Colorado Capitol Report

In this Capitol Report:

• Construction-Litigation Bills Encounter Stormy Weather
• CACI Board Gives “Conceptual Support” to Transportation Funding Bill, HB-1242
• NAM, CACI Honor U.S. Sen. Gardner With Manufacturing Legislative Excellence Award
• Colorado Energy Office Chief Speaks to CACI Energy and Environment Council
• Save-the-Date: Next CACI Federal Policy Council is April 11th
• CACI's Legislative Agenda

Construction-Litigation Bills Encounter Stormy Weather

The likelihood that the legislature can pass bipartisan legislation to significantly reform the state’s construction-litigation laws is starting to look doubtful now that the session has passed the half-way mark, and two of the five introduced bills have died while a third is headed to a likely demise.

SB-157

SB-157 died in the Senate Business Labor and Technology Committee Monday.  SB-157, “Construction Defect Actions Notice Vote Approval,” was sponsored by Senator Angela Williams (D-Denver).  Here’s the legislature’s summary of the introduced bill:

The bill requires that, before the executive board of a unit owners’ association (HOA) in a common interest community brings suit against a developer or builder on behalf of unit owners, the board must:

• Notify all unit owners; and
• Except when the HOA contracted with the developer or builder for the work complained of or the amount in controversy is less than $100,000, obtain the approval of a majority of the unit owners after giving them detailed disclosures about the lawsuit and its potential costs and benefits.

HB-1169

HB-1169, “Construction Defect Litigation Builder’s Right To Repair,” was sponsored by Representative Tim Leonard (R-Evergreen).

The bill died on a party-line, 6-3 vote on March 1^st in the House State, Veterans and Military Affairs Committee, which is known as the chamber’s “kill committee.”

Here’s the summary of the introduced bill:

The bill clarifies that a construction professional has the right to receive notice from a prospective claimant concerning an alleged construction defect; to inspect the property; and then to elect to either repair the defect or tender an offer of settlement before the claimant can file a lawsuit seeking damages.

SB-156

The bill, which has the support of the business community, has been assigned to the House “kill committee,” the House State, Veterans and Military Affairs Committee.

The bill is scheduled for a hearing when the Committee convenes at 1:30 p.m. on Wednesday, April 19^th, in Room A in the Legislative Services Building.

The bill passed the Senate on a final, bi-partisan Third Reading 23-to-12 vote.

SB-156, “Homeowners’ Association Construction Defect Lawsuit Approval Timelines,” was sponsored in the Senate by Republican Senator Owen Hill (Colorado Springs).  The House co-sponsors are Republican Representatives Cole Wist and Lori Saine.

Here’s the introduced bill’s description:

The bill states that when the governing documents of a common interest community require mediation or arbitration of a construction defect claim and the requirement is later amended or removed, mediation or arbitration is still required for a construction defect claim. These provisions are in section 3 of the bill. Section 3 also specifies that the mediation or arbitration must take place in the judicial district in which the community is located and that the arbitrator must:

• Be a neutral third party;
• Make certain disclosures before being selected; and
• Be selected as specified in the common interest community’s governing documents or, if not so specified, in accordance with applicable state or federal laws governing mediation or arbitration. 

Section 1 of the bill specifies that, in the arbitration of a construction defect action, the arbitrator is required to follow the substantive law of Colorado with regard to any applicable claim or defense and any remedy granted, and a failure to do so is grounds for a district court to vacate or refuse to confirm the arbitrator’s award.

Section 4 of the bill requires that, before a construction defect claim is filed on behalf of the association:

• The parties must submit the matter to mediation before a neutral third party; and
• The board must give advance notice to all unit owners, together with a disclosure of the projected costs, duration, and financial impact of the construction defect claim, and must obtain the written consent of the owners of units to which at least a majority of the votes in the association are allocated.

Section 5 of the bill adds to the disclosures required prior to the purchase and sale of property in a common interest community a notice that the community’s governing documents may require binding arbitration of certain disputes.

