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2010 Regular Session of the Florida Legislature

It’s over at last! The 2010 Regular Session of the Florida Legislature concluded with the adjournment of the Florida Senate at 8:47 p.m. on Friday, April 30. Almost 2,500 bills were filed for consideration this Session. Of those bills, 651 passed in one chamber or the other, but only 301 bills passed both the House and the Senate. Of course, this session and its aftermath are certain to play out more dramatically than ever in light of the upcoming November election and Governors Crist’s announcement that he will be running this fall for the U.S. Senate as an independent rather than as a Republican. Most prominent Republicans have withdrawn their previous endorsements of Governor Crist as a result. Possible vetoes, special sessions and political jockeying are likely to be the order of the day in Tallahassee for some time to come. With regard to construction, there are well over 100 bills filed for consideration by the 2010 Florida Legislature that could affect your business. Beyond the bills that AGC is actively trying to pass, AGC must also determine the impact of dozens of other bills and decide to support, oppose, or amend them as warranted. Outlined below are the major bills and issues on which AGC pursued the interests of Florida’s general contractors during the 2010 session here in Tallahassee. PRIORITY UNEMPLOYMENT COMP. TAX CUT STATUS: SIGNED INTO LAW SB 1666 - Policy & Steering Comm. on Ways & Means AGC POSITION: SUPPORT HB 7033 - Econ. Development & Community Affairs Policy Council AGC scored a major victory for Florida’s general contractors and construction businesses very early in the 2010 session. On March 2 (the Session’s opening day), the Florida Legislature passed and Governor Crist signed into law HB 7033, a bill that will provide significant relief to Florida employers that were otherwise facing a dramatic increase in their unemployment compensation (“UC”) taxes for 2010 and 2011. AGC was an early and vocal advocate in the Florida Legislature for quick passage of this bill, which should result in a tax savings to Florida businesses of over $1.8 billion over the next two years. In sum, if your business is paying UC tax at the minimum rate, your tax was due to jump from $8.40 per employee in 2009 up to $100.30 per employee in 2010 and $164.05 per employee in 2011. Under the new law, your UC tax should instead be approximately $25.20 per employee in 2010 and $53.90 per employee in 2011. If your business is paying UC tax at the maximum rate, your tax was due to jump from $378 per employee in 2009 up to $459 per employee in 2010 and 2011. Under the new law, your UC tax should instead remain at approximately $378 per employee in 2010 and 2011. The new law will also allow employers to make their 2010 and 2011 UC tax payments in quarterly installments without interest or penalties as long as the employer timely makes the filings and payments and pays an annual $5 administrative fee. Notably, while this legislation will provide short-term relief to businesses by reducing the UC tax in 2010 and 2011, the likelihood is that Florida employers will face significant UC tax increases in 2012 and beyond due to the poor economy and high unemployment. Hopefully, however, the economy will have improved sufficiently by that time for employers to better absorb these tax increases. PRIORITY SALES TAX LIABILITY FOR “DIRECT PURC HASES” STATUS: PASSED HB 7157 - House Finance & Tax Council AGC POSITION: SUPPORT SB 1976 - Sen. Thad Altman (R - Melbourne) When a governmental entity hires a contractor to construct or improve a public building, Florida law allows that governmental entity to directly purchase the building materials and fixtures used in that building without paying sales tax if the governmental entity complies with specific requirements on the transaction imposed by the Department of Revenue. A problem arises, however, when the Department later finds that the governmental entity did not comply with those requirements. In such instances, the Department frequently tries to collect the unpaid sales tax from the contractor, and this often occurs long after the building was completed and the project closed out. While material suppliers pursued legislation in years past to dramatically streamline and simplify the direct purchase process, these bills made no significant progress because the Revenue Estimating Conference—a group of economists and legislative staffers that evaluate the fiscal impact of legislation on the state budget—decided that these bills would cause the state to lose a great deal of sales tax revenue. Regardless of the current complexity of the direct purchase process, however, AGC’s position is that sales tax liability in these circumstances should properly rest with the governmental entity that failed to follow the Department’s rules, not the contractor. As such, AGC worked with House staff to craft an amendment consistent with this principle, with the overarching goal of eliminating any adverse fiscal impact to the state. UPDATE: After several redrafts of the language, the Revenue Estimating Conference determined that the AGC amendment would not result in any negative fiscal impact to the state. This determination was critical in that an assignment of any state fiscal impact would have surely killed the issue in this very tight budget year. At the last possible moment on the House floor, we managed to get the amendment added to a large bill dealing with taxation and the Department of Revenue (HB 7157). The bill was passed by the House on April 26. This was by no means the end of the story, however, because the companion Senate bill (SB 1976) was still scheduled to go through two additional Senate committees before it (and HB 7157) could be considered by the full Senate. Over the last few days of the Session, we managed to get SB 1976 withdrawn from each of its last two committees, which is an exceedingly rare occurrence. On the afternoon of April 30—on the final day of the 2010 Regular Session—the Senate took up and