Master Builders of Iowa

February 3, 2012
Volume XI, Edition 4

Budget Targets Set the Stage for a Contentious Spending Debate

House Republicans this week issued a budget target of $6.059 billion for the fiscal year that begins July 1, 2012.  That is about 1 percent greater than the current fiscal year and $182 million less than what was proposed by Gov. Terry Branstad last month in his State of the State address.

Senate Democrats additionally released their budget targets for the upcoming fiscal year. The Democratic plan calls for a $6.218 budget, which includes allocations for a commercial property tax cut proposal as well an expansion of a tax break to low-income families known as the “Earned Income Tax Credit.” 

All of this budget gamesmanship has the makings of a very partisan budget battle as the Legislature works toward adjournment in mid-April. 

Bar Association and Trial Lawyers Strongly Oppose Statute of Repose Legislation
MBI and a number of construction groups have strongly endorsed HF 2078, a bill introduced by Representative Eric Helland (R-Johnston) that would shorten the current 15-year statute of repose to a more fair and reasonable 8 years.  MBI feels that the current 15 year “warranty on latent defects” is way out of line with other state statutes and indirectly increases the cost of construction through the heightened prospects litigation and forced settlements to avoid costly trials.

Strong opposition came from the Iowa Bar Association, the Iowa Association of Justice (trial lawyers) and the Iowa Attorney General’s office.  All three groups lined up in favor of plaintiffs’ lawyers to the detriment of MBI’s efforts to protect contractors from frivolous lawsuits.  MBI has a long-held belief that in the instance of defect claims, contractors are force to prove themselves innocent through acquiring lawyers and consultants to make their case as to whether fault lies with the designer, the manufacturer, the installer, the subcontractor or even the owner.  Often drawings, plans and project specifications are no longer available and information gathering to defend is difficult and costly.  In most instances, a contractor sees the writing on the wall and will acquiesce to an out of court settlement. 

MBI will continue to try to move this bill in the House, while countering the Bar, the Attorney General’s office and the trial lawyers’ anti-business efforts. 

 MBI Working to Increase Major Maintenance at DAS
One of MBI’s priorities this year is to work to increase funding for major maintenance needs at the Iowa Department of Administrative Services (DAS).  Over the last couple of years, funding for major maintenance at DAS has been woefully short and inadequate considering the fact that the State of Iowa owns and manages a $3.5 billion building portfolio.  In fact, last year only $2.5 million was allocated for major maintenance needs.  This year, MBI is proposing a 3 to 5 year effort of $15 million per year.  By providing a multi-year commitment, DAS will better be able to prioritize and schedule repairs to major maintenance and life / health / safety needs.

Bills of Interest Introduced This Week

- HF 2188 by a host of House Democrats would establish a preference for Iowa contractors when bidding against out-of-state contractors in which the lowest Iowa resident bidder would have the opportunity to match the low apparent bidder, should that bidder be a non-Iowa bidder.   This opportunity to match would only be in those instances in which the Iowa bidder is within 5 percent or $10,000 of the low bid submitted.  MBI has concerns with this in that it would most likely trigger other surrounding states reciprocal bidder preferences.
- HF 2190 by Kelley (D-Newton) would require schools to perform energy audits and get recommendations on energy-efficiency retrofits.  The Iowa Utilities Board would establish criteria.  MBI is monitoring this bill.
- HF 2191 by Kelley (D-Newton) would in essence require all new school construction to meet a LEED Silver certification (or a similar distinction by any other group).  MBI has always been skeptical of mandating certain levels or types of sustainable building performance, but is willing to work with the Legislature to provide perspective from the building community on this issue.
- HF 2204 by Byrnes (R- Osage) would provide for energy-based performance contracting.  This is similar to legislation that MBI has opposed over the last 17 years.  The bill bundles the design and building components with financing, long term maintenance and training into one RFP with a 20-year contract. 
- HSB 580 is a State Government Committee bill and is substantially similar to HF 2204 which promotes performance contracting in the public sector.  MBI has a long standing opposition to this concept being used on public structures.

Until next week,

Chad Kleppe