House Study Bill 568 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON LOCAL GOVERNMENT BILL BY CHAIRPERSON HIGHFILL) A BILL FOR An Act regarding competitive bidding requirements for 1 construction by a private party of property to be leased or 2 lease-purchased by certain government entities and including 3 effective date and applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 5313YC (6) 87 js/jh

H.F. _____ Section 1. Section 8.46, Code 2018, is amended by adding the 1 following new subsection: 2 NEW SUBSECTION . 4. A contract for construction by a private 3 party of property to be leased or lease-purchased by a state 4 agency is a contract for a public improvement as defined in 5 section 26.2. If the estimated cost of the property to be 6 leased or lease-purchased that is renovated, repaired, or 7 involves new construction exceeds the competitive bid threshold 8 in section 26.3, the state agency shall comply with the 9 competitive bidding requirements of section 26.3. 10 Sec. 2. Section 260C.38, subsection 3, Code 2018, is amended 11 to read as follows: 12 3. Before Subject to subsection 4, before entering into a 13 lease agreement with a purchase option for a building to be 14 constructed, or placed, upon real estate owned by the community 15 college, the board shall first adopt plans and specifications 16 for the proposed building which it considers suitable for the 17 intended use, and the board shall also adopt the proposed 18 terms of the lease agreement and purchase option. The board 19 shall invite bids, by advertisement published once each week 20 for two consecutive weeks in the county where the building is 21 to be located. The lease agreement shall be awarded to the 22 lowest responsible bidder, or the board may reject all bids and 23 readvertise for new bids. 24 Sec. 3. Section 260C.38, Code 2018, is amended by adding the 25 following new subsection: 26 NEW SUBSECTION . 4. A contract for construction by a 27 private party of property to be leased or lease-purchased by 28 a community college is a contract for a public improvement as 29 defined in section 26.2. If the estimated cost of the property 30 to be leased or lease-purchased that is renovated, repaired, or 31 involves new construction exceeds the competitive bid threshold 32 in section 26.3, the board shall comply with the competitive 33 bidding requirements of section 26.3. 34 Sec. 4. Section 262.34, subsection 1, Code 2018, is amended 35 -1- LSB 5313YC (6) 87 js/jh 1/ 6

H.F. _____ to read as follows: 1 1. When the estimated cost of construction, repairs, 2 or improvement of buildings or grounds under charge of the 3 state board of regents , including construction, renovation, 4 or repairs by a private party of a property to be leased or 5 lease-purchased by the board exceeds one hundred thousand 6 dollars, the board shall advertise for bids for the 7 contemplated improvement or construction and shall let the work 8 to the lowest responsible bidder. However, if in the judgment 9 of the board bids received are not acceptable, the board may 10 reject all bids and proceed with the construction, repair, or 11 improvement by a method as the board may determine. All plans 12 and specifications for repairs or construction, together with 13 bids on the plans or specifications, shall be filed by the 14 board and be open for public inspection. All bids submitted 15 under this section shall be accompanied by a deposit of money, 16 a certified check, or a credit union certified share draft in 17 an amount as the board may prescribe. 18 Sec. 5. Section 278.1, subsection 2, paragraph b, Code 2018, 19 is amended to read as follows: 20 b. Before Subject to paragraph “c” , before entering into 21 a rental or lease-purchase option contract, authorized by the 22 electors, the board shall first adopt plans and specifications 23 for a building or buildings which it considers suitable for the 24 intended use and also adopt a form of rental or lease-purchase 25 option contract. The board shall then invite bids thereon, 26 by advertisement published once each week for two consecutive 27 weeks, in a newspaper published in the county in which the 28 building or buildings are to be located, and the rental or 29 lease-purchase option contract shall be awarded to the lowest 30 responsible bidder, but the board may reject any and all bids 31 and advertise for new bids. 32 Sec. 6. Section 278.1, subsection 2, Code 2018, is amended 33 by adding the following new paragraph: 34 NEW PARAGRAPH . c. A contract for construction by a private 35 -2- LSB 5313YC (6) 87 js/jh 2/ 6

