Creating a Business Environment that Promotes Quality Construction

· 2007-2008 sees the continuation of efforts on Indemnification Reform in the commercial sector. A newly formed Risk Transfer Round Table organized by ASAC and comprised of associations representing subcontractors, general contractors, and the insurance industry is meeting to discuss and seek remedies. Heavy hitters all, the participants are taking their time to discuss indemnity reform in commercial projects. The group has also formed sub-committees to work on other problems of common interest.

· In 2006 ASAC introduced SB 1581, authored by Senator Joe Dunn (D-Santa Ana), Chairman of the Senate Judiciary Committee.  The measure was designed to enable a meaningful dialogue among general contractors, subcontractors, insurers and other stakeholders involved in commercial construction, similar to the prior year’s effort regarding residential construction.

The stakeholder discussions focused on issues regarding equitable resolution of construction defect claims, litigation and the costs of liability insurance. 

· The prior legislative session ASAC successfully worked on Indemnification Reform. ASAC’s aim is to pass legislation limiting the liability of every party to a construction contract to his/her proportionate share of fault. This legislation also limits defense obligations and insuring agreements to the same principle -- each party is only liable for its share of fault.

The passage of AB 758 made very good improvements to the residential side of the problem.

· ASAC also sponsored a bill to Reform Retention practices. Relating to the construction of any private work of improvement, the bill asked that retention proceeds not exceed 10% of the progress payments until the work is 50% complete.

This bill made it through the California State Legislature with bipartisan support (for the third time!), only to be VETOED by Governor Schwarzenegger. Any efforts at Retention Reform in 2007 will have to take the governor’s veto message into consideration and be handled accordingly.

· Continued to monitor the California Law Revision Commission as they review and propose revisions to the state Mechanics Lien Law. This body’s efforts are winding down, and the resulting changes may be presented to the legislature in 2007. ASAC will monitor and take positions on those bills as they come forth.

· Secured a seat on the Caltrans Small Business Council, where the mission is to encourage the participation of small businesses with Caltrans and to provide a forum for small business trade associations to comment and provide feedback on Caltrans policies and practices that affect or impact small business utilization and participation in Caltrans contracts and projects.

· In 2003 ASAC sponsored a bill requiring the owner to notify the prime contractor and any subcontractors and suppliers who have filed preliminary notices within ten days of recordation of a Notice of Completion or Notice of Cessation. Such notification must be by first class mail. The bill, limited to private works only, received incredible support from the subcontractor community.

The bill was signed by Governor Davis on July 14, 2003, and took effect January 1, 2004. A VICTORY for the subcontractors and suppliers of California!

· Defended subcontractors against erosion of Mechanic’s Lien rights. The movement to protect the homeowner by sacrificing subcontractors’ M/L protections is being turned as other remedies are sought. The uproar from the ASAC grassroots efforts made it clear subcontractors will not stand quietly by as their rights are threatened.

· Sponsored legislation that was signed into law by Governor Gray Davis requiring 100% bonding on public works projects beginning January 2001. This Little Miller Act legislation mirrors federal law recently amended based on ASA National Government Relations work.

· Ran a defense at the State Capitol on behalf of subcontractors that protected listing rights in the many design build bills before the legislature.

· Pay if Paid – Instrumental in the 1997 “pay if paid” victory from the California Supreme Court. ASA California’s Legal Counsel, Bill Crawford of Crawford & Bangs LLP (pictured right) led the fight for this major decision.

· Protected the Supreme Court decision in the legislature. Through active participation, we have been able stop several attempts to overturn “pay if paid”. This retained the major triumph for the subcontractor community. (We must remain present to prevent future attacks!)

· Developed and introduced several bills to reform retention practices in the state, including a pass through bill for public and private works. Led battles all the way to the desk of Governor Pete Wilson. 1998 saw the first passage of retention reform when the Governor signed pass through of retention on public works projects into law.

· Supported the coalition of 83 trade organizations that continues to work together in support of retention reform and furtherance of subcontractor interests. ASAC’s leadership for this coalition paid off in a grassroots movement that caught the attention of the legislature and increased the visibility of the subcontracting community.

· Supported the successful passage of legislation, and industry efforts, to allow contractors to stop working, without incurring delay damages. We applauded this equitable response to the “pay if paid” decision.

· Worked through the California Coalition for Construction in the Classroom (CCCC) to increase funding for “shop” classes in the schools. ASAC is a charter member of this organization, and serves on their Board of Directors.

· Voiced members’ concerns on legislative and regulatory issues in a series of meetings with representatives of other construction associations, through participation in the various industry meetings, and the Construction Industry Legislative Council (CILC).

· Represented members’ interests at the California State level through a Registered Legislative Advocate.

· Increased the visibility of ASA and its members in featured articles in California Construction, the McGraw-Hill industry newsletter reaching over 40,000 readers.

· Interacted with other ASA chapters and leadership through attendance and participation at the National level. ASA California has a Director on the ASA National Board, in the person of Wyatt Jones of Airco Mechanical, as well as several members participating in committees, councils and tasks forces. Additionally, ASAC’s Past President Bill Olmo of FEDCO Construction is the current Treasurer of ASA National, and is expected to move up the ladder to be the President.

· Maintained an ASAC group for workers compensation at the State Fund. Members can join, saving 6% and becoming eligible for premium refunds.

· Continue to offer Employee Group Benefits programs with “Flexibility for Employers”. Types of coverage available include: Medical, Dental, Vision, Life, and Disability & Section 125 Salary saving plans to minimize costs to both the employers and their employees. The program is able to provide competitive quotes to meet the various needs & sizes of all members. No pressure alternative quotes, allow you to learn, and buy only if your needs are meet!

· Met members’ information needs by publishing a bi-monthly newsletter with articles on legislative developments, trends in the courts, and tips on how to improve their bottom line. The newsletter, ASACalifornia, is now posted on the website at www.asacalif.com and available via e-mail as well as in print.

· Taught members how to meet the requirements of the state’s complex lien law, including sample copies of forms, through the availability of the manual California Lien Law and Collection Procedures.

·Added to this popular book, the Guide to the Small Claims Courts of California, by the same author.

· Developed a website to spread the word about ASAC and member companies. The site contains valuable information that subcontractors can access on a 24-hour basis, and will eventually be linked to other sites of value to ASA members. Visit us at www.asacalif.com.

Scott Holbrook (pictured) of ASAC Legal Counsel Crawford & Bangs LLP has written briefs on behalf of California subcontractors, most recently in the Crawford v. Weather Shield Mfg. case listed below.

American Subcontractors Association California, Inc. P.O. Box 292867, Sacramento, California  95829-2867 Phone: 888-310-2722   Fax: 530-662-2865   e-mail

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