The Ohio Senate Finance Committee released its version of the state budget bill, Sub. HB 49 Monday agreeing with AIA Ohio on all three issues architects have raised relative to the original bill Governor Kasich introduced last January:
First, it removed a House inserted provision that allowed the Department of Administrative Services to circumvent the Qualification Based Selection of Architects (QBS). The language would have allowed DAS to award its own design and construction contracts as “supplies” or “services” contracts under R.C. Chapter 125, thereby circumventing R.C. Chapter 153 construction law. Using this language, DAS could have authorized a private third-party administrator to bid and award construction contracts, without the transparency and fair processes required under ORC 153. Further, DAS could have used its cooperative purchasing authority to extend this same contract to all political subdivisions. The state’s construction authority, OFCC, could not have challenge these contracts since “a contract awarded by DAS takes precedence over the commission’s authority.”
When this provision was inserted into HB 49 by the House, AIA Ohio issued an Action Alert asking members to communicate opposition. Points made about the provision:
- It bypasses the competitive processes and protections of standard construction under ORC Chapter 153, including advertising, bonding, subcontractor protections, etc.;
- It creates a path for all political subdivisions to avoid competitive bidding for construction;
- It could be a path to “pay to play” and the selection of less qualified professionals;
- It makes the award of construction contracts less transparent;
- It breeds confusion and a sense of unfairness within the design and construction industry in Ohio;
- It provides no legal recourse to challenge the appropriateness of a construction contract awarded by a non-construction agency (DAS).
Second, The Senate Finance Committee followed the House of Representatives by leaving intact the House’s removal of Governor Kasich’s provision that would have extended the sales tax to both interior and landscape design services.
Third, the Senate Finance Committee maintained the provision that’s intended to address the 2015 U.S. Supreme Court decision against the North Carolina Board of Dental Examiners that ruled they violated federal antitrust laws because members of the state’s dental board were active participants in the profession they regulated.
HB49 proposes the creation of a third-party review process by the Department of Administrative Services (DAS), in which the DAS would review any action taken by or on behalf of a board that could be subject to antitrust laws. Not only would this protect boards from costly legal action for antitrust-related concerns, it would also prevent unnecessary delays in business decisions the boards make and promote better coordination and efficiency within the licensing boards structure.
Finally, HB 49 continues to fund the operation of the Ohio Architects Board, though at a slightly lower level than the House version. Faced with a projected $1 billion shortfall in both sales and income taxes, senators balanced the budget with a 3-4% across the board cut in the administrative costs for state agencies ($20 million), more targeted cuts to agency programs ($100 million), the elimination of millions of dollars in earmarks and reducing Medicaid $200.
Following the unveiling of the Senate Finance Committee’s Substitute Bill, it was accepted by the Committee and will undergo several additional hearings where minor changes may be made prior to being approved by the full Senate on June 21. From there it will be reconciled by a conference committee composed of House and Senate leaders before being sent to Governor Kasich for his signature prior to June 30.
At this point state lawmakers have heard from AIA members and have responded favorably to all of AIA Ohio’s Budget Bill concerns. We’ll update you with any meaningful developments as the bill progresses through the Conference Committee and on to the Governor’s desk.
At its meeting on May 26, 2017, the Board of Building Standards adopted updates to the Ohio Building, Plumbing and Mechanical Codes based on 2015 I-Codes effective November 1, 2017.
The Board initiated the rule change process in October 2016 and the rules have been available in draft form on the Board’s website. The final adopted rules with summaries can be found at the following links:
Ohio Building Code (OBC) Rules:http://www.com.state.oh.us/documents/AG%2093%20OBC%20Adoption%20Announcement.pdf
Ohio Plumbing Code (OPC) Rules:http://www.com.state.oh.us/documents/AG%2093%20OPC%20Adoption%20Announcement.pdf
Ohio Mechanical Code (OMC) Rules:http://www.com.state.oh.us/documents/AG%2093%20OMC%20Adoption%20Announcement.pdf
Any non-residential project submitted to a building department on or after November 1, 2017 shall comply with the above rules. Any non-residential project submitted before November 1, 2017 shall comply with the current Ohio Building, Plumbing & Mechanical Codes based on the 2009 I-Codes as amended. These rules can be found here: http://www.com.state.oh.us/dico/bbs/NonResidentialBuildingCodes.aspx#OBC
The Residential Code of Ohio (RCO) which regulates 1-, 2- & 3- Family dwellings is not affected by these code updates. The RCO remains based on the 2009 International Residential Code (IRC) as amended. The Residential Construction Advisory Committee and the Board continue to review newer editions of the IRC for possible adoption at a later date.
