Legislative Background

The length and depth of the current economic downturn has punished Oregon’s construction industry more than any other sector of the economy. These poor economic conditions led many contractors to the Oregon Legislature to seek economic relief during the 2011 Legislative Session.

Relief was sought in many forms, including bills that proposed overturning long-standing industry practices like the current prompt pay laws. These proposals had the potential to do three things:

• They would have undermined the ‘pay when paid’ principle for all contractors;
• The bills would have also redefined the rights of parties to contract with each other without government imposed restrictions; and
• Finally, these proposed solutions would have created significant new fines and led to potential debarment from public works projects.

Policy

Following the 2011 session, AGC initiated discussions with our partners on the management and labor sides of our industry. In general, AGC works hard to support and to advocate public policies that work for the entire commercial construction chain of commerce. This means Owner to General Contractor, to Specialty Contractor, to Supplier.

In light of the 2011 Legislative Session debates, AGC’s leadership developed a core policy relating to prompt pay last fall. The position is as follows: “Prompt Pay: Support strengthening existing laws to ensure prompt payment throughout the chain of commerce – owner to General Contractor, to Specialty Contractor, to Supplier.” This policy was reviewed by AGC’s Executive Committee and approved by the full Board of Directors on October 21, 2011.

HB 4034: A Summary

As a result of this policy and the discussions that followed the 2011 session, AGC worked with a variety of key stakeholders in the construction industry and in the Legislature to develop what became House Bill 4034.

HB 4034 is aimed at strengthening Oregon’s existing prompt pay procedures and law. It does this in three ways:

• the passage of this law will ensure that specialty or subcontractors will know exactly what is required of them to receive prompt payment;
• if there are changes to billing procedures, or required information for prompt payment, when the law goes into effect the law will require a 45-day notification if any changes are to be made for prompt payment billing purpose; and
• HB 4034 raises interest penalty rates to the Oregon statutory standard to 9%, replacing the current complicated, federally-based rate calculation that currently equals a 1-2% interest penalty rate.

HB 4034 passed both the House and Senate unanimously. The bill has now been sent to the Governor for his signature. AGC believes the unanimous passage of this bill demonstrates what can be accomplished in the Oregon state capitol when the industry unites and advocates in its own interests.

For additional information about this issue or HB 4034, please contact Government Affairs Director John Rakowitz at johnr@agc-oregon.org.

Proposed New Laws Impacting Construction

As we have seen in the past four sessions, public contracting issues have been the focus of multiple bills in this year’s session. There are two contracting bills that have been a major focus for the AGC lobbying team. The first, HB 4144, proposed major changes to Oregon’s public contracting laws. The changes would have fundamentally altered the lowest responsible bidder principle. AGC, along with local government contracting agencies, actively opposed and successfully killed this legislation.

The second bill with potentially dangerous impacts to public contracting law was, in its original form, SB 1518. AGC worked with the bill’s sponsor—Senate Democratic leadership—to exclude Section 279C, the portion of Oregon’s public contracting laws that deals with commercial construction. The bill is now moving forward as amended, but will not impact public works construction law, our members, or our industry. Click here to access the amended version of the bill.

Capital Construction and Public Works Spending

The legislature will focus most of the remaining days of this annual session on agreeing to budgets, including capital construction proposals. In this first annual short session, AGC has prioritized spending on new public works projects and protecting existing dedicated funding sources, like the Highway Trust Fund.

AGC’s team is actively working to secure approval for Oregon University System (OUS) capital projects. In 2011, the legislature deferred decisions on three large projects at Oregon State University (OSU): the OSU Student Experience Center ($43.6M/392 potential jobs), the OSU Memorial Union Renovation ($9.58M/86 potential jobs), and the OSU New Residence Hall ($30M/270 potential jobs). A new level of due diligence regarding cost, need, and value of projects, coupled with the constrained debt ceiling have been barriers to approval. AGC’s Government Affairs team, along with the leadership of AGC First Vice President Tom Gerding, are working diligently with the Oregon House Republican leadership to win the necessary approval for these projects to move forward. For more information on the specific projects please click here.

As always, the waning days of any session revolve around budget decisions. The date targeted by the legislative leadership to finish its business is Wednesday, February 29.

Jim McKune, 2012 AGC Board President (Credit: Sam Tenney/DJC)

Lee Fehrenbacher, a reporter from the Daily Journal of Commerce sat down a few days ago with 2012 AGC Board President Jim McKune of Emerick Construction Co. to discuss the upcoming year and issues facing the construction industry.

You can read Jim’s interview here.

In the 2011 Legislative Session, proposals to redefine the use of CM/GC (alternative contracting methods) for construction purposes were abundant. In late 2011, a public contracting work group was appointed by legislators who were looking for a full discussion by contractors and public owners with real knowledge of the use of CM/GC and alternative contracting methods and the complex intricacies of it. AGC has two members directly appointed to speak on the behalf of our chapter: AGC First Vice President Tom Gerding of T Gerding Construction represents AGC’s building side, and past AGC President Scott Williams of Hamilton Construction Co. represents the highway side. The work group has met once and is expected to meet monthly until the fall. There is a wide range of knowledgeable individuals who comprise the work group, ranging from contractors to public owners to legal experts. Board Counsel Jeremy Vermilyea co-chairs the group and AGC Secretary Larry Gesher of Slayden Construction Group, Inc. has filled a slot on the committee as a highway contractor. If you are interested in the issues being discussed by the public contracting work group, please feel free to contact the AGC representatives named above; if you have questions on the legislative history of this issue, please contact AGC Government Affairs Director John Rakowitz.