passed HB 7157. The bill will go to the Governor for his action sometime during the next few weeks. PRIORITY MINIMIZE REDUCTION IN STATE ROAD FUNDS STATUS: PASSED SB 2700 – Policy & Steering Comm. on Ways & Means AGC POSITION: SUPPORT HB 5001 – Approp’s Council on Education & Econ. Development One of the primary differences between the state budgets initially put forward by the Senate and the House involved the “State Transportation Trust Fund,” which is used to build and maintain roads throughout the state. Due to the House’s decision to maintain higher reserves and to refrain from using in its budget still uncertain Seminole gambling money and enhanced federal Medicaid funding, the House budget proposed to take well over $400 million from the state road fund for other purposes. The Senate budget took no dollars from this fund. In light of the direct and indirect economic impacts on construction throughout Florida, AGC supported the Senate position and sought to minimize the loss of dollars to the state road fund. UPDATE: While the state road fund certainly did not escape the Session untouched, the scale of the loss was significantly reduced. As a result of the budget conference process between the House and Senate, the Legislature ended up cutting $160 million from the fund, with the prospect of recouping approximately $40 million of that cut from enhanced federal Medicaid funding (if enacted by Congress) and approximately $19 million from the repayment of funds borrowed by the Tampa/Hillsborough County Expressway Authority. If these resources come through, the state road fund would end up with a loss of about $100 million. Of course, this cut will still produce some significant pain in the transportation sector, and there is a move afoot to urge Governor Crist to veto this portion of the budget. PRIORITY ATTORNEY’S FEES ON LIEN & BOND CLAIMS STATUS: DID NOT PASS SB 1048 - Sen. Carey Baker (R - Eustis) AGC POSITION: OPPOSE HB 693 - Rep. Scott Plakon (R - Longwood) While the above-referenced bills had some positive aspects, one of the provisions contained in SB 1048 led AGC to strongly oppose the bill. The provision in question would have fundamentally changed how “prevailing party” attorney’s fees are awarded in suits over liens and payment bond claims. Rather than relying on long-established precedent which requires a court to look at the case as whole to determine which party “prevailed” on the significant issues in dispute, the change sought by suppliers and subcontractors would have awarded attorney’s fees to the lienor or bond claimant if they recovered any amount at all in the litigation, even $1. UPDATE: AGC was the only group publicly opposed to this change in the law. On February 26, in the bill’s first committee stop in the Senate, the offending provision was removed from SB 1048. Thereafter, AGC monitored all construction legislation in the 2010 Session and was successful in ensuring that this very bad attorney’s fee provision did not find its way onto another bill as an amendment. PRIORITY PERMIT EXTENSIONS STATUS: PASSED SB 2452 - Sen. Mike Bennett (R - Bradenton) GC POSITION: SUPPORT HB 7099 - Military & Local Affairs Policy Comm. SB 1752 - Sen. Don Gaetz (R - Niceville) HB 1509 - Rep. Will Weatherford (R - Wesley Chapel) In addition to a variety of other growth management measures, SB 360 was amended in the closing days of the 2009 Session to extend for two years the expiration date of certain developmentrelated permits and orders. The extension applied to those permits and orders that expired on or after September 1, 2008, and that would expire before January 1, 2012. The extension covered any permit issued by DEP or a water management district under part IV of chapter 373, Florida Statutes, and any development order or building permit issued by a local government. Extended permits would be governed by the rules in effect at the time the permit was issued, except when it could be demonstrated that the rules in effect at the time the permit was issued would create an immediate threat to public safety or health. Entities requesting an extension and renewal had to notify the authorizing agency in writing by December 31, 2009. Soon after SB 360 became law, numerous local governments challenged the new law in court. SB 2452 and HB 7099 were filed to try and preserve the permit extensions granted by SB 360 in the event that the legal challenge is successful and SB 360 is ultimately declared invalid by a state court. HB 1509, one of the House’s economic development bills, contained a provision to preserve the permit extensions and keep them in place for three years instead of two years. SB 1752, the Senate’s omnibus economic development bill, contains a similar savings provision, but it clarifies the types of permits eligible for the extension. SB 1752 also provides for an additional two-year extension and gives permit holders until December 31, 2010, to apply for the extension. Similar to SB 360, the extension would not apply to: Army Corps of Engineers’ permits, permit holders that are not complying with the terms of their permits, or permits that would interfere with court orders. The bill also gives local governments leeway to adjust permit extensions if the extension would result in unsafe or unsanitary conditions. UPDATE: When the dust finally settled, the only one of these bills to make it across the finish line was SB 1752, which finally passed the Senate and House during the final two days of the 2010 Session. The bill will go to the Governor for his action some time during the next few weeks. PRIORITY SUNSHINE LAW & PUBLIC PROCUREMENT STATUS: DID NOT PASS SB 1142 - Sen. Mike Fasano (R - New Port Richey) AGC POSITION: SUPPORT HB 745 - Rep. Lake Ray (R - Jacksonville) This AGC-priority bill sought to remove current inequities in the public procurement of construction services by temporarily shielding bid documents and bid presentations from inspection by competitors during the bid process. The bill clarifies that sealed responses received by an agency in response to an invitation to bid, request for proposals, or