House Committee on Business, Labor, Economic, & Workforce Development (02/27/2014)

Final
STAFF SUMMARY OF MEETING

HOUSE COMMITTEE ON BUSINESS, LABOR, ECONOMIC, & WORKFORCE DEVELOPMENT

Date:	02/27/2014	ATTENDANCE

Time:	01:33 PM to 04:34 PM	Exum	X
		Hamner	X
Place:	LSB A	Holbert	X
		Navarro	X
This Meeting was called to order by		Nordberg	*
	Representative Williams	Rosenthal	X
		Ryden	X
This Report was prepared by		Szabo	X
	Erin Vanderberg	Wright	X
		Kraft-Tharp	X
		Williams	X
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
HB14-1091 HB14-1165 HB14-1274		Postponed Indefinitely Postponed Indefinitely Referred to the Committee of the Whole

01:34 PM -- HB 14-1091

The committee came to order. A quorum was present. Representative Swalm presented House Bill 14-1091, concerning the reporting of workers' compensation injury dollars in the experience modification factor of employers. Workers' compensation insurance premiums for employers are adjusted by experience modification factors based on an employer's previous three years of losses due to workplace injuries. Experience modification factors are calculated by an authorized rating organization that collects claims information from insurance companies. This bill requires insurance companies, including Pinnacol Assurance (Pinnacol), to submit revised claim information when:

• a claim closed during the policy year for an amount less than the amount paid plus reserves; or
• the insurance company recovered moneys through subrogation after the claim closed.

Under the bill, the authorized rating organization has 30 days after receipt of the updated information to revise the experience modification factor. Insurance companies are required to credit employers for premium reductions that occur as a result of applying the revised experience modification factor.

Representative Swalm distributed Amendment L.005 and Amendment L.006 (Attachments A and B, respectively). Representative Swalm responded to questions from the committee.

140227 AttachA.pdf

140227 AttachB.pdf

01:44 PM

Representative Swalm continued to respond to questions from the committee.

The following individuals testified:

01:50 PM -- Dave Davia, representing Colorado Association of Mechanical and Plumbing Contractors (CAMPC), testified in opposition to the bill. Mr. Davia discussed the impact the legislation would have on his industry and responded to questions from the committee.

01:59 PM -- Mark Isaakson, representing Pinnacol Assurance (Pinnacol), testified in opposition to the bill. Mr. Isaakson stated that the bill would skew the premium determination in Colorado in favor of a small number of companies. Mr. Isaakson responded to questions from the committee.

02:03 PM -- Loren Furman, Colorado Association of Commerce and Industry (CACI), testified in opposition to the bill. Ms. Furman echoed prior opposition testimony.

02:05 PM -- John Cevette, representing the Department of Regulatory Agencies (DORA), came to the table to respond to questions from the sponsor about his previous experience serving on the Pinnacol board.

02:09 PM -- Patrick Kuepler, representing the Division of Insurance in DORA, came to the table to respond to questions from the sponsor and the committee.

02:12 PM -- Robert Ferm, representing the National Council on Compensation Insurance (NCCI), came to the table to respond to technical questions on the bill.

02:19 PM -- Mark Simon, representing himself, testified in support of the bill. Mr. Simon discussed his experience with workers' compensation and explained why he believed the bill would be good for Colorado businesses.

02:22 PM -- Paul Andrews, representing Nelson Pipeline, testified in support of the bill. Mr. Andrews discussed his small business' safety record and discussed how modification factors are used during the bidding process.

02:24 PM -- John Berry, representing the Workers' Compensation Council, testified in support of the bill. Mr. Berry distributed a handout to the committee (Attachment C). Mr. Berry discussed his organization's work on the bill and explained that it would help businesses remain competitive in the bidding process. Mr. Berry responded to questions from the committee.

140227 AttachC.pdf

02:28 PM -- Sonia Guenther, representing Willis of Colorado, testified in support of the bill. Ms. Guenther discussed similar laws in other states. She stated her belief that the bill's requirement for resubmittal of claim information would create a minimal administrative impact for insurance companies. Ms. Guenther responded to questions from the committee.

02:31 PM -- Renee Williams, representing her business To The Rescue, and Nick Vuolo, representing Network Insurance, testified in support of the bill. Ms. Williams discussed her experience as a business owner and explained how her experience modification rating impacts her insurance premiums. Mr. Vuolo, who manages Ms. Williams insurance account, stated his concerns about the current experience modification rating system and its negative impact on his policyholders. Mr Vuolo responded to questions from the committee.

02:37 PM -- Susan Mishler, representing Network Insurance, testified in support of the bill. Ms. Mishler discussed the real-world impact of experience modifications on businesses. Ms. Mishler responded to questions from the committee.