If you have questions related to these amendments, please contact the Board Office at (614) 644-2613 or email@example.com.
Ohio’s Board of Building Standards has adopted the 2017 OBC with an effective date of November 1. A combined update of the 2012 and 2015 editions of the IBC, along with Ohio amendments, the new code includes significant improvements to health care (aligning much more closely with the 2000 Life SafetyCode), as well as an updated version of Chapter 34. Ohio is not adopting the IEBC.
Over a dozen opponents – mostly members of local building departments and fire safety organizations – expressed their opposition to HB 128 which would permit a general contractor or owner of specified buildings to enter into a contract with a third-party private inspector or a certified building department for building inspection.
The ability for contractors to use the bill to pick and choose their inspectors, thereby circumventing municipal inspection requirements, was a major concern of the witnesses. Josh Brown, director of communications for the Ohio Municipal League, emphasized the role of local building inspectors.
“Proponents have argued that building departments should compete with each other, effectively creating a free market in law enforcement,” he said. “However, nobody seriously believes that law enforcement officers should compete with each other to enforce the law. Citizens are not consumers of law enforcement.”
There was general consensus among the opponents that the Ohio Board of Building Standards ought to remain the sole authority for inspections in the state, and that permission for contractors to request independent inspections would lead to chaos.
“This rule change would undermine the OBBS existence,” wrote Neal Dorenkott, member of the North Central Ohio Building Officials Association. “This would send the inspection process back in time; it could be an example of the ‘fox guarding the hen house.'”
Several witnesses suggested that some of the issues raised in the bill ought to be dealt with at the level of the OBBS.
Bryan Parker, president of the Miami Valley Building Council, has been on both sides of the appeals process – as a contractor and an inspector. He said the OBBS listens and is fair, and the board is quite capable of handling complaints from contractors. The issues of timeliness
Jonathan Westendorf, fire chief for the city of Franklin, provided opponent testimony on behalf of the Ohio Fire Chiefs’ Association. He said that there is often a great deal of collaboration between fire safety inspectors and building officials, given that fire officials take up authority once the inspector’s office provides a certificate of occupancy to a successfully inspected building. He argued against the bill on the grounds that building officials and inspectors act as a law enforcement officers with responsibility beyond that of just an inspector. He also shared concerns that a provision in which contractors would pay inspection fees to third-party inspectors would essentially make the construction industry self-regulating.
He expressed concerns that the bill contains no provisions ensuring continued collaboration between the fire safety community and third party inspectors, as well as about the 24-hour deadline provision and possible degradation of safety standards.
Qualification Based Selection (QBS) of architects is in jeopardy from an amendment that the House of Representatives added to the state’s Budget Bill, Sub. HB 49. Please contact your state Senator today asking that the Senate remove this amendment.
In 2012-2013, comprehensive construction reform provided the most significant change to Ohio’s public construction law in more than 130 years. One positive result of this collaboration between industry and government was the centralization of construction authority into OFCC, creating consistency and transparency in Ohio’s public construction projects.
This House amendment to the state’s Budget Bill, Sub. HB 49, takes a step backward by allowing for the establishment of a second construction authority in the Ohio Department of Administrative Services (DAS), causing confusion, inconsistency and the potential of significant legal entanglements.
The language would allow DAS to award its own design and construction contracts as “supplies” or “services” contracts under R.C. Chapter 125, thereby circumventing R.C. Chapter 153 construction law. Using this language, DAS could authorize a private third-party administrator to bid and award construction contracts, without the transparency and fair processes required under ORC 153. Further, DAS could use its cooperative purchasing authority to extend this same contract to all political subdivisions. The state’s construction authority, OFCC, could not challenge these contracts since “a contract awarded by DAS takes precedence over the commission’s authority” according to the bill.
