2015 MISSOURI LEGISLATIVE UPDATE AT
THE MIDPOINT OF THE SESSION
It’s hard to believe the 2015 legislative session is at its midpoint. It has been a very active session for construction-related issues. Tax credit programs, namely the Historic Preservation and the Low Income Housing programs, have not been discussed much, but a new bill just filed might change things. Right To Work has had several bills filed in support of it and legislation passed the House (the first time that has occurred). Prevailing wage law changes also have been proposed and have just recently had hearings.
Last year, state bonding authority was increased. In response, Senator Parson has field two bills outlining projects across the state for higher education ($200 million) and state building projects and parks (another $200 million). Those bills have passed the Senate and are awaiting hearings in the House.
The budget has not been as tight as in previous years, but disagreements remain between the Governor and the General Assembly. Legislative leaders basically ignored the Governor’s budget proposals and used their own budget outline to debate in hearings. The House and Senate hope to have their budget bills finished early and sent to the Governor to give the legislature time to override any vetoes that may occur.
Below are the significant issues facing the regional construction industry with a prognosis of their chances to become law in Missouri.
STATE PROJECTS LIST HAS BEEN PRODUCED IN RESPONSE TO
INCREASED BONDING CAPACITY FOR THE STATE
Last year, legislation passed that increased the bonding capacity of the state by a total of $600 million. The act raised the cap on the amount of revenue bonds that may be issued by the State Board of Public Buildings by $400 million (to $1.175 billion). Bonds that may be issued due to the increase in the cap may only be used for renovation or repair of existing buildings or facilities. In addition, the amount of revenue bonds that may be issued by the State Board of Public Buildings for projects at public institutions of higher education was increased. The change raisedthe cap by $200 million to $375 million. Bonds that may be issued due to the increase in the cap can, again, only be used for renovation or repair of existing buildings or facilities.
This session, Senator Mike Parson introduced SCR 8 and SCR 9. SCR 8 is a six page list of state building projects that are to be funded by the revenue bonds. The list includes projects in all areas of the state, which are mostly HVAC repairs, roof repairs and other maintenance projects. SCR 9 is a list of higher education projects at basically every university, college and community college in the state. These projects consist of the same kind of maintenance work. Click on the links above to go over the lists. These bills have passed the Senate and now sit in the House in the select committee on the budget.
Senator Parson also filed SB 330. As mentioned above, use of funds from the increased cap space is limited to renovation and maintenance of existing facilities. For projects other than higher education projects, this act removes the restrictions so that funds from the increased cap space may be used for any project. This bill currently has made its way back to the Senate floor and awaits final passage. It will then be sent to the House.
TAX CREDITS GEARING UP FOR DEBATE IN THE SECOND HALF
Over the past several sessions, tax credit reform has been a topic of much debate. The two programs of most importance to The Builders’ Association are the Low Income Housing Tax Credit Program and the Historic Preservation Tax Credit Program. Certain state legislators, particularly senators, have wanted to sunset the programs or cap them at the very least. If it were not for legislators in the House, the two programs would have been gutted long ago.
Last year really looked like the year for changes to tax credits in the state, but in the end, everything stalled again (which was good for the construction industry). This year, three bills of significance have been filed. In the House, HB 274 filed by Rep. Dave Hinson and HB 378 filed by Rep. Kathryn Swan have been introduced, but have not been referred to a committee. HB 274 proposes to just eliminate tax credits. HB 378 specifies that all new and existing tax credits shall be approved by the General Assembly as part of the budget process. Both bills are undesirable.
The most important bill to watch on the topic of tax credits is one that was just filed last week. Senator Ryan Silvey filed SB 507. This bill places a cap on the total amount of tax credits that may be authorized in a fiscal year. For FY 2016, the cap is set at $575 million. The cap would be reduced by 3% in each of the following five fiscal years. Thereafter, the cap would be adjusted in accordance with the percent changes in general revenue collections. With the respect Senator Silvey has in the legislature, along with his experience in budget matters as a former chair of the House budget committee, this bill will receive some discussion. This legislation would place all tax credits in competition with each other (redeveloping versus food pantries, for example) and then would decrease the credits available over the next five years.
The historic preservation and low Income housing tax credit programs are good state programs that have created much work for our members. Staff will continue to weigh in on this issue. Call or email your legislators today to express your support of historic preservation and low income housing tax credits.
