July 28, 2015

The 2015 Legislative Session: Impacts on the Construction and Development Industries



JULY 2015

The Oregon Legislature adjourned its 2015 Session on July 6, 2015.  The Session started with the resignation of Governor John Kitzhaber, calling into question his prior legislative agenda and budget priorities.  However, as Governor Brown entered office, she made it clear that her own 2015 legislative priorities would closely track those of her predecessor.  The Democrats, firmly controlling both the Oregon House and Senate, created a dominant single-party legislative environment, which they utilized to successfully pass a number of policy bills that could affect the construction and development industries.  This is a very brief summary of some of the most significant bills that passed as well as some of those that did not.

Bills that Passed

Public Facilities Funding

$1.2 Billion Statewide Construction Funding Package

In the waning hours of the Session, the Legislature passed HB 5005 and HB 5030, which together authorized spending $1.2 billion on future construction projects across the state.  The spending package is backed by general fund and lottery-backed revenue bonds.  It includes $175 million in seismic upgrades in schools, $125 million for similar upgrades in other settings—including police and fire stations, $50 million for water supply development projects, $40 million for affordable housing projects, and relatively minor amounts for select transportation projects.

Real Estate and Development

Brownfield Redevelopment

HB 2734 authorizes the creation of land bank authorities at the local government level.  Land banks bring together local governments, lenders, and the development community to acquire, clean-up, and redevelop contaminated properties.  HB 2289 allows property owners and developers to reduce income taxes by a percentage of the documented qualifying costs of a brownfield cleanup.  Together these bills are likely to help spur the redevelopment of contaminated properties across Oregon.

Expedited Land Divisions

HB 3223 Expands the definition of expedited land division under ORS 197.360 to include affordable housing developments and requires municipalities to advise applicants if a project might qualify as an expedited land division.

Affordable Housing Preference in State Land Disposition

HB 3524 requires that state agencies grant the right of first refusal to developers of affordable housing when selling or disposing of land.

Vertical Housing Development Zone Tax Exemption

HB 2126 extends the sunset on the property tax exemption available for project developers within a Vertical Housing Development Zone, which is another tool used to encourage the construction of affordable housing.

Statewide Mandatory Paid Sick Leave

SB 454 requires Oregon employers with 10 or more employees to provide at least one hour of paid sick leave time for every 30 hours of work (5 days per year).  Employers with less than 10 employees must provide at least 5 unpaid sick leave days per year.  The allowable leave extends beyond an employee’s personal illness to cover a variety of other absences related to family member illnesses or death, domestic violence, and public health emergencies.

Public Contracting

MWESB Certification

HB 2716 requires contracting agencies provide as a material condition of the public contract that any certified contractor remain certified as a disadvantaged, minority, women, or emerging small business enterprise (MWESB) during the entire term of the contract, if the contract was awarded on the basis of the contractor’s certification.  The bill also requires contractors to include a similar provision in their subcontracts.

Disabled Veteran-Owned Businesses

HB 3303 expands eligibility for disadvantaged business entity certification to include service-disabled, veteran-owned businesses, making them eligible for certain preferences in public contracting.

Bills that Did Not Pass

Transportation Infrastructure

In what many feel is the biggest disappointment of the Session, the Legislature failed to pass a transportation funding package.  The package would have created approximately $340 million in new funding for transportation infrastructure maintenance and improvements.  The Governor and Legislature made considerable bi-partisan efforts to develop an acceptable package.  However, the issue was ultimately too politically charged because of the early Session passage of the Low Carbon Fuel Standard Bill (SB 324), and the subsequent effort to replace that bill with alternate greenhouse gas emissions reduction strategies.

Inclusionary Zoning

HB 2564 would have repealed a statewide preemption on inclusionary zoning.  Inclusionary zoning is a tool used by local governments in other states to require all housing developments over a certain size to allocate a percentage of the total units built for affordable housing.  Because the bill failed, the ban remains in place.

Minimum Wage Increase

Despite being identified as a significant priority for the Democrat majority, the Legislature did not pass any of the bills that proposed to increase Oregon’s minimum wage to $15 (or more in some cases). This issue will likely re-emerge as a ballot initiative in 2016.

Other Labor and Employment Bills that Did Not Pass

HB 2043 would have mandated use of the federal E-Verify system to check immigration status of all potential hires.  HB 2386 would have empowered BOLI to issue cease and desist orders for alleged wage and hour violations.  SB 19 would have established liability on employees who aid or abet their employer in violation of wage laws.  SB 718 would have allowed employees to file liens against employers for alleged wage and hour violations.

The Issue that Didn’t Come Up

During the session, the Oregon Supreme Court invalidated a 2013 compromise that would have reduced PERS costs to the state and all local governments.  The PERS Board is now determining what the cost increase will be.  It will be effective in 2017, and will significantly affect spending by all levels of government.  It may also lead to tax increases.  Stay tuned.

Parting Thoughts

The construction and development industries will be directly affected by many of the bills passed by the 2015 Legislature.  In addition to the bills summarized above, there are many others that are relevant to these industries.  In particular, the $1.2 billion construction package should create a number of opportunities for developers and contractors as these projects move forward.  In addition, the Legislature’s considerable emphasis on affordable housing should create new opportunities in that sector.  In the coming months, state agencies will initiate rulemaking processes to implement these new laws.  It will be important for affected businesses to stay abreast of these rulemaking efforts in order to make sure their interests are well represented.

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