AIA Ohio Believes:
This language is not in the best interests of public construction in Ohio because:
· It bypasses the competitive processes and protections of standard construction under ORC Chapter 153, including advertising, bonding, subcontractor protections, etc.;
· It creates a path for all political subdivisions to avoid competitive bidding for construction;
· It makes the award of construction contracts less transparent;
· It breeds confusion and a sense of unfairness within the design and construction industry in Ohio;
· It provides no legal recourse to challenge the appropriateness of a construction contract awarded by a non-construction agency (DAS).
AIA Ohio has uploaded the parts of Sub. HB 49 that include this language here. Please ask your state Senator to remove the language that is shown Please ask your state Senator to remove the language that is shown highlighted in red boxes.
The Ohio House Economic Development, Commerce and Labor Committee took testimony May 9 on HB 163 which would allow political subdivisions, special districts, and state institutions of higher education to elect to apply the Prevailing Wage Law to public improvement projects.
Reps. Roegner and Reidel said in sponsor testimony the bill, a companion to Sen. Huffman’s SB72, would allow local governments to decide whether to use prevailing wage on public improvement projects.
Roegner said the state-required prevailing wage is “inflated” by including costs such as base union wage, and union fringe benefits like health care, pensions and training. She also said that the requirement to have the Ohio Department of Commerce determine wages to be paid on a project is a bureaucratic hindrance. The result, she said, is that local projects are more expensive than they should be.
Roegner noted 20 states currently do not have prevailing wage requirements, and cited Ohio’s experience with removing prevailing wage requirements from school construction projects, saying it saved hundreds of millions of dollars in five years.
Reidel said his 27 years of experience in the construction industry showed him there’s no justification for the assertions that prevailing wages provides higher quality work and safer conditions on projects. “I will attest that the quality of workmanship and safety on construction projects today are of the same caliber whether that project pays prevailing wage or doesn’t,” he said.
Rep. Lepore-Hagan asked the motivation for the bill, and whether it would be better to restore Local Government Fund money rather than “attack wages.”
Roegner said the committee will hear from future witnesses about the ability for the bill to save local governments money. She disagreed with the characterization that the bill attacks wages.
Rep. Sheehy asked if the sponsors could quantify estimated savings from the bill, as well as estimated wage reductions.
Roegner again cited Ohio’s experience with school construction, and said a California study had showed substantial increases in costs when public housing projects there were subject to prevailing wage. As to wages, Reidel said in his experience, a steelworker on a prevailing wage project might make $50 or more per hour, versus $25 to $30 on anon-prevailing wage project.
Rep. West asked if the bill would hurt local governments’ funding, as people are paid less on construction projects and thus pay less in income taxes. Roegner said savings to local governments from avoiding prevailing wage requirements could enable them to finance additional projects, thus increasing employment and tax revenue.
West also cited a Midwest Economic Policy Institute study that showed the loss of prevailing wage could cost some workers their health and pension benefits and reduce wages for some to the point they qualify for public assistance. Roegner said she would look at the study he cited, adding that research she’s seen shows compelling benefits related to removing prevailing wage requirements.
Rep. Kelly asked if prevailing wage projects are more or less likely to attract in-state versus out-of-state contractors. Reidel said bidding by Indiana companies in Ohio and vice versa is common in the border counties he represents, but said the paperwork involved in prevailing wage projects is often what compels contractors to forego bidding on a project. Kelly also asked if the paperwork is in fact the problem, or the wage levels. Reidel said there’s no question the paperwork stifles participation, while saying the bill simply seeks to give local governments a choice on the question of wages.
Rep. Arndt asked about how the bill would affect bonding requirements for public projects, citing a situation in his area where an out-of-state contractor couldn’t complete a project, and the community had to go through the bonding agent to try to find another contractor who would complete the work at the same price. He said he wants to make sure taxpayers are not at risk.
Roegner said she would look into it, but posited that the 20 states without prevailing wage laws must have come up with answers to such situations.
The bill that would authorize third party building inspections, HB 128 received a sponsor’s hearing April 25 in the House Economic Development, Commerce and Labor Committee.
Rep. Kristina Roegner (R-Hudson) gave sponsor testimony on the legislation that she said would give a common sense solution to expanding the base of inspection to avoid costly delays. She said no matter how efficient and organized a construction company may be, if the inspections are delayed, it holds up progress on the project.