02:40 PM

Representative Swalm discussed the amendments.


BILL:	HB14-1091
TIME:	02:40:19 PM
MOVED:	Holbert
MOTION:	Adopt amendment L.005. The motion passed without objection.
SECONDED:	Ryden
		VOTE
	Exum
	Hamner
	Holbert
	Navarro
	Nordberg	Excused
	Rosenthal
	Ryden
	Szabo
	Wright
	Kraft-Tharp
	Williams

YES: 0 NO: 0 EXC: 1 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	HB14-1091
TIME:	02:44:57 PM
MOVED:	Kraft-Tharp
MOTION:	Adopt amendment L.006. The motion passed without objection.
SECONDED:	Ryden
		VOTE
	Exum
	Hamner
	Holbert
	Navarro
	Nordberg	Excused
	Rosenthal
	Ryden
	Szabo
	Wright
	Kraft-Tharp
	Williams
YES: 0 NO: 0 EXC: 1 ABS: 0 FINAL ACTION: Pass Without Objection

02:46 PM

Representative Swalm made closing remarks on the bill.


BILL:	HB14-1091
TIME:	02:47:17 PM
MOVED:	Kraft-Tharp
MOTION:	Refer House Bill 14-1091, as amended, to the Committee of the Whole. The motion failed on a vote of 1-10.
SECONDED:	Szabo
		VOTE
	Exum	No
	Hamner	No
	Holbert	No
	Navarro	No
	Nordberg	No
	Rosenthal	No
	Ryden	Yes
	Szabo	No
	Wright	No
	Kraft-Tharp	No
	Williams	No
YES: 1 NO: 10 EXC: 0 ABS: 0 FINAL ACTION: FAIL


BILL:	HB14-1091
TIME:	02:53:58 PM
MOVED:	Kraft-Tharp
MOTION:	Postpone House Bill 14-1091 indefinitely. The motion passed on a vote of 8-2.
SECONDED:	Rosenthal
		VOTE
	Exum	No
	Hamner	Yes
	Holbert	Yes
	Navarro	Yes
	Nordberg	Excused
	Rosenthal	Yes
	Ryden	Yes
	Szabo	Yes
	Wright	No
	Kraft-Tharp	Yes
	Williams	Yes

Final YES: 8 NO: 2 EXC: 1 ABS: 0 FINAL ACTION: PASS

02:55 PM -- HB 14-1165

Representative Fischer presented House Bill 14-1165, concerning a limit on the retainage allowed under a private construction contract. The bill requires 95 percent of all costs under a construction contract to be paid at the time they are invoiced and due according to the contractual payment schedule. Any party that withholds funds (retainage) in excess of five percent of the amount due is liable in a civil action for release of the excess withheld plus interest and legal expenses. The bill does not apply to projects with a total contract value less than $150,000, contracts concerning residential buildings with four or fewer dwelling units, or construction contracts with a public entity.

Representative Fischer distributed Amendment L.001 (Attachment D). Representative Fischer responded to questions from the committee.

140227 AttachD.pdf

The following individuals testified:

03:08 PM -- Rick Woodruff, representing NAIOP and Urban Land Conservancy, testified in opposition to the bill. Mr. Woodruff stated that he was also authorized to speak for Building Owners and Managers Association (BOMA) and Independent Bankers in opposition to the bill. Mr. Woodruff discussed the retainage process and responded to questions from the committee.

03:13 PM -- Dave Davia, representing CAMPC and Building Jobs 4 Colorado, testified in opposition to the bill. Mr. Davia characterized the issue as a fracture in the industry. He responded to questions from the committee.

03:24 PM -- Ted Gorab, representing the Colorado Association of Homebuilders, testified in opposition to the bill. Mr. Gorab discussed lender constraints and the different risk profile and conditions of each construction project. He responded to questions from the committee.

03:27 PM -- Jesse Witt and David Ford, representing the Community Associations Institute (CAI), testified in opposition to the bill. Mr. Witt stated his concerns that the bill would create complications for multi-family housing developments. Mr. Ford stated his concern that this bill would set a retainage precedent where retainage has not previously been used. Mr. Witt and Mr. Ford responded to questions from the committee.

03:32 PM -- Karen Harris, representing American Institute of Architects (AIA), testified in opposition to the bill. She stated that there is no one-size-fits-all in contracting.

03:35 PM -- Nikolaus Remus, representing AIA, testified in opposition to the bill. He stated his concern with the bill in instances where the construction project is part of a greater endeavor, like the opening of a restaurant, and discussed the purpose of retainage as a tool in successful project completion.

03:37 PM -- Chris Green, representing AIA, testified in opposition to the bill.

03:40 PM -- Kevin Eronimous, representing AIA, testified in opposition to the bill.