RIGHT TO WORK LEGISLATION PASSES HOUSE IN HISTORIC VOTE
Several Right To Work bills were filed last year and one bill filed by Rep. Eric Burlison made it through two readings on the House floor, but failed to garner enough votes for a third and final reading. To date, that was the furthest Right To Work legislation has progressed in the General Assembly. This session has seen another flurry of bills introduced. Two of them made it back to the House floor for debate and one, HB 116 from Rep. Burlison again, was passed and is awaiting action in the Senate.
No less than nine Right To Work bills have been filed in the legislature this session (same as last year). Eight of these filed bills are in the House; one has been filed in the Senate. Most all contain the same basic language. The only bills that differ slightly in language were filed by Rep. Courtney Allen Curtis. They are HB 582 and HJR 32. HB 582 is the other bill, mentioned above, that made it back to the House floor for debate. The difference in the wording of these bills lies in the fact they are directed only to the construction industry. This twist, along with the fact that Rep. Curtis is a Democrat, made this legislation notable this year. As most know, Republicans have been pushing the Right To Work debate and Democrats have been strong opponents.
The other bills filed are HB 47 by Rep. Bill Lant, HJR 2 by Rep. Bill Lant, HB 286 by Rep. Bill White, HB 569 by Rep. Bill Lant and HJR 35 filed by Rep. Nick Marshall. Since HB 116 already has passed the House there is no need for debate on these other bills, so they will sit unless something significant changes.
The lone bill in the Senate is SB 127, filed by Senator Dan Brown. In years past, the Senate basically has let the House take the lead with Right To Work legislation, waiting for a bill to pass over to the Senate. Senators then would decide if they wanted to debate the issue. This year, Senator Brown went ahead and filed SB 127, and now HB 116 awaits Senate action, too. This past week, SB 127 had a hearing in the Senate Small Business, Insurance and Industry Committee. The hearing room was packed and the hearing lasted nearly three hours. SB 127 now awaits the committee’s action.
PREVAILING WAGE CHANGES NOT GARNERING MUCH ATTENTION
In the 2013 legislative session, significant changes were made to prevailing wage in Missouri. Legislation passed that changed how prevailing wages were determined each year under the Annual Wage Order compiled by the Missouri Division of Labor Standards. Essentially, if no wage data were available for a particular craft in a specific county, the Division could use wages compiled in adjacent counties and go back several years. In 2014, volunteer labor at local schools that provided help with school projects were exempted from prevailing wage requirements (as long as they are truly volunteering their time).
In 2016, five bills have been filed to make further changes, some drastic. In the House, HB 69 was filed by Rep. Bill Lant. This bill allows any public body to opt out of the provisions regarding prevailing wages for the construction of public works projects for which the contract awarded is $750,000 or less. HB 195, filed by Rep. Warren Love, expands the definition of “maintenance work” (which is not subject to prevailing wage) and further restricts the definition of “construction” (which is subject to prevailing wage). The bill also changes the way in which prevailing wages are determined by using the median hourly estimated wage for the construction and extraction occupational code most closely resembling the occupational title as published in the latest United States Bureauof Labor Statistics by Metropolitan and Non-Metropolitan Area Occupational Employment Wage Estimate or, if the rate cannot be determined under that method, the prevailing hourly rate of wageswill be the median hourly wage estimate for occupational code 47-0000 in the construction and extraction occupational code published in the latest United States Bureau of Labor Statistics publication. First class counties and the City of St. Louis are exempted. Those counties and city could continue to determine prevailing hourly wages by consideration of the applicable wage rates established by collective bargaining agreements, if any, and the rates paid generally within those counties and city.
HB 257, filed by Rep. Tony Dugger, is similar to one filed last year. This bill establishes the School
Construction Act which exempts construction and maintenance work done for certain school districts from the prevailing wage requirement upon majority vote of the district's school board. HB 285, filed by Rep. Bill White, prohibits the Missouri Housing Development Commission from requiring a prevailing hourly wage to be paid to a contractor on a project eligible for a housing tax credit if it is in a Governor-declared disaster area.
Last, SB 128, filed by Sen. Dan Brown, repeals the law pertaining to prevailing wage. The act also contains a referendum clause submitting the repeal to voters for approval.
Three of the five bills have been heard in a public hearing. The other two, HB 69 and SB 128, are just sitting in their respective committees awaiting a hearing.
