H.F. 2253 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 3 private party of property to be 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 lease-purchased that is renovated, repaired, or involves new 7 construction exceeds the competitive bid threshold in section 8 26.3, the state agency shall comply with the competitive 9 bidding requirements of section 26.3. 10 Sec. 2. Section 26.2, subsection 3, Code 2018, is amended 11 to read as follows: 12 3. “Public improvement” means a building or construction 13 work which is constructed under the control of a governmental 14 entity and is paid for in whole or in part with funds of the 15 governmental entity or for which a commitment has been made 16 prior to construction by the governmental entity to pay for the 17 building or construction work in whole or in part with funds of 18 the governmental entity , including a building or improvement 19 constructed or operated jointly with any other public or 20 private agency, but excluding urban renewal demolition and 21 low-rent housing projects, industrial aid projects authorized 22 under chapter 419 , emergency work or repair or maintenance 23 work performed by employees of a governmental entity, and 24 excluding a highway, bridge, or culvert project, and excluding 25 construction or repair or maintenance work performed for a city 26 utility under chapter 388 by its employees or performed for a 27 rural water district under chapter 357A by its employees. 28 Sec. 3. Section 26.2, Code 2018, is amended by adding the 29 following new subsection: 30 NEW SUBSECTION . 5. “Under the control of a governmental 31 entity” includes determining the construction work to be 32 performed or establishing the specifications for a building or 33 construction work to be occupied by the governmental entity. 34 Sec. 4. Section 260C.38, subsection 3, Code 2018, is amended 35 -1- LSB 5313HV (2) 87 js/jh 1/ 6

H.F. 2253 to read as follows: 1 3. Before Subject to subsection 4, before entering into a 2 lease agreement with a purchase option for a building to be 3 constructed, or placed, upon real estate owned by the community 4 college, the board shall first adopt plans and specifications 5 for the proposed building which it considers suitable for the 6 intended use, and the board shall also adopt the proposed 7 terms of the lease agreement and purchase option. The board 8 shall invite bids, by advertisement published once each week 9 for two consecutive weeks in the county where the building is 10 to be located. The lease agreement shall be awarded to the 11 lowest responsible bidder, or the board may reject all bids and 12 readvertise for new bids. 13 Sec. 5. Section 260C.38, Code 2018, is amended by adding the 14 following new subsection: 15 NEW SUBSECTION . 4. A contract for construction by a 16 private party of property to be lease-purchased by a community 17 college is a contract for a public improvement as defined in 18 section 26.2. If the estimated cost of the property to be 19 lease-purchased that is renovated, repaired, or involves new 20 construction exceeds the competitive bid threshold in section 21 26.3, the board shall comply with the competitive bidding 22 requirements of section 26.3. 23 Sec. 6. Section 262.34, subsection 1, Code 2018, is amended 24 to read as follows: 25 1. When the estimated cost of construction, repairs, or 26 improvement of buildings or grounds under charge of the state 27 board of regents , including construction, renovation, or 28 repairs by a private party of a property to be lease-purchased 29 by the board exceeds one hundred thousand dollars, the board 30 shall advertise for bids for the contemplated improvement or 31 construction and shall let the work to the lowest responsible 32 bidder. However, if in the judgment of the board bids received 33 are not acceptable, the board may reject all bids and proceed 34 with the construction, repair, or improvement by a method as 35 -2- LSB 5313HV (2) 87 js/jh 2/ 6

H.F. 2253 the board may determine. All plans and specifications for 1 repairs or construction, together with bids on the plans or 2 specifications, shall be filed by the board and be open for 3 public inspection. All bids submitted under this section shall 4 be accompanied by a deposit of money, a certified check, or a 5 credit union certified share draft in an amount as the board 6 may prescribe. 7 Sec. 7. Section 278.1, subsection 2, paragraph b, Code 2018, 8 is amended to read as follows: 9 b. Before Subject to paragraph “c” , before entering into 10 a rental or lease-purchase option contract, authorized by the 11 electors, the board shall first adopt plans and specifications 12 for a building or buildings which it considers suitable for the 13 intended use and also adopt a form of rental or lease-purchase 14 option contract. The board shall then invite bids thereon, 15 by advertisement published once each week for two consecutive 16 weeks, in a newspaper published in the county in which the 17 building or buildings are to be located, and the rental or 18 lease-purchase option contract shall be awarded to the lowest 19 responsible bidder, but the board may reject any and all bids 20 and advertise for new bids. 21 Sec. 8. Section 278.1, subsection 2, Code 2018, is amended 22 by adding the following new paragraph: 23 NEW PARAGRAPH . c. A contract for construction by a private 24 party of property to be lease-purchased by a public school 25 corporation is a contract for a public improvement as defined 26 in section 26.2. If the estimated cost of the property to be 27 lease-purchased that is renovated, repaired, or involves new 28 construction exceeds the competitive bid threshold in section 29 26.3, the board shall comply with the competitive bidding 30 requirements of section 26.3. 31 Sec. 9. Section 298.3, subsection 1, paragraph j, Code 2018, 32 is amended to read as follows: 33 j. The purchase of buildings or lease-purchase option 34 agreements for school buildings. However, a contract 35 -3- LSB 5313HV (2) 87 js/jh 3/ 6

