2018 California Construction Law Update

by Wendel, Rosen, Black & Dean LLP
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The California State Legislature introduced 2,495 bills during the first year of the 2017-2018 Legislative Session. Of these, 859 were signed into law.

While much political attention was focused on several California laws that could be viewed as California’s rebuke of Washington, including California’s legalization of marijuana, enactment of “sanctuary state” legislation, and bills focused on climate change, 2017 also saw the enactment of a package of bills intended to address the state’s housing affordability crises (for a great summary of these bills see Wendel Rosen’s Landuse Group’s recent article Slate of New Housing Bills Takes Effect January 1, 2018), as well as a range of other bills of interest to the construction industry including bills related construction financing, alternative project delivery methods, and solar construction.

Each of the bills discussed below took effect on January 1, 2018, except as otherwise stated.

Contractors

AB 534 – Prohibits a mechanics lien from being recorded against any other property of an owner in a common interest development on which work was performed unless consent was provided by that owner or that owner made a request for labor or finishing of materials or services. However, permits the recording of a mechanics lien against another owner in a common interest development where emergency repairs are made. Permits the owner of a separate interest in a common interest development to remove a mechanics lien by paying a mechanics lien claimant a proportional fraction of the total sum secured by the mechanics lien or to record a lien release bond.

AB 1278 – Revises requirements related to the notification to the Contractors State License Board of an unsatisfied judgment, bonds for the judgment and suspension for failure to comply. Provides that if a judgment is entered against a contractor, the qualifier is automatically prohibited from serving as a qualifier or personnel of record on another license until the judgment is satisfied.

AB 1357 – Permits C-39 roofing contractors to perform repairs pursuant to a roof inspection for purposes of providing a roof certification.

SB 486 – Authorizes the Contractors State License Board (CSLB) to issue a letter of admonishment to an applicant, licensee, or home improvement registrant instead of issuing a citation if, upon investigation, the CSLB has probable cause to believe that a licensee, applicant or registrant has committed acts or omissions that are grounds for denial, suspension, or revocation of a license or registration.

Public Works Projects

AB 92 – Extends until January 1, 2023, the limitation by public entities, direct contractors and subcontractors to withhold more than 5 percent retention on public works projects unless a specific finding is made by the public entity that a higher retention is required.

AB 1223 – Requires state agencies, within 10 days of making a construction contract payment on projects of $25,000 or more, to post on the Internet the name of the construction contractor or company paid, the date the payment was made or the date the state agency transmitted instructions to the controller or other payer to make payment, the payment application number or other identifying information, and the amount of the payment.

Prevailing Wages, Apprentices, and Workers’ Compensation

AB 55 – Effective July 1, 2018, adjusts the time period from two to three years for a worker to have completed at least 20 hours of approved advanced safety training at high hazard facilities to qualify as a “skilled journeyperson” for purposes of performing this type of work.

AB 199 – Expands the definition of private residential projects exempt from the payment of prevailing wages to include projects built pursuant to an agreement with a successor agency to a redevelopment agency.

AB 1066 – Expands the definition of public works for purposes of paying prevailing wages to include tree removal work.

AB 1701 – For contracts entered into on or after January 1, 2018, makes direct contractors involved in the erection, construction, alteration, or repair of a building, structure ,or other work, liable for wages, fringe and other benefit payments or contributions (including interest incurred by a subcontractor of any tier), except penalties or liquidated damages.

SB 189 – Effective July 1, 2018, expands the exception to the requirement that employees be covered by workers’ compensation insurance to include officers and directors who render service for pay who (1) own at least 10 percent of the issued and outstanding stock; or (2) own at least 1 percent of the issued and outstanding stock if that officer or director’s parent, grandparent, sibling, spouse, or child owns at least 10 percent of the issued and outstanding stock, the officer or director is covered by a health care service plan or health insurance policy, and executes a written waiver.

SB 418 – Revises the definition of skilled and trained workforce by providing that: (1) for work performed on or after January 1, 2018, at least 40 percent of the skilled journeypersons are graduates of an apprenticeship program, with the exception certain occupations; (2) for work performed on or after January 1, 2019, at least 50 percent of the skilled journeypersons are graduates of an apprenticeship program, with the exception of certain occupations; and (3) for work performed on or after January 1, 2020, at least 30 percent of the skilled journeypersons are graduates of an apprenticeship program, with the exception of certain occupations.

Alternative Project Delivery

AB 115 – Extends the authority of the California Department of Transportation to use the construction manager/general contractor (CM/GC) project delivery method, which was originally limited to no more than 12 projects, to an additional 12 projects. Expands the use of the CM/GC project delivery method by regional transportation agencies to railroad grade separations and bridge rehabilitations and replacements in Riverside County. Permits Alameda, Los Angeles, Riverside, San Bernardino, San Diego, Solano and Yuba Counties to use the cost-plus-time bidding procedure for certain projects.

AB 851 – Extends the authorization of counties to utilize construction manager at-risk (CMAR) project delivery method on projects exceeding $1 million from January 1, 2018, to January 1, 2023. Provides that CMs shall not be prequalfied or shortlisted unless the CM certifies that the CM and its subcontractors of every tier will use a skilled and trained workforce. Authorizes the City of San Diego to use the CMAR project delivery method and authorizes the Santa Clara Valley Water District to use the design-build method of project delivery.

AB 994 – Authorizes the Beach Cities Health District to use the design-build project delivery method until January 1, 2023.

SB 373 – Authorizes the Stanislaus Regional Water Authority to use the design-build procurement process for its Regional Surface Water Supply Project.