The Construction Contractors Board has a new AGC member, Andrew Colas of Colas Construction, who replaced long time CCB member Rob Hernandez of S & B James Construction Company. AGC Workforce Development Committee Chair Sandy Trainor of Kodiak Pacific Construction continues her service at least through the end of this year.

Thank you to all our members who represent AGC in these important positions!

Take a look at the February 13, 2012 Daily Journal of Commerce article covering the Board’s action.

Questions about this item? Contact Mike Salsgiver at mikes@agc-oregon.org.

Later this afternoon, Congressman Earl Blumenauer (OR-3) will hold a public forum to discuss the House version of the transportation bill (H.R. 7 – Caution: This is an 847-page bill). The meeting will be held in Portland at the State of Oregon Building, 800 NE Oregon Street, Room 1-D at 3:00pm. Congressman Blumenauer has been very critical of the version of H.R. 7 that is moving through the House of Representatives. Click here for a recent blog post from the Congressman about the bill.

AGC of America has prepared a side-by-side analysis of both bills and compared them with AGC’s position. That analysis can be found here.

Congress has set a March 31, 2012 deadline to complete action on a transportation reauthorization bill. Once the bills have moved through the House and the Senate, they will go to a conference committee to reconcile differences between the two versions of the bills.

Please contact your Senators (for Oregon, Senator Ron Wyden and Senator Jeff Merkley; for Washington, Senator Patty Murray and Senator Maria Cantwell) and ask them to vote in favor of the motion to proceed. You can send a letter through AGC’s Legislative Action Center by clicking here.

AGC will continue to send alerts over the next several weeks as the highway and transit bills are debated on the House and Senate floors. It is vital that AGC members keep in contact with their Senators and Representatives. AGC will be issuing action alerts as necessary to ensure that Congress hears from the construction industry. It is important that you respond to these action alerts by contacting your Members of Congress.

Along with general fund forecasts, the report produced by the Office of Economic Analysis contains important economic data and trends. Here are some of the highlights straight from the report:

• Baseline employment forecast remains essentially unchanged over the last 6 months, slow growth will continue to be the norm
• Oregon is not expected to recover all of the jobs lost until the end of 2014
• There are positive signs: filings for jobless claims are at normal levels and the majority of households expect to see their income rise next year
• Oregon’s recovery is fragile; the primary risk is the debt crisis in Europe
• Growth in personal income tax collections is expected to moderate, but remain strong enough to offset losses in corporate income tax collections and flat lottery transfers

Click here if you are interested in reading yesterday’s article regarding the forecast from the Oregonian.
Click here to access the full Oregon Economic and Revenue Forecast Report.

When CARB adopted the regulation in 2009, it sparked the development of similar standards and programs in many states, including Oregon and Washington. Here in Oregon, the Department of Environmental Quality (DEQ) is considering the adoption of a LCFS modeled directly after California’s. However, on December 29, 2011 the District Court in Fresno, California ruled the state’s LCFS program is a violation of the U.S. Constitution’s Commerce Clause by discriminating against out-of-state fuel and biofuel producers. Upon this ruling, the California LCFS immediately became unenforceable and we are seeing states such as Maine and Washington suspending their own LCFS programs.

LCFS programs developed and implemented in other states are even more vulnerable to legal challenge than California, since California was the sole state to be given authority to create this type of greenhouse gas emissions control. It is also important to note the economic impact an LCFS program could have. The standard regulates fuel production, but cannot guarantee fuel availability, which will be drastically cut down if other states begin to adopt their own LCFS. The lack of availability of acceptable fuel blends would likely increase the cost of fuel dramatically in California and Oregon.

The California court ruling is a monumental development. Given the LCFS’s constitutional violation and the potential economic impact, it is extremely important for Oregon DEQ to follow the lead of states like Washington and suspend their LCFS program. AGC is part of a coalition working to inform DEQ and legislators of the LCFS’s real effect on the state and to strongly encourage DEQ to end development of a LCFS program.

If you have questions or would like to find out more about AGC and their involvement with Oregon’s LCFS program, please contact Allison Koenker.

2012 Construction/Construction Management Staff Survey from Personnel Administration Services (PAS) has been sent to chapter members via email and snail mail. The deadline for the survey is February 28, 2012.

We encourage you to participate in this annual survey of GC/SC contractor operational personnel since the larger the sample, the more reliable and useful the resulting information will be to not only the construction industry, but to you as well.

The final survey report will be over 180 pages of detail enabling you to perform extensive salary comparisons by position, geographic location, size of company, contract type, type of construction performed, and more. The survey will be printed and distributed in March. Each chapter participant will receive a free copy of the Oregon-Columbia Chapter results. For those who desire to purchase a copy of the entire survey, PAS is offering all participants a discounted rate of $130.

Please contact Robin Edgar, 503-685-8306 or 800-826-6610, with any questions.