The bill’s fiscal note provides another analysis of the introduced bill.  The bill was amended by the Senate Business, Labor and Technology Committee and further amended on Second Reading on the House Floor.

SB-45

SB-45, “Construction Defect Claim Allocation of Defense Costs,” stands out among the other bills in that is has bipartisan, leadership sponsorship in both chambers.  In the Senate, the bill is sponsored by Senate President Grantham and Senator Angela Williams (D-Denver).  In the House, the sponsors are Speaker Duran and Senate Assistant Minority Leader Cole Wist (R-Centennial).

The bill was heard by the Senate Business, Labor and Technology Committee on February 8^th.  After being amended on an unanimous vote, the Committee passed the bill on a six-to-one vote and sent it to the Senate Appropriations Committee.  Only Democrat Senator Cheri Jahn (Wheat Ridge) voted against the bill.

Because of the sponsors, statehouse participants give the bill the best chance of being passed by the legislature and sent to Governor John Hickenlooper (D) for his signature.

As introduced, SB-45 is summarized in the following way on the legislature’s Web site:

In a construction defect action in which more than one insurer has a duty to defend a party, the bill requires the court to apportion the costs of defense, including reasonable attorney fees, among all insurers with a duty to defend. An initial order apportioning costs must be made within 90 days after an insurer files its claim for contribution, and the court must make a final apportionment of costs after entry of a final judgment resolving all of the underlying claims against the insured. An insurer seeking contribution may also make a claim against an insured or additional insured who chose not to procure liability insurance for a period of time relevant to the underlying action. A claim for contribution may be assigned and does not affect any insurer’s duty to defend.

SB-155

SB-155, “Statutory Definition of Construction Defect,” is sponsored by two Republicans, Senator Jack Tate (Centennial) and Representative Lori Saine (Dacono).  Here’s the introduced bill’s description:

The bill separately defines and clarifies the term ‘construction defect’ in the ‘Construction Defect Action Reform Act’.

The bill was assigned to the Senate Business, Labor and Technology Committee.  The bill’s Fiscal Note summarizes the bill this way:

Summary of Legislation

The bill defines the term “construction defect” to mean a defect in the design or construction of any improvement to real property that causes damages to or the loss of use of personal property, or causes personal injury.

More Information

For more information on the issue and the legislation, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.

CACI Board Gives “Conceptual Support” to Transportation Funding Bill, HB-1242

Yesterday, the CACI Board of Directors voted to give “conceptual support” to HB-1242, the bipartisan bill advanced by House and Senate leaders to address long-term transportation funding.

The bill is the product of more than half-a-year of negotiations between Democrat House Speaker Crisanta Duran (Denver) and Republican Senate President Kevin Grantham (Canon City), other legislators and interested parties, including CACI’s Loren Furman, Senior Vice President, State and Federal Relations.

The introduced bill will likely be highly amended as it advances through interested parties various committees and the two chambers.

The CACI Board agreed that it will monitor the bill’s evolution and, should the final product be approved by the legislature, the Board will then assess the referendum to determine whether or not CACI will support its approval by the voters at the November ballot.

The 20-year bill would increase the state sales tax from 2.9 percent to 3.52 percent to generate almost $700 million per year.  The proposal would use the revenue stream from the sales tax increase to allow the issuance of $3.5 billion in bonds to quickly kick-start priority projects.

In addition to the two leaders, the sponsors of 40-page HB-1242 include the chair of each chamber’s transportation committee: Representative Diane Mitsch Bush (D-Steamboat Springs) and Senator Randy Baumgardner (R-Hot Sulfur Springs).

The bill, assigned to the House Transportation and Energy Committee, is scheduled for a hearing on Wednesday, March 22^nd, when the Committee convenes at 1:30 p.m. in Room 112 at the State Capitol.  A fiscal note has not yet been issued for the bill.

