Infrastructure and Transportation Financing

Transcription

1 DATE: September 12, 2015 Associated General Contractors (AGC) The California Chapters TO: FROM: AGC Sand Diego and California Chapters Dave Ackerman Jamie Khan Paul Gladfelty SUBJECT: Legislative Session Update as of September 11, 2015 Infrastructure and Transportation Financing At the top of AGC s agenda issue for 2015 was securing permanent financing for transportation and other infrastructure projects. AGC has spent considerable time and effort this year with Chair of the Senate Transportation Committee Senator Jim Beall, the Assembly Speaker Toni Atkins, and the Assembly Transportation Chair Assemblyman Jim Frazier, on crafting a major transportation financing program. AGC is represents the construction industry on Transportation Secretary, Brian Kelly s Transportation Task Force, and developed options to recommend to the Governor. As a result of this work, when introducing his budget for this year, Governor Jerry Brown cited a $59 billion transportation maintenance and rehabilitation backlog need that must be addressed and tasked the Legislature to address this challenge in much the same way the Water Bond was enacted in Under the umbrella of Transportation California and the California Alliance for Jobs, AGC was a key member of the Fix Our Roads Coalition which was formed to coordinate the lobbying activity to enact the transportation finance package. The coalition included Construction, Business, Labor, Local and Regional Agencies, and Developers. Legislative Advocates: David Ackerman Paul Gladfelty Jamie Khan 1201 K Street Suite 750 Sacramento, CA (916) (916) Fax Building on the work done by Senator Beall, Assembly Speaker Atkins and Assemblyman Frazier, the coalition outlined a nine point transportation framework to recommend to the Legislature and the Governor. The coalition recognized that local streets and roads were in just as much disrepair as the state highway system citing an additional $78 billion in maintenance and repair needs that are necessary and in addition to the Governor s $59 billion figure. The coalition pressed for at least a $6 billion annual new revenue investment in transportation projects.

2 2 P a g e Special Session on Transportation In response, the Governor called a special session of the Legislature to focus on transportation and infrastructure issues and the first legislative hearings of the special session were held on July 2 and July 6 in the Senate and Assembly. This led to the introduction of numerous bills proposing various funding ideas, as well as reforms and accountability relating to Caltrans and the California Transportation Commission. Negotiations on the transportation package took place over the summer with the hope of a final legislative deal surfacing in late August or early September. During this time, Senator Beall, the Governor and the Assembly Speaker offered several measures that contained funding and reform, including: Returning $1 billion a year in truck weight fees to the highway account for its intended purpose. Increase in the gas tax to make up for the decline in value lost to inflation. Increase in the vehicle license fee annually over 5 years. Increase in the vehicle registration fee. An annual fee on Zero-emission vehicles. Constitutional guarantees that the revenue will be used exclusively for road, street, and bridge repairs, along with improving freight mobility. Exemption of certain projects from the California Environmental Quality Act. Authorization of Public Private Partnership projects. Approval of Construction Manager/General Contractor procurement. Additional contracting out authority for Caltrans. Modification of the annual adjustment to the gas tax made by the Board of Equalization. Republican Caucuses in the Senate and Assembly responded by rejecting any new fees or taxes and instead proposed funding derived from existing sources and redirection of General Fund revenues, citing the significant State surplus and the failure of the democrat majority to address transportation needs during the regular budget process. The Republican proposals also recommended a number of reform and accountability measures.

