Projected Surety & Fidelity Legislative Issues in 2015
ALABAMA
ALASKA
--With the repeal of the Maryland individual surety law, there is some movement to repeal the
Alaska law, the only other law that could permit use of individual sureties. The local AGC
appears to be interested in moving this.
ARIZONA
--Seek: Amend the P3 law enacted in 2012 to require bonding
--Local ASA may be seeking a mechanics lien bill that creates a Registry for the liens.
Pennsylvania and Utah recently have enacted such laws
ARKANSAS
--New: There is a bill draft for a P3 being circulated; The bill is the same one with the same
sponsor (Rep. Sabin) as introduced in 2013; The legislature now is under complete Republican
control and Sabin is a Democrat, but that does not mean the bill won’t have a chance.
CALIFORNIA
--Continuing: The Los Angeles Unified School District (LAUSD) had a bill in 2013 to waive
bonds on its projects that are less than $1 million and/or or other legislation on bonding;
LAUSD may come back with some bonding legislation.
--New: The transportation P3 law expires on Jan 1, 2017. The existing law requires that the
private partner must demonstration that it has the capacity to obtain all required payment and
performance bonds;
--The subcontractors are looking at legislation to address the issue of suspension of work for
non-payment in private construction projects.
COLORADO
--Continuing: P3 bill that was vetoed in 2014 will be back in some form. The 2014 bill did not
impact bonding, but rather focused on issues of interest to investors and private partners. The
Colorado P3 laws are silent on the issue of bonding and any legislation might be a vehicle
CONNECTICUT
--Seek: Amendment to the law to address the doctrine of nullum tempus after the Lombardo
decision and enact a statue of repose and limitations. This year, however, the Attorney General
may have another surety bill pending at the same time. The Connecticut Supreme Court ruled
against the Attorney General in a case in which the State contended that if a surety does not
comply with any of its obligations under a bond, the surety loses all of its defenses. The
Attorney General may well seek legislation to overturn the decision in whole or in part. Also a
factor this year is a new committee chair and changes in the committee composition. We expect
another attempt on the nullem tempus issue.
--New: The P3 statute in Connecticut allows the governor to approve up to five P3 projects prior
to Jan. 1, 2015. This suggests that there might be action in Connecticut in 2015. The existing law
requires “performance and payment bonds or other security deemed suitable by the agency.”
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DELAWARE
DISTRICT OF COLUMBIA.
--Continuing: Bad faith legislation likely will be back in 2015 that could include surety;
--The subcontractors will be seeking a prompt pay bill that likely also will address retainage.
FLORIDA
--New: Florida enacted P3 legislation in 2013 for local government entities that requires the
construction portion of the project to be bonded. In 2014, Florida’s P3 study committee has
issued its report which has now resulted in more P3 legislation in 2015; This year’s bill seeks to
expand the authority for P3s to colleges and universities. This year’s bill includes favorable
bonding provisions.
GEORGIA
--Continuing: P3 legislation was introduced after the crossover date in 2013 and considered in
2014; The bill moved in 2014 but failed to pass, and is expected to be back in 2015.
HAWAII
IDAHO
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ILLINOIS
--Legislation may surface that would allow contractors to obtain a bond in order to have a
mechanics lien released.
INDIANA
--Seek: Indiana P3 law does not require 100% bonding and needs to be amended
--Continuing: The public official bond issue may come back this year. Several years ago, we
corrected the law so that the bond amount was annual not cumulative over the term of office.
IOWA
KANSAS
KENTUCKY
--Continuing: P3 legislation was vetoed in 2014; The bill needs to come back for a joint bridge
project with Ohio.
--Legislation will be considered this year that prohibits awards of state contracts to contractors
with delinquent taxes and unpaid fines.
