The legislation, House Bill 5466, sponsored by Representative Kurt Heise (R-Plymouth) amends Public Act 165 of 1966, which invalidates certain indemnity requirements in construction contracts, to do the following, effective March 1, 2013:
"Public entity" would mean the State; any public body corporate or nonincorporated public body within the State; or any agency of the State or public body. The term would include cities, villages, townships, counties, school districts, intermediate school districts, authorities, and community and junior colleges, and their employees and agents, including construction managers or other business arrangements retained by or contracting with the public entity to manage or administer the contract for the public entity. "Public entity" would not include State institutions of higher education.
Under the Act, a covenant, promise, agreement, or understanding in, or in connection with or collateral to, a contract or agreement relative to the construction, alteration, repair, or maintenance of a building, structure, appurtenance, and appliance, that purports to indemnify the promisee against liability for damages arising out of bodily injury or property damage caused by or resulting from the sole negligence of the promisee or indemnitee, is against public policy and is void and unenforceable.
It was believed that the Michigan Legislature intended to take up legislation to repeal prevailing wage requirements on school construction work during the "lame duck" legislative session this year. House and Senate leadership was rumored to have already agreed to pass the legislation repealing prevailing wage.
The Construction Association of Michigan took a position alongside AGC in opposition and was successful in defeating this legislation. It is believed that bills will be introduced again next year to repeal prevailing wage.
School Bond Loans
CAM joined several other interest groups in opposition that will reduce school construction across the state. The legislation was a top priority for the Department of Treasury and ultimately the Governor.
The School Bond Loan Legislation would set some limits on school bonding (SB 770, SB 771 and SB 772) was approved by the Senate on its final session day. SB 770 and SB 772 passed along party-line votes, 26-12, with Republicans in support of the legislation and Democrats in opposition. SB 771 only needed to be granted immediate effect by the chamber.
The series of bills would make the following revisions to the School Bond Loan Program:
Personal Property Tax Reform
Repealing PPT was a priority for the Governor, Speaker, and Majority LeaderThe plan approved Thursday does not provide communites with full revenue replacement.
That plan would phase out the industrial portion of the tax from 2016-22 with local governments receiving replacement of 80 percent of the revenue they lose, provided the lost revenue equals at least 2.3 percent of a local government's total property tax revenues. That 2.3 percent threshold was lowered from the previous level of 2.5 percent.
Local governments could then use a special assessment on industrial property to replace 100 percent of lost revenue for police, fire, and ambulance and, under an amendment from the House, jail operations.
As passed the House, the bills would also replace all lost school funding with use tax dollars.
But the replacement funds would come largely from the use tax, which requires voter approval in the August 2014 primary election to change its current distribution among state funds. Because all the bills are now tied to HB 6026 that makes that change, they all require voter approval for the PPT on industrial property to begin phasing out.
Left mostly untouched is the personal property tax on commercial and utility personal property.
However, some commercial personal property holders would get a break. Starting in the 2013-14 fiscal year, businesses with less the $40,000 in total commercial or industrial personal property in any one jurisdiction would not have to pay personal property tax to that jurisdiction.
All industrial personal property purchased after 2011 would become exempt in fiscal year 2015-16. Then industrial personal property would become exempt as it reaches 10 years old beginning in fiscal year 2015-16.
The bills would create a Metropolitan Area, essentially a statewide authority that would accept the use tax funds (between 1 to 1.5 cents of every 6 cents on the dollar of the tax) and redistribute them to qualifying communities.
Right To Work
As you know by now, Michigan has become the 24th state in the union to have a law barring workers with unionized employers from having to pay union dues or a fee.Â These bills exempt police and fire, however it will impact all other union shops.
Both bills (HB 4003 and SB 116) passed the Legislature on Tuesday and were signed into law by the Governor on December 11th.
The bills will become law 90 days after Sine Die, which will occur in roughly two weeks.Â It is expected that these bills will end up in court early 2013.
ALLOW FOR UPDATE TO UNIFORM CONSTRUCTION CODE EVERY 6 YEARS, RATHER THAN EVERY 3 YEARS
CAM was monitoring House Bill 4561 sponsored by Representative Joe Haveman (R-Holland) amends the Uniform Construction Code to increase the timeframe in which the director of the Department of Licensing and Regulatory Affairs mustupdate the code from not less than once every 3 years to not less than once every 6 yearsor more than once every 3 years.
The bill would amend the Single State Construction Code Act to do the following:
The bill also specifies that if the Michigan Residential Code were updated on a six-year cycle, use of a material, product, method of manufacture, or method or manner of construction or installation provided for in an interim edition of the International Residential Code would be authorized throughout Michigan and would have to be permitted, but could not be mandated, by an enforcing agency or its building official or inspectors. If a material, product, or method in the interim edition were used, however, the enforcing agency, official, or inspectors could require the use to comply with all applicable requirements in the interim edition.