3 3 P a g e In an effort to kick start the negotiations, a week before the end of the Legislative Session the Governor offered a $3.6 billion proposal split between state and local projects and also included several of the reforms listed above. Instead of negotiating a compromise, the Republicans and Democrats came to an impasse and no deal was able to be achieved by September 11. Since the Special Session called by the Governor can continue through the rest of this year, the Senate and Assembly are forming a conference committee of both Republicans and Democrats so that work toward a compromise plan can take place over the next several months. On The Governor s Desk The following eighteen bills are now before the Governor for signature or veto. The Governor has until October 11 to take action on all legislation sent to him at the end of the legislative session. AB 219 (Daly) - Prevailing Wage for Concrete Delivery Truck Drivers (OPPOSE VETO REQUESTED) AB 219 expands the use of prevailing wage to include the hauling and delivery of ready mixed concrete to any public works project at the state or local level. AGC is leading the construction industry opposition and requesting a veto because AB 219: Is Not Necessary to Clarify When California s Prevailing Wage Laws Apply to the Delivery of Ready Mixed Concrete Does Not Fulfill the Recognized Purposes of California s Prevailing Wage Laws. Imposes Significant New Liability and Administrative Burdens on Prime Contractors Prevailing Wage for ready mix drivers away from the site of construction is unenforceable Will Cause the State to Incur Significant Enforcement Costs Negatively Impacts New Construction Jobs and Current Projects AGC members have been asked to submit individual veto requests to the Governor.

4 4 P a g e AB 1347 (Chiu) Prompt Payment on Change Orders (SUPPORT CO-SPONSOR) AB 1347 will establish a process to allow contractors to be paid promptly concerning change orders on public works projects. AGC is a co-sponsor of AB 1347 that is sponsored by the United Contractors. SB 119 (Hill) Excavation (SUPPORT as AMENDED) AGC was a part of a construction coalition that met with Senator Hill for several months to craft a bill that provided additional penalties and sanctions on violators of underground excavation laws. There were three main issues of concern to construction: 1) enforcement of the no call requirement for contractors, 2) enforcement on facility operators who fail to show up and mark locations, and 3) clarification of the operator s liability for damages arising from an inaccurate field mark when an excavator, who has followed all of the notification requirements, damages a subsurface installation due to the mismarks of the underground facility. All of the concerns were addressed by the author, therefore, AGC and the construction industry removed their opposition and supported SB 119 as it progressed through the Legislature. SB 767 (de Leon) LA County Transportation Sales Tax (SUPPORT) Instead of seeking to extend Measure R, SB 767 will authorize Los Angeles County Metropolitan Transportation Authority (LACMTA) to propose to voters another half-cent sales tax measure to fund transportation projects. This new authorization would not contain the required projects of past measures, nor the restrictions of past legislation, but is a "clean slate" from which LACMTA can build a new expenditure plan and funding prioritization. AB 1354 (Dodd) Gender Inequity Reporting (OPPOSITION REMOVED) AB 1354 requires all state contractors and subcontractors with 100 employees or more to file a nondiscrimination report with the Fair Employment and Housing Department that lists all employees according to gender and ethnicity, as well as their wages and hours. AGC as well as other construction and business groups were opposed to this bill, but removed their opposition once the bill was amended to closely parallel federal requirements, limit employees to those in the state and exempt all employees who are covered by collective bargaining agreements.

5 5 P a g e AB 1185 (Ridley-Thomas) LA Unified School District Best Value Bidding (SUPPORT as AMENDED) AB 1185 authorizes the Los Angeles Unified School District to utilize a best value procurement process as a pilot project until December 31, 2020, for construction projects over $1 million. AGC worked with the author and bill sponsor to amend the bill to be consistent with AGC sponsored SB 785 from 2014 dealing with design-build. The definition of contractor s safety record, skilled workforce availability and best value needed to be consistent in both bills. SB 762 (Wolk) Best Value Contracting (SUPPORT as AMENDED) SB 762 establishes a pilot program to allow counties, until January 1, 2020, to use a "best value" procurement process to award construction contracts in excess of $1 million. AGC worked with the author to amend the bill to be consistent with AGC sponsored SB 785 from 2014 dealing with design-build. The definition of best value and other provisions of the bill needed to be consistent in both bills. AB 1358 (Dababneh) School Facilities: Design-Build Contracts (SUPPORT) AB 1358 aligns the process for school districts awarding contracts through the designbuild method with the process established for state and local agencies. AGC worked with the State Building Trades, the sponsor, to insure that the provisions of SB 785 from last year are accurately reflected in AB AB 1506 (Hernandez) Private Attorney General Act (SUPPORT) AB 1506 was amended to provide employers with an opportunity to cure technical violations in an itemized wage statement before being subject to costly and devastating litigation. Although this is only limited relief from the Private Attorney General Act (PAGA), it is an area in which employers have seen an increase in frivolous lawsuits. AGC and the general business community supported this measure. SB 588 (DeLeon) Nonpayment of Wages (OPPOSITION REMOVED) For the last couple of years, AGC and the business community have continually fought and defeated measures that sought to provide employees and their representatives the authority to place a lien against their employer s personal property in order to recover unpaid wages.

