2013 Maryland General Assembly Passes Bills Affecting Construction Industry

by Baker Donelson

A number of bills were passed during the Maryland General Assembly's 2013 legislative session that will impact certain sectors of the construction industry. Ober|Kaler has put together brief summaries of certain bills from information supplied by the Maryland Department of Legislative Services.

Senate Bill 140 (Retention of Percentage of Contract as Security)

This bill reduces the allowable retainage amounts on construction contracts entered into by public bodies other than the State of Maryland (i.e., local governments). If a contractor has furnished 100% payment security and 100% performance security for a construction contract, a local government may not retain more than 5% of the total amount of the contract. The bill revises the current law, which permits a local government to retain up to 10% of the total amount of a construction contract during the first half of the contract and 5% thereafter. The bill brings local governments in line with the State with respect to retainage, as the State may not retain more than 5% of the total amount of construction contracts. The bill was approved by the Governor on April 9, 2013. The bill will take effect on July 1, 2013, but only applies to construction contracts awarded on or after that date.

Senate Bill 599 / House Bill 585 (Subcontractor Equal Access to Bonding Act of 2013)

This bill prohibits prime contractors that require subcontractors to provide bid, performance, or payment security on specified State contracts from imposing bonding requirements that are more stringent than what the State imposes on prime contractors. The bill also requires prime contractors to accept bonds submitted by subcontractors if the bond would be accepted by the State and if the bond is provided by either (1) a surety authorized to do business in Maryland or (2) the Maryland Small Business Development Financing Authority. The bill was approved by the Governor on May 16, 2013, and will take effect on July 1, 2013.

House Bill 560 (Public Private Partnerships)

This bill establishes a State policy for public-private partnerships (“P3s”) and authorizes certain State agencies, including the Department of General Services, the Maryland Department of Transportation, the Maryland Transportation Authority, and certain higher education institutions, to enter into them. P3s are a method for delivering public infrastructure assets using a long-term, performance-based agreement between an authorized State agency and a private entity where: (1) the private entity performs functions normally undertaken by the government, but the State agency remains accountable for the public infrastructure asset and its public function; and (2) the State may retain ownership of the public infrastructure asset while the private entity may be given additional decision-making authority in deciding how the asset is financed, developed, constructed, operated, and maintained over its life cycle.

The bill encourages P3s to address Maryland’s growing infrastructure needs and provides innovative financing options for them. P3s have been used in the past in Maryland, although sparingly because of the lack of a comprehensive State legislative and regulatory scheme. The bill creates Maryland’s first statewide policy on P3s and is aimed at increasing efficiency, predictability, and transparency to attract private investors. While transportation projects have traditionally been the focus of P3s, the bill applies to any capital facility or structure.

The bill allows a private entity to submit an unsolicited proposal to an authorized State agency and then allows the entity to participate in the competitive procurement process if the agency determines that the unsolicited proposal meets its needs. The bill also requires, among other things, that P3 agreements contain minority business enterprise participation goals, as established by the State, and that P3 projects comply with the State’s prevailing wage, living wage, environmental, non-discrimination, and anti-collusion laws. The bill was approved by the Governor on April 9, 2013, and will take effect on July 1, 2013.

House Bill 1515 (Transportation Infrastructure Act of 2013)

This bill, among other things, increases the sales tax on all motor fuel except aviation gasoline and turbine fuel, increases the vehicle registration fee surcharge, and requires the Maryland Transit Administration to increase base fare prices beginning in fiscal year 2015. The sales tax on motor fuel will be increased by three percent, phased in over three years between Fiscal Years 2014 – 2016. The bill was approved by the Governor on May 16, 2013; except for specified provisions, the bill takes effect on June 1, 2013.

Senate Bill 73 (Cargo – Length, Overhang, and Fastening Standards)

This bill requires vehicles carrying piling, poles, logs, or similar cargo that exceed 75 feet to carry a special oversize hauling permit from the State Highway Administration. The bill also repeals a current requirement for vehicles carrying such cargo loads to enclose the cargo entirely, providing instead that the loads comply with specified load-fastening requirements such as those set forth in Part 393.102(b) (securement systems) of the federal Motor Carrier Safety Regulations. The bill was approved by the Governor on April 9, 2013, and became effective immediately.