LOUISIANA
--Continuing: Caps on appeal bonds surfaces periodically
MAINE
MARYLAND
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--Continuing: Amend new 2013 Maryland P3 law. The law requires payment and performance
security, but requires only the payment bond to be for 100% of the construction amount. There
is no limit on the performance bond. We have contacted the Lt Governor in 2014 and no
technical corrections bill was introduced in 2014; Seek a technical correction in 2015, which
now will be under a new Administration;
--Continuing: SFAA is working with the Senate committee leadership and updating them on
SFAA’s efforts to address bonding for small and emerging contractors in Maryland and we will
implement our MCDP in Charles County in the spring of 2015. Hopefully, the individual surety
issue will be off the agenda in Maryland in 2015.
--We are aware that legislation is being drafted to address issues with change orders and that the
local AGC and ASA now are involved with it.
MASSACHUSETTS
SB 1558 would have required bids to be verified when the bid in cases where a bid is 10% or
more lower than the next lowest bid and lower than the awarding authority’s estimate by 10% or
more to determine whether the bid is insufficiently or unjustifiably low. The bidder also would
have to provide a certification from the surety that the surety has verified the bid. The
certification must include an advisory opinion from the surety company to the awarding
authority on whether or not the bid should be verified or disqualified. If a contractor submits
three or more bids in a year that must be verified, an investigation would be conducted, including
a review of the records of the contractor’s surety company that provided the bond, to determine
whether the contractor has properly bid according to his or her audited financial statement, and
whether the surety company or companies committed a violation through its practices with
regard to the contractor or contractors under investigation. The bill was sent for more study. It
may come back in 2015.
MICHIGAN
--Local contractors associations are working on a prompt pay bill
MINNESOTA
MISSISSIPPI
-- Continuing; Caps on appeal bonds have been a perennial issue.
-- New: AIAI expects a P3 bill in 2015
--ASA and ABC are working on legislation regarding retainage in private projects.
MISSOURI
--New—Recent disparity study recommends increase in state bond threshold and a bonding
program to assist small, emerging and minority contractors to obtain bonds.
--P3 legislation has been introduced and the bonding provisions need to be amended. The
Governor recently has expressed interest in use of a P3 for financing needed work on I-70.
MONTANA
--Legislation has been introduced on alternative methods for delivery of construction projects (H
97 and 262)
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NEBRASKA
--Seek: Legislation to permit service of process on the Secretary of State for federal lawsuits on
bonds in order to eliminate the requirement for sureties to file a resident agent in each federal
district.
NEVADA
NEW HAMPSHIRE
--Continuing; There was P3 legislation in 2014, which was converted to a study bill that failed
to pass;
NEW JERSEY
--Still Pending. Good contractor license bond opportunities in pending, but impetus for a bond
requirement is waning.
--Still Pending; New Jersey has P3 legislation pending that will carry over to 2015
--Still Pending: Pending legislation would increase the state bond threshold from $200,000 to
$300,000 and requiring indexing the bond threshold for inflation going forward.
--New Jersey has significant transportation funding problems. The gas tax revenues are paying
to finance the current debt on the funding for transportation projects and the gas tax revenues are
projected to run out on June 30.
--Legislation did not move in 2014 that seems to give colleges the discretion to require bonds (S
855)
NEW MEXICO
--New: P3s were studied for a bill in 2014 that never materialized in the short session. There
now is another draft P3 bill being circulated for 2015? The P3 agreement must require bonds as
required under the Little Miller Act for the construction portions of any P3 project.
NEW YORK.
--Continuing: There has been an ongoing effort over the last five years to enact a home
improvement contractor license bond, but support for this new bond requirement is disappearing;
--Continuing: Monitor the impact in the new law that changes the statute of limitations for
actions on the payment bond and seek amendments to the law;
--New: AIAI expects a P3 bill in New York and provisions should be contained in the
Governor’s budget proposal.
NORTH CAROLINA
-- New: Bonding for small and emerging contractors remains an issue and SFAA’s current
efforts might help initiate a move to reduce the state bond threshold ($500,000). SFAA and AIA
are going to work with legislators to have draft a letter to UNC and the state agencies asking for
the reports required by statute regarding the projects under the $500,000 bond threshold that
have not been bonded.