CONSTRUCTION MANAGEMENT SERVICES/DESIGN-BUILD
PROPOSALS FILED AGAIN
Similar to last year’s session, a few bills dealing with Construction Management and Design-Build have been filed (HB 844, HB 1042, SB 359, SB 367SB 388). They are all similar. For discussion purposes, SB 388 is detailed below.
Under current law, a construction manager is not allowed to bid on or perform any construction on a public works project, nor is the firm that controls, is controlled by, or shares control with the construction manager allowed to engage in such activities. This act repeals those restrictions and allows the construction manager to bid on or perform construction on a public works project if the construction manager submits a sealed bid in the same manner as other bidders.
In addition, current law also forbids construction management services contracts from being awarded by a public owner if the construction manager or associated firm assumes financial responsibility for the work of others, provides the public owner with a guaranteed maximum price for the work of others, or guarantees or furnishes a performance or payment bond for other contractors. This act allows such activities. This act also repeals a requirement that contracts for construction management be let by competitive bidding like contracts for construction work.
This act allows political subdivisions to use the construction manager-at-risk method for construction projects. Before selecting a construction manager-at-risk, or during the selection process, the political subdivision must select an engineer or architect to prepare the construction documents. The political subdivision may use a one-step or two-step process to select the construction manager-at-risk. This act outlines the necessary procedures for both processes. The political subdivision may determine how to publish its notice that it is seeking a construction manager-at-risk.
Further, this act requires the construction manager-at-risk to publicly bid its subcontracts for the performance of all major elements of the work. If the construction manager-at-risk seeks to perform the work, it must be selected by the political subdivision and provide the best value. Both the political subdivision and the construction manager-at-risk evaluate the bids, and the political subdivision may compensate the construction manager-at-risk if the political subdivision requires a different bid be accepted than the one recommended by the construction manager.
Regarding Design-Build, this same act allows political subdivisions to enter into contracts for design-build projects that exceed an expenditure of $25 million. This act requires political subdivisions that do not employ certain types of full time staff to employ a design criteria consultant.
The act also requires political subdivisions to advertise the request for proposal in a certain manner and include certain information in the request for proposal. It creates a three-stage process for the solicitation of proposals. The political subdivision must award the project to the highest-scoring bidder. If the political subdivision determines it is not in its best interest to proceed with the project with the highest scoring bidder, the political subdivision must reject all the proposals. All the design-builders who submitted bids must receive stipends, and the highest-scoring design-builder must receive double the stipend. If all the proposals are rejected, the political subdivision may solicit new proposals using different qualifications, costs, and criteria. Design-builders who accept stipends give the political subdivision a nonexclusive right to use their designs and the design-builders have no liability for the use of the designs.
Under this act, the payment requirements that apply to public works contracts also apply to design-build projects. The design-build provisions expire on September 1, 2025.
All of the bills mentioned above have been referred to a committee, but have yet to receive a hearing.
OTHER BILLS OF INTEREST
Paycheck Protection: Six similar bills have been filed by Representative Bill Lant (HB 48, HJR 3 and HB 570), Representative Holly Rehder (HB 158 and HB 159) and Senator Dan Brown (SB 129). The bills prohibit any sum from being withheld from the earnings of a public employee for the payment of any portion of dues, agency shop fees, or other fees paid by public employee members of a public labor organization or a public employee who is not a member except upon the annual written authorization of the employee on a form as prescribed in the bill. In addition, a public labor organization is prohibited from using or obtaining any portion of dues, agency shop fees, or any other fees paid by member and nonmember public employees to make political campaign contributions unless it obtains a written authorization from the member or nonmember within the previous 12 months on a form prescribed in the bill signed by the member or nonmember and an officer of the union. HB 570 has progressed the furthest by passing out of the two committees it was sent to and now awaits House floor action.
Missouri One Call: Representative Dave Schatz has filed SB 491. Currently, any person who violates certain provisions of the Underground Facility Safety and Damage Prevention Act is liable for a civil penalty of up to $10,000. Under this act, the civil penalty for such a violation is $50,000. In addition, the current maximum penalties for violations of federally mandated natural gas safety standards shall not be greater than $15,000 for each violation with a maximum penalty not to exceed $150,000 for multiple violations, with such penalties increasing every decade beginning in 2015. Under this act, the existing civil penalties are repealed, and the civil penalty for such violations shall not exceed an amount as determined by the U.S. Secretary of Transportation pursuant to federal law, which is currently not to exceed $100,000 for each violation for each day with a maximum penalty not to exceed $1,000,000 for any series of violations. This bill has been referred to committee, but has not had a hearing.