House Bill 1098 (Prevailing Wage Task Force)

The initial bill was introduced to require all public work projects of $500,000 or more that are funded in whole or in part with State money to pay a prevailing wage. The initial bill, however, was amended to create a task force instead to examine the State’s current prevailing wage law and how it applies to school construction projects. The task force must report its findings and recommendations to the Governor by December 31, 2013. The bill was approved by the Governor on May 2, 2013, and will take effect on July 1, 2013.

Senate Bill 47 / House Bill 191 (Purchase of American Manufactured Goods)

This bill creates a preference for American manufactured goods in State contracting by compelling public bodies of the State to require contractors and subcontractors to use or supply American manufactured goods when performing a contract either to build or maintain a public work or to buy or manufacture machinery or equipment to be installed at a public work site. The bill does not apply to “emergency life safety and property safety goods” – as defined in the bill. The bill also does not apply if the head of the public body determines that: (1) the price discrepancy between an American manufactured good and a similar foreign manufactured good is unreasonably high; (2) the American manufactured good is not available in sufficient quantities; (3) the quality of the American manufactured good is substantially less than the foreign manufactured good; and (4) the procurement of the American manufactured good is inconsistent with the public interest. The bill does not affect certain public bodies exempt from most provisions of State procurement law, including the University System of Maryland, Morgan State University, and St. Mary’s College of Maryland. The bill was approved by the Governor on May 16, 2013, and will take effect on October 1, 2013.

Senate Bill 969 / House Bill 1413 (Fire Protection and Prevention – Smoke Alarms)

This bill clarifies existing laws regarding smoke alarms in residential and nonresidential structures and specifies new technological and installation requirements. Clarifications relate to the type and location of smoke alarms in existing residential structures; a landlord or owner’s responsibility for the installation, repair, maintenance, and replacement of required smoke alarms; and a building permit applicant’s responsibility (or a general contractor’s responsibility if no building permit is required) for the installation of required smoke alarms in residential structures after July 1, 2013. The bill also requires that the placement of smoke alarms in existing residential structures be upgraded to comply with certain minimum specified standards by January 1, 2018, establishes requirements for the location of smoke alarms in all new residential units constructed after July 1, 2013, and requires that additional smoke alarm information be included in a specified disclosure form in a contract of sale for a single-family residential property. The bill was approved by the Governor on May 16, 2013, and will take effect on July 1, 2013.

Senate Bill 900 / House Bill 335 (Baltimore City – Payment in Lieu of Taxes Agreement – Economic Development Projects)

This bill expands Baltimore City’s authorization to enter into payment in lieu of taxes agreements for economic development projects located anywhere in Baltimore City. Under the current law, such agreements are only authorized for economic development projects in specified urban renewal areas in the City. The bill was approved by the Governor on May 16, 2013, will take effect on June 1, 2013, and applies to taxable years beginning after June 30, 2013.

Senate Bill 245 / House Bill 103 (School Buildings – Solar Technology – Design Development Documents)

This bill requires the Board of Public Works to adopt regulations mandating that design development documents submitted by local school boards to the Interagency Committee on School Construction for the construction or major renovation of public school buildings include an evaluation of the use of solar technology. If the school board’s evaluation determines that solar technology is not appropriate for a particular project, the board must submit a report explaining its determination. The bill was approved by the Governor on May 2, 2013, and will take effect on June 1, 2013.

House Bill 226 (Maryland Offshore Wind Energy Act of 2013)

This bill creates a “carve-out” for energy generated from offshore wind projects in the State Renewable Energy Portfolio Standing, beginning in 2017. This means that in 2017, and for every following year, State electricity sales must include an amount derived from offshore wind energy. The bill also creates an application and review process for proposed offshore wind projects by the Public Service Commission. A qualified offshore wind project means a wind turbine electricity generation facility (including associated transmission-related interconnection facilities and equipment) that: (1) is located in the Atlantic Ocean between 10 and 30 miles off the coast in an area designated for leasing by the U.S. Department of the Interior; (2) interconnects to the Pennsylvania, New Jersey, Maryland Interconnection, Inc. Interconnection Grid at a point located on the Delmarva peninsula; and (3) is approved by Public Service Commission. The bill was approved by the Governor on April 9, 2013, and will take effect on July 1, 2013.