invitation to negotiate are temporarily exempt from the state’s public records requirements, which generally mandate that all documents in the possession of an agency be made available for public inspection. Importantly, the bill also exempts from the state’s open meeting requirements those meetings at which vendors make oral presentations as part of the competitive procurement process. Because it creates exemptions from the state’s “Sunshine Law” requirements, this bill will require a two-thirds vote of the members of both houses of the Legislature in order to pass. UPDATE: Having worked hard over the course of the Session with the road builders, state agencies, and public interest watchdog groups to arrive at bill language that all parties can agree upon, we were able to move SB 1142 through three Senate committees. We hit a roadblock in the House, however, which wanted to delay consideration of the bill until the 2011 Session. While the House seemed to have no objection to the substantive changes made in the bill, the current public records and public meeting statutes that the bill amends are up for periodic review in the 2011 Session. As such, the House wants to delay passage of our bill until next year and accomplish its review of the existing law all at the same time. PRIORITY SPEEDING PAYMENT ON BONDED PROJECTS STATUS: DID NOT PASS SB 878 - Sen. John Thrasher (R - Jacksonville) AGC POSITION: SUPPORT HB 755 - Rep. Doug Holder (R - Sarasota) As you well know, on virtually all public construction projects and on most large private projects, the general contractor provides a payment bond to guarantee the payment of sub’s, sub-sub’s, and suppliers for their work and materials. A major problem for the general contractor arises when a subcontractor defaults on its obligations and fails to pay its sub-subs and suppliers. In this situation, the sub-subs and suppliers will proceed to make a claim against the general contractor’s payment bond. To make such a claim, the sub-sub or supplier must first file a statutorily-required “notice of nonpayment” with the general contractor and the surety. The intent of this notice is obviously to generate discussion and an exchange of information between the general contractor and sub-sub or supplier prior to the filing of any legal action. This statutory notice, however, states little more than the amount allegedly due and owing, and the contemplated exchange of information between the parties often does not occur. The sub-sub or supplier filing the notice is not required by law to provide the general contractor with documentation to substantiate the amount claimed to be due, and such documentation frequently is not produced until a lawsuit has been filed by the sub-sub or supplier and the parties are engaged in discovery, after both parties have incurred many thousands of dollars in legal fees. What frequently appears from this documentation is that funds previously paid by the general contractor to the subcontractor on a specific project, and then paid by that subcontractor to its sub-subs and suppliers, have been misapplied by the sub-sub or supplier and credited to other work the sub-sub or supplier did for the defaulting subcontractor on other projects. If the documentation necessary to substantiate a claim were supplied along with the notice of non-payment, then the general contractor and the claiming sub-sub or supplier could undoubtedly resolve hundreds if not thousands of these claims, saving the parties attorneys fees, costs, delays in payment, and a needless waste of court resources. The above-referenced AGC bill would have required sub-subs and suppliers to provide the general contractor with documentation of the amounts they claim to be owed along with the notice of non-payment. The net effect would have been quicker payment to sub-sub’s and suppliers, avoiding needless litigation and costly legal fees for all parties. UPDATE: Despite its stated goals, the AGC bill was opposed by the Associated Builders and Contractors and by the Florida Surety Association, as well as other organizations representing subcontractors and materials suppliers. These groups were reportedly concerned about the possible need to produce voluminous documentation, with an omission potentially putting their bond claim in jeopardy. AGC worked long and hard over the course of the session to alter the bill to address these concerns while still giving general contractors the tools they need to speed up the payment process, e.g., paring down the required documentation, providing greater latitude on when it is produced, etc. While the bill made it through one of its three committees in the Senate, the bill ultimately died in its second Senate committee, which is chaired by Senator Mike Bennett (R - Bradenton), an electrical contractor. BAN ON LOCAL BID PREFERENCES STATUS: DID NOT PASS SB 1924 - Sen. Stephen Wise (R - Jacksonville) AGC POSITION: SUPPORT HB 899 - Rep. John Tobia (R - Winter Haven) This bill would have prohibited any local ordinance or regulation that grants a preference to a local bidder based upon the bidder maintaining a business office or principal place of business in the local jurisdiction or based upon the bidder paying local taxes, assessments or duties. UPDATE: As compared to efforts by AGC to pass similar legislation in past years, this bill got even less traction in the House and Senate in 2010, with neither bill receiving a hearing in any committee. AGC’s experience has been that, while a legislator will often oppose local bid preferences in the abstract, that legislator will generally change his or her position once they understand that: (a) one or more local governments in their legislative district have a local bid preference; and (b) the local contractors in that jurisdiction support the bid preference. The 2010 bills were strongly opposed by city and county governments. Moreover, as discussed later in this report, the legislation also ran up against a significant “Buy Florida” sentiment in the Legislature arising from the state’s high unemployment rate. LOCAL GOV’T PROMPT PAYMENT ACT STATUS: