March 12, 2007

AGC Legislative Day
Over 200 people attended AGC Legislative Day this year. Thank you to all who participated.

See Pictures of Legislative Day at Legislative Day.

Following is the handout given to legislators on AGC Legislative Day.
For a copy of the handout in its original format go to Legislative Handout.

We Support…

Contingent Payment Clauses

SB 324 by Deuell & companion HB 734 by Chisum

• These bills eliminate many perceived and real abuses in construction contracts, while still allowing one party to contractually spread risk of non-payment by an upstream party in the chain of a contract.

• This legislation is the result of a compromise between AGC Texas Building Branch and Texas Construction Association.

• This legislation does not affect municipal & utility, residential, and highway construction. It also does not affect contracts for design services.

• These bills clearly define situations that are “unconscionable”.

We Support…

Consolidation of Public Alternative Delivery Construction Statutes

HB 447 by Callegari & companion SB 356 by M. Jackson

• These bills will consolidate the State’s public construction procurement statutes into a single location in the Government Code. Currently, they are located in four different chapters of various codes.

• Both the commercial building industry and owner groups will benefit from having these statutes combined into a single location.

• The bill will put some limits on the use of interlocal agreements for construction and design services. The use of interlocal agreements for construction and design services is not transparent to local taxpayers.

We Support…

Clarification of “Construction Claims” for Condominiums

HB 3147 by Solomons

• This bill is intended to clarify a number of issues so that claims of construction defects on residential condominium structures will be covered by the processes set forth in Chapter 27 of the Property Code (the Residential Construction Liability Act, or RCLA). This bill does not put condominiums under the dispute resolution process of the Texas Residential Construction Commission.

• Individual condominium units are currently covered by RCLA provisions; however, the definition is silent in regard to common elements (exterior walls, roof, structural elements, foundation, etc.). The bill will place these common elements into RCLA so they can be covered by the current statute.

• The bill will also clear up confusion as to who is to provide disclosure notice to the condo unit purchaser.

School District Lawsuits for Construction Defects

• In the past several years, numerous lawsuits have been filed on behalf of several school districts in South Texas. These suits name as defendants all general contractors, architects and engineers who have completed work for the district in the last ten years.

• The first notice of the construction defect has been when the contractor, architect, or other party is served with the lawsuit. In many of the suits no specific construction defects are named; rather, a reference is made to the finding of potential construction defects.

• If a legitimate construction defect does exist, the objective should be to get the problem fixed or “cured”. The issue is having safe, habitable schools for the students. The lawsuits that have been filed have not allowed for an inspection by the contractor or any attempt to fix “real” problems.

• As a result of these lawsuits, the bidding costs on public works  projects  are  escalating  as  fewer  contractors are offering bids. Those who are bidding this work have increased overhead costs due to rising insurance rates as a result of the lawsuits.

• In many of the cases, the school districts have received money from the State for the construction of these facilities as Chapter 46 school districts. The State has a formula for how much money property-poor school districts receive from the State for their bond indebtedness.

• A portion of any proceeds from the decisions or settlements of these lawsuits should come back to the State after first fixing the problem at the facility and then paying the attorneys. Legal fees for the plaintiff’s attorneys should be approved by the local school board and should also be reviewed and approved by the Texas Commissioner of Education. AGC is working with legislative leaders to find a solution that protects the State’s investment in school facilities and insures a safe environment for the students of Texas.

Illegal Immigration and Border Security

• We agree with Governor Perry that comprehensive immigration policy reform is a federal, not a state, issue.

• We applaud Governor Perry’s efforts to improve border security.

• AGC Texas Building Branch supports legislation to tighten the documentation process and hold the federal government responsible for ensuring the accuracy of identification cards and social security numbers, so that employers no longer have the threat of undocumented workers on their jobsites.

• We are greatly concerned about legislation which would withhold payment to a contractor on public projects if they inadvertently violate immigration law. Withholding payment for properly performed work could punish companies with a death sentence without due process. Penalties should be commensurate with the offense, with provisions to protect first-time good faith offenders.

Defending Recent Changes to Sovereign Immunity Statutes

• In 2003, the passage of HB 1898 allowed contractors to go to court to resolve a construction dispute with a county.

• In 2005, SB 2039 clarified that a contractor can go to court if a construction dispute with a local governmental entity cannot be resolved.

• AGC Texas Building Branch believes that in construction disputes, the process used to resolve the issue should be fair for both parties including the ability of a contractor to pursue court action if necessary.

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