By Steve Rizer
ConstructionPro Week has prepared summaries of 81 new state policies affecting America’s construction community, including Arizona’s new law for construction indemnity agreements, a measure that Illinois adopted earlier this month to raise the threshold at which public construction projects must require surety bonds, Indiana’s new “E-Verify” law, and Utah’s attempt to ensure that all preconstruction liens on a project property “are on equal footing.” All of the measures were passed into law this year.
H.B. 419 will take effect Jan. 1 and offer a tax exemption through public contracts. The state Department of Revenue will be permitted to grant certificates of exemption from sales and use taxes to eligible contractors and subcontractors for the purchase of certain materials. Associated Builders and Contractors of Alabama predicted that the new law “will completely revise the material transmittal process for public works projects in [the state], easing a major administrative burden and saving many hundreds of thousands of dollars a year.” For more information, click here.
S.B. 1231 (Ch. 238) allows a contracting agent to require a contractor, subcontractor, or design professional to indemnify and hold harmless the agent from liabilities caused by negligence, recklessness, or intentional wrongful conduct in the performance of the contract. Specifically, the new law allows a contracting agent “to mandate that a construction or design professional services contract or subcontract require the contractor, subcontractor, or design professional that provides work, services, studies, planning, surveys, or other preparatory work in connection with a public building or improvement, to indemnify and hold harmless the agent, and its officers and employees, from liabilities, damages, losses, and costs, including reasonable attorney fees, caused by negligence, recklessness, or intentional wrongful conduct in the performance of the contract or subcontract.” For more information, click here.
S.B. 446 (Act 526) amends state Code Ann. Section 19-4-1416(d)(1), concerning job order contracting bid awards for construction projects by increasing the threshold amount from $400,000 to $750,000 as the maximum value allowed for each job order contract construction job for the first year of the contract. This threshold increase is only for state agencies and higher-education institutions with general appropriations of at least $10 million that use these types of construction contracts. For more information, click here.
H.B. 85 (Chapter 2013-223) creates a standardized framework for local public-private partnerships to facilitate the construction of public-purpose projects. According to Gov. Rick Scott (R), the measure “provides legislative findings and intent relating to construction or improvement by private entities of facilities used predominantly for public purposes; provides for procurement procedures, requirements for project approval, project qualifications and process, notice to affected local jurisdictions, comprehensive agreements between public and private entities, use fees, financing sources for certain projects by private entities, and applicability of sovereign immunity for public entities with respect to qualified projects; authorizes counties to enter into public-private partnership agreements to construct, extend, or improve county roads; provides requirements and limitations for such agreements; provides procurement procedures; requires [a] fee for certain proposals; [and] revises [the] limit on terms for leases that Orlando-Orange County Expressway Authority may enter.” For more information, click here.
H.B. 202 (Act 18) requires that value engineering studies be performed on all projects whose costs exceed $50 million except for any project procured in accordance with Code Sections 32-2-79, 14 32-2-80, and 32-2-81. The state Department of Transportation must submit an annual report to the governor, the lieutenant governor, the House, and the chairpersons of the House and Senate Transportation Committees detailing the amount saved via the value engineering studies. For more information, click here.
H. 26 (Ch. 101) amends existing law relating to the installation of heating, ventilation, and air-conditioning systems to establish provisions allowing individuals holding either an HVAC certification or plumbing certification to install certain piping. In Section 1, 54-5015, “No local jurisdiction shall have the authority to require additional certification or registration or to require payment of any fees in order for any HVAC contractor, specialty contractor, journeyman, specialty journeyman, apprentice, or specialty apprentice to engage in the heating, ventilation and air-conditioning trade within the local jurisdiction or to issue certificates to persons certified or registered under the provisions of this chapter.” For more information, click here.
H.B. 1404 (Public Act 098-0216), which became law last week, increases the threshold at which public construction projects must require surety bonds from $5,000 to $50,000. Park districts called for the legislation in response to the increasing expense of surety bonds, the cost of which is passed on to local governments in their construction contracts. The impetus for this measure was to bring units of local government bond requirements back into conformity with the state’s bond requirements. The amount of the bond must be fixed by the officials, boards, commissioners or agents, and the bond, among other conditions, and be conditioned for the completion of the contract, for the payment of material used in the work, and for all labor performed in the work, whether by subcontractor or otherwise. If the contract is for emergency repairs as provided in the state Procurement Code, proof of payment for all labor, materials, apparatus, fixtures, and machinery may be furnished in lieu of the bond as required by the new law. For more information, click here.
S.B. 175 provides that a “public contract for services,” for purposes of the law that requires a public contract to contain a provision requiring a contractor to enroll in and use the E-Verify program and to sign an affidavit, applies to written agreements between a state agency or political subdivision and a contractor for the procurement of services. State law had applied to any agreement between a state agency or political subdivision and a contractor for the procurement of services. For more information, click here.
S.F. 561 (Ch. 88) is expected to “create a level playing field” for subcontractors in the construction industry. The new law makes the broad form indemnity clause in construction contracts void and unenforceable. Section 1 of Minnesota Statutes 2012, section 337.05, subdivision 1 is amended to read as follows: “Subdivision 1. Agreements valid. (a) Except as otherwise provided in paragraph (b), Sections 337.01 to 337.05 do not affect the validity of agreements whereby a promisor agrees to provide specific insurance coverage for the benefit of others. (b) A provision that requires a party to provide insurance coverage to one or more other parties, including third parties, for the negligence or intentional acts or omissions of any of those other parties, including third parties, is against public policy and is void and unenforceable. (c) Paragraph (b) does not affect the validity of a provision that requires a party to provide or obtain workers’ compensation insurance, construction performance, or payment bonds, or project-specific insurance, including, without limitation, builder’s risk policies or owner- or contractor-controlled insurance programs or policies. (d) Paragraph (b) does not affect the validity of a provision that requires the promisor to provide or obtain insurance coverage for the promisee’s vicarious liability, or liability imposed by warranty, arising out of the acts or omissions of the promisor. (e) Paragraph (b) does not apply to building and construction contracts for work within 50 feet of public or private railroads, or railroads regulated by the Federal Railroad Administration.” The law took effect earlier this month. For more information, click here.
S.B. 256 (Session Law Chapter 464) amends Title 38, Chapter 1a on preconstruction and construction liens. Specifically, the new law changes the name of a notice of retention described in Section 38-1a-401 to a notice of preconstruction service. In addition, the measure “provides that all preconstruction liens on a project property are on equal footing.” A person wanting to claim a preconstruction lien on real property must file a notice of preconstruction service with the state Construction Registry no later than 20 days after the person begins providing preconstruction service for the anticipated improvement on the real property. For more information, click here.
The ConstructionPro Network member version of this article contains summaries of 71 additional new state laws. To sign up for a membership, click here.