NASBP Focal Point – March 13, 2017

Last week, the American Society of Civil Engineers (ASCE) released its infrastructure report card assigning letter grades to the physical condition of our nation’s infrastructure, which was assigned a D+ grade overall. Previous reports issued by ASCE on this subject were often cited by lawmakers as the reason why the nation’s infrastructure needed immediate attention. ASCE releases its report every four years and accordingly stated: “Our nation’s infrastructure problems are solvable if we have leadership and commit to making good ideas a reality. Raising the grades on our infrastructure will require that we seek and adopt a wide range of solutions.” For a copy please visit https://www.infrastructurereportcard.org/.The Washington Post, last week, featured an article in its Business Section describing the Administration’s effort to push federal agencies by pressing them to “identify new projects; find existing projects that need help with completion; identify policy, regulatory, and statutory issues that would need to be addressed; and finally come up with a way to pay for it all.” President Trump has pledged to create a program that funds $1 trillion in new infrastructure programs, but may face opposition from his own party relating to budgetary concerns. The President strongly supports private financing as part of the equation coupled with public funding. Although there already have been several hearings dedicated to rebuilding our nation’s infrastructure, Congress is currently working on repealing the Affordable Care Act and replacing it with the American Health Care Act, which will be followed by legislation to overhaul the tax code, as put forth in Speaker Ryan’s Better Way for Tax Reform. At this point, it is uncertain when Congress will address infrastructure spending. To review the Post article please visit here.

Senate and House Hearings on Infrastructure

On Thursday, March 09, Garret Graves (R-LA-6th) conducted his first hearing as the newly appointed Chair of the U.S. House Transportation & Infrastructure subcommittee on Water Resources and the Environment. The hearing examined how the federal government, in conjunction with its partners in state and local governments, can work to reduce inefficiencies and delays in project delivery, include affordability considerations in the rulemaking process, better use of data and technology, and how to maximize benefits from existing resources. According to Chairman Graves, “there has to be transformational change across these agencies for our country to realize the full competitive advantage of its water infrastructure. Bureaucracy is ineffective, disruptive, and has contributed to our infrastructure’s state of decay. Doing things the same old way won’t get us to a 21st century system. As we work with the President on enhancing infrastructure investment, fixing these broken processes will be key to getting the job done.” Witnesses included: the American Waterworks Company, the Minnesota Pollution Control Agency, Sutter Butte Flood Control Agency of California, the Mayor of Schenectady, New York, Cycle Construction Company on behalf of the Associated General Contractors of America (AGC) and the Center for American Progress. To review the witnesses’ statements, please visit https://transportation.house.gov/calendar/eventsingle.aspx?EventID=401181

The day before, the U.S. Senate Appropriation’s Subcommittee on Transportation, Housing, and Urban Development, and Related Agencies, Chaired by U.S. Senator Susan Collins (R-ME) conducted a hearing on “Investing in America: Funding our Nation’s Transportation Infrastructure Needs.” Senator Collins began the hearing by quoting a recent report by the Department of Transportation’s “Conditions and Performance,” which identified an $836 billion backlog of unmet needs for our nation’s highways and bridges. In order to address the $836 billion backlog and meet the future needs over the next two decades, all levels of government combined would be required to increase spending by 36 percent. The Senator from Maine added that “deficient roads are costing motorists in my home state of Maine $1 billion annually in vehicle damage, congestion delays, and traffic crashes. In Portland, these costs can exceed $1,000 per motorist. The question is, how do we pay for this much-needed investment?”  According to her statement, Senator Collins believes all sources of revenues should be explored such as highway user fees, alternative financing models such as P3s, expansion of the Transportation Infrastructure Finance and Innovation Act (TIFIA) loan program, and increasing the Passenger Facility Charges, or P.F.C.s. to fund airport infrastructure projects. Witness included the U.S. Chamber of Commerce, American Association of State Highway Transportation Officials, American Association of Airport Executives, and Transportation for America. To review Senator Collins’ statement or the testimony from the witnesses, please visit: https://www.appropriations.senate.gov/hearings/investing-in-america-funding-our-nations-transportation-infrastructure-needs

AR HB 1595 (Holcomb) increases the threshold for when a bid bond is required from $20,000 to $35,000. HB 1595 passed the House and is scheduled for a hearing in the Senate Committee on State Agencies and Governmental Affairs on 03/09/2017.

ID SB 1074 (Senate Commerce and Human Resources Committee) amends the Idaho Little Miller Act, Idaho Code § 54.1926, to create a bond threshold of $50,000. Currently the state does not have a threshold. SB 1074 has passed the Senate and was referred to the House Committee on State Affairs on 03/08/2017.

IN HB 1117 (Miller) amends one of Indiana’s Little Miller Acts, Ind. Code § 5-16, by raising the bonding threshold on state educational institutions from $200,000 to $500,000. As originally introduced and passed by the House, HB 1117 did not contemplate an increase to the bond threshold. The threshold increase language was added by the Senate Committee on Local Government on 03/09/2017. NASBP has contacted local members and will provide updates as they develop.

NH HB 371 (Danielson) increases the amount of a public works contract for which a bond is required from $35,000 to $75,000. As introduced, HB 371, would have raised the threshold to $150,000. The House Public Works and Highways Committee, lowered the threshold to $75,000 but allowed political subdivisions the discretion to waive performance and payment bond requirements as mandated by N.H. Rev. Stat. Ann. § 447:16 and 17. NASBP sent a
letter in opposition highlighting a specific NH contractor that negatively impacted New Hampshire taxpayers and small businesses. HB 371 passed the House and has not yet been referred to a committee in the Senate.

WA SB 5734 (Chase) attempts to raise the bonding threshold in RCW 39.08.010, the Little Miller Act, from $35,000 to $150,000. SB 5734 passed the Senate on 02/28/2017 and was referred to the House State Government, Elections & Information Technology Committee.

HI HB 1415 (Holt) amends the Little Miller Act to require the following: 1) sureties be independent from the companies awarded bids; and 2) sureties cannot be revoked or dismissed until 90 days after project completion. Additionally, during the amendment process language was added to the bill that would duplicate the payment bond language within the performance bond. NASBP is uncertain of the intent of the amendment but believes this may be a drafting error and is working with local members to clarify the language. HB 1415 passed the House on 03/07/2017.

MI SB 97 (Kowall) would authorize the state to utilize P3s for public construction projects, including transportation projects. The performance and payment security language is discretionary. SB 97 passed the Senate and was referred to the House Transportation and Infrastructure Committee on 02/28/2017. NASBP will continue to monitor this legislation and provide the membership with updates.

MT SB 335 (Welborn) would allow state and local agencies the authority to utilize public-private partnerships for public infrastructure projects. The comprehensive agreement must include “specification for delivery of maintenance, performance, and payment bonds as well as letters of credit in connection with the development or operation of the qualifying project.” SB 335 was introduced on 03/08/2017 and has not yet been referred.

MA HB 1702 (Rogers) amends the Massachusetts Little Miller Act to allow Subcontractor Default Insurance in lieu of performance and payment bonds. Subcontractors must submit payment and performance bonds to the CMAR at no additional cost to the firm or awarding agency. This bill was introduced last session and opposed by NASBP. NASBP has contacted local members and is developing a strategy to address this legislation. HB 1702 was referred to the Joint Committee on State Administration and Regulatory Oversight on 02/27/2017.