Under current law, the Board of Building Standards formulates and adopts rules governing the erection, construction, repair, alteration and maintenance of buildings, she said. The rules are incorporated into residential and non-residential codes. The board then certifies local building departments and the personnel of these departments as well as individuals, corporations and firms to approve plans and perform inspections. The building inspections currently must be performed by the local building department, she said, but if there are backlogs or personality conflicts, the lack of choice can cause unnecessary and expensive delays.
The bill would specify that inspections, performed by the building department having jurisdiction, must be performed within 24 hours of a request. The general contractor or owner of a building may request an independent inspection, and the Board of Building Standards shall provide a list, which it will maintain, of board-certified, third party, private inspectors and certified building departments from which the contractor may choose. The contractor/owner would still be responsible for inspection fees to the third party, and the local building department may still charge the general contractor/owner any standard fee customary for approval including administrative and filing fees. The third party inspector would be required to send a copy of the inspection results within 24 hours post-inspection to the local building department.
The bill also specifies that local building departments may contract with the division of industrial compliance to exercise enforcement authority, accept and approve plans/specifications and perform inspections for non-residential buildings. It provides for an expedited arbitration process in which a general contractor/owner may appeal inspection results.
During the hearing Rep. Lepore-Hagan asked if the bill would constitute a cut to local governments. Roegner said the bill does not address any funding. She noted that if a contractor or owner uses a third-party inspector, that local government can still charge application and other fees. Lepore-Hagan also said she is concerned that the bill would privatize government services. Roegner said the bill provides choice, and competition can only drive up quality. She also said the contractors could choose a building department from a neighboring jurisdiction.
Lepore-Hagan asked if a situation would be created where a friend of the contractor would do the inspection and be lenient. Roegner said the list of third party inspectors would be certified by the state and any wrong-doing could cause them to lose certification. She also said contractors could also have a situation like that under current law with a friend in the local building department. “I really do not believe that will be an issue,” she said.
Rep. West asked if local governments could farm out inspections under current law. Roegner said they can but a contractor could not do it independently. West also asked if Roegner had talked to local governments about the bill. The sponsor replied that she had talked to the Ohio Municipal League, who has some concerns, but has been at the table.
Rep. Arndt said the 24-hour deadline seems to be a tight period to complete the work. Roegner said she is drafting an amendment to address those issues so there won’t be a time squeeze. She said they want to be reasonable but also put into place best practices.
She told Rep. Kelly that she didn’t have any statistics on how often inspections are delayed or the cost of those delays, but she said it will be interesting to see what proponents have to say about the bill.
She told Rep. Stein that the bill is silent on penalties for violating the 24-hour rule.
She told Rep. Sheehy that she was approached about the issue by several construction companies and contractors. She said they are concerned about retaliation if they complain about lags in building inspections to the Board of Building Standards.
Two interior designers testified against the proposed extension of the sales tax to interior designers during an April 5 hearing before the House Finance Committee studying the state’s Budget Bill, HB 49.
Tamra Fuscaldo, an interior designer representing the International Interior Design Association (IIDA) Ohio Kentucky Chapter, said she opposed the expansion of sales tax on interior design services. “Simply stated, IIDA and its members are opposed to the expansion of sales tax on interior design because taxing commercial interior design services adds costs to public and private building construction costs, and would clearly hinder companies seeking to expand or bring their business to the state of Ohio,” she said.
“Professional services should not be taxed as they are not a commodity,” Fuscaldo continued. “The interior design process follows a systematic and coordinated methodology, including research, analysis and integration of knowledge into the creative process, whereby the needs and resources of the client are satisfied to produce an interior space that fulfills the project goals. We are not a luxury or a discretionary service and should not be taxed as such.”
Tracy Phelps, an interior designer from Mentor’s Laura Gills Interior Design, said she opposed the expansion of sales tax on interior design services.
“As a young, striving designer, I chose this profession and to stay in Ohio because there was great potential for this industry. I, like many of the current students studying for their degree in interior design at many of our institutions across Ohio, fear that a tax on our services would stifle opportunities for our future in our state,” she said. “Our profession is already competitive in nature and must have a balance between good design, best price, and best value. I feel that if this provision were to stay in HB49, Ohio’s interior designers would be placed at an extreme disadvantage and opportunities in Ohio for graduates of interior design would be drastically reduced.”
The Department of Commerce will hold an April 14 hearing on a proposed Rule 4101:1-16-01 regarding Structural Design.