Texas Legislature Gives Construction Industry New Tools (and Some New Challenges)

The 81st Texas Legislature passed a number of bill affecting the construction and design industry in this past session, some of which are new tools and some of which can present new challenges to the business. All of these bills will become law unless vetoed by the Governor by the end of the month.

Two bills dealt with issues of importance to all members of the construction industry especially in challenging economic times:  how to get paid, and the method of securing payment. The legislature modified the methods for holding and disbursing construction trust funds, including clarifications of when owners may be considered trustees (HB 1513). It also clarified that there would be no liability for filing a construction lien containing defective or incorrect information, unless the lien was made with the intent to defraud others (HB 669).

Architects and engineers had an interesting session.  The language of their 10 year statue of repose was strengthened, in the wake of several court challenges (SB 2141).  Also the certificate of merit requirements, required before a suit may be filed against a design professional, were modified to address several court cases which had attempted to narrow the classes of cases for which a certificate of merit was required (SB 1201.

Several changes to State and local purchasing statutes related to construction were also passed. Currently, a local government can award a contract to a local bidder even if he is 5% over the lowest bid.  In the future, this provision will apply only to contract of $10,000 or less (HB 2082). HB 987 now will allow a contractor suing a local government for breach of a construction contract to recover attorneys’ fee as well as other recoverable damages.

Other construction trades did not escape the legislature’s notice.  New educational requirements were added for plumbers and licensed electrical apprentices (HB 1758 and SB 470) and new testing requirements related to swimming pools were added to the electrician’s examination (HB 1973). A number of changes to the requirements for a plumbing license and the ability of plumbers to perform work inside counties were adopted in SB 1354. More importantly, the Texas Department of Licensing and Regulation, which oversees a number of construction occupations,   received increased authority to take immediate action to suspend licenses or certification and issue emergency cease and desist orders in cases involving health and safety violations (HB 2310)

The State continues to adopt some “green”  building provisions (although most of the bills on the subject failed) mainly by adopting a number of standard for energy and other efficiency standards, including provisions contained in the most recent model building codes. Among the changes were new performance standards for plumbing fixtures sold in the state (HB 2667) and the adoption of the most recent version of  national building codes in cities over 100,000 and in certain counties along the border with Mexico (HB 2833 and SB 820)

Finally, there was a lot the legislature did not accomplish.  A widely discussed anti-indemnification bill agreed to by general contractor and subcontractors groups did not receive final approval (SB 555). The bill which would have continued the Texas Residential Construction Agency for an additional period of time also failed. That agency will expire in September 2009 and is now determining how to wind up business and the claims before it.

The largest unresolved issue is the fate of the Texas Department of Transportation. Its sunset bill, like the TRCC’s also did not pass. It is widely expected that the Governor, in early spring 2010, will call a special session to deal with issue related to the continuation of both TxDOT and the Texas Department of Insurance.  At that special session, however, other opportunities may arise for legislative members to reoffer bills that failed this session or which did not get timely considered.

Finally, the state budget contains authorization to spend a large amount of stimulus funds. Among the funds distributed to the state were stimulus dollars for “shovel ready” highway projects, water and wastewater infrastructure projects and weatherization projects.

The lawyers of Allensworth and Porter are closely monitoring the Governor’s actions on these bills (as well as several hundred other that affect the design and construction industry) and following the end of the Governor’s veto period will post a summary of all the changes affecting our industry. Check back soon for the latest news.