SB 622 – Authorizes bridge and highway districts to use informal bidding for construction, repair, maintenance and alteration work with an estimated expenditure that does not exceed $50,000.

SB 793 – Authorizes the Peninsula Health Care District, Midpeninsula Regional Open Space District and Santa Clara Valley Open-Space Authority to use design-build process for construction of facilities or buildings. Exempts the Midpeninsula Regional Open Space District and Santa Clara Valley Open-Space Authority from the minimum project limitation of $1 million. Authorizes the Counties of Alameda, Los Angeles, Riverside, San Bernardino, San Diego, San Mateo, Solano and Yuba to select bidders on the basis of bet value for construction projects in excess of $1 million but not to exceed $3 million, adjusted annually by the California Consumer Price Index, through January 1, 2020.

School Construction

AB 203 – Requires the Department of Education, in establishing standards for school districts to ensure that the design and construction of school facilities are educationally appropriate and promote school safety, to provide for design flexibility by school districts. Requires the Department of Education, Division of the State Architect, and Office of Public School Construction, on or before July 1, 2018, to submit a report to the State Legislature on streamlining their application processes.

AB 618 – Permits school districts to set the monetary threshold by which they are authorized to use job order contracting. Prohibits contractors retained by a school district to assist in the development of job order contract documents from bidding on job order contracts or participating in the preparation of a bid with any job order contractor. Authorizes community college districts to use job order contracting through January 1, 2022.

AB 1082 – Authorizes electrical corporations to file with the Public Utilities Commission by July 30, 2018 a pilot program proposal for the installation of vehicle charging stations at school facilities and other educational institutions.

Transportation

AB 1282 – Requires the Secretary of Transportation, in consultation with the Secretary of the Natural Resources Agency, to establish a Transportation Permitting Task force to develop a process for early engagement in the development of transportation projects, establish reasonable deadlines for permit approvals, and provide for greater certainty of permit approval requirements by April 1, 2018, and to prepare and submit a report by December 1, 2019.

Project Funding

AB 56 – Revises the definition of “public development facilities” under the Bergeson-Peace Infrastructure and Economic Development Act to mean real and personal property, structures, conveyances, equipment, thoroughfares, buildings, and supporting components thereof, excluding any housing, that are directly related to providing housing-related infrastructure including city streets, drainage, water supply and flood control, etc.

AB 560 – Authorizes the State Water Resources Control Board to use funds from the Safe Drinking Water State Revolving Fund to provide grants or revolving fund loans for the design and construction of projects in service areas that qualify as severely disadvantaged communities.

SB 3 – Enacts the Veterans and Affordable Housing Bond Act of 2018, which, if adopted by voters in teh November 2018 general election, would authorize the issuance of $4 billion in bonds for veterans and affordable housing.

SB 5 – Authorizes, upon approval by the voters, the issuance of $4 billion in bonds to finance drought, water, parks, climate, coastal protection and outdoor access programs, including construction.

Environmental, Solar and Climate Change

AB 28 – Provides that the State of California consents to jurisdiction by the federal courts with regard to compliance, discharge, or enforcement of environmental review and clearance under U.S. Department of Transportation’s surface transportation project delivery pilot program.

AB 262 – Requires the Department of General Services, by January 1, 2019, to publish in the State Contracting Manual, a maximum acceptable global warming potential for “eligible materials,” defined as carbon steel rebar, flat glass, mineral wool board insulation and structural steel. Requires, for public works contracts entered into on or after July 1, 2019, that an awarding agency require a successful bidder to submit an Environmental Product Declaration for eligible materials.

AB 634 – Prohibits common interest development associations from prohibiting the installation or use of a rooftop solar energy system on the roof of a building in which an owner resides or on a garage or carport adjacent to a building that has been assigned to an owner for his or her exclusive use.

AB 733 – Authorizes enhanced infrastructure financing districts established by cities and counties to finance projects that enable communities to adapt to the impacts of climate change.

AB 797 – Requires the Public Utilities Commission to reserve 50 percent of the solar water heating program for the installation of solar thermal systems in low-income residential housing or in buildings in disadvantaged communities.

AB 1070 – Requires the Contractors State License Board in collaboration with the Public Utilities Commission to develop and make available on the Internet a disclosure document that provides consumers with accurate, clear, and concise information regarding the installation of solar energy systems by January 1, 2018, and requires that this disclosure document be provided to consumers by solar energy systems companies, including  for solar energy systems utilizing PACE financing.

AB 1414 – Extends the prohibition of building permit fees for rooftop solar systems from exceeding certain maximum amounts unless the  local agency provides substantial evidence of reasonable need for higher fees from January 1, 2018 to January 1, 2025.

SB 242 – Requires PACE program administrators to orally confirm that at least one owner of the property has a copy of specified documents and forms, to provide an oral confirmation of key terms of an assessment contract, and to record such oral confirmations.

SB 541 – Requires the State Water Resources Control Board, in consultation with regional water quality control boards, and the Division of the State Architect to recommend best design and use practices for stormwater and dry weather runoff capture practices by January 1, 2019.

Americans with Disabilities Act

AB 1148 – Clarifies ent of existing law regarding the requirement that commercial property owners or lessors state in every lease or rental agreement executed on or after January 1, 2017, whether or not the premises have undergone inspection by a Certified Access Specialist (CASp), applies only to commercial properties rented or leased to persons operating, or intending to operate, a place of public accommodation or a facility to which the general public will be invited.

California Fires

AB 367 – Permits the issuance of a building permit for a residence to be supplied by a water hauler, bottled water, a water-vending machine or retail water facility if the residence is being rebuilt because of a fire.

Photo credit: CC0 Public Domain

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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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