H.F. 2253 for construction by a private party of property to be 1 lease-purchased by a public school corporation is a contract 2 for a public improvement as defined in section 26.2. If 3 the estimated cost of the property to be lease-purchased 4 that is renovated, repaired, or involves new construction in 5 excess of the competitive bid threshold in section 26.3, the 6 board of directors shall comply with the competitive bidding 7 requirements of section 26.3. 8 Sec. 10. Section 331.301, subsection 10, paragraph i, Code 9 2018, is amended to read as follows: 10 i. A contract for construction by a private party of 11 property to be leased or lease-purchased by a county is not 12 a contract for a public improvement under and is subject to 13 section 331.341, subsection 1 . However, if a lease-purchase 14 contract is funded in advance by means of the lessor depositing 15 moneys to be administered by a county, with the county’s 16 obligation to make rent payments commencing with its receipt of 17 moneys, a contract for construction of the property in question 18 awarded by the county is a public improvement and is subject to 19 section 331.341, subsection 1 . 20 Sec. 11. Section 364.4, subsection 4, paragraph i, Code 21 2018, is amended to read as follows: 22 i. A contract for construction by a private party of 23 property to be leased or lease-purchased by a city is not 24 a contract for a public improvement under section 26.2, 25 subsection 3 , except for purposes of section 26.12 . However, 26 if a lease-purchase contract is funded in advance by means of 27 the lessor depositing moneys to be administered by a city, 28 with the city’s obligations to make rent payments commencing 29 with its receipt of moneys, a contract for construction of 30 the property in question awarded by the city is subject to 31 chapter 26 . If the estimated cost of the property to be 32 lease-purchased that is renovated, repaired, or involves new 33 construction exceeds the competitive bid threshold set in 26.3, 34 the city shall comply with the competitive bidding requirements 35 -4- LSB 5313HV (2) 87 js/jh 4/ 6

H.F. 2253 of section 26.3. 1 Sec. 12. EFFECTIVE DATE. This Act, being deemed of 2 immediate importance, takes effect upon enactment. 3 Sec. 13. APPLICABILITY. This Act applies to lease-purchase 4 contracts entered into on or after the effective date of this 5 Act. 6 EXPLANATION 7 The inclusion of this explanation does not constitute agreement with 8 the explanation’s substance by the members of the general assembly. 9 This bill relates to competitive bidding requirements for 10 construction on properties that certain government entities 11 will lease or lease-purchase. 12 Code chapter 26 (public construction bidding) imposes public 13 bidding requirements on certain public improvements which are 14 estimated to cost above a threshold amount. 15 The bill expands the definition of “public improvement” to 16 include work that a governmental entity commits to pay for in 17 whole or in part prior to the construction commencing. The 18 bill defines “under the control of a governmental entity”. 19 The bill makes a contract for construction by a private party 20 of a property to be lease-purchased by the state of Iowa, a 21 community college, or a public school corporation a contract 22 for public improvement under Code section 26.2. The state 23 of Iowa, a community college, or a public school corporation 24 must therefore take competitive bids for renovations, repairs, 25 or new construction on a property to be lease-purchased that 26 exceeds the competitive bid threshold set in Code section 26.3. 27 Current law requires the state board of regents to 28 competitively bid for construction, repairs, or improvement 29 of buildings or grounds under its charge when the estimated 30 cost of the work exceeds $100,000. The bill requires the state 31 board of regents to competitively bid for construction by a 32 private party of a property to be lease-purchased by the state 33 board of regents if the estimated cost of that constructions 34 exceeds $100,000. 35 -5- LSB 5313HV (2) 87 js/jh 5/ 6

H.F. 2253 Currently, a contract for construction by a private party of 1 a property to be lease-purchased by a county is not a contract 2 for public improvement under Code section 331.341(1), unless a 3 lease-purchase contract is funded in advance by means of the 4 lessor depositing moneys to be administered by the county, with 5 the county’s obligation to make rent payments commencing with 6 its receipt of moneys. 7 Under the bill, all lease-purchase contracts by a county 8 are contracts for public improvements and are subject to Code 9 section 331.341. By operation of law, such contracts that 10 exceed the threshold amount must comply with the requirements 11 of Code chapter 26. 12 Under current law, a contract for construction by a private 13 party of a property to be lease-purchased by a city is not a 14 contract for public improvement under Code section 26.2, except 15 for purposes of Code section 26.12. A lease-purchase contract 16 funded in advance by means of the lessor depositing moneys to 17 be administered by the city, with the city’s obligation to make 18 rent payments commencing with its receipt of moneys, is also 19 subject to Code chapter 26. 20 The bill makes this type of contract a contract for public 21 improvement under Code section 26.2. A city must therefore 22 take competitive bids for renovations, repairs, or new 23 construction on a property to be lease-purchased that exceeds 24 the competitive bid threshold in Code section 26.3. 25 The bill is effective upon enactment and applies to 26 lease-purchase contracts entered into on or after the effective 27 date of the bill. 28 -6- LSB 5313HV (2) 87 js/jh 6/ 6