New York Governor Cuomo’s executive order 202.6 (the Executive Order) requires the elimination of 100% of the in-person workforce for “non-essential” businesses in New York State.1 Revised guidance released on March 27 provides more information on the scope of construction activities that may continue during the pandemic. We anticipate that this latest guidance will have an immediate and significant impact on development projects in New York State.
- Initial guidance on the definition of “essential” businesses included “construction”, and was interpreted to mean that all construction activity in New York State would be deemed “essential”.
- The New York State Department of Economic Development (DED) issued revised guidance on March 27, 2020 limiting the definition of “essential” construction activity to “roads, bridges, transit facilities, utilities, hospitals or health care facilities, affordable housing, and homeless shelters” and a limited exception for emergency construction on non-essential sites to protect the health and safety of the public.2
- Under the updated guidance to the Executive Order, all construction activities in New York State other than those listed above must immediately cease until further guidance is issued.
On March 20, 2020, New York Governor Andrew Cuomo signed the Executive Order, requiring businesses, other than those that provide “essential” services, to keep 100 percent of their workforce at home, effectively shuttering any non-essential business whose workforce cannot work from home. The executive order took effect on Sunday, March 22, 2020, at 8 p.m., and lasts until April 19, 2020.
Under the Executive Order, any business classified as an “essential business” is not subject to such in-person work restrictions, and the list of services deemed “essential businesses” includes “construction.” Initial guidance published by the DED defined construction as “skilled trades, such as plumbers and electricians, and other related construction firms and professionals for infrastructure, or for emergency repair and safety purposes.” The term “construction” within this list could be interpreted to classify all construction as essential, and construction activity at sites around New York State continued largely unabated after the initial guidance was released.
On March 27, 2020, the DED provided an update of its interpretation of what construction activities are deemed “essential”, noting in pertinent part that “[e]ssential construction may continue and includes roads, bridges, transit facilities, utilities, hospitals or health care facilities, affordable housing, and homeless shelters.” The revised guidance also allows for emergency construction on non-essential sites, including where it is unsafe to stop construction until it is safe to shutter the site. On all sites where construction is taking place, the revised guidance requires appropriate social distancing requirements to be met, noting that fines of $10,000 per violation would be issued to any sites not following those protocols. Further guidance is needed to clarify the scope of essential construction; for example, if a project is comprised of a mixture of affordance and market-rate housing, or the scope of “health care facilities” that are deemed “essential”.
The initial impact of this guidance will be to shutter the large majority of construction sites in New York State and put the relevant development projects on hold, modifying completion, delivery and, if applicable, sales timelines.
We anticipate that this guidance will have an immediate and significant impact on our clients on both the equity and debt side of development projects in New York State.
1 As amended by executive order 202.8.
2 A link to the updated guidance can be found here: https://esd.ny.gov/guidance-executive-order-2026
Read all our coronavirus-related updates on our COVID-19 guidance for organizations resource page.
To discuss these issues, please contact the author(s).
This publication is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, we would be pleased to discuss the issues in this publication with you, in the context of your particular circumstances.
For permission to republish this or any other publication, contact Janelle Weed.
© 2020 by Torys LLP.
All rights reserved.