2022 California Construction Law Update

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It’s been a trying year as we approach the end of 2021. From the pandemic approaching nearly two years to concerns regarding climate change to the impact of inflation on everything from the cost of groceries to housing affordability.

During the first half of the 2021-2022 legislative session, a total of 2,421 bills were introduced in 2021 of which 836 made it to the Governor’s desk and 770 were signed into law. This is up from the 2,223 bills introduced in 2020 of which 428 bills made it to the Governor’s desk and 372 were signed into law, due in large part, to the fact that legislators were not required to shelter-in-place as they were in 2020.

Not surprisingly, for the construction industry, many of the bills were focused on the hot topics of the year including housing affordability and climate change. However, there were also the typical changes to project delivery methods and a few changes to the Licensing Law.

Contractors

A.B. 938 – For home improvement contracts, changes the three-day right to cancel to a five-day right to cancel for consumers who are senior citizens.

A.B. 1023 – Clarifies that on public works projects contractors and subcontractors must furnish certified payroll records at least once every 30 days while work is being performed on a project and within 30 days after the final day of work performed on the project. The bill also specifies that certified payroll records must be furnished in electronic format on the website of the Department of Labor. The bill also provides that a contractor or subcontractor who fails to furnish certified payroll records is liable for a penalty of $100 per day not to exceed $5,000 per project.

A.B. 1561 – Eliminates the “A, B, C” test with respect to relationships between contractors and subcontractors for work performed before January 1, 2025 and provides instead that a subcontractor is deemed to be an independent contractor rather than employee under seven-part test if: (a) the subcontract is in writing; (b) the subcontractor is licensed by the CSLB and the work is within the scope of that license; (c) the subcontractor is domiciled in a jurisdiction that requires the subcontractor to have a business license or business tax registration and the subcontractor has a business license or business tax registration; (d) the subcontractor maintains a business location that is separate from the business or work location fo the contractor; (e) the subcontractor has the authority to hire and fire other persons to provide or to assist in providing the services; (f) the subcontractor assumes financial responsibility for errors or omission sin labor or services as evidenced by insurance, legally authorized indemnity obligations, performance bonds, or warranties relating to the labor or services provided; (g) the subcontractor is customarily engaged in an independently established business of the same nature as that involved in the work performed.

S.B. 297 – Establishes the Wade Kilpatrick Gas Safety and Workforce Adequacy Act of 2021 which provides for a civil penalty up to $100,000 against operators and excavators of subsurface installations who damage gas or hazardous liquid pipe subsurface installations that results in the escape of any flammable, toxic or corrosive gas or liquid.

S.B. 727 – For contracts entered into on or after January 1, 2022, extends the liability of a direct contractor for unpaid wages, fringe or other benefit payments or contributions including interest owed by a subcontractor to also include penalties and liquidated damages.

S.B. 757 – Includes solar energy systems within the definition of “home improvement” for purposes of the Home Improvement Act. The bill also authorizes home improvement salespersons to be employed by one or more home improvement contractors and requires home improvement salespersons to identify to the owner or tenant the business name and license number fo the contractor they are representing. Clarifies that the limitation on downpayment also applies to advance payment requests from any lender or financier for the performance or sale of home improvement goods or services.

Licensing

A.B. 569 – Increases the civil penalty limit that can be issued by the CSLB from $5,000 to $8,000 and enhanced civil penalty limit that the can be issued by the CSLB for unlicensed persons from $15,000 to $30,000 and would expand the enhanced civil penalty limit to contractors failing to secure workers’ compensation insurance when required.

A.B. 607 – Increases the license bond amount of construction contractors from $15,000 to $25,000 and qualifier bond from $12,500 to $25,000 beginning January 1, 2023.

A.B. 830 – Defines a responsible managing employee of a construction contractor as a an employee permanently employed by a contractor and working 32 hours per week or 80% of the total hours per week of the contractor’s regular Business hours, whichever is less. Requires the CSLB to develop an employment duty statement whereby a contractor, as a condition of licensure, provide detailed information on a qualifier’s duties and responsibilities for supervision of the contractor’s construction operations.

S.B. 826 – Authorizes C-22 Asbestos Abatement contractors to engage in asbestos-related work with an asbestos certification.

Climate Change

A.B. 137 – Establishes the Solar Energy System Restitution Program to be administered by the CSLB for the restitution to consumers of solar energy systems installed by contractors on single-family residences who violate the Licensing Law. Authorizes the Department of General Services to use the progressive design-build procurement process for three public works projects. Authorizes the Energy Commission to implement the Build Initiative for Low-Emissions Development Program Phase 2 program to incentivize the construction of new market-rate multifamily and single-family residential buildings as all-electric buildings or with energy storage systems.

S.B. 30 – Prohibits state agencies from designing or constructing state facilities connected to the natural gas grid. Prohibits state agencies from providing funding or other support for certain projects involving the construction of residential and nonresidential buildings connected to the natural gas grid.

S.B. 69 – Requires the State Energy Resources Conservation and Development Commission to gather or develop, and publish on its internet website, guidance and best practices to help building owners, the construction industry, and local governments to overcome barriers to electrification of buildings and installation of electric vehicle charging equipment. Authorizes the Energy Commission to award money under the Electric Program Investment Charge program for projects that will benefit electricity ratepayers and lead to technological advancements to reduce the costs of building electrification.

S.B. 369 – Establishes the Yolo Bypass Cache Slough Partnership Multibenefit Program to support the development and implementation of flood control projects within the Yolo Bypass and Cache Slough region.

