Atkinson Andelson Loya Ruud Romo A Professional Law

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Legal Update Presented by: Michael Baker, Esq. Atkinson, Andelson, Loya, Ruud & Romo CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 1

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Almost a License Requirement The requirement of a CM license was the most significant legal issue facing the profession this year. A bill was introduced (SB 355) that would have required licensure by the State of California of construction managers. Bill has been withdrawn/stricken. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 2

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Significant cases in Past Year Disgorgement: Contractor considered unlicensed if license suspended for failure to maintain workers’ compensation insurance. Contractor’s actual payroll records did not match what was reported to Insurance Fund. Automatic suspension ultimately resulted in disgorgement of funds. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 3

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Significant cases in Past Year Site Disclaimers Not Controlling: Site conditions materially different than represented. Contractor made claim for extras. Owner asserted site disclaimer re contractor site investigation shifting risk to contractor. Public entity could not disclaim responsibility for subsurface conditions that differ from those indicated. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 4

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Significant cases in Past Year Government Code Claim Requirements Upheld: Claim not tolled while the parties attempt to resolve public contract code claims. Must substantially comply with Government Code. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 5

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Significant cases in Past Year Third Party Beneficiary to Contract: Party not named in contract may qualify as a beneficiary where the contracting parties must have intended to benefit the unnamed party and the agreement reflects that intent. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 6

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Significant cases in Past Year Subcontractor Listing Law: Listing law does not require listing for all change order work, but only for the performance of change orders causing changes to or deletions from the original contract. May subcontract to non listed subcontractor if significant and new and different work from original scope. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 7

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Significant cases in Past Year Damages for Lost Bonding Capacity: Still the law, no damages – case holding otherwise creating split in law decertified and cannot be cited as authority. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 8

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session AB 117 Transportation Authorities and Districts: Contracts (Beall): This bill would increase the minimum value for which the Alameda-Contra Costa Transit District, Santa Clara Valley Transit Authority, and the San Mateo County Transit District must award bids to the lowest responsible bidder from $25, 000 to $100, 000. This bill increases the minimum value for which the Golden Gate Bridge, Highway and Transportation District must award bids to the lowest responsible bidder from $20, 000 to $100, 000. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 9

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session AB 125 – School Facilities (Ma): This bill would authorize the annual, independent performance audit required of districts that issue local school facilities construction bonds to include a review of the district’s compliance with its bond ballot language and specified design and construction costs and procedures. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 10

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session AB 396 – Public Contracts: Bid Preferences: Employee Health Care Expenditures (Hernandez): This bill would require a public entity awarding a public works contract to provide a 2. 5% bid preference to a bidder whose employee health care expenditures, and those of its subcontractors, are at least 6. 5% of the aggregate Social Security wages paid to its employees in California. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 11

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session AB 983 – Public Contracts: Plans & Specifications (Ma): This bill would require, except in design-build projects, a local public entity, before entering into any contract for a project, to provide full and accurate plans and specifications and estimates of cost, giving such direction as would enable a bidding contractor to carry them out. For purposes of a breach of warranty action based upon incomplete or misleading plans and specifications, nothing in its provisions would be construed to require a contractor to prove an affirmative or intentional misrepresentation or active concealment on the part of the local public entity. This bill would also provide that nothing in its provisions would expand, restrict, or otherwise change the liability or potential liability of a design professional as set forth under current law. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 12

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session AB 1062 – School Facilities: Uniform Standards: Solar Design Plans (Ma): This bill would require the Division of the State Architect on or before January 1, 2010, to develop uniform standards for a pre-approved solar design plan for a school facility that complies with the rules and regulations adopted by the Department of General Services and the applicable requirements of the California Building Standards Code. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 13

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session AB 1065 – Public Resources: Building Standards: Greenhouse Gas (Lieber): This bill would require the California Energy Commission to revise its building energy efficiency standards to decrease energy usage from offsite sources by 80% by 2030. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 14