PASSED SB 1056 - Sen. Carey Baker (R - Eustis) AGC POSITION: SUPPORT HB 1157 - Rep. Eric Eisnaugle (R - Orlando) This bill revises an existing law that requires timely payment for construction services on local government projects. The bill provides that invoicing requirements and the dispute resolution process must be set forth in the contract. The local government’s agent for purposes of submitting payment requests must be identified in the contract or via a separate written notice. A local government would be required to reject a payment request or invoice that does not meet the contract requirements within 20 days of receipt. Each prime contract for construction services would have to provide for the development of a single punch list at the end of the project, with the final contract completion date extended to at least 30 days after delivery of the punch list. Items not included in the punch list could not affect the final payment of retainage. No delay damages against the contractor could be imposed if the punch list was not timely supplied to the contractor. If the local government fails to develop the punch list, the contractor may request payment of any remaining contract amount, which must be paid within 20 business days. The bill requires that the local government notify vendors in writing that their pay request or invoice is improper. If the local governmental entity does not timely commence the dispute resolution process, the objection to payment is deemed to be waived. The bill also expands the attorney fee provision to permit courts to award attorney fees to the prevailing party, removing language conditioning such an award on whether the nonprevailing party had a reasonable basis for withholding payment. UPDATE: After passing the House on April 26, HB 1157 later passed the Senate on April 29. The bill will go to Governor Crist for his action sometime during the next few weeks. DESIGN PROFESSIONAL LIABILITY STATUS: PASSED SB 1964 - Sen. Joe Negron (R - Jacksonville) AGC POSITION: AMEND / OPPOSE HB 701 - Rep. Steve Precourt (R - Orlando) “Design professionals” are engineers, surveyors, architects, interior designers and landscape architects. Under current law, design professionals are personally subject to claims of professional malpractice, regardless of what the contract between the design firm and the owner or general contractor may have provided regarding limitations on contractual liability, required insurance coverages, etc. With respect to damages to the specific project that the design professional was engaged to work on, this bill originally was intended to eliminate any professional malpractice claim against the design professional brought by the owner or brought by the general contractor in a design-build situation. In sum, a breach of contract action subject to the liability limitations and insurance requirements of the contract would control all questions of liability for such damages caused by faulty design work. For damages arising from personal injuries or from collateral property damage, a professional malpractice claim against a design professional would still exist for all parties. UPDATE: While AGC consistently opposed the original version of the bill, we recognized the political reality that the bill was likely to pass in some form, so we worked hard over the course of the Session to get all of the interested parties together and explore possible solutions that might address the concerns of the design professionals while ensuring that some safeguards were put in place. As a product of these discussions, amendments were adopted to: (a) make clear that only the owner would be cut off from bringing a malpractice claim; (b) condition removal of the design professional’s malpractice liability on the design professional or design firm maintaining the insurance coverages specified in their contract; and (c) prohibit any contract provision that would purport to limit the design professional’s liability in a manner inconsistent with the contract’s insurance requirements. SB 1964 passed the Senate on April 16 on a vote of 33-4 and later passed the House on April 28 on a vote of 111-2. The bill will go to Governor Crist for his action sometime in the next few weeks. AFFORABLE HOUSING CONSTRUCTION STATUS: DID NOT PASS SB 262 - Sen. Mike Bennett (R - Bradenton) AGC POSITION: SUPPORT HB 665 - Rep. Gary Aubuchon (R - Cape Coral) Among other things, this bill removed the statutory cap on documentary stamp tax revenues that go into the State and Local Government Housing Trust Funds but would have prohibited the use of such funds to finance new construction until July 1, 2011. The bill also provided targeted housing assistance for persons with special needs and required multi-family housing funds to be administered to provide for individuals most in need of housing. UPDATE: While this bill was actually poised to pass in the final days of the Session, a disagreement erupted between the House and Senate over one provision of the bill dealing with the ability of a local government in a dense urban land area to limit consideration of a portion of a county as an “urban service area.” As a result of this dispute, the bill ultimately ran out of time and did not pass in the 2010 Session. CRANE REGULATION STATUS: DID NOT PASS SB 1174 - Sen. Thad Altman (R - Melbourne) AGC POSITION: SUPPORT HB 375 - Rep. Greg Evers (R - Milton) Construction cranes are currently regulated under federal rules adopted by OSHA. OSHA has conducted a thorough and exhaustive review of these rules over the last few years in an effort to better protect against crane hazards, in consultation with many of the most knowledgeable engineering, construction, and safety experts in the nation and in the world. This review has culminated in new proposed rules setting forth comprehensive and detailed new regulations applicable to construction cranes and their operators, which were published in the Federal Register in late 2008. Construction cranes are routinely transported across city, county, and state lines, making uniform federal regulation of such