May 20, 2009

2009 Minnesota Construction Legislative Update

In the 2009 legislative session, the Minnesota House and Senate heard several bills of importance to the construction industry. The following summary describes the most significant of these construction-related provisions and explains which survived the legislative process—and the governor's veto—to become law.

False Claims Act (S.F. 2082)

The State Government Omnibus Bill includes a false claims cause of action that imposes civil penalties and treble damages against contractors who assert false claims to public bodies in Minnesota. Private plaintiffs are authorized to bring lawsuits to enforce these provisions and are even allowed to share in any recovery from the contractor. The bill passed the House and the Senate and was signed by the governor on May 16. A more detailed analysis of how this new law will likely affect contractors on public projects in Minnesota will be the subject of a future Construction Law Update.

Prevailing Wage Law Changes (H.F. 2088, S.F. 1926)

The revised Economic Development Omnibus Bill included various changes to the reporting, enforcement and penalty provisions of prevailing state wage laws. The original Economic Development Omnibus Bill (H.F. 1169, S.F. 2081) was vetoed by the governor. But the revised bill, including the changes to the prevailing wage laws, was passed by the House and the Senate and subsequently signed by the governor (with some line item vetoes) on May 14.

Prompt Payment to Subcontractors (H.F. 1056, S.F. 638)

Minn. Stat. Section 337.10, Subd. 3 states that building and construction contracts are deemed to include a provision requiring the general contractor to promptly pay its subcontractors and suppliers within 10 days of receipt of payment for those goods and services. The statute did not apply to residential construction projects with fewer than 13 units per structure. This bill removed the residential exception from the statute. The bill passed the House and the Senate and was signed by the governor on May 12.

Residential Home Warranties

Minn. Stat. Section 327A contains Minnesota's residential construction warranties. Four separate bills that would modify this statute passed the House and the Senate.

  • H.F. 211, S.F. 170 allows a judge to award attorneys fees to a homeowner if they are the prevailing party in a lawsuit enforcing the statutory residential warranties. This bill is waiting for action from the governor.
  • H.F. 239, S.F. 6 would have allowed a homeowner to recover short term housing costs resulting from a breach of the statutory warranties, but prohibits a double recovery. The governor vetoed this bill on May 19.
  • H.F. 412, S.F. 470 modifies the statute of limitations for residential warranty actions (Minn. Stat. Section 541.051, subdivision 4) by allowing a claimant who discovers a breach of warranty more than 10 years after the warranty date to bring an action within one year after discovering the breach, but no more than 12 years after the warranty date. The governor vetoed this bill on May 19.
  • H.F. 362, S.F. 362 allows a homeowner to pursue a warranty claim even if the homeowner did not provide written notice to the contractor as required by Section 327A, as long as the homeowner can establish that the contractor had actual knowledge of the loss or damage. This bill is waiting for action from the governor.

Capital Investment Bill (H.F. 855, S.F. 781)

This bill appropriated over $340 million in bond proceed funds for the purpose of acquiring and improving public land and buildings and other public improvements of a capital nature. The bill passed the House and the Senate and was sent to the governor on May 13. The governor signed the bill into law on May 16 with more than $85 million in line item vetoes.

Transportation Finance Omnibus Bill (H.F. 1309, S.F. 1276)

This bill appropriated almost $4.3 billion in total transportation funding to airport, highway, rail, and transit projects, including over $3 billion for road construction and maintenance. In addition, the bill authorized $40 million in trunk highway bonding authority to be used for the construction of interchanges and matching of federal grants. The bill passed the House and the Senate and was signed by the governor on May 7.

Local Government Design-Build Authority

Included in the Transportation Finance Omnibus Bill was a pilot program allowing the use of design-build contracting on a maximum of 15 municipal and county transportation projects over a period of three years. The bill establishes a Design-Build Project Selection Council to evaluate and select the projects. The bill sets up a two-step design-builder selection process modeled after the Minnesota Department of Transportation design-build statute. As noted above, the bill was signed by the governor on May 7.

Vertical Construction Stimulus Bill (H.F. 2364, S.F. 2078)

This bill would have created several programs designed to encourage economic activity and development, including a loan guaranty fund, restrictions on certain environmental reviews, new revenue bonding for green building projects, tax credits for historic rehabilitation and low income housing, special assessment authority for energy improvements, tax increment financing projects, and a state loan program to advance federal first-time home buyer credits. The bill passed the Senate on May 11, but did not pass the House.
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