the tall buildings,” says Lazaruk. This helped ensure the job could be done on schedule.
“These projects require massive amounts of steel, so, they went around the world to different companies purchasing steel from different sources,” says DiPerna. “This way it was not all coming from one single source, and the risk was not all in one place.”
With the east side platform almost completed, work on the west side platform is beginning. The Duane Morris attorneys focus on construction issues. The developers or other law firms handle the real estate leasing or purchasing of the condominiums or other property sales.
When GlobeSt.com asked why Duane Morris was selected for this project that places a historical imprint on the city skyline, Lazaruk cited his firm’s experience and knowledge of the construction industry. They were involved with the project from the time Related made its bid and the firm had previously represented Related with the Time Warner Center construction.
“There are few groups in the city that have the number of people that have our experience doing this,” says Lazaruk. “We represent a lot of developers and we’re used to doing big projects.”
When developers are looking for construction lawyers for a project of substantial size and scope, Lazaruk suggests looking at the number of attorneys available to handle multiple projects. Counsel should have solid experience in the full gamut of construction law, including with unions, contractors, design and insurance. “You need a number of attorneys. It can’t be done by one attorney.”
DiPerna also notes while there are many construction lawyers in the city, the vast majority focus on litigation and claims management. This is after agreements are already in place, projects are built, work is defective, a delay happens and a dispute results. “There are few teams that do the front end work, to prevent those claims from happening in the first place,” says DiPerna.