Legislative Update 2017

In a more unusual twist of events than the past six years, the final days of the 2017 Legislative session and special session between Governor Dayton and the Legislature took another strange turn. Unable to balance the budget by the constitutional deadline, Governor Dayton and the Legislature came to a global agreement on spending bills half an hour before adjourning sine die with the caveat that all would come back in the morning to start passing the spending bills…by 7 am the next day.

As special session began it became clear that seven of the eleven bills would not be brokered, reviewed, and sent to each body for passage off the floor by 7 am the next day. Consequently, the special session lasted three more days. The result was each side crying foul. Governor Dayton decried “poison pill” language was snuck into the State Government Finance bill shutting down the Department of Revenue and sending pink slips to all 1,300 employees if the Tax bill wasn’t signed into law. In what can only be described about as turnabout is fair play, the Governor turned around and line item vetoed all appropriations for the House of Representatives and the Senate effectively shutting down the legislature. Again, the threat of pink slips to state employees.Hence, the impending constitutional crisis. Does the Governor have the authority to funding to the legislature? Each side has drawn its proverbial sword and to Court they are a headed.

For the past few years, the Contractors Association of MN (CAM) has been moving legislation that would hold insurance companies more accountable to homeowners and contractors during an occurrence related event. This year, the Association was hopeful that Republicans (who are typically business friendly) would assist in advancing the CAM agenda. Rep. Tama Theis (R – St. Cloud), who owns a contracting business in the St. Cloud area, authored the legislation with several other legislators willing to move the legislation through the process. Unfortunately, once again, we were stalled by Commerce Committee Chairs in the House and the Senate (Republicans to boot) who wouldn’t hear our legislation because the insurance companies opposed it. We were, however, able to pique curiosity in the House Commerce Committee when Rep. Greg Davids (R – Preston) offered an amendment to a related bill that would have required insurance adjusters to have better Minnesota code education. The amendment was eventually withdrawn but as previously noted, legislators took note. CAM will be meeting with these and other legislators during the interim to continue educating them on the difficulties of properly repairing a home that has had a storm occurrence related event.

CAM was able to kill a significant piece of legislation that would have allowed insurance companies to continue winnowing away at contractors duty to help a customer in an occurrence related event. This bill was introduced on a Monday and heard Wednesday of the same week. The issue was brought forward by the insurance industry to clarify a MN Supreme Court decision – Wilcox vs State Farm Fire and Casualty. The crux of the issue was whether an insurance provider could depreciate labor costs when arriving at the Actual Cash Value of an insurance claim. The insurance industry subsequently introduced a bill that would allow them to file a form with the Commerce Department to depreciate labor costs. Surprisingly, the Commerce Department was not willing to accept the bill and strongly opposed it.

CAM had strong objections to the meat of the legislation allowing for labor expense depreciation applicable when determining the value of a damaged property in insurance policies. The insurance industry reiterated the intent of the legislation was not to take away benefits from policyholders, but simply to follow the Wilcox decision. Nevertheless, CAM began building consensus objection to the bill; however, the bill moved through the Senate Commerce committee with an amendment to the “good faith statute” that would have allowed for

the depreciation costs of goods, material, labor and services necessary to replace, repair, or rebuild damaged property.

The success came when CAM spoke with Rep. Tama Theis and the House Commerce committee members along with other interested parties to stop this legislation from moving any further.

CAM fully expects a continued assault on the industry due to the influence of the insurance companies up at the Capitol. It is important as a member of the industry to make sure that you contract your legislator when a call to action comes across your email. Also, we had a successful CAM Day on the Hill. Please stay tuned next legislative session for the Day on the Hill. Legislators need to hear first hand from their constituents!

The Minnesota Legislature adjourned in May after an extremely abbreviated session. This year’s legislative agenda focused on taxes, bonding and a supplemental budget. All of the bills were passed with bipartisan support; however, Governor Dayton ending up pocket vetoing both the tax bill and the bonding bill. A pocket veto essentially means he refused to sign the legislation so it “died on his desk.” The tax bill was meant to provide relief to business owners, veterans and students with college loans among.. The bonding bill was one of the most significant ever for transportation and water infrastructure – think Flint, Michigan.

