SEPTEMBER NEWSLETTER...
THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA
SOUTHEAST FLORIDA IS DEFINITELY THE CULTURAL MELTING POT
KEEP OPTION TO SUE

PLATITUDES OF WISDOM
I AM ALWAYS AMAZED
THERE HAS BEEN A BUILDING BOOM
USELESS FACTS AND STATISTICS
CURRENT NEWSLETTER

FROM A DEMOGRAPHIC PERSPECTIVE… the State of Florida is unique and exciting. There is no question about the fact that, from a financial perspective, local, state and federal government spending will increasingly be directed to the benefit of the 65+ age group as our population continues to age. Florida is known as the "retirement state". Business in general, and construction specifically, will be directed more and more to infrastructure and facilities that will accommodate what will be the most important voting block in our political and economic society.

The following shows the State of Florida broken down into 10 sections indicating the population of each section, along with the percentage of the state population and the 65 and over population in both number and percentage:

Section of State % Of State Popluation % Of Popluation Over 65
Southeast
Broward, Miami-Dade, Monroe 		24.4% or 3,708,220 15.8% or 585,737
Southwest
Charlotte, Collier , DeSoto, Glades, Hardee, Hendry, Highlands, Lee, Manatee, Sarasota		 9.8% or 1,488,975 27.4% or 408.514
Treasure Coast
Indian River, Martin, Okeechobee, Palm Beach, St. Lucie 		9.9% or 1,500,759 23.9% or 358,278
Tampa Bay
Hernando, Hillsborough, Pasco, Pinellas, Polk 		18.2% or 2,751,243 21.3% or 584,688
Central
Lake, Orange, Osceola, Seminole 		10.1% or 1,536,013 13.5% or 207,742
Space Coast
Brevard, Flagler, Volusia 		6.3% or 957,406 20.8% or 198,853
North Central
Alachua, Bradford, Citrus, Levy, Marion, Putnam, Sumter 		4.9% or 739,153 20.9% or 154,798
Northeast
Clay, Duval, Nassau, St. Johns 		7.1% or 1,071,460 11.7% or 124,953
Big Bend
Baker, Columbia, Dixon, Gilchrist, Hamilton, Jefferson, Lafayette, Leon, Madison, Suwannee, Taylor, Union, Wakula 		3.0% or 462,088 10.9% or 50,303
Northwest
Bay, Calhoun, Escambia, Franklin Gadsen, Gulf, Holures, Jackson, Liberty, Okaloosa, Santa Rosa, Walton, Washington 		6.3% or 951,108 12.8% or 121,566
TOTAL: 15,166,425 2,795,432

The State of Florida has a population slightly in excess of 15,000,000. The Southeast sector including Broward, Miami-Dade and Monroe Counties are by far the most populous areas of the state comprising 24.4% of the total population of the State of Florida. The Southeast section is very close in number to the Tampa Bay section of the state as far as number of residents 65 and older. Both areas have just under 600,000 residents 65 and over. In the State of Florida, there are approximately 2,795,432 individuals 65 and over. Between the Southeast section (Broward, Miami-Dade, Monroe) and the Tampa Bay section (Hernando, Hillsborough, Pasco, Pinellas and Polk), there are 1,170,425 individuals 65 and over or a total of almost 42% of the state’s aging population. I think that fact bodes well for continued construction and financial prosperity in those two sections. From a percentage and numbers standpoint, the Panhandle (Big Bend and Northwest sections of the state) have the lowest aging population.

In celebration of our aging population in the State of Florida, my quotes in this newsletter will be on "old age". H.L. Mencken said: "The older I grow, the more I distrust the familiar doctrine that age brings wisdom." On the other hand, S.I. Hayakawa said: "There is only one thing age can give you, and that is wisdom." Henry Wheeler Shaw said: "I’ve never known a person to live to be 100 and be remarkable for anything else."

Return toTopics

* * *

THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA… has recently approved AGC-650 and AGC-655 which are two new standard forms of subcontract agreements. AGC-650 has the subtitle of "Where the Contractor Assumes the Risk of Owner Payment" and AGC-655 is titled "Where the Contractor and Subcontractor Assume the Risk of Owner Payment". Other than the payment provisions, the forms are basically identical. The title of each form is adequately descriptive of the difference between the two forms. In AGC-650, Article 8.2.5 states the following: "If payment from the owner for such subcontractor’s work is not received by the contractor through no fault of the subcontractor, the contractor will make payment to the subcontractor within a reasonable time for the subcontract work satisfactorily performed." This is basically the "paid-when-paid" clause so familiar in subcontracts.

AGC-655 differs completely as it relates to payment terms. In this subcontract, the subcontractor does not get paid unless the owner makes payment to the contractor. This is the "paid-if-paid" clause which only a desperate subcontractor would ever consider signing. The legal technique employed in the AGC-655 is that payment to the contractor by the owner is "a condition precedent" to the contractor’s obligation to pay the subcontractor. In this form subcontract, the subcontractor is obviously in a situation in which it assumes the risk of non-payment by the owner. The subcontractor therefore acknowledges the fact that it relies on the credit of the owner, not the contractor, for payment of the subcontracts.

We have dealt with "paid-when-paid" issues in previous Bond Newsletters and will re-visit that issue once again before the end of this year. Based upon OBS v Pace (1991 court case), I have serious doubts that AGC-650 would prevent a subcontractor, through court litigation, from going after the general contractor’s bond. There is a high likelihood that based upon the way that the "paid-when-paid" clause is written under AGC-650 that the subcontractor would prevail. On the other hand, I cannot imagine any subcontractor signing the AGC-655, but I do believe that the "paid-if-paid" clause is written in such a way that the general contractor would legally be within its rights to deny payment to the subcontractor if the owner did not pay the general contractor. It is likely that litigation would not result in the same success achieved under the AGC-650.

There are other issues in both the AGC-650 and AGC-655 that not surprisingly are opposed by the American Subcontractors Association. As a matter of fact, ASA has sent out a "wake up and speak out" alert to the members of the ASA against both the 650 and 655 forms. Other problems that exist in both of these forms are the absence of any right a subcontractor has to contest a negotiated settlement between the owner and the contractor as a result of suspension or termination. There are a number of areas of these forms which I think are well written and equitable to both the general and subcontractor, but based upon a number of issues that the ASA object to, I do not see that either of the forms will replace the AIA-A401. Truth is, most large general contractors have their own subcontract forms to begin with and would probably find little reason to utilize the AGC-650, 655 or AIA-A401.

* * *

"When a man retires and time is no longer a matter of urgent importance, its colleagues generally present him with a watch." - R.C. Sherriff

"Old age is when you first realize that other people’s faults are no worse than your own." - Edgar A. Shoaff

"You know when you’re getting old when the candles cost more than the cake." - Bob Hope

* * *

Return toTopics

   

Home Page | Current Newsletter

Copyright © 2002 by Nielson and CompanyInc. All rights reserved.

Surety Bonds USA
Nielson and CompanyInc.
4380 St. Johns Parkway, Suite 110, Sanford, FL 32771
Collinsworth: 407.330.3990 or 1.888.668.2663

Web Design by Sales & Marketing Technologies