Here’s the bill summary:

Section 15 of the bill requires a ballot question to be submitted to the voters of the state at the November 2017 statewide election that seeks approval for the state to temporarily increase the rate of the state sales and use tax for 20 years beginning in 2018. If the voters approve the temporary sales and use tax rate increase, the new revenue generated is allocated solely for transportation infrastructure funding purposes, with specific projects to be funded required to be included in the 2017 ballot information booklet provided to the voters of the state, as follows:

• $300 million annually to the state highway fund for use by the department of transportation (CDOT); and
• Of the remaining new revenue:
• 70% to counties and municipalities in equal total amounts; and
• 30% to a newly created multimodal transportation options fund (fund).
• If the voters approve the temporary state sales and use tax rate increase:
• CDOT may issue up to a specified amount of transportation revenue anticipation notes (TRANs) for the purpose of funding transportation projects that are part of CDOT’s strategic transportation investment program and are on CDOT’s priority list for funding and the transportation commission must covenant that amounts it allocates on an annual basis to pay TRANs shall be paid: First, from $50 million from any legally available money under its control other than the new sales and use tax revenue; next, from the new sales and use tax revenue; and last, if necessary, from any other legally available money under its control any amount needed for payment of the TRANs until the TRANs are fully repaid;
• The revenue allocations to counties and municipalities are further allocated to each county and municipality in accordance with certain existing statutory formulas used to allocate highway users tax fund (HUTF) money to each county and municipality;
• The existing statutory requirement that at least 10% of the sales and use tax net revenue and other general fund revenue that may be transferred or appropriated to the HUTF and subsequently credited to the state highway fund must be expended for transit purposes of transit-related capital improvements is repealed;
• A transportation options account and a pedestrian and active transportation account are created in the fund and the transportation commission is required to designate the percentages of fund revenue to be credited to each account subject to the limitations that for any given fiscal year no more than 75% of the revenue may be credited to the transportation options account and at least 25% of the revenue must be credited to the pedestrian and active transportation account;
• A multimodal transportation options committee of gubernatorial appointees representing transit agencies, transportation planning organizations, local governments, and CDOT is created as a type 1 agency within CDOT for the purpose of allocating the money in the transportation options account of the fund for transportation options projects throughout the state. Under the supervision and guidance of the committee, the transit and rail division of CDOT is required to solicit, receive, and evaluate proposed transportation options projects and propose funding for interregional transportation options projects. Any transportation options project receiving funding from the transportation options account of the fund must also be funded by at least an equal total amount of local government, regional transportation authority, or transit agency funding.
• CDOT is required to allocate the money in the pedestrian and active transportation account of the fund for projects for transportation infrastructure that is designed for users of nonmotorized mobility-enhancing equipment;
• Transfers of 2% of general fund revenue to the HUTF that are scheduled under current law to be made for state fiscal years 2017-18, 2018-19, and 2019-20 are eliminated;
• The state road safety surcharges imposed on motor vehicles weighing 10,000 pounds or less are reduced for the same period during which the rates of the state sales and use taxes are increased. The resulting reduction in state fee revenue is taken entirely from the share of such fee revenue that is kept by the state so that county and municipal allocations of such revenue are not reduced.
• CDOT must annually report to the joint budget committee, legislative audit committee, house transportation and energy committee, and senate transportation committee regarding its use of TRANs proceeds and must post the reports and certain user-friendly project-specific information on its website; and
• The transportation revenue anticipation notes citizen oversight committee is created to provide oversight of the expenditure by the department of the proceeds of additional TRANs. The committee must annually report to the transportation legislation review committee regarding its activities and findings.

For more information about transportation funding and HB-1242, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.

