The battle over the stalled Atlantic Yards B2 BKLYN Residential Project, planned at 32 stories as the world's tallest modular tower, is in full swing. On Sept. 23, the same day that N.Y.S. Supreme Court Justice Saliann Scarpulla ordered the two partners in FC+Skanska Modular to meet to resolve their business differences over the Brooklyn factory that was producing the 930 B2 modules, Skanska USA Building terminated its construction management and fabrication services agreement for the Atlantic Yards B2 Residential Project with Forest City Ratner's affiliate, the Atlantic Yards B2 Owner.
Also on Sept. 23, the justice denied the relief, requested of the court by Forest City Ratner, to force Skanska back to work on B2 in the factory and field. After a separate request from Forest City’s lawyer at the Sept. 23 hearing, the judge ordered both parties to hold another board meeting to discuss the management of the FC+S Modular business.
FCRC and Skanska have a complicated relationship. In 2012, Skanska signed its $177-million, fixed-price contract with Atlantic Yards B2 Owner LLC. About the same time, FCRC Modular LLC and Skanska Modular LLC went into the modular buildings business by forming FC+Skanska Modular LLC to produce B2's modules and perhaps other projects. Late last month, Skanska stopped work on the B2 project. Skanska Modular LLC and FCRC Modular LLC then sued and countersued each other.
At this point, neither Forest City nor Skanska will grant interviews. As a matter of fact, Forest City has turned down numerous requests for interviews since April. Also, the members of the B2 building team have declined to speak to ENR, citing contractual clauses with Forest City. Until the lawsuits were filed, Skanska also was not talking about the B2 project.
Both Forest City and Skanska are issuing statements to the press, though.
This is Skanska's side of its Sept. 23 move that terminated its agreement as CM. Skanska says it notified the B2 Owner on Aug. 8 of its intent to terminate "if the B2 Owner did not address its many material breaches under the agreement. The notice was issued after a series of unsuccessful efforts by Skanska throughout 2014 to resolve the significant commercial and design issues facing the B2 project. Consistent with its behavior, the B2 Owner again took no action to remedy its breaches, leaving Skanska no choice but to terminate the agreement and pursue its rights to be paid for the millions of dollars in extra costs it has incurred to keep the project going and its modular factory workers working."
“Today is an incredibly disappointing day," said Richard A. Kennedy, Skanska USA's co-chief operating officer, in Skanska's statement. "Our company has a long history of working with our clients through all kinds of challenges so, at the end of the day, we deliver the best product possible to our clients and the communities in which we live and work.
"While the B2 project certainly has its issues, we were hopeful that our client and partner would address them so we could move forward with building much-needed affordable housing in Brooklyn," he continued. "But we could not continue to incur millions of dollars in extra costs with little hope that Forest City would take responsibility for fixing the significant commercial and design issues on the project. We pride ourselves on being an innovative company and we will continue to build using prefab and modular techniques to move the construction industry forward. This issue will not deter us from continuing on that journey of innovation.”
In response, MaryAnne Gilmartin, president and CEO of Forest City Ratner, issued the following statement:
“Today Skanska terminated their contracts as construction and factory manager for B2, making clear again that they have no intention of moving this project forward. We believe in modular and have worked tirelessly to get B2 back on track since Skanska blind-sided us by ceasing construction and putting 157 workers on the street last month.
"Skanska has responded with inaction and inertia, trying to leverage us financially by stonewalling B2's progress. These are deplorable and disappointing tactics that show remarkable indifference to the well-being of these workers and the project. We will continue to rigorously pursue our options through the courts to get B2 built."
Skanska did grant an interview earlier this month, after the lawsuits had been filed. During the interview, Kennedy, who is named in the FCRC Moular suit as a defendant, explained that Skanska went into business with Forest City based on a design that Forest City represented as "complete to build," when it wasn't. Kennedy added that Skanska's decision to invest in modular was based on Forest City's representation that they had spent years and millions of dollars making the B2 modular design work.
