(Written by Jack Milarch – NMHBA EVP/CEO – Originally published in the March 2011 Housing Journal)

Report from Santa Fe

Report on the Demise of Legislative Efforts to Make Code Compliance More Efficient

NMHBA, along with members of the NM-ICC Chapters of Building Officials, and a handful of knowledgeable legislators have been working for the past five years or more to try to give municipal inspection service departments more “tools in the toolbox” to enable them to be more successful and more able to provide quality and timely service to the construction industry in their local communities. Helping our mid-sized communities become more successful in these efforts is critical to the ability of these communities to grow and attract economic development. SB61 (Harden) and related bills were the result of these efforts. We believed this initiative was important especially looking forward to the end of the recession and in anticipation of increasing need for services for the construction industry.

After a number of years of working on these objectives, many of us felt that with the new administration the timing was right, and we had a short window of opportunity to achieve real change by way of the Legislature. SB61 was drafted following the concepts for improvement outlined in two “white papers” produced by NM Home Builders Association and a group of local chief building officials three years ago. The changes included the need to formally create the position of a Chief Building Official (CBO) at the local level, allow the CBO to utilize combination inspectors and third-party inspection services as needed, remove municipal inspectors from CID’s authority, and clarify that municipalities have the right to permit and inspect public buildings within their territory.

As SB61 promotional efforts got underway, IAPMO and two former Construction Industries Commissioners began lobbying against SB61, saying they were not appropriately included in discussions and passage of the bill would reignite the “code wars” (contentious debate over which model building code New Mexico uses as its base code) again even though the bill contained no language to change the way municipalities adopt their building codes.

The bill was assigned to a Senate committee where success was doubtful considering the opposition, and the first hearing was stalled by the sponsor as he tried to resolve problems. Eventually we had all the players ready for a battle royal in that first Senate committee when our sponsor got the news (just prior to the hearing!) from Dee Dennis, new Regulation and Licensing Department Superintendent, that the Martinez Administration was opposed to our bill. We were stunned. RLD insisted on CID retaining control over the local inspector “certification” process and wanted a stronger statement about the state code being the minimum statewide, at least. SB61 was intended to deregulate the inspection process so each local community could develop services that were the most efficient for them, but the new Administration is of the opinion that statewide economic development would best be served by standardizing codes and inspection services at the state level. While these are good goals, we explained that many years of frustration with our state level regulatory processes have led us to believe the changes we proposed were necessary.

It became increasingly apparent that our main sponsor, Senator Harden (an east side Republican), was under tremendous pressure for his efforts to promote a bill that was displeasing to his friends in the new Administration. In the end NMHBA leadership agreed to pull the plug on the effort. It was obvious that even if we succeeded in getting SB61 through the Legislature, the bill would likely be vetoed.

Superintendent Dennis has committed to working with us after the Session to resolve problems in getting better service in the “frontier areas” (the new term apparently for areas outside the Rio Grande Corridor) and in getting a more mainstream and development-friendly building code in place at the state level.

We believe we have succeeded in elevating the CID/CIC problems up on the priority list for the Martinez Administration, which is in itself a major accomplishment. Our efforts have succeeded in focusing everyone involved on the need for more efficient and effective code compliance processes and on possible solutions to those problems. As of this writing we have not heard who is to be appointed to the Construction Industries Commission, but as soon as we do we will be discussing all this with them at the earliest convenience.

We are asking sponsors of our related bills to just let them languish, so they will probably wither away along with SB61.

Other bills that concern the reorganization of CID/CIC include:

HB242 Transfer Of Duties To RLD (Bandy) – If passed, this one would eliminate the Construction Industries Commission (CIC) and just let CID adopt regulations without Commission review. Recently RLD Superintendent Dee Dennis asked a number of construction industry representatives if they supported the concept, and because all opposed the bill he agreed to ask the sponsor to redraft the bill to delete references to CIC and CID.

We are monitoring SB478 (Cravens) & HB594 (Doyle) CIC Rulemaking – These bills consolidate lines of authority from CID Bureau Chiefs directly to the Governor. They would make the Bureau Chief positions political appointments, the CIC advisory only, and transfer final authority for code adoption to the RLD Superintendent. We are still discussing its components with the sponsors and RLD/CID bosses. Waiting for their first committee hearings.

 

NMHBA Continues Working to Kill Residential Sprinklers Mandates

Our Association’s main effort this Legislative Session is to pass a bill which will prevent the Construction Industries Division and Commission from requiring fire sprinklers in single family homes and town homes built under the International Residential Code.