NAM, CACI Honor U.S. Sen. Gardner With Manufacturing Legislative Excellence Award

Senator Cory Gardner and Chuck Berry, CACI

Each year the National Association of Manufacturing (NAM) looks at legislative issues before Congress and identifies which ones are key to a bright and productive manufacturing sector  – as well as flagging harmful bills which could create unnecessary or burdensome reporting, redundant layers of regulation, as well as bills which pick winners and losers in our economy.  Based on the key legislation reviewed and identified by the NAM, votes by all members of Congress are weighed against this matrix.  We are pleased to announce that U.S. Senator Cory Gardner supported manufacturing priorities 87% of the time.

CACI is proud to recognize Senator Gardner’s legislative efforts!  Through his voting record, he has proven time and again that he is a friend of Colorado’s businesses, workers and a true partner in protecting our state’s growing business environment.  This is the second time as a U.S. Senator that Gardner has been honored with this award, and his fourth while as U.S. Representative for the Colorado Fourth District.

The NAM awards members of Congress with the Manufacturing Legislative Excellence Award when support reaches levels of at least 70% on key or targeted votes.  Click here to find the key Senate and House voting lists.  Other members of the Colorado Congressional Delegation receiving this award are:

Rep. Mike Coffman (R-CO-6) – 93%

Rep. Doug Lamborn (R-CO-5) – 89%

Rep. Scott Tipton (R-CO-3) – 86%

Rep. Ken Buck (R-CO-4) – 80%

U.S. Senator Michael Bennet was 3% short of also receiving the award.

Colorado Energy Office Chief Speaks to CACI Energy and Environment Council

The CACI Energy and Environment Council, at its meeting Tuesday, heard a presentation by Kathleen Staks, Executive Director of the Colorado Energy Office.  Staks was appointed to the position in January by Governor John Hickenlooper.

Staks told the Council that the Office’s funding expires June 30^th and renewal of its funding by the legislature is her top priority.  She noted that the mission of the Office was expanded by the legislature in 2012 to cover energy resources.  She reviewed in detailed the various programs of the Office, including energy efficiency, transportation, alternative energy sources and education and communication.

Here is a summary of the Office’s activities and programs:

Energy Performance Contracting: 146 county, municipal, special districts across 75% of counties have used EPC to finance energy performance improvements. 194 projects completed providing over $500 million leveraged private investment and $31 million in annual energy savings.

Energy Savings for Schools: Provides rural and small schools energy and water audits, technical support to identify and implement priority projects, and assistance in securing financial resources.

Agricultural Energy Efficiency: Provides energy audits, technical assistance, and helps secure financial resources for dairies, powered irrigators, greenhouses, and cold storage facilities. CEO secured a $1.6 million grant from USDA for program participants. Program will generate more than $4.5 million in savings for participants.

Commercial Property Assessed Clean Energy (C-PACE): Program facilitates private financing energy and water improvements in commercial properties. 14 counties have opted into the program which gives access to 58% of commercial buildings.

Charge Ahead Colorado: Funded from electric vehicle registration fees, this program has provided competitive grants for 129 electric vehicle charging stations.

Weatherization Assistance Program: has served 14,173 eligible households (~2,800/yr) across every county in the state. It has saved clients more than $6.7 million with an average annual savings of $200-$500 per household.

ALT Fuels Colorado: Federally funded program has provided grants for 14 compressed natural gas fueling stations across major transportation highways, including connecting the entire I-25 corridor.

Hydropower: Efforts in streamlined state/federal permitting and technical guidance have led to over 20 MW installed and more than 10 MW additional filings for exemptions at FERC. Projects range from municipal water conduit, pressurized irrigation, dams, and ditches.

Save-the-Date: Next CACI Federal Policy Council is April 11th

Put these dates on your calendar for the rest of 2017:

• June 6^th
• July 18^th
• August 9^th – CACI Congressional Luncheon
• October 3^rd

If you have any questions, ideas or suggestions about federal issues, please contact CACI Federal Policy Director Leah Curtsinger at (303) 866-9641.

CACI's Legislative Agenda

Below is a list of bills and their status on which CACI Policy Councils and the Board of Directors have taken positions.  For more information on the bills, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.