"We tied our price and schedule under our agreement to the representation Forest City made around their modular solution," when, Kennedy said, the solution had problems.
"Our experience is that the pieces are not fitting together," said Kennedy. "This is a discrete problem around a discrete building and not a reflection on modular," he added. "The problems are not insurmountable but there are cost and schedule implications."
Also on Sept. 23, the justice denied the relief, requested of the court by Forest City Ratner, to force Skanska back to work on B2 in the factory and field. After a separate request from Forest City’s lawyer at the Sept. 23 hearing, the judge ordered both parties to hold another board meeting to discuss the management of the FC+S Modular business.
FCRC and Skanska have a complicated relationship. In 2012, Skanska signed its $177-million, fixed-price contract with Atlantic Yards B2 Owner LLC. About the same time, FCRC Modular LLC and Skanska Modular LLC went into the modular buildings business by forming FC+Skanska Modular LLC to produce B2's modules and perhaps other projects. Late last month, Skanska stopped work on the B2 project. Skanska Modular LLC and FCRC Modular LLC then sued and countersued each other.
At this point, neither Forest City nor Skanska will grant interviews. As a matter of fact, Forest City has turned down numerous requests for interviews since April. Also, the members of the B2 building team have declined to speak to ENR, citing contractual clauses with Forest City. Until the lawsuits were filed, Skanska also was not talking about the B2 project.
Both Forest City and Skanska are issuing statements to the press, though.
This is Skanska's side of its Sept. 23 move that terminated its agreement as CM. Skanska says it notified the B2 Owner on Aug. 8 of its intent to terminate "if the B2 Owner did not address its many material breaches under the agreement. The notice was issued after a series of unsuccessful efforts by Skanska throughout 2014 to resolve the significant commercial and design issues facing the B2 project. Consistent with its behavior, the B2 Owner again took no action to remedy its breaches, leaving Skanska no choice but to terminate the agreement and pursue its rights to be paid for the millions of dollars in extra costs it has incurred to keep the project going and its modular factory workers working."
“Today is an incredibly disappointing day," said Richard A. Kennedy, Skanska USA's co-chief operating officer, in Skanska's statement. "Our company has a long history of working with our clients through all kinds of challenges so, at the end of the day, we deliver the best product possible to our clients and the communities in which we live and work.
"While the B2 project certainly has its issues, we were hopeful that our client and partner would address them so we could move forward with building much-needed affordable housing in Brooklyn," he continued. "But we could not continue to incur millions of dollars in extra costs with little hope that Forest City would take responsibility for fixing the significant commercial and design issues on the project. We pride ourselves on being an innovative company and we will continue to build using prefab and modular techniques to move the construction industry forward. This issue will not deter us from continuing on that journey of innovation.”
In response, MaryAnne Gilmartin, president and CEO of Forest City Ratner, issued the following statement:
“Today Skanska terminated their contracts as construction and factory manager for B2, making clear again that they have no intention of moving this project forward. We believe in modular and have worked tirelessly to get B2 back on track since Skanska blind-sided us by ceasing construction and putting 157 workers on the street last month.
"Skanska has responded with inaction and inertia, trying to leverage us financially by stonewalling B2's progress. These are deplorable and disappointing tactics that show remarkable indifference to the well-being of these workers and the project. We will continue to rigorously pursue our options through the courts to get B2 built."
Skanska did grant an interview earlier this month, after the lawsuits had been filed. During the interview, Kennedy, who is named in the FCRC Moular suit as a defendant, explained that Skanska went into business with Forest City based on a design that Forest City represented as "complete to build," when it wasn't. Kennedy added that Skanska's decision to invest in modular was based on Forest City's representation that they had spent years and millions of dollars making the B2 modular design work.
"We tied our price and schedule under our agreement to the representation Forest City made around their modular solution," when, Kennedy said, the solution had problems.
"Our experience is that the pieces are not fitting together," said Kennedy. "This is a discrete problem around a discrete building and not a reflection on modular," he added. "The problems are not insurmountable but there are cost and schedule implications."
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