As part of our discussions about residential fire sprinklers in our state codes, NMHBA leadership identified two additional areas of concern where we believe our state law should be changed.

– Commercial construction Certificate of Occupancy authorizations are being held up as the two “chiefs” (building vs. fire) debate their interpretations of the fire and building codes. On both public and private buildings this often results in last minute changes and expenses. (One such very high profile problem occurred recently at a University of New Mexico sports stadium; however, this situation is repeated numerous times across New Mexico without as much press coverage!)

– Local governments are under pressure to adopt ordinances for residential fire sprinkler requirements, often at the request of the local fire marshal. Under our current state law provisions, local governments can make their building/fire codes more restrictive than the state code.

Two matching bills to deal with these issues, SB201 (Munoz) and HB167 (Doyle), were introduced on both sides of the Legislature the first week of the Session. At the first committee hearing in the Senate, fire fighters and fire marshals from around the state joined with local government lobbyists and insurance company interests to oppose our bill. Recognizing the opposition was strong and the most important goal was keeping the fire sprinkler mandates out of the state level housing code, SB201 was stripped back to only that issue. The House version was similarly stripped back to the core issue at its first hearing as well. Opposition since then has been light or non-existent.

At the time this went to press, SB201 just passed the Senate and was headed to the House, and HB167 was heading to its second hearing, in the House Judiciary Committee.

NMHBA sends a Weekly Update of Bills of Interest via email. If you would like to be placed on the distribution list for this information, call Melinda at 505-344-7072 with your e-mail address.

There were nearly 1300 bills introduced this session, and the last day to introduce bills has passed. Not many bills were heard even in their first committee as this article went to press, but we understand the Committee Chairs have been given the order to start pushing things along.

Below is the listing of bills NMHBA is either supporting or opposing.

Building Departments / CID / CIC

We SUPPORTED SB61 Local Government Building Inspectors (Harden)– See Jack’s column (Part I) for information on this important issue.

 

We are monitoring HB242 Transfer Of Duties To RLD (Bandy), and SB478 CIC Rulemaking (Cravens), and HB594 CID Rulemaking (Doyle) – These are more bills for restructuring – HB242 would eliminate the Construction Industries Commission (CIC) and just let CID adopt regulations without Commission review; SB478 and HB594 both would make the CID Bureau Chiefs appointed positions and the CIC strictly advisory. We don’t see anything in any of these bills that will save money, and they may fizzle like the other restructuring bills appear to be. Recently RLD Superintendent Dee Dennis asked a number of construction industry representatives if they supported the concept in HB242, and because all opposed the bill he agreed to ask the sponsor to redraft the bill to delete references to CIC and CID. The superintendent appears to be focusing his efforts this Session searching for a way to exercise more control over the CID Bureau Chiefs and Director.

 

Fire Codes, Fire Marshal, Fire Sprinklers

We SUPPORT SB201 & HB167 Fire Prevention Ordinances & Code Changes (Munoz/Doyle) – These bills had their content stripped back to just prohibit the state from enacting a building code or rule which would mandate residential fire sprinklers. See Jack’s column for more details. SB201 passed the Senate on a unanimous vote and heads to the House; HB167 passed its first committee without opposition.

 

Workers’ Compensation

We SUPPORT SB274 Qualification of Workers’ Comp Judges (Lopez) – Builder’s Trust was instrumental in creating this bill. SB274 changes the WC judge selection and retention/review process to more closely mirror the process used for district court judges. The current process is simply that the WC Director appoints judges. Passed its first committee hearing.

We SUPPORT HB356 No Workers’ Comp if Drugs/Alcohol Involved (Roch) –This bill would add being under the influence of alcohol or controlled substances to the short list of situations that deny WC benefits. Passed its first committee hearing.

 

Public Works Bidding

We SUPPORT SB35 Public Works Contract Subcontractor Bonds (Larranaga) – If passed, this bill would raise the “trigger” point for requiring a bond on PW contracts from the current $125,000 to $200,000 or more project value, which seems to be a good idea and NMHBA is supporting. Passed both committees and is waiting to be scheduled on the Senate Floor.

This topic has generated many bills to broaden or narrow provisions of PW bidding. We are also monitoring a number of bills that would 1) require the director of the Labor Relations Division of the Workforce Solutions Department to determine prevailing wage and fringe benefit rates on public works projects by conducting a continuing program to compile rate information; 2) require any worksheets or notes used to evaluate bids for contracts over $50,000 to be signed by the individual evaluator and kept as a public record for the length of the contract; and 3) replace the current method of determining prevailing wages from wage rates and fringe benefit rates used in collective bargaining agreements between labor organizations and their signatory employers to voluntary submission of wage rate and fringe benefit rate data by contractors, contractors’ associations, labor organizations, interested persons and public officers. HB186 passed its first committee; HB63, SB287 are waiting to be heard in first committee.