Housing Affordability

A.B. 140 – Authorizes state public bodies to use moneys received from the Coronavirus State Fiscal Recovery Fund established by the federal American Rescue Plan Act of 2021 for new construction and developments. Authorizes the Department of Housing and Community Development to award a forgivable loan or grant to a qualified rental housing development to replace federal and state low-income housing credit equity. Requires the Department of Industrial Relations to establish and maintain a strategic enforcement unit focused on construction, alteration and repair projects.

A.B. 172 – Establishes the Community Care Expansion Program to award grants to preserve or expand capacity of residential adult and senior care facilities through the acquisition, construction or rehabilitation for property.

A.B. 687 – Authorizes the creation of the Western Riverside County Housing Finance Trust, a joint powers authority, for the purposes of funding hosing assisting the homeless population and families of extremely low, very low and low income within the County of Riverside.

S.B. 8 – Clarifies that, under the Housing Crisis Act of 2019, a “housing development project” incudes projects that involve no discretionary approvals, projects that involve both discretionary and non discretionary approvals, and projects that include a proposal to construct a single dwelling unit. Makes other clarifying changes under the Housing Crisis Act of 2019.

S.B. 9 – Requires certain proposed housing development containing no more than two residential units within a single-family residential zone to be considered ministerially, without discretionary review or hearing.

S.B. 10 – Authorizes local governments to adopt ordinances or zone any parcel for up to 10 units of residential density per peace, at a height specified in the ordinance, if the parcel is located in a transit-rich area or urban infill site.

S.B. 51 – Requires housing-related entities to provide an enforceable commitment to a selling agency that if construction is to be performed on surplus property being sold by a local agency that prevailing wages will be paid. The bill also requires housing-related entitles to include prevailing wage requirements in its contracts for construction work and to include requirements that direct contractors include prevailing wage requirements in their subcontracts for construction work.

S.B. 169 – Establishes the Higher Education Student Housing Grant Program to provide one-time grants for the construction of student housing or for the acquisition and renovation of commercial properties into student housing for the purpose of providing affordable, low-cost housing options for students enrolled in public postsecondary education.

S.B. 330 – Authorizes the Los Angeles Community College District to lease property to a nonprofit entity if the lease requires the nonprofit entity to construct buildings developed and operated as affordable housing for students or employees.

S.B. 478 – Prohibits local agencies from imposing a floor area ratio standard that is less than 1.0 on a housing project that consists of three to seven units, or less than 1.25 on a housing development project that consists of eight to ten units.

S.B. 791 – Establishes the California Surplus Land Unit within the Department of Community Development for the purpose of facilitating the development and construction of residential housing on local surplus land.

Technology

A.B. 41 – Requires the Department of Transportation, with respect to broadband deployment on department-led construction projects, to ensure that construction includes the installation of conditions capable of supporting fiber optic communication cables.

S.B. 4 – Requires the Governor’s Office of Business and Economic Development, known as “GO-Biz,” to coordinate with state and local agencies and national organizations to explore ways to streamline local land use approvals and construction permit processes for projects related to broadband infrastructure deployment and connectivity.

S.B. 156 – Establishes the Office of Broadband and Digital Literacy within the Department of Technology to over see the acquisition and management of $2 billion in contracts for the development, construction, operation and maintenance of a statewide open-access middle-mile broadband network. The bill would also authorize the use of job order contracting for the construction of the broadband network.

S.B. 378 – Requires local permitting agencies to allow micro trenching for the installation of underground fiber if the installation in the micro trench is limited to fiber.

Project Delivery Methods

A.B. 149 – Authorizes the Department of Transportation to us job order contracting for construction projects funded pursuant to the Clean California State Beautification Program of 2021.

A.B. 271 – Authorizes the Santa Clara Valley Water District to award contracts on a “best value” basis for any work on the Anderson Dam project.

A.B. 486 – Extends the requirement that lease-leaseback contracts for K-12 projects be based on a competitive solicitation process providing the best value to the school district be extended from July 1, 2022 to July 1, 2027.

A.B. 846 – Extends the job order contracting method for school districts and community college districts from January 1, 2022 to January 1, 2027.

A.B. 1499 – Extends the authorization of the Department of Transportation to utilize design-build procurement based on either best value or lowest responsible bid for up to 10 projects from January 1, 2024 to January 1, 2034.

S.B. 626 – Authorizes a pilot program whereby the Department of Water Resources is authorized to utilize the Construction Manager/General Contractor (CM/GC) project delivery method and design-build procurement method for up to 7 projects each through January 1, 2033.

Project Finance

A.B. 464 – Expands the list of facilities and projects that may be funded by an enhanced infrastructure financing district from the acquisition, construction or repair of industrial structures to commercial structures of small businesses and facilities of nonprofit community organizations which provide health, youth, homeless and social services.

S.B. 146 – Nominally reduces the amount of revenue bonds, notes and anticipation notes that the State Public Works Board may issue for the acquisition, design and construction of local jail facilities and adult local criminal justice facilities.

Miscellaneous

A.B. 712 – Increases the change order cap for the County of Los Angeles and Los Angeles County Flood Control District to $400,000 for contracts whose original cost exceeds $25 million and $750,000 for contracts whose original cost exceeds $50 million and provides for annual adjustment based on the California Consumer Price Index.

A.B. 414 – Abolishes the San Joaquin County Regional Facility Justice Facility Financing Agency, Orange County Regional Justice Facilities Commission, and ability of counties to establish county regional justice facilities financing agencies.

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