03:42 PM -- Jenifer Waller, representing Colorado Bankers Association, testified in opposition to the bill. She stated her organization's concern that the bill would impact commercial development if enacted. She discussed the purposes of retainage, and stated the variable involved in setting the percentage. Ms. Waller responded to questions from the committee.

03:46 PM -- Bart McTaggart, representing Excel Environmental, testified in support of the bill. Mr. McTaggart discussed the burden of retainage on subcontractors and responded to questions from the committee.

03:49 PM -- Ed King and Ralph Baldwin, representing themselves as general contractors in Tennessee and New Mexico, testified in support of the bill. Mr. King and Mr. Baldwin discussed their experience in states where similar legislation has been enacted and responded to questions from the committee.

04:02 PM -- Travis Vap, representing South Valley Gravel, testified in support of the bill. Mr. Vap discussed the role of general contractors in project completion.

04:04 PM -- Rusty Ploughman, representing Delta Drywall, testified in support of the bill. Mr. Ploughman discussed examples of how slow pay and retainage lead to subcontractors going out of business.

04:07 PM -- Tara Olson, representing OE Construction Company, testified in support of the bill. She discussed the impact of retainage on cash flow.

04:09 PM -- Jim Donaldson, representing AIA Industries, testified in support of the bill. Mr. Donaldson discussed the difficulties of being in the subcontracting business because of retainage.

04:12 PM -- Dan Beaver, representing himself, testified in support of the bill. He discussed the alternatives to retainage.

04:15 PM -- Scott Deering, representing American Subcontractor Association of Colorado, testified in support of the bill. Mr. Deering stated that the bill was a good compromise.

04:17 PM

Representative Fischer discussed the amendment.


BILL:	HB14-1165
TIME:	04:17:37 PM
MOVED:	Ryden
MOTION:	Adopt amendment L.001. The motion passed without objection.
SECONDED:	Holbert
		VOTE
	Exum
	Hamner
	Holbert
	Navarro
	Nordberg
	Rosenthal
	Ryden
	Szabo
	Wright
	Kraft-Tharp
	Williams
YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection

04:18 PM

Representative Fischer made closing remarks.


BILL:	HB14-1165
TIME:	04:18:40 PM
MOVED:	Rosenthal
MOTION:	Refer House Bill 14-1165, as amended, to the Committee of the Whole. The motion failed on a vote of 3-7.
SECONDED:	Ryden
		VOTE
	Exum	Yes
	Hamner	No
	Holbert	No
	Navarro	No
	Nordberg	No
	Rosenthal	Yes
	Ryden	Yes
	Szabo	No
	Wright	Excused
	Kraft-Tharp	No
	Williams	No
YES: 3 NO: 7 EXC: 1 ABS: 0 FINAL ACTION: FAIL


BILL:	HB14-1165
TIME:	04:20:49 PM
MOVED:	Kraft-Tharp
MOTION:	Postpone House Bill 14-1165 indefinitely. The motion passed on a vote of 9-1.
SECONDED:	Rosenthal
		VOTE
	Exum	No
	Hamner	Yes
	Holbert	Yes
	Navarro	Yes
	Nordberg	Yes
	Rosenthal	Yes
	Ryden	Yes
	Szabo	Yes
	Wright	Excused
	Kraft-Tharp	Yes
	Williams	Yes

Final YES: 9 NO: 1 EXC: 1 ABS: 0 FINAL ACTION: PASS

04:21 PM -- HB 14-1274

Representative Holbert and Representative Kraft-Tharp presented House Bill 14-1274, concerning the modification of certain limitations on the managers of a bank chartered by Colorado. The bill repeals certain limitations on qualifications for state bank directors. Under the bill, at least three-fourths of the directors must be citizens of the United States, and a majority of the directors must be state residents.

The following individuals testified:

04:30 PM -- Jenifer Waller, Colorado Bankers Association, testified in support of the bill. Ms. Waller discussed the state's charter bank policy.

04:33 PM

The sponsors made closing remarks.


BILL:	HB14-1274
TIME:	04:33:15 PM
MOVED:	Kraft-Tharp
MOTION:	Refer House Bill 14-1274 to the Committee of the Whole. The motion passed on a vote of 10-0.
SECONDED:	Holbert
		VOTE
	Exum	Yes
	Hamner	Yes
	Holbert	Yes
	Navarro	Yes
	Nordberg	Yes
	Rosenthal	Yes
	Ryden	Yes
	Szabo	Yes
	Wright	Yes
	Kraft-Tharp	Yes
	Williams	Excused

YES: 10 NO: 0 EXC: 1 ABS: 0 FINAL ACTION: PASS

04:34 PM

The committee adjourned.