The MNAES has growing support for legislation they introduced during the 2015 – 2016 legislative session. The bill required insurance companies to offer:

• supplement insurance options to a policy;
• require insurance companies to discuss a claim with a contractor;
• require an insurance adjuster (with an insurance company) to have continuing education on Minnesota construction codes; and
• would have allowed for certain findings e.g., Commerce Department findings to be admitted as evidence in a court case.

The MNAES was able to obtain signatures in both the House and the Senate to introduce the bill. While it didn’t receive a hearing in either body, it received substantial positive feedback and an informational meeting with legislators, staff, the MNAES and the insurance federation.

Several bills adverse to the industry were also introduced. The MNAES lobbied legislators on the detriments of these pieces of legislation and none of them received a hearing.

• Contractors would have been required to pay attorney’s fees if they lost a court case on the home warranty statute (MN Statutes 327A);
• Insurance policy limits would have been established for building code requirements; and
• Clarifying in law that a public adjuster could not negotiate claims if the public

adjuster was in anyway affiliated with a business that performs loss on repairs or storm damage.

The MNAES has been working to build relationships with the Departments of Commerce and Labor and Industry (DOLI). This last month a meeting commenced with Commerce and DOLI to discuss several issues that have made it difficult for contractors to perform a high quality job for their customer. Issues discussed including insurance companies requiring:

• Unreacted to receive operating and profit;
• A guidance memo on code requirements the insurance industry must pay on a claim;
• Insurance company policy endorsements; and
• Insurance companies directing consumers to preferred contractors.

The Departments will be working on a guidance memo for required building codes for storm repair damage. If you would like to submit codes you feel should be part of the guidance memo to assist a customer in getting their home repaired, please send them to Lisa Frenette at frenettela@gmail.com

Commerce was very interested that insurance companies have been changing policy endorsements. They have assigned insurance investigators to go over policies to look for other unfair changes in policy endorsements.

The MNAES will be scheduling in early September to continue working on these issues. Please contact Lisa Frenette if you have questions or comments at frenettela@gmail.com.

Legislative Update 2015

The Minnesota Legislature adjourned in May with as many questions as answers. While all the public’s attention has been on education funding, other significant issues are still in limbo. To date the Governor and House Republicans have been meeting to resolve differences in the vetoed bills with the Governor continually renegotiating provisions he’d like to see put in or taken out of bills. Below are highlights of enacted laws or provisions the MNAES was able to stave off this year.

First, the last bill the Legislature passed was the Omnibus Jobs and Energy bill – literally in the last minutes of session. House DFL members instantly cried foul given they had no time to read the bill before passage. The bill was also criticized for a technical, but perhaps fatal, flaw given the House Clerk read the wrong bill number before the vote.

The most relevant piece to MNAES members was the provision prohibiting the mandate of fire sprinklers in new residential construction. To date, the Governor has not made removing the sprinkler prohibition mandate a priority for signing the Omnibus Jobs bill.

Second, the Construction Codes and Licensing bill contained the model code cycle language that MNAES worked on with BAM this session. The original bill was amended to move the full model residential and building (commercial) code updates prescribed by the ICC from three years to six years but allows the Department of Labor and Industry (DOLI) to provide amendments in the case of updated technology or for the health, safety and welfare of the public. An example of this is when the legislature passed a law requiring code changes for window fall protection. If there wasn’t flexibility, the department wouldn’t have been able to provide rule making mandated by the legislature. The bill also clarifies in federal law on energy codes which requires DOLI (as well as the other 50 states) to certify to the Department of Energy that the state has reviewed provisions of the energy codes and made a determination as to whether it is appropriate for the state to update its energy codes. This year DOLI reviewed the new energy codes and made the decision not to proceed with anything new.

The Department of Labor and Industry also has several clean up provisions in its bill this year.

1. Construction Contractor Registration dates have been changed. All registrations issues on or before December 31, 2015 expire on on December 31, 2015 in the odd numbered year. The previous date was June 30, 2015.
2. A residential roofer under 326B.86 must “give and maintain” a bond with a penal sum of

$15,000 to DOLI as a ground for sanctions for failure to “give and maintain” the bond.

The MNAES was also able to hold back bills that would have been detrimental to the industry. This includes attorneys fees against a contractor, insurance limitation on building code coverage and the regulation of insurance claims. These bills are still in the mix next year and the MNAES should fully expect them to surface as part of a legislative agenda.

Stay tuned for more special session information as well as new regulatory information on asbestos and lead.