House Bill 621 (Maryland Energy Administration – Regulated Sustainable Energy Contract Program)

This bill authorizes the Maryland Energy Administration to create a Regulated Energy Contract Program, which allows qualified contractors to provide residential renewable energy installations and energy efficiency measures to owners under regulated sustainable energy contracts of up to $30,000. The contracts may be recorded in land records and are enforceable by imposing a lien on the property. The Maryland Energy Administration must perform a feasibility study before implementing the program. The bill was approved by the Governor on May 16, 2013, and will take effect on July 1, 2013.

Senate Bill 750 / House Bill 769 (Maryland Building Performance Standards – Local Wind Design and Wind-Borne Debris Standards)

This bill prohibits local governments from adopting any amendments to the Maryland Building Performance Standards (the “MBPS”) that weaken the wind design and wind-borne debris provisions contained in the standards. Local governments are responsible for implementing and enforcing the MBPS. Currently, local governments may adopt local amendments to the MBPS, as long as the amendments do not weaken the energy conservation and efficiency provisions or certain automatic fire sprinkler system provisions. The bill adds to this current list a new prohibition on any amendments that weaken the wind design and wind-borne debris provisions. Thus, builders could face additional costs in having to adhere to wind design and wind-borne debris provisions in the MBPS that local governments may have previously been able to weaken by amendment. The bill was approved by the Governor on May 16, 2013, and will take effect on October 1, 2013.

House Bill 637 (Maryland-National Capital Park and Planning Commission – High Performance Buildings)

This bill requires that certain buildings owned by the Maryland-National Capital Park and Planning Commission (the “Commission”) be high-performance buildings and requires the Commission to use green building technologies in the construction or renovation of these buildings. High-performance buildings are ones that either meet or exceed the current version of the U.S. Green Building Council’s LEED silver rating or achieve at least a comparable rating from a nationally recognized sustainable development rating system. High-performance buildings must also meet the standards set forth in the High Efficiency Green Building Program adopted by the Maryland Green Building Council. Commission buildings that do not need to be constructed or renovated as high-performance buildings under the bill are: warehouse and storage facilities; garages; maintenance facilities; transmitter buildings; cabins, pavilions, and other structures intended for open air or rustic uses; buildings of historic significance; and other similar types of buildings, as determined by the Commission. The bill was approved by the Governor on May 16, 2013, and will take effect on October 1, 2013.

House Bill 766 (Severn River Watershed – Silt and Erosion Control – Certification)

This bill allows professional land surveyors and licensed landscape architects to certify that a developer’s plan to control silt and erosion is adequate prior to a grading or building permit being issued by Anne Arundel County or the City of Annapolis for property within the Severn River Watershed. Under current law, only a professional engineer can certify the adequacy of silt and erosion control plans for property in the Severn River Watershed. The bill conforms the certification process with that in effect in the rest of the State, where land surveyors and licensed architects are already able to certify the adequacy of silt and erosion control plans. The bill was approved by the Governor on April 9, 2013, and will take effect on October 1, 2013.

House Bill 347 (Professional Engineers – Firm Permits)

This bill requires that, after October 15, 2015, a corporation, partnership, or limited liability company must hold a permit issued by the State Board for Professional Engineers before the firm may operate a business through which engineering is practiced, except for specified circumstances relating to if the firm provides engineering services for itself or affiliated firms. The bill was approved by the Governor on May 16, 2013, and will take effect on October 1, 2013.

Senate Bill 280 (Landscape Architects – License Renewal – Continuing Professional Competency Requirement)

This bill requires the State Board of Landscape Architects to establish continuing professional competency requirements for licensed landscape architects. Licensees must now complete at least 24 hours of professional development activities in order to renew their licenses, except for the first renewal. The bill was approved by the Governor on May 16, 2013, will take effect on October 1, 2013, and will be phased in for licenses expiring before October 1, 2016.

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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