equipment and its operators essential to commerce, to Florida’s economic competitiveness, and to minimizing construction costs in our state. Several local governments, however, most notably Miami-Dade County, have enacted (or have expressed interest in enacting) burdensome new ordinances that seek to regulate the operation of construction cranes and to require the certification of crane operators. The Miami-Dade County crane ordinance was successfully challenged by a consortium of construction groups, including the South Florida Chapter of AGC, in light of the ordinance’s conflict with federal law and current OSHA regulations. Legislation has been proposed in the last three regular sessions of the Florida Legislature to deal with the problems created by local regulation of cranes and crane operators. This year, the above-referenced bills would prohibit local governments from enacting any ordinances regulating cranes or crane operators, in deference to the federal OSHA regulations. The bill would also adopt statewide standards for certain construction cranes with respect to hurricane preparedness and communications. These are the aspects of the Miami-Dade County crane ordinance that the federal district court held were outside the purview of OSHA’s regulations and thus not preempted. UPDATE: In light of the successful challenge to the Miami-Dade County crane ordinance and the pending adoption of federal OSHA regulations, this bill has lost a great deal of momentum. While the bill made it through several House and Senate committees in the 2010 Session, the bill ultimately did not pass. LIEN LAW / PAYMENT BONDS STATUS: DID NOT PASS SB 1048 - Sen. Carey Baker (R - Eustis) AGC POSITION: MONITOR HB 693 - Rep. Scott Plakon (R - Longwood) Coming on the heels of a review of Florida’s construction lien law over the past few years by the Senate Regulated Industries Committee, this bill contained several changes to current law, most of which were intended to make the lien law more “consumerfriendly.” The bill also reformatted some of the statutory language to make it more readable. As originally filed, the bill included the following provisions: • Makes a notice of commencement valid until 90 days after all work is completed or the owner files a notice of termination, thus eliminating the current improper payment trap for owners and contractors caused by automatic expiration of the notice of commencement within one year or after a later expiration date cited in the notice, or if the project is not commenced within 90 days of recording the notice. • Requires a copy of the payment bond, if any, to be recorded as an attachment to the notice of commencement. • Requires a new statutorily-created “plain language” notice to owners of their rights and obligations under the lien law on any single or multiple family dwellings up to and including four units. This notice must be signed and provided to the building official with the building permit application. • Requires, as a pre-condition to any inspections, that the building official have on file a copy of the recorded notice of commencement, a copy of the recorded payment bond, if any, and a copy of the “plain language” notice signed by the owner on single or multiple family dwellings up to and including four units. UPDATE: As it moved through the legislative process, SB 1048 was substantially amended. Beyond removing the “prevailing party” attorneys fee provision to which AGC was very much opposed (see above), the bill was amended to remove the notice of commencement provisions described in the first bullet above due to concerns that this change would complicate title work and delay closings. Changes to the current law dealing with the filing of a “single claim of lien” on multiple improvements under the same direct contact were also removed from the bill. AGC and the other interested parties will be working on these issues over the summer in hopes of bringing consensus legislation forward in the 2011 Session. While SB 1048 successfully navigated through all of its committees in the Senate, HB 693 was never heard in any of its four House committees, so the bill did not pass in the 2010 Session. “BUY FLORIDA” ON PUBLIC CONTRACTS STATUS: PASSED* SB 2386 - Policy & Steering Comm. on Ways & Means AGC POSITION: MONITOR HB 5003 - Full Approp’s Council on Education & Economic Development SB 5003 is the “implementing bill” for the 2009-10 state budget. In keeping with the strong “Buy Florida” sentiment prevalent in the Legislature and its desire to spend state dollars in a manner designed to boost employment, SB 5003 contains the following provision: (1) Consistent with the principles of promoting employment of state residents, ensuring that the expenditure of state funds benefits state residents, and encouraging economic development within the state, each entity expending funds provided in the 2010-2011 General Appropriations Act for any purchase of goods and services in excess of $5 million shall give preference, to the maximum extent possible under or consistent with applicable state and federal laws, to vendors or businesses with a principal place of business in the State of Florida that commit contractually to maximize the use of Florida residents, products and other Florida-based businesses in the fulfillment of their contractual duties. (2) This section does not apply to any contract that was funded prior to June 1, 2010. (3) Each state agency shall identify contracts subject to this section and shall report by March 1, 2011, each contractor’s compliance with this section to the Agency for Workforce Innovation. (4) This section expires July 1, 2011. A similar provision is also included in SB 2386, a bill dealing generally with state financial matters. UPDATE: HB 5003 and SB 2386 passed during the final day of the 2010 Session. The bills will go to Governor Crist for his action at some point in the next few weeks. If these bills become law, it remains to be seen how the state will interpret some of the more vague language in the above provision. ELECTRICAL JOURNEYMAN REQUIREMENTS STATUS: DID NOT PASS SB 508 - Sen. Stephen Wise (R - Jacksonville) AGC POSITION: OPPOSE Current law allows a county or city to adopt an ordinance requiring one electrical journeyman to be present on an industrial or commercial new construction site of 50,000 gross square feet or more when electrical work in excess of 77 volts is being performed. The bill would have removed this provision and replaced it with a statewide requirement that one electrical journeyman must be present on any industrial or commercial new construction site when electrical work in excess of 77 volts is being performed. AGC opposed any such state mandate. The decision on how any particular job should be staffed should be left to the electrical contractor and should not be dictated by state law. UPDATE: SB 508 was not heard in either of its two Senate committees. A companion bill to SB 508 was never filed in the House. STATE CONTRACTING STATUS: DID NOT PASS SB 1706 - Sen. J.D. Alexander (R - Winter Haven) GC POSITION: MONITOR HB 1491 - Rep. Elaine Schwartz (D - Hollywood) This bill was intended to enhance the authority of the Legislature over agency contracting that affects the state budget. Of particular note, the bill specified certain types of contracts that may not be entered into by an agency or branch of state government. Such contracts include those that require the state to pay liquidated damages or any other moneys resulting from a breach or early termination of the contract, unless the Legislature specifically authorizes the agency to commit funds for the purpose of paying moneys for breach or early termination. Any contract or agreement in violation of these provisions would be null and void, and a public officer or employee who willfully enters into a contract in violation of these provisions commits a first degree misdemeanor. When this issue was first raised by the bill sponsor during the January 2009 Special Session, AGC voiced its concerns about the liquidated damages prohibition and its implications for state construction work. The current version of the bill has been modified to generally allow liquidated damages clauses for breach or early termination in state contracts, but would specifically prohibit clauses providing for the payment of liquidated damages in situations where the Legislature decides not to complete the funding of a state contract. UPDATE: SB 1706 ultimately did not pass both houses of the Legislature. While similar language was amended onto SB 902 very late in the Session, that bill also did not pass. STATE AGENCY RULEMAKING STATUS: PASSED SB 1844 - Sen. Mike Bennett (R - Bradenton) AGC POSITION: SUPPORT HB 1565 - Rep. Chris Dorworth (R - Heathrow) Currently, under Florida’s Administrative Procedure Act, before the adoption, amendment, or repeal of a rule, each agency must consider the impact of the rule on small businesses, small counties, and small cities. Agencies are required to prepare a statement of estimated regulatory costs (“SERC”) prior to the adoption, amendment, or repeal of any rule that has an adverse impact on small business. This bill would also require an agency to prepare a SERC prior to the adoption, amendment, or repeal of any rule that is likely to directly or indirectly increase regulatory costs in excess of $200,000 in the aggregate in the state within one year of implementation. When a lower regulatory cost alternative to a proposed rule is submitted to an agency, it is required to revise the earlier SERC and either adopt the alternative or give a statement of the reasons for rejecting the alternative in favor of the proposed rule. The grounds for challenging the validity of a SERC are revised, and the requirements for a SERC are expanded to include an economic analysis of whether the proposed rule directly or indirectly is likely to have an adverse impact within five years of implementation in excess of $1 million in the aggregate on economic growth, private-sector job creation or employment, business competitiveness, private-sector investment, productivity, innovation, or ability of persons doing business in Florida to compete with out-of-state businesses or domestic markets. Also, the economic analysis must include whether the proposed rule directly or indirectly increases regulatory costs, including any transactional costs in excess of $1 million in the aggregate within five years of implementation. UPDATE: Having passed the House on April 26, HB 1565 passed the Senate on April 29. The bill will go to the Governor for his action sometime in the next few weeks. BUILDING CODES / BUILDING SAFETY STATUS: PASSED SB 648 - Sen. Mike Bennett (R - Bradenton) AGC POSITION: SUPPORT HB 663 - Rep. Gary Aubuchon (R - Cape Coral) This bill is similar to last year’s building code bill, which made it through all of its committees but was never taken up by the full Senate. The bill includes the following provisions: • Adds equivalency of standards to the acceptable criteria for “glitch” building code amendments. • Grants rule authority for the Florida Building Commission to establish voting requirements, such as a super-majority, for certain commission actions. • Provides for alternative plan review and inspection process for certain inspections. • Eliminates the building code core course requirement for all licensees. • Provides a process for expedited declaratory statements relating to interpretations of the Florida Fire Prevention Code by the State Fire Marshal; • Establishes the Fire Code Interpretation Committee and provides a process for obtaining nonbinding interpretations of the Florida Fire Prevention Code; • Provides a 10-day expedited product approval process for products that contain a certification mark or listing with products immediately added to the approved product approval list and a subsequent ratification by the Commission’s program oversight committee. • Eliminates the five-year inspection by engineers of condominium improvements. • Includes additional options for energy efficiency of buildings. • As to elevator safety, revises requirements for retrofitting, regional emergency elevator access, and emergency alternative