Several Troublesome Issues Emerge in Nevada

The state of Nevada has been home to several troubling pieces of legislation this year. In February, legislation was introduced that would have increased the state bonding threshold from $100k to $1M. In March, a bill was introduced in the state’s Assembly creating a scheme in which individual sureties could issue bonds on state and local projects. NASBP took a proactive approach on both bills, engaging with NASBP members in Nevada, state and national construction associations, and a Nevada-based lobbyist.

SB 108 – Bond Threshold Increase

On February 2, Nevada state Senator Settlemeyer introduced SB 108, which would increase the current bonding threshold from $100k to $1M. This threshold would be the highest in the country and seven times larger than the federal Miller Act. On February 24, NASBP sent a letter to the bill sponsor detailing the importance of the surety product and the millions of dollars saved in Nevada alone, by having projects properly bonded. As in every other state, surety bonds have played a crucial role in protecting taxpayer dollars and subcontractors and suppliers. According to data from the Surety & Fidelity Association of America (SFAA), between 2001-2013 the total surety premium earned on Nevada state and municipal public works projects was nearly $370 million, while losses for that same time period were over $135 million, which amounts to a loss ratio of slightly more than 37%. In 2009, when the Nevada economy took a severe downturn, surety losses were $47 million versus $43 million in premium.

The bill was heard in the Senate Committee on Government Affairs on March 27. Following concerns raised by the surety industry and other associations, the bill was amended to remove this provision. NASBP would like to thank member Rich Pratt of InterWest Insurance Services, LLC for his assistance on the ground with this effort.

AB 345 – Individual Surety Legislation 

On March 16, Nevada Assemblywoman Neal introduced AB 345, which authorizes the state and local governments to accept certain alternate forms of security and provides circumstances under which an individual surety might provide such security. This bill was introduced due to concerns raised by the sponsors’ constituents who believe that bonds are an impediment to them for participation on public contracts. NASBP submitted testimony opposing the bill and has been working closely with a lobbyist to gather further political intelligence on the bill and make contact with legislators and state agencies. NASBP alerted its industry allies, AGC, ASA, and MCA of Nevada, to make them aware of the impact to their members. NASBP has jointly worked with SFAA, sharing political intelligence and resource materials.

The bill was scheduled to be heard on March 23 in the Assembly’s Committee on Government Affairs. However, the bill sponsor pulled the bill from consideration at that hearing to obtain additional information. The individual surety provisions were removed from the bill on April 9. NASBP is continuing to monitor the legislation and NASBP members and underwriters are planning to meet with the bill sponsor. Rep. Neal requested reps from the surety industry meet with her to discuss the prequalification process and to describe their involvement with assisting small and emerging contractors.

Between sessions, NASBP conducts outreach to members and other associations to trade information on the outlook for the upcoming legislative season. Both of these bills were unanticipated this year. NASBP is grateful for the assistance of members to help our efforts to defeat these items.

For more information contact NASBP Manager of State Relations, Shannon Crawford at scrawford@nasbp.org.