BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2914|
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THIRD READING
Bill No: AB 2914
Author: Leno (D)
Amended: 8/23/06 in Senate
Vote: 21
SENATE JUDICIARY COMMITTEE : 4-0, 6/27/06
AYES: Dunn, Escutia, Harman, Kuehl
NO VOTE RECORDED: Morrow
ASSEMBLY FLOOR : 75-0, 4/20/06 (Consent) - See last page
for vote
SUBJECT : Architects: limited liability partnerships
SOURCE : American Institute of Architects, California
Council
DIGEST : This bill extends until January 1, 2012,
existing law that allows architectural firms to form
limited liability partnerships (LLPs) and foreign LLPs to
engage in the practice of architecture. This bill also
increases, on January 1, 2008, to $1,000,000 (from
$500,000) the minimum amount of insurance that an
architectural LLP must obtain in order to gain the LLP
status.
Senate Floor Amendments of 8/23/06 add chaptering
amendments to avoid chaptering problems if this bill and AB
339 (Harman) are both enacted.
CONTINUED
AB 2914
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2
ANALYSIS : Existing law, until January 1, 2007,
authorizes registered LLPs to be formed for the practice of
architecture when the LLP maintains liability insurance of
at least $500,000 or an amount equal to $100,000 multiplied
by the number of licensees in the firm, whichever is
greater, up to a maximum of $5 million, for claims arising
from acts, errors or omissions arising out of the practice
of architecture. In lieu of the insurance coverage, the
LLP may maintain in trust or bank escrow, cash, bank
certificates of deposits, United States Treasury
obligations, or bank letters of credit in the required
amount as security for payment of tort or contract
liabilities.
This bill extends that sunset date five years to January 1,
2012.
This bill, on January 1, 2008, increases the required
minimum amount of insurance to at least $1 million for a
LLP with five or fewer licensees. For additional licensees
above five, an additional $100,000 per additional licensee
will be required.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 7/5/06) (Unable to reverify)
American Institute of Architects, California Council
(source)
ARGUMENTS IN SUPPORT : According to the author's office,
more than 100 architectural firms have registered as LLPs.
Allowing the law to sunset would require these existing LLP
firms to undergo considerable expense to reorganize.
The author's office also asserts that licensed
architectural firms have had a successful eight-year
experience operating as LLPs, and that the current law
allowing architectural LLPs allow California offices of
national firms to parallel their business structure in
other states such as New York and Illinois. Extension of
the law would also avoid anomalous results for partners in
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3
national firms when they engage in projects across state
lines.
ASSEMBLY FLOOR :
AYES: Aghazarian, Arambula, Baca, Benoit, Berg, Bermudez,
Blakeslee, Bogh, Canciamilla, Chan, Chavez, Chu, Cogdill,
Cohn, Coto, Daucher, De La Torre, DeVore, Dymally,
Emmerson, Evans, Frommer, Garcia, Goldberg, Hancock,
Harman, Jerome Horton, Shirley Horton, Houston, Huff,
Jones, Karnette, Keene, Klehs, Koretz, La Malfa, La Suer,
Laird, Leno, Leslie, Levine, Lieber, Lieu, Liu, Matthews,
McCarthy, Montanez, Mountjoy, Mullin, Nakanishi, Nation,
Nava, Negrete McLeod, Niello, Oropeza, Parra, Pavley,
Plescia, Richman, Ridley-Thomas, Sharon Runner, Ruskin,
Saldana, Spitzer, Strickland, Torrico, Tran, Umberg,
Vargas, Villines, Walters, Wolk, Wyland, Yee, Nunez
NO VOTE RECORDED: Bass, Calderon, Haynes, Maze, Salinas
RJG:mel 8/23/06 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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