SF 482 (LSB 2370XS (3) 88)

SENATE FILE 482

BY  BOULTON

A BILL FOR

An Act relating to competitive bidding requirements for construction by a private party of property to be lease-purchased by certain government entities and including effective date and applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 8.46, subsection 4, Code 2019, is amended by striking the subsection.
    Sec. 2.  Section 26.2, subsection 3, paragraph a, Code 2019, is amended to read as follows:
   a.  “Public improvement” means a building or construction work which that is constructed under the control of a governmental entity and for which either of the following applies:
   (1)  Has been is paid for in whole or in part with funds of the governmental entity.
   (2)  A commitment has been made prior to construction by the governmental entity to pay for the building or construction work in whole or in part with funds of the governmental entity.
    Sec. 3.  Section 26.2, subsection 5, Code 2019, is amended by striking the subsection.
    Sec. 4.  Section 260C.38, subsection 3, Code 2019, is amended to read as follows:
   3.  Subject to subsection 4, before Before entering into a lease agreement with a purchase option for a building to be constructed, or placed, upon real estate owned by the community college, the board shall first adopt plans and specifications for the proposed building which it considers suitable for the intended use, and the board shall also adopt the proposed terms of the lease agreement and purchase option. The board shall invite bids, by advertisement published once each week for two consecutive weeks in the county where the building is to be located. The lease agreement shall be awarded to the lowest responsible bidder, or the board may reject all bids and readvertise for new bids.
    Sec. 5.  Section 260C.38, subsection 4, Code 2019, is amended by striking the subsection.
    Sec. 6.  Section 262.34, subsection 1, Code 2019, is amended to read as follows:
   1.  When the estimated cost of construction, repairs, or improvement of buildings or grounds under charge of the state board of regents, including construction, renovation, or repairs by a private party of a property to be lease-purchased by the board exceeds one hundred thousand dollars, the board shall advertise for bids for the contemplated improvement or construction and shall let the work to the lowest responsible bidder. However, if in the judgment of the board bids received are not acceptable, the board may reject all bids and proceed with the construction, repair, or improvement by a method as the board may determine. All plans and specifications for repairs or construction, together with bids on the plans or specifications, shall be filed by the board and be open for public inspection. All bids submitted under this section shall be accompanied by a deposit of money, a certified check, or a credit union certified share draft in an amount as the board may prescribe.
    Sec. 7.  Section 278.1, subsection 2, paragraph b, Code 2019, is amended to read as follows:
   b.  Subject to paragraph “c”, before Before entering into a rental or lease-purchase option contract, authorized by the electors, the board shall first adopt plans and specifications for a building or buildings which it considers suitable for the intended use and also adopt a form of rental or lease-purchase option contract. The board shall then invite bids thereon, by advertisement published once each week for two consecutive weeks, in a newspaper published in the county in which the building or buildings are to be located, and the rental or lease-purchase option contract shall be awarded to the lowest responsible bidder, but the board may reject any and all bids and advertise for new bids.
    Sec. 8.  Section 278.1, subsection 2, paragraph c, Code 2019, is amended by striking the paragraph.
    Sec. 9.  Section 298.3, subsection 1, paragraph j, Code 2019, is amended to read as follows:
   j.  The purchase of buildings or lease-purchase option agreements for school buildings. However, a contract for construction by a private party of property to be lease-purchased by a public school corporation is a contract for a public improvement as defined in section 26.2. If the estimated cost of the property to be lease-purchased that is renovated, repaired, or involves new construction exceeds the competitive bid threshold in section 26.3, the board of directors shall comply with the competitive bidding requirements of section 26.3.
    Sec. 10.  Section 331.301, subsection 10, paragraph i, Code 2019, is amended to read as follows:
   i.  A contract for construction by a private party of property to be leased or lease-purchased by a county is not a contract for a public improvement and is subject to under section 331.341, subsection 1. However, if a lease-purchase contract is funded in advance by means of the lessor depositing moneys to be administered by a county, with the county’s obligation to make rent payments commencing with its receipt of moneys, a contract for construction of the property in question awarded by the county is a public improvement and is subject to section 331.341, subsection 1.
    Sec. 11.  Section 364.4, subsection 4, paragraph i, Code 2019, is amended to read as follows:
   i.  A contract for construction by a private party of property to be leased or lease-purchased by a city is not a contract for a public improvement under section 26.2, subsection 3. If the estimated cost of the property to be lease-purchased that is renovated, repaired, or involves new construction exceeds the competitive bid threshold set in section 26.3, the city shall comply with the competitive bidding requirements of section 26.3, except for purposes of section 26.12. However, if a lease-purchase contract is funded in advance by means of the lessor depositing moneys to be administered by a city, with the city’s obligation to make rent payments commencing with its receipt of moneys, a contract for construction of the property in question awarded by the city is subject to chapter 26.
    Sec. 12.  EFFECTIVE DATE.  This Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 13.  APPLICABILITY.  This Act applies to lease-purchase agreements entered into on or after the effective date of this Act.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to competitive bidding requirements for construction on properties that certain government entities will lease or lease-purchase.
   Code chapter 26 (public construction bidding) imposes public bidding requirements on certain public improvements that are estimated to cost above a threshold amount.
   Under current law, a contract for construction by a private party of a property to be lease-purchased by the state of Iowa, a community college, a public school corporation, or a city is a contract for a public improvement under Code section 26.2. Under current law, all lease-purchase contracts by a county are contracts for public improvements and are subject to Code section 331.341. By operation of law, such contracts that exceed the threshold amount must comply with the requirements of Code chapter 26. The state of Iowa, a community college, a public school corporation, a city, or a county must therefore take competitive bids pursuant to the process set forth in Code chapter 26 for renovations, repairs, or new construction on a property to be lease-purchased that exceeds the competitive bid threshold set in Code section 26.3. In addition, current law states that the construction, renovation, or repairs by a private party of property to be lease-purchased by the board of regents is subject to competitive bidding requirements when the cost of the construction, renovation, or repairs exceeds $100,000.
   Under the bill, a contract for construction by a private party of property to be lease-purchased by the state of Iowa, a community college, or a public school corporation is not considered a contract for a public improvement for purposes of Code chapter 26. The bill also removes the construction, renovation, or repairs by a private party of property to be lease-purchased by the state board of regents from competitive bidding requirements.
   Under the bill, a contract for construction by a private party of a property to be lease-purchased by a county is not a contract for public improvement under Code section 331.341, subsection 1, unless a lease-purchase contract is funded in advance by means of the lessor depositing moneys to be administered by the county, with the county’s obligation to make rent payments commencing with its receipt of moneys. Additionally, a contract for construction by a private party of a property to be lease-purchased by a city is not a contract for public improvement under Code section 26.2, except for purposes of Code section 26.12. However, a lease-purchase contract funded in advance by means of the lessor depositing moneys to be administered by the city, with the city’s obligation to make rent payments commencing with its receipt of moneys, is subject to Code chapter 26.
   The bill is effective upon enactment and applies to lease-purchase contracts entered into on or after the effective date of the bill.