power. UPDATE: Having passed the House on April 26, HB 663 passed the Senate on the final day of the 2010 Session. The bill will go to Governor Crist for his action sometime in the next few weeks. RECYCLING STATUS: PASSED SB 570 - Sen. Lee Constantine (R - Altamonte Springs) AGC POSITION: MONITOR HB 7243 - General Gov’t Policy Council While this far-ranging bill addresses many subjects, it contains the following provisions specific to construction and demolition debris: • Requires each county to develop and implement a recycling program for construction and demolition debris. • Requires property receiving a certificate of occupancy on or after July 1, 2012, that is used for multifamily residential purposes or for commercial purposes to provide adequate space and an adequate receptacle for recycling by owners and tenants. • By January 1, 2012, requires counties to annually report to DEP the amount of construction and demolition debris processed and recycled prior to disposal at a permitted materials recovery facility or at a permitted disposal facility. DEP rules would require that, to the extent economically feasible, all construction and demolition debris must be processed prior to disposal, but such processing would not be required for materials that have been source separated and offered for recycling or to materials that have been previously processed. UPDATE: Having passed the House on April 26, HB 7243 passed the Senate on the final day of the 2010 Session. The bill will go to Governor Crist for his action sometime in the next few weeks. RESIDENTIAL FIRE SPRINKLER REQUIREMENTS STATUS: PASSED SB 846 - Sen. Mike Bennett (R - Bradenton) AGC POSITION: MONITOR HB 7095 - Governmental Affairs Policy Committee Section R313 of the 2009 Residential International Code currently requires the installation of automatic fire sprinkler systems in newly constructed one-family and two-family residential dwellings and townhouses effective January 1, 2011. This bill provides that the provisions in s. R313 of the most recent version of the International Residential Code relating to mandatory fire sprinklers shall not be included in the Florida Building Code or adopted as a local amendment to the code. The bill clarifies that this provision does not apply to a local government that has lawfully adopted an ordinance relating to fire sprinklers that has been in effect since January 1, 2010. The bill also prohibits a local government from requiring a property owner to install fire sprinklers in any residential property based on its use or reclassification as a rental property. UPDATE: SB 846 passed the Senate on April 22 by a vote of 38-0. The bill passed the House on April 28 by a vote of 112-3. The bill will go to Governor Crist at some point in the next few weeks. DEP’T OF BUSINESS & PROFESSIONAL REGULATION STATUS: PASSED SB 1196 - Sen. Mike Fasano (R - New Port Richey) AGC POSITION: MONITOR HB 561 - Rep. Ellyn Bogdanoff (R - Ft. Lauderdale) While this bill contained nothing of special consequence to the construction industry, it provided a tempting target for bad amendments all session long. AGC watched this bill carefully, and we were able to beat back an amendment floated early in the Session by some South Florida building officials that would have subjected a contractor to disciplinary action for allowing a building permit to expire. We were also able to keep off an amendment that would have significantly expanded the $75,000 “owner exemption” from contractor licensure. Current law allows owners to serve as their own contractors only on owner-occupied structures. The amendment would have also allowed owners to serve as their own contractors on residential or commercial property they are offering for lease. UPDATE: The bill ultimately passed on the final day of the Session, without any undesirable amendments. The bill will go to Governor Crist for his action sometime during the next few weeks. COMMERCIAL LINES INSURANCE STATUS: PASSED SB 2176 - Sen. Durrell Peaden (R - Crestview) AGC POSITION: MONITOR HB 1563 - Rep. Brad Drake (R - DeFuniak Springs) This bill amends the insurance “Rating Law” to allow specified types of commercial lines insurance to be exempt from the rate filing and prior review requirements of s. 627.062(2), Florida Statutes. An insurer must notify the Office of Insurance Regulation (“OIR”) of any changes to rates for these exempted types of insurance within 30 days after the effective date of the change. The bill specifies the information that must be included in the notice and requires that underwriting files, premiums, and loss and expense statistics must be maintained by the insurer and subject to review by the OIR. This exemption would apply to a number of different insurance lines, including excess or umbrella, surety and fidelity, errors and omissions, and directors and officers, employment practices and management liability. Although the bill exempts the specified lines from the filing and review requirements, these types of insurance coverages continue to be subject to the requirement that rates must not be excessive, inadequate, or unfairly discriminatory. UPDATE: SB 2176 ultimately passed on the final day of the 2010 Session. The bill will go to Governor Crist for his action sometime in the next few weeks. SULFUROUS DRYWALL STATUS: PASSED SB 2160 - Sen. Ronda Storms (R - Brandon) AGC POSITION: MONITOR HB 965 - Rep. Seth McKeel (R - Lakeland) Between 2004 and 2007, numerous homes were built with drywall that is now under investigation for causing harm to homes, personal possessions, and human health. This tainted drywall, coupled with depreciating home values, has rendered some homes valueless and exacerbated the current housing crisis. Homes with tainted drywall may also depress the property values of adjacent homes. The estimated cost of remediation is $100,000 per home. The extent of the tainted drywall problem is unknown. This bill requires property appraisers to adjust the assessed value of affected single-family residential property by taking into consideration the presence of imported drywall and the impact it