6 6 P a g e This year, SB 588, co-sponsored by the Service Employees International Union, the Koreatown Immigrant Workers Alliance, and the Wage Justice Center, allows the Labor Commissioner to file a lien or levy on an employer s property in order to assist the employee to collect unpaid wages when there is a judgment against the employer. AGC joined with the California Chamber of Commerce and remained opposed until amendments were secured to remove concerns which included personal liability on lower-level supervisors. Once the bill was amended, opposition was removed and a no position was registered. AB 413 (Chavez) Disabled Veteran Business Enterprise (DVBE) (SUPPORT) AB 413 is sponsored by the Disabled Veteran Business Alliance and authorizes a spouse or child of a disabled veteran to enter into additional state contracts during the existing three-year designation extension following the death or permanent disability of the owner of a certified disabled veteran owned business enterprise (DVBE). AGC and DVBE members supported this bill which will not only allow flexibility in completing existing DVBE contracts but also allow the heirs an opportunity to enter into additional contracts. AB 465 (Hernandez) Contracts against public policy (OPPOSE) AB 465 is sponsored by the California Labor Federation and will prohibit mandatory employment arbitration agreements and is labeled a Job Killer by the California Chamber because it will preempt federal law and will lead to an increase in litigation for employment related lawsuits. AGC was part of the California Chamber coalition that opposed this measure throughout the legislative process. AB 970 (Nazarian) Enforcement of Employee Claims (OPPOSE) AB 970 was sponsored by the California Rural Legal Assistance Foundation and will allow the State Labor Commissioner to issue citations to employers for failure to comply with local minimum wage laws which will increase employers annual assessments and provide employers with a limited opportunity to appeal. AGC joined with the California Chamber and other business groups in opposition to this measure. Although there was concern expressed regarding the impact on employers who fund the Labor Commissioner s Office through their workers compensation premiums, the bill passed both houses of the Legislature. SB 406 (Jackson) Medical Leave (OPPOSE) AGC joined with the California Chamber of Commerce and other business organizations to oppose SB 406. The bill has been labeled a Job Killer by the California Chamber. SB 406 will mandate small employers with fifty employees or more to provide a 12-week protected leave of absence under the California Family Rights Act (CFRA), as well as significantly expand the type of individuals for which employees can take the leave. This

7 7 P a g e will put a greater burden on both small and large businesses and create an even further disconnect from the federal Family and Medical Leave Act ( FMLA ). AB 1171 (Linder) CM/GC Procurement (SUPPORT) AB 1171 authorizes regional transportation agencies (RTAs) to use an alternative procurement method referred to as construction manager/general contractor (CMGC) contracts. The bill was amended to apply only to expressway projects not on the state highway system. AB 552 (O Donnell) - Public Works Contracts: Damages (SUPPORT) AB 552 is sponsored by the Construction Employers Association and limits the scope of consequential damages arising from a breach of a public works contract to cover only "delay damages," defined as damages incurred by a public agency for each day after the date on which the work was to be completed by the contractor pursuant to the public works contract. AB 1124 (Perea) Workers Compensation (SUPPORT) Establishes a mechanism to reduce the high cost of drugs in the workers compensation system by requiring the Administrative Director to establish a formulary for medications prescribed in the workers' compensation system to be effective July 1, SB 63 (Hall) Port Infrastructure Financing (SUPPORT) SB 63 will provide ports with access to public financing tools through the formation of Seaport Infrastructure Financing Districts which will augment their current reliance on revenue bonds backed by fees or lease revenues. This bill will facilitate new capital investments in California seaports. Let s Wait until Two-Year Bills Five priority bills will be carried over to the second year of the two year legislative session which will begin in January next year. These include three of AGC s sponsored or co-sponsored bills. AB 975 (Mullin) - Lease-Leaseback School Construction (CO-SPONSOR) On June 1, 2015, the Court of Appeal of the Fifth District issued its opinion in Davis v. Fresno Unified School District concerning lease-leaseback project delivery for public education.