 

Climate Change / Sustainable Building Tax Credit

We SUPPORT HB166 Review Certain Tax Credits (Sandoval) – Beginning in 2014 and at six-year intervals, would require a report on the sustainable building tax credit so it could be reviewed to see if a need remains for the credit, and if the credit is cost-effective. This would effectively extend the sustainable building tax credits currently scheduled to expire in 2013. Passed its first committee hearing; on to Tax & Rev.

We OPPOSE SB442 Building Energy Disclosure Act (Cisneros) – This bill would require all 5,000 sq. ft. (or larger) commercial building owners to disclose data about the building’s energy. As far as we can tell there would be no meaningful data collected, however, efforts along these lines will continue to be promoted from the national level. Energy usage provided by a publicly regulated utility is already public information, according to PRC Commissioner Jason Marks, and if so this bill would appear unnecessary. Waiting for its first committee hearing.

 

Eminent Domain

We SUPPORT HB110 Limited Use of Eminent Domain (Madalena) – Always a very controversial subject, this bill would permit the City of Rio Rancho to condemn unoccupied lots if there are more than ten thousand vacant or unimproved subdivision lots in the city and the property to be condemned is part of a subdivision platted prior to 1973, except if there is any structure on any of the impacted lots. Supported by the HBA of Central New Mexico. Moved out of its first committee without recommendation (unusual), and waiting to be scheduled in next committee. We hear negotiations for amendments are underway prior to its next hearing.

We SUPPORT SB177 Municipal & County Affordable Housing Act (Ortiz y Pino) – Promoted by Santa Fe Area HBA, this would allow Santa Fe County to raise property tax assessments not to exceed $2 per $1,000/taxable value to fund affordable housing projects. Proposal must be submitted to voters for approval. Passed (amended) its first committee.

We OPPOSE SB243 Tax Increment District Requirements (Fischmann) – This bill would severely limit the use of TIDDs by permitting GRT to pay back bonds only if the TIDD is limited to redevelopment of public improvements and existing infrastructure that will remain owned by a local government or the state. Also would require developers to contribute a minimum of 40% of the initial public infrastructure costs (instead of the current 20%) before bonds can be sold. Pulled from the schedule in its first committee hearing when the sponsor determined there were not sufficient votes for it to pass.

 

Mortgages / RECs / Foreclosures

There are several bills introduced which we believe may have the impact of chilling real estate loans because the bills would limit lenders’ ability to recover when the loans go bad, retroactively alter terms, or provide long contract rescission times.

We are opposing SB320 Real Estate Installment Contract Act (Wirth) – If passed, this bill would make it more difficult and hazardous for the seller to use Real Estate Contracts. These arrangements are often used for financing sales to those with no credit or no down payment. In this market, we are hesitant to see cold water thrown on any financing options, including real estate contracts. Realtors and escrow organizations are also opposing. Pulled from the schedule in its first committee hearing for amendments that no one seems to be working on.

We SUPPORT SJM14 Qualified Homebuyers to Obtain Financing (Boitano/Baldonado) – This Joint Memorial encourages federal mortgage lending regulators to reassess and amend their credit policies so that more homeowners can refinance their current home loans and more qualified homebuyers can obtain mortgage financing. NMHBA leadership will be meeting with the New Mexico Congressional delegation to discuss this very issue during February and March.

 

Miscellaneous

We SUPPORT HB492 Repeal Construction Industry Stop Notice Act (Cervantes) – This bill would remove a seldom-used and highly convoluted portion of the Lien Law applying only to the sale of newly constructed residential property. Problems with this part of the law were the subject of long discussions over the last two years with the Attorney General’s Consumer Protection Division. Waiting for its first committee hearing.

We are monitoring HB9 Homeowner Association Act (Stewart) – Among many other provisions, this bill began with a provision which would require developers to turn over management of the HOA to residents when there are still 25% of the lots to sell. Passed (amended) its first committee. This bill has a broad base of support among citizens who are willing to testify for the bill and among legislators. We continue trying to work with the sponsor to see if she would remove sections that are bad for builders/developers who utilize HOAs in their projects.

The actual text of any bill may be found online at http://www.nmlegis.gov/lcs/default.aspx. Click on “Legislation”, then “Bill Finder” on left side, enter the bill number, and scroll down to the file. Call Melanie at the NMHBA office for further details.