BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 164|
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CONSENT
Bill No: AB 164
Author: Wieckowski (D), et al
Amended: 6/5/13 in Senate
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 6-0, 6/12/13
AYES: Wolk, Knight, Beall, DeSaulnier, Emmerson, Liu
NO VOTE RECORDED: Hernandez
ASSEMBLY FLOOR : 73-0, 5/16/13 - See last page for vote
SUBJECT : Infrastructure financing
SOURCE : American Subcontractors Association of California
DIGEST : This bill requires local governments' public-private
partnership agreements for fee-producing infrastructure projects
to include performance bonds and payment bonds.
ANALYSIS : The California Constitution grants laborers and
materials suppliers a mechanics lien on any property improved by
their labor or material (Article XIV, Section 3). A mechanics
lien gives laborers and suppliers a way to obtain, from a
property owner, the payment of debts resulting from labor or
materials used in construction on the property. The mechanics
lien law in the Civil Code generally specifies the obligations,
rights, and remedies of those involved in a construction project
SB 189, (Lowenthal, Chapter 697, Statutes of 2010).
Local governments may solicit proposals and enter into
CONTINUED
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agreements with private entities for the study, planning,
design, financing, construction, maintenance, rebuilding,
improvement, repair, or operation by private entities of
specific types of fee-producing infrastructure AB 2660 (Aguiar,
Chapter 1040, Statutes of 1996). Infrastructure financed by
these public-private partnership agreements is typically
constructed under contracts awarded by the private sector
entity, which does not need to require a payment bond. However,
the local government retains ownership of the real property
being developed, which means that mechanics liens are not an
available remedy for laborers and materials suppliers who work
on the project.
A performance bond protects a property owner from losses that
result from a direct contractor defaulting in the performance of
the contract. Existing law generally requires local governments
to obtain performance bonds from contractors on public works
projects. Existing law specifies elements that must be included
in an infrastructure financing agreement between a local
government and private entity, including provisions to ensure
security for the construction of the facility to ensure its
completion.
This bill requires that local governments' agreements with
private entities for the study, planning, design, financing,
construction, maintenance, rebuilding, improvement, repair, or
operation by private entities of specific types of fee-producing
infrastructure must include provisions to ensure:
Performance bonds as security to ensure completion of a
facility's construction.
Payment bonds to secure the payment of claims of
laborers, mechanics, and materialmen employed on the work
under the contract.
Comments
Because of their mixed public-private characteristics, some
infrastructure projects financed under a public-private
partnership agreement may not provide either mechanics liens or
payment bonds. This leaves subcontractors and suppliers on
these projects unsure that they will be paid for their work.
Inadequate security for completion of a public-private
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infrastructure project could leave a local government vulnerable
to covering the costs of work that isn't completed according to
the terms of a contract. This bill responds by requiring that
projects local governments build in partnership with private
entities must comply with statutory bonding requirements that
already apply to public works projects. This bill protects
laborers, materials suppliers, and local governments against
losses that could result from a private sector entity's decision
to cease work on an incomplete infrastructure project financed
pursuant to a public-private infrastructure agreement.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 6/12/13)
American Subcontractors Association of California (source)
Air Conditioning Trade Association
Association of General Contractors
Building Industry Credit Association
California Chapter of the National Electrical Contractors
Association
California Concrete Contractors Association
California Landscape Contractors Association
California Legislative Conference of the Plumbing, Heating and
Piping Industry
California Precast Concrete Association
California State Association of Electrical Workers
California State Pipe Trades Council
Northern California Glass Management Association
Painting and Decorating Contractors of California
Plumbing-Heating-Cooling Contractors Association of California
Western Electrical Contractors Association
Western States Council of Sheet Metal Workers
ASSEMBLY FLOOR : 73-0, 5/16/13
AYES: Achadjian, Alejo, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Ch�vez, Chesbro, Conway,
Cooley, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell,
Gray, Hagman, Hall, Harkey, Roger Hern�ndez, Jones,
Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein,
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Mansoor, Medina, Mitchell, Mullin, Muratsuchi, Nazarian,
Nestande, Olsen, Pan, Patterson, Perea, V. Manuel P�rez,
Quirk, Quirk-Silva, Rendon, Salas, Skinner, Ting, Torres,
Wagner, Waldron, Weber, Wieckowski, Wilk, Williams, Yamada,
John A. P�rez
NO VOTE RECORDED: Allen, Grove, Holden, Melendez, Morrell,
Stone, Vacancy
AB:ej 6/13/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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