H.F. _____ party of property to be leased or lease-purchased by a public 1 school corporation is a contract for a public improvement as 2 defined in section 26.2. If the estimated cost of the property 3 to be leased or lease-purchased that is renovated, repaired, or 4 involves new construction exceeds the competitive bid threshold 5 in section 26.3, the board shall comply with the competitive 6 bidding requirements of section 26.3. 7 Sec. 7. Section 298.3, subsection 1, paragraph j, Code 2018, 8 is amended to read as follows: 9 j. The purchase of buildings or lease-purchase option 10 agreements for school buildings. However, a contract for 11 construction by a private party of property to be leased or 12 lease-purchased by a public school corporation is a contract 13 for a public improvement as defined in section 26.2. If the 14 estimated cost of the property to be leased or lease-purchased 15 that is renovated, repaired, or involves new construction in 16 excess of the competitive bid threshold in section 26.3, the 17 board of directors shall comply with the competitive bidding 18 requirements of section 26.3. 19 Sec. 8. Section 331.301, subsection 10, paragraph i, Code 20 2018, is amended to read as follows: 21 i. A contract for construction by a private party of 22 property to be leased or lease-purchased by a county is not 23 a contract for a public improvement under and is subject to 24 section 331.341, subsection 1 . However, if a lease-purchase 25 contract is funded in advance by means of the lessor depositing 26 moneys to be administered by a county, with the county’s 27 obligation to make rent payments commencing with its receipt of 28 moneys, a contract for construction of the property in question 29 awarded by the county is a public improvement and is subject to 30 section 331.341, subsection 1 . 31 Sec. 9. Section 364.4, subsection 4, paragraph i, Code 2018, 32 is amended to read as follows: 33 i. A contract for construction by a private party of 34 property to be leased or lease-purchased by a city is not 35 -3- LSB 5313YC (6) 87 js/jh 3/ 6

H.F. _____ a contract for a public improvement under section 26.2, 1 subsection 3 , except for purposes of section 26.12 . However, 2 if a lease-purchase contract is funded in advance by means of 3 the lessor depositing moneys to be administered by a city, 4 with the city’s obligations to make rent payments commencing 5 with its receipt of moneys, a contract for construction of 6 the property in question awarded by the city is subject to 7 chapter 26 . If the estimated cost the property to be leased 8 or lease-purchased that is renovated, repaired, or involves 9 new construction exceeds the competitive bid threshold set 10 in 26.3, the city shall comply with the competitive building 11 requirements of section 26.3. 12 Sec. 10. EFFECTIVE DATE. This Act, being deemed of 13 immediate importance, takes effect upon enactment. 14 Sec. 11. APPLICABILITY. This Act applies to leases and 15 lease-purchase contracts entered into on or after the effective 16 date of this Act. 17 EXPLANATION 18 The inclusion of this explanation does not constitute agreement with 19 the explanation’s substance by the members of the general assembly. 20 This bill relates to competitive bidding requirements for 21 construction on properties that certain government entities 22 will lease or lease-purchase. 23 Code chapter 26 (public construction bidding) imposes public 24 bidding requirements on certain public improvements which are 25 estimated to cost above a threshold amount. 26 The bill makes a contract for construction by a private 27 party of a property to be leased or lease-purchased by 28 the state of Iowa, a community college, or a public school 29 corporation a contract for public improvement under Code 30 section 26.2. The state of Iowa, a community college, or a 31 public school corporation must therefore take competitive bids 32 for renovations, repairs, or new construction on a property to 33 be leased or lease-purchased that exceeds the competitive bid 34 threshold set in Code section 26.3. 35 -4- LSB 5313YC (6) 87 js/jh 4/ 6

H.F. _____ Current law requires the state board of regents to 1 competitively bid for construction, repairs, or improvement 2 of buildings or grounds under its charge when the estimated 3 cost of the work exceeds $100,000. The bill requires the state 4 board of regents to competitively bid for construction by a 5 private party of a property to be leased or lease-purchased 6 by the state board of regents if the estimated cost of that 7 constructions exceeds $100,000. 8 Currently, a contract for construction by a private party of 9 a property to be leased or lease-purchased by a county is not a 10 contract for public improvement under Code section 331.341(1), 11 unless a lease-purchase contract is funded in advance by means 12 of the lessor depositing moneys to be administered by the 13 county, with the county’s obligation to make rent payments 14 commencing with its receipt of moneys. 15 Under the bill all lease and lease-purchase contracts by a 16 county are contracts for public improvements and are subject to 17 Code section 331.341. By operation of law, such contracts that 18 exceed the threshold amount must comply with the requirements 19 of Code chapter 26. 20 Under current law, a contract for construction by a private 21 party of a property to be leased or lease-purchased by a 22 city is not a contract for public improvement under Code 23 section 26.2, except for purposes of Code section 26.12. A 24 lease-purchase contract funded in advance by means of the 25 lessor depositing moneys to be administered by the city, with 26 the city’s obligation to make rent payments commencing with its 27 receipt of moneys, is also subject to Code chapter 26. 28 The bill makes this type of contract a contract for public 29 improvement under Code section 26.2. A city must therefore 30 take competitive bids for renovations, repairs, or new 31 construction on a property to be leased or lease-purchased that 32 exceeds the competitive bid threshold in Code section 26.3. 33 The bill is effective upon enactment and applies to leases 34 and lease-purchase contracts entered into on or after the 35 -5- LSB 5313YC (6) 87 js/jh 5/ 6