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session AB 1925 – Franchise Tax Board: Professional or Occupational Licenses (Eng): This bill would authorize the Franchise Tax Board to suspend state occupational and professional licenses because of unpaid tax liabilities. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 15

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session AB 2002 – Public Works: Payments (De. Leon): This bill would increase the penalty to $100 per day plus interest a contractor or any subcontractor under the contractor is required to pay to the state or political subdivision on whose behalf the public work is being performed when determined by the Labor Commissioner that the contractor or subcontractor violated the prevailing wage provisions. It would subject a contractor to a penalty assessment only when the contractor had knowledge, or should have had knowledge of its subcontractor’s failure to comply with applicable requirements. It would also increase the penalty to $50 per day plus interest for failure by the contractor or subcontractor to produce certified copies of payroll records. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 16

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session AB 2133 – State Contracts: Cost Limits (Hancock): This bill would increase the cost limit, from $500, 000 to $5 million under which the Department of General Services may delegate its contracting authority for a public works contract to departments, boards and commissions within the Resources Agency. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 17

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session AB 2177 – Public Works: Prevailing Wages: Compliance Group Representatives (Bass): This bill would require the Department of Industrial relations to train and monitor qualified “Compliance Group Representatives, ” who would interview workers on public works job sites to ensure the proper payment of prevailing wages. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 18

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session AB 2288 – Automatic Fire Extinguishing Systems: Certificate of Registration (Torrico): This bill would prohibit any person from installing or modifying a fire sprinkler system, a wet standpipe system, or an automatic fire extinguishing system without a certificate of registration issued by the State Fire Marshall. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 19

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session AB 2369 – Apprenticeship Programs; Prevailing Wage Enforcement (Fuentes): This bill would authorize an awarding body to assist the Director of the Department of Industrial Relations in the enforcement of prevailing wage laws applying to apprenticeships through the operation of the awarding body’s approved labor compliance program. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 20

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session AB 2376 – Small and Emerging Contractors Technical Assistance Program (Price): This bill would require the Department of Transportation (Caltrans) to establish and administer the Small and Emerging Contractor Technical Assistance Program for the purpose of providing training and technical assistance to small businesses to improve their ability to obtain the surety bonds and liability insurance necessary to qualify for public works projects. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 21

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session AB 2916 – State Buildings: Energy Efficiency Measures (Nunez): This bill would require all buildings owned or leased by the state to comply with the standards set forth in the United States Building Council’s Leadership in Energy and Environmental Design gold green building standards (LEED Gold) by January 1, 2012. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 22

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session AB 3020 – State Contract Act: Definition: Department (Salas): This bill would add the Military Department to the list of state departments who are authorized in statute to contract out for public works projects pursuant to the State Contract Act. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 23

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session SB 191 – Public Works: Labor Compliance Programs (Padilla): Requires an awarding body that chooses to use funds derived from the Kindergarten-University Public Education Facilities Bond Act of 2006 to initiate and enforce (or contract with a third-party to enforce) a labor compliance program. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 24

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session SB 593 – Department of Transportation: Retention Proceeds (Margett): This bill would prohibit the Department of Transportation from withholding retention proceeds when making progress payments for work performed by a contractor. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 25

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session SB 1352 – Public Works: Prevailing Wage Rates: Wage and Penalty Assessments (Wyland): This bill would allow contractors and/or subcontractors who have received a wage and penalty assessment under public works law, as an alternative to becoming automatically liable for liquidated damages in specified circumstances, to establish an escrow account into which they may deposit amounts allegedly due workers. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 26

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session SB 1362 – Electrician Certification (Margett): This bill would provide that a person who performs work as an electrician without proper certification would be subject to specified penalties imposed by the Chief of the Division of Apprenticeship Standards. It would further provide that a contractor that employs a person who performs work as an electrician without proper certification would be subject to specified penalties imposed by the Registrar of Contractors of the Contractors’ State License Board. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 27