has on the assessed value. If the building cannot be used for its intended purpose without remediation or repair, the value of the building will be set at $0. If the affected property is homestead property, it will not be considered abandoned if the owner vacates the property during repairs and does not establish a new homestead. UPDATE: This bill passed both the House and the Senate in the final week of the Session, and it will go to Governor Crist for his action sometime in the next few weeks. IMMIGRATION ENFORCEMENT STATUS: DID NOT PASS SB 1880 - Sen. Nancy Detert (R - Venice) AGC POSITION: MONITOR HB 219 - Rep. Sandy Adams (R - Oviedo) The federal Immigration Reform and Control Act of 1986 made it illegal for any U.S. employer to knowingly: • Hire, recruit, or refer for a fee an alien knowing he or she is unauthorized to work; • Continue to employ an alien knowing he or she has become unauthorized; or • Hire, recruit, or refer for a fee any person (citizen or alien) without following the record keeping requirements of the Act. Employees are required to present paper documents to their employers that establish both the worker’s identity and eligibility to work, and employers are required to complete an “I-9” form for each new employee hired. Because such paper documents are easily falsified, enforcement has been a problem. In 1996, Congress enacted legislation creating three pilot programs to test electronic employment eligibility verification systems. Of these three programs, what is now known as the Employment Eligibility Verification Program (EEV), or e-Verify, was chosen to provide an automated link to federal databases to help employers determine employment eligibility of new hires and the validity of their Social Security numbers. The e-Verify system is free to employers and is available in all 50 states. Having been filed several times in past years, the above-referenced Florida bill would prohibit public employers from entering into contracts for the performance of services in this state unless the contractor participates in the federal e-Verify system. Contractors who receive such contract awards would be prohibited from executing a contract, purchase order, or subcontract in connection with the award unless the contractor and all subcontractors participate in the federal e-Verify system and certify this participation in writing. Compliance with this requirement was phased in between July 1, 2011 and July 1, 2013, based upon the number of employees employed by a specified contractor or subcontractor. UPDATE: HB 219 passed the House on April 26, after being amended to ensure that employers could not be held liable for civil damages for hiring or refusing to hire a person based upon the immigration status reflected in the e-Verify system. SB 1880, however, never received a committee hearing, so the bill did not pass in the 2010 Session. OUT-OF-STATE EMPLOYERS & WORKERS’ COMP STATUS: DID NOT PASS SB 1448 - Sen. John Thrasher (R - Jacksonville) AGC POSITION: MONITOR HB 757 - Rep. Michael Weinstein (R - Orange Park) This bill would have exempted out-of-state employers and employees temporarily doing work in Florida from most provisions of Florida’s workers’ compensation insurance laws if the employer furnished workers compensations insurance under the laws of its home state covering those employees. This exemption would only apply, however, if the home state in question extended similar reciprocity to Florida employers. UPDATE: Neither of these bills received a committee hearing in the 2010 Session, but they will likely be filed again next year. SUNSHINE STATE ONE-CALL STATUS: PASSED SB 982 - Sen. Mike Bennett (R - Bradenton) AGC POSITION: MONITOR HB 691 - Rep. Dave Murzin (R - Pensacola) The Underground Facility Damage Prevention and Safety Act, codified in chapter 556 of the Florida Statutes, creates a system by which persons intending to engage in excavation or demolition activities can provide notice of this intent, to allow operators of underground facilities the opportunity to identify and locate their underground facilities, thereby preventing damage and injury. The notification system is operated by a statutorily created not-forprofit corporation, Sunshine State One-Call of Florida, Inc. (One- Call). All operators of underground facilities within the state are members of One-Call and are required to use its system. Among other changes, this bill: • Prohibits local governments from enacting ordinances that conflict with the Act. • Provides for low-impact marking of underground facilities. • Establishes a program through the Division of Administrative Hearings for evaluating allegations of damage caused to high-priority subsurface installations. • Revises notice and incident reporting responsibilities of excavators and operators. • Increases the amount of the civil penalty that may be imposed for a noncriminal infraction to $500 from the current level of $250. • Requires One-Call to establish a voluntary alternative dispute resolution program to resolve disputes arising from excavation activities. UPDATE: SB 982 passed the Senate on April 22 by a vote of 38-0. The bill passed the House on April 28 by a vote of 112-0. The bill will go to Governor Crist at some point in the next few weeks. CONDOMINIUMS STATUS: PASSED SB 1196 - Sen. Mike Fasano (R - New Port Richey) AGC POSITION: MONITOR HB 561 - Rep. Ellyn Bogdanoff (R - Ft. Lauderdale) The bill revises laws related to community associations, including condominium, homeowners, and cooperative associations. Of possible interest from a construction perspective, the bill creates the “Distressed Condominium Relief Act” to limit the extent to which successors to the developer, including the construction lender after a foreclosure and other bulk buyers and bulk assignees of condominium units, may be responsible for implied warranties. UPDATE: SB 1196 passed the Senate on April 16 by a vote of 38-0. The bill passed the House on April 28 by a vote of 107-4. The bill will go to Governor Crist at some point in the next few weeks.

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