2014 Maryland General Assembly Passes Bills Affecting Construction Industry

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A number of bills were passed during the Maryland General Assembly’s 2014 legislative session that will impact certain sectors of the construction industry. Ober|Kaler has put together brief summaries of certain key bills.

House Bill 727 / Senate Bill 232 (Procurement - Prevailing Wage)

This bill expands the application of the State’s prevailing wage law to more school construction projects. The new law requires projects costing more than $500,000 and receiving more than 25% of their funding from the State to pay the prevailing wage rate. Previously, the prevailing wage law only applied if the State paid for at least 50% of a project’s cost. By reducing the State’s funding share requirement from 50% to 25%, virtually all school construction contracts valued at more than $500,000 will be subject to the prevailing wage rate. The University System of Maryland, Morgan State University, St. Mary’s College of Maryland, and Maryland Stadium Authority are all exempt from the prevailing wage law. The bill has been approved by the Governor, and will take effect on July 1, 2014. The bill, however, will apply only to procurement contracts executed on or after that date.

House Bill 295 (Maryland Minimum Wage Act of 2014)

This administration bill requires employers in Maryland to pay a minimum wage of $10.10 per hour by July 1, 2018. The bill incrementally increases the State’s minimum wage during that time as follows: from the current $7.25 an hour to $8.00 on January 1, 2015; to $8.25 on July 1, 2015; to $8.75 on July 1, 2016; to $9.25 on July 1, 2017; and finally to $10.10 on July 1, 2018. The bill has been approved by the Governor, and will take effect on July 1, 2014.

House Bill 878 (State Highway Administration - Compost & Compost-Based Products)

This bill establishes the use of compost and compost–based products in State highway construction projects as a best management practice for certain pollution mitigation strategies, including (1) erosion and sediment control practices identified in the most recent Maryland Standards and Specifications for Soil Erosion and Sediment Control and (2) post-construction stormwater management practices identified in the Maryland Department of the Environment’s most recent Maryland Stormwater Design Manual. Under the bill, the State Highway Administration (SHA) must establish a specification for acquiring and using compost and compost-based products in these two areas by December 30, 2014. The SHA also must develop recommendations for maximizing the use of compost as a recycled material in State highway construction projects. The bill has been approved by the Governor, and will take effect on July 1, 2014.

House Bill 947 / Senate Bill 401 (Building Codes - Balcony Railing Inspections)

This bill establishes that political subdivisions of the State, other than Baltimore City, must require periodic inspections of certain multifamily dwellings with balcony railings that are primarily constructed of wood at least once every five years to ensure that the railings meet the applicable local housing code or the Minimum Livability Code, which incorporates the 2012 International Property Maintenance Code. For Baltimore City, the bill prohibits the renewal of a multifamily dwelling license unless the applicant demonstrates that a professional inspector has ensured the balcony railings meet the applicable City codes. Under the bill, a multifamily dwelling is defined as a property containing two or more dwelling units, including an apartment house, boarding house, dormitory, fraternity or sorority house, hotel or motel, convent, monastery, or vacation time-share property. The bill does not apply to condominiums or cooperative housing corporations. The bill has been approved by the Governor, and will take effect on October 1, 2014.

House Bill 1168 (Electricity - Certificate - Wind Turbines)

This bill prohibits the Public Service Commission (PSC) from approving certificates of public convenience and necessity for the construction of wind-powered generating stations with wind turbines exceeding specified heights within a 56-mile radius of the Patuxent River Naval Air Station before July 1, 2015. This area covers about 3,875 square miles (or almost 40% of the State’s total land area). Height requirements will be determined by regulations adopted by the PSC in conjunction with the Commander of the Naval Air Warfare Center Aircraft Division. The bill may not be construed to affect any wind-powered generating station where (1) construction began before March 10, 2014 and (2) a Maryland Water Quality Financing Administration loan has been paid to a manufacturer of wind–powered generating stations to initiate construction of the station. The bill will take effect on June 1, 2014, unless vetoed by the Governor.

Senate Bill 259 (Agriculture - Easements - Renewable Energy Generation Facilities)

This bill allows property owners to request approval from the Maryland Agricultural Land Preservation Foundation (MALPF) for land subject to an agricultural easement to be used for renewable energy generation under specified circumstances. The bill also allows MALPF to approve amendments to agricultural easements so that the land can be used for renewable energy generation. Any wind turbine facilities constructed under this bill may not exceed certain height requirements if they are within a 56-mile radius of the Patuxent River Naval Air Station. The bill has been approved by the Governor, and will take effect on July 1, 2014. The bill applies to any easement acquired by MALPF before, on, or after the effective date.

House Bill 207 (State Capital Projects - High Performance Buildings)

This administration bill expands the definition of a high-performance building to include any building that complies with a nationally recognized and accepted green building standard that is (1) reviewed and recommended by the Maryland Green Building Council and (2) approved by the Secretaries of Budget and Management and General Services for Maryland. Legislation passed in 2008 required many new/renovated State buildings and new school buildings to be constructed as high performance buildings, subject to a waiver process. In addition to the waiver process, the law only applied to new or renovated State buildings that are at least 7,500 square feet and are built or renovated entirely with State funds. Under the law, renovations must include the replacement of HVAC, electrical, and plumbing systems, and must retain the building shell. Unoccupied buildings, such as warehouses, garages, maintenance facilities, transmitter buildings, and pumping stations, are exempt. The bill has been approved by the Governor, and will take effect on October 1, 2014.