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session SB 1449 – Works of Improvement (Calderon): This bill would require each person entitled to a mechanics lien, in an amount greater than $400, to prepare a list of other persons with whom that person has contracted to provide labor or materials on the project who would therefore also be eligible to file a mechanic’s lien. The list would include contact information for each person on the list and would be delivered to the prime contractor or owner within 14 days of commencing work. This bill would also require an addendum to the list within 14 days after entering into a new contract with an additional person entitled to a mechanic’s lien. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 28

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session SB 1552 – State Allocation Board: Office of Public School Construction (Margett): This bill would transfer the functions and staff of the Office of Public School Construction from the Department of General Services to the State Allocation Board. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 29

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session SB 1581 – Contractors (Aanested): This bill would provide that a contractor furnishing a bond, bond equivalent, or joint control approved by the registrar of contractors need not include, as part of the contract, a notice stating that the owner or tenant has the right to require the contractor to have a performance and payment bond. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 30

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session SB 1605 – School Facilities: New Construction: Funding (Cox): This bill, in part, would require the State Allocation Board to solicit bids for additional construction plans for schools and to select and purchase sets of plans in a number it determines is sufficient to address the needs of school districts located throughout the state. The Board would be required to pay a royalty to the person or entity that prepared a purchased set of plans each time a school district uses the plans and to provide the plans and specifications it obtains to school districts free of charge. The bill would also require that each set of plans purchased contain options for sustainable design elements. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 31

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session SB 1687 – State Contracts: Participation Goals: Developmentally Disabled Business Enterprises (Negrete Mc. Leod): This bill would establish a statewide participation goal of not less than two percent for developmentally disabled business enterprises (DDBE) to participate in all contracts awarded by a state department for construction, services, materials, supplies, equipment, alterations, repairs, or improvements. It would impose civil penalties for initial and subsequent violations of providing false information with respect to the qualification of a business as a DDBE and would prohibit the person that made the false statement from bidding on state contracts for three to five years. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 32

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session SB 1691 – Mechanics Liens (Lowenthal): This omnibus bill would reorganize and restate statutory mechanics lien law in order to improve its clarity and usability. It is based upon the comprehensive review by the California Law Revision Commission as requested by the Senate Judiciary Committee. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 33

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session SB 1692 – California Community Colleges: Public Works: Cost Reduction Changes (Padilla): This bill would expand the existing authority of community college districts to pay extra compensation to a contractor for changes in plans and specifications that reduce cost. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 34

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Construction Related Legislation 2008 Legislative Session SB 1699 – Public Contracts: Health Care Districts: Design-Build (Wiggins): This bill would permit a health care district to use the design-build contracting method for the construction of a hospital or health facility building, and for related improvements. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 35

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com BIM - Panacea or New Problem Ø New Contractual Approach Ø Old Contracts Not Useful Ø Terminology Ø Standards Issues CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 36

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Possible Contract Models to Follow Ø American Institute of Architects California Council Ø Consensus Docs Ø Federal Ø ATA publishes guide and first version of National Building Information Model Standard was released in December 2007. Next release due in December 2008. CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 37

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Contractual Issues Ø Develop Integrated Project Delivery Ø Building Teams Ø BIM Implementation Plans Ø Who Should Model What Ø Are Models Contract Documents CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 38

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Licensing/ Jurisdiction Legal Issues & BIM Indemnity Limitation of Liability Implementation Lack of Intergratability Software Problems Information Sharing Role of CM Expanded Insurance/ Integrated Coverage Data Exchange Deliverables Protocol CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE Models Turnover ● SACRAMENTO ● SAN DIEGO 39

Atkinson, Andelson, Loya, Ruud & Romo A Professional Law Corporation www. aalrr. com Thank You For Coming Please contact: Michael Baker @ (562) 653 -3200 or mbaker@aalrr. com CERRITOS ● FRESNO ● PLEASANTON ● RIVERSIDE ● SACRAMENTO ● SAN DIEGO 40