8 8 P a g e The result of the published case is the lease-leaseback system being used by virtually all school districts for non-state funded projects may be illegal and void unless the construction contracts were the subject of validation actions. It was feared that contractors who entered into lease-leaseback contracts may be at serious risk to have to pay back percent of all contract funds received, and there is no safe harbor to protect them under Public Contract Code Section 5110, as the projects at issue were never the subject of competitive bidding - and if no competitive bidding occurred, there is no safe harbor. Since the statute of limitations for violation of statute is three years, all jobs finished within the last three years and ongoing contracts are at risk. To address the uncertainty created by the Davis decision, AGC in conjunction with the Construction Employers Association, prepared amendments to an existing legislative bill, AB 975, to protect contractors and subcontractors from possible disgorgement of funds on completed or current lease-leaseback projects. The Chair of the Education Committee refused to hold a hearing on the bill in August and it is now pending a hearing in the Senate Education Committee when the Legislature returns to session in January. AB 356 (Frazier) Prevailing Wage Claims Bond Option (SPONSORED BY AGC) AB 356 will allow the Department of Industrial Relations (DIR) to accept a bond instead of a cash deposit for a contractor to avoid assessment of liquidated damages arising out of a prevailing wage claim. The bill was held for future hearing in the Assembly Labor Committee following concerns raised by the State Building Trades that resulted in the Committee Chair to decide to postpone consideration of the bill until AGC continues to discuss the bill s intent with the DIR in an effort to reach consensus as we pursue the legislation. AB 1315 (Alejo) Stormwater Plans (SPONSORED BY AGC) AB 1315 requires public agencies to prepare and design stormwater plans prior to putting a project out to bid. The bill is sponsored by AGC and co-sponsored by the Construction Employers Association, Southern California Contractors Association, National Electrical Contractors Association, United Contractors and the California Legislative Conference of the Plumbing, Heating and Piping Industry. The Assembly Appropriations Committee analysis on the bill indicated the bill could result in a mandated program that could require reimbursement to local agencies and create an obligation for the State General Fund. Amendments were drafted to eliminate the potential mandate, but those amendments were not accepted by the Appropriations Committee, and the bill was held in Appropriations Committee. AGC is exploring

9 9 P a g e different options to move forward with the legislation when the Legislature returns for session in January. SB 465 (Hill) Balcony Collapse Bill (OPPOSE) SB 465 was the result of media coverage of the Berkeley balcony collapse, which caused the death and injury of several students. SB 465 was gutted and amended after the incident to require all contractors to submit documentation for convictions of felonies or any other crimes substantially related to their qualifications or duties, as well as settlement agreement information to the Contractors State License Board (CSLB). Since these types of disclosures are provided in other professions, Senator Hill believed that expanding these provisions to construction would provide the CSLB and the public with critical information about a contractor s history and lead to appropriate action. This approach was very problematic and AGC led the opposition against this measure, resulting in failure of the bill in the Assembly Business and Professions committee. The CSLB is following up with stakeholder meetings to determine if there are parameters under which certain information should be disclosed to the Board in order to promote safety and competency. This issue likely will again be revisited in 2016 following the results of the stakeholder meetings held by the CSLB. ACA 4 (Frazier) Local Transportation Sales Tax Vote Requirement (SUPPORT) ACA 4 provides that the imposition, extension, or increase of a sales and use tax or transactions and use tax for local transportation projects will require approval of 55% of those voting on such a measure rather than the current 2/3rds vote requirement.