--Legislation enacted in 2014 created the Blue Ribbon Commission to study the building and
infrastructure needs of the state.
--NORTH DAKOTA
--HB 1128—just introduced—needs to be reviewed
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OHIO
--Continuing; the 2012 budget bill amended Chapter 153.11 so that the bond amount is
increased with every change order. The law should be amended to restore the prior law, but the
local sureties want to establish good working relationships with stakeholders first
--New: The amendments to Ohio’s P3 law in 2014 need some technical changes on bonding that
needs to done in the next budget bill.
OKLAHOMA
--The subcontractors will seek a mechanics lien bill, patterned after enactments in Pennsylvania
and Utah, which creates a Registry for liens.
OREGON
--Seek: Amendment to the motor vehicle dealer bond to assure that injured consumers are paid
first under the bond
-- Continuing: Bad faith legislation likely will be introduced again.
--The local subcontractors will be seeking legislation to address retainage on private projects.
PENNSYLVANIA
--Seek: Amendment to the law needed to address the doctrine of null tempus
--Still Pending—P3 legislation likely will be reintroduced in 2013; SFAA seeks to amend the
bonding provisions in the existing P3 law.
RHODE ISLAND
--Continuing: After a year hiatus, the surety bad faith bill came back again in 2014 for probate
bonds and we defeated it. It is hard to tell if it will come back again in 2015.
SOUTH CAROLINA
--Continuing: To amend the advisory organization law or develop a regulatory solution so that
SFAA’s annual license renewal as an advisory organization is not dependent on the requirement
that SFAA submit a copy of an examination that is five years old or less.
-- Continuing: P3 legislation was introduced in recent years; We expect the P3 bill to be back as
South Carolina has transportation funding problems.
--AB 3013, just introduced, needs to be reviewed as it requires life cycle costs to be developed
for public projects;
SOUTH DAKOTA
TENNESSEE
--Continuing: P3 legislation has been considered but not enacted in the past few years. Hard to
predict whether it will come back in 2015;
TEXAS
--New: AIAI and its members are considering a Center for Excellence for P3s and the sureties
area considering whether to pursue a bill to amend the P3 law that allows alterative security in
lieu of the bond; Texas also has significant transportation funding issues;
--There may be a bill addressing wrap-up insurance.
--The subcontractors are looking at a bill that would require lenders to give contractors and
subcontractors notice when funding for a public construction projects evaporates.
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UTAH
VERMONT
VIRGINIA
--Seek: Amend the transportation P3 law to require bonding of the construction portions of P3s;
The Governor wants legislation this year to amend the P3 law to address issues of transparency
and accountability and that may provide an opportunity to amend the Virginia P3 laws.
--New: Legislation may be introduced to address the bonding requirements for fiduciaries due to
recent case of elder abuse;
--Continuing: Amend Insurance Code to give the commissioner authority to issue a cease and
desist order that prohibits persons and entities located in the Commonwealth from engaging in
unauthorized insurance in any state, rather than just in Virginia.
--Continuing: To amend the 2008 law giving colleges and universities a $1 million bond
threshold so that the educational institution must disclose in its contract specifications that there
is no payment or performance bond in place on a project under $1 million and must provide
written justification for acceptance of alternate security. This is going to be difficult to amend
absent a major default at UVA.
--The subcontractors will be working on legislation to address under what circumstances liens
and claims under a bond may be waived.
--The local contractors also are interested in legislation to address a 2015 court case interpreting
the provision in the law that change order cannot exceed 125% of the contract price. The
contractor won on a claim in excess of 125% but could only be paid up to 125% of the contract
price.
WASHINGTON
--Seek: Legislation to eliminate the requirement for A rated surety on retainage bonds for the
port authority;
WEST VIRGINIA
--Continuing: Trial bar may seek to restore third-party bad faith law repealed in 2005;
--Continuing: There is interest in regulating roofers and rogue contractors, which might provide
a license bond opportunity.
WISCONSIN
--Seek: Amend the state bond threshold law to repeal the biennial review for inflation
WYOMING
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