House Bill 553 (Energy-Efficient Home Construction Loan Program)

This administration bill creates the Energy-Efficient Home Construction Loan Program, which will provide low interest loans to those who develop and build low-energy and net-zero homes in Maryland. A low-energy home is one that achieves a Home Energy Rating System index of 50 or lower, which equates to a home that is 50% more efficient than a standard new home. A net-zero home is one designed to produce an amount of energy in one year that is equal to the amount of energy the home uses in one year. Interest rates for the loans may be as low as 0%, or as high as is reasonable to make a project viable. The program will be administered by the Department of Housing and Community Development. The bill has been approved by the Governor, and will take effect on July 1, 2014.

House Bill 202 / Senate Bill 186 (Clean Energy Loan Programs - Private Lenders)

This bill allows private lenders to provide capital for loans to commercial property owners under local property-assessed clean energy (PACE) loan programs. PACE loans help property owners finance expensive clean energy improvements over time, allowing responsibility for the financing payments to be tied to the property instead of to the property owner. Some local governments, however, had concerns about the legality of using property tax billing and collection mechanisms to recover payments for private loans for energy efficiency improvements. Under the new law, which addresses those concerns, a county or municipality may collect loan payments owed to private lenders through a surcharge on the owner’s property tax bill, provided that any holder of a mortgage or deed of trust on a property that is to be improved through a PACE loan has given express consent. The bill has been approved by the Governor, and will take effect on October 1, 2014.

House Bill 742 / Senate Bill 600 (Regional Institution Strategic Enterprise Zone Program)

This bill establishes the Regional Institution Strategic Enterprise (RISE) Zone Program in the Maryland Department of Business and Economic Development (DBED). Under the new law, qualified institutions, together with a county, municipal corporation, or economic development agency of the county/municipal corporation, may apply to DBED to designate an area as a RISE zone. Business entities that locate in the RISE zone are then entitled to a property tax credit, an income tax credit, and priority consideration for assistance from the State’s economic development and financial assistance programs. Qualified institutions include: (1) institutions of higher education (public and private four-year institutions and community colleges); (2) non-profit organizations affiliated with federal agencies; or (3) regional higher education centers. The bill has been approved by the Governor, and will take effect on June 1, 2014.

House Bill 510 (Sustainable Communities Tax Credit Program)

This administration bill extends the termination date of the Sustainable Communities Tax Credit Program through fiscal year 2017 for commercial and owner-occupied residential property rehabilitations. The bill also authorizes the Maryland Historical Trust, starting on January 1, 2015, to award up to $4 million in tax credits to certain small commercial projects. A qualifying project involves the rehabilitation of a structure primarily used for commercial, income-producing purposes if: (1) the project’s qualified rehabilitation expenditures do not exceed $500,000; and (2) the structure is located within a sustainable community. Eligible projects include mixed-use commercial/residential buildings; however, projects used solely for residential purposes do not qualify. The bill has been approved by the Governor, and will take effect on June 1, 2014.

House Bill 876 / Senate Bill 736 (Property Tax Credit for Historic or Heritage Properties)

This bill alters the calculation of the local property tax credit for restorations and rehabilitations of historic and heritage properties in Baltimore City. On or after October 1, 2014, for purposes of calculating the property tax credit, the full cash value of the property must be determined – both before and after the improvements – by a licensed professional appraiser selected by the Mayor and City Council. The bill has been approved by the Governor, and will take effect on June 1, 2014.

House Bill 6 (Maryland Home Improvement Commission - Guaranty Fund Claims)

This administration bill raises the maximum claim amount against the Home Improvement Guaranty Fund for which the Maryland Home Improvement Commission may issue a proposed order without a hearing from $5,000 to $7,500. The bill also increases the time that a contractor has to reimburse the fund for claims paid out on its behalf from 30 to 60 days. The bill has been approved by the Governor, and will take effect on July 1, 2014.

     
 

On March 6, 2014, we alerted you that HB1488, if passed, would require a bidder on a State contract to pay the State up to 5% of the value of the contract on which he bid, if that bidder unsuccessfully appeals to the Board of Contract Appeals from the denial of the bid protest by a State unit. We are pleased to report that the bill was officially withdrawn today by its sponsors after the Health and Government Operations Committee issued an unfavorable report. The bill garnered no support in the committee where 20 voted to issue an unfavorable report, and 3 were excused from voting. No one voted in favor of the bill.

Although the bill is dead this year, since it was sponsored by the administration, we expect a modified version to be introduced next year. We will advise you if that occurs.

 

Topics:  Construction Contracts, Construction Workers, Contractors, Prevailing Wages, Procurement Guidelines, Subcontractors

Published In: Construction Updates, Energy & Utilities Updates, Commercial Real Estate Updates, Residential Real Estate Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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