First Regular Session Sixty-ninth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 13-0137.01 Bart Miller x2173 SENATE BILL 13-052 SENATE SPONSORSHIP Scheffel, Cadman HOUSE SPONSORSHIP DelGrosso, Senate Committees House Committees Judiciary A BILL FOR AN ACT Concerning real property construction defect actions, and, in connection therewith, enacting the "Transit-oriented Development Claims Act of 2013". Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) With respect to construction defect actions involving transit-oriented development, the bill makes the following changes to the law: Section 1 creates the "Transit-oriented Development Claims Act of 2013". Section 2 institutes a right to repair for construction professionals that receive a notice of claim with respect to a construction defect in a transit-oriented development. Section 3 institutes a binding arbitration requirement for claims against construction professionals with respect to transit-oriented development. This section also makes construction professionals immune to suit for environmental conditions including noise, odors, light, temperatures, humidity, vibrations, and smoke or fumes causally related to transit, commercial, public, or retail use. With respect to construction defect actions in general: Section 4 clarifies the statute of repose for the 6-year statute of limitations for actions against architects, contractors, builders, builder vendors, engineers, or inspectors involved in improvements to real property. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Short title. This section 1 and sections 2, 3, and 6 of this act shall be known and may be cited as the "Transit-oriented Development Claims Act of 2013". SECTION 2. In Colorado Revised Statutes, 13-20-803.5, add (13) as follows: 13-20-803.5. Notice of claim process - transit-oriented development - right to repair. (13) (a) If any claimed defects described in a notice of claim arise out of, relate to, or involve transit-oriented development, as defined in section 13-20-809, a construction professional that is sent or delivered a written notice of claim pursuant to subsections (1) and (2) of this section has a right pursuant to this subsection (13) to repair any claimed defect upon sending or delivering to the claimant a written offer to remedy the claimed defect. The construction professional need not offer to repair all claimed defects. (b) The timetable for completion of the repair must be within a reasonable time, with reasonable efforts to conclude within one hundred eighty days after commencement of repairs subject to the remainder of this subsection (13). (c) The written offer to remedy the claimed defect must include: (I) Names, addresses, telephone numbers, and professional license numbers of the contractors and subcontractors the construction professional intends to have perform the repairs; (II) Within ten days after any request by the claimant, certificates of insurance of each contractor or subcontractor showing occurrence coverage for property damage of at least one million dollars per occurrence, including completed operations coverage; and (III) If a permit is required for the repair, plans and specifications for the repair, as available, within a reasonable time after the written offer is delivered. If no permit is required, plans and specifications need not be provided. (d) If the claimant objects to any contractor or subcontractor identified by a construction professional under subparagraph (I) of paragraph (c) of this subsection (13), the claimant must notify the construction professional within fifteen days after the receipt of the offer and may then select another contractor or subcontractor. The claimant is financially responsible for any increased costs related to the selection of the alternative contractor or subcontractor. (e) The claimant and all participating construction professionals shall meet to coordinate repairs within thirty days after the offer to remedy the claimed defect. Legal representatives may also attend. (f) Each construction professional agreeing to participate in the repairs shall act reasonably to obtain needed permits in a reasonable time. (g) Repairs must commence as agreed by the claimant and participating construction professionals, with reasonable efforts to begin within thirty-five days after the offer to remedy the claimed defects. (h) All repairs shall be completed using reasonable care under the circumstances and as soon as reasonably possible subject to: (I) The nature of the repair; (II) Access issues; or (III) Unforeseen events not caused by the participating construction professionals or those contractors or subcontractors the participating construction professionals choose to perform the repair. (i) If a construction professional elects to repair some but not all claimed defects, the offer must state in writing the reasons for not repairing all claimed defects. (j) If a construction professional fails to complete repairs within the time specified in the offer, and the failure is not due to any fault of the claimant or of contractors or subcontractors selected by the claimant nor as a result of an unforeseen condition, including an unforeseen weather condition, the claimant may file an action. (k) If the repair requires relocation of the claimant or other persons or of any personal property, the construction professional shall pay reasonable costs of relocation and related moving expenses in a timely manner. Construction professionals are not responsible for any alleged loss of use or loss of income for repairs that do not require relocation. (l) The claimant shall provide reasonable access for the repairs, including obtaining cooperation from tenants, association members, or others. (m) A construction professional shall repair or replace to reasonable preexisting condition any property damaged by the repair. (n) A construction professional shall not obtain a release or waiver in exchange for any repair pursuant to this subsection (13). However, claimants and construction professionals may negotiate a release in exchange for repairs. (o) At the conclusion of any repairs, a claimant may proceed with an action, including any claim for inadequate repair. (p) During the notice process and repair, and for ninety days after substantial completion of the repair, the statute of limitations and statute of repose applicable to the claimant, including any construction professionals involved in the original construction or design acting as a claimant, are tolled as to all construction professionals who worked on the original construction or design. (q) Nothing in this subsection (13) precludes construction professionals from offering cash or other consideration instead of a repair. The claimant may accept or reject an offer of cash or other consideration, and if rejected, may proceed with an action. The parties may negotiate for a release in the event of an accepted offer involving cash, repairs, or other consideration. SECTION 3. In Colorado Revised Statutes, add 13-20-809 as follows: 13-20-809. Legislative declaration - claims related to transit-oriented development - definitions. (1) (a) The general assembly finds that encouragement of transit-oriented development is vital to the economic and social welfare of the citizens of Colorado. (b) The general assembly determines the following nonexhaustive list to be benefits of transit-oriented development: Job creation; economic development; improved workforce access to job opportunities; enhanced access to public transit; improved public health; improved access to amenities; increased transit ridership; reduced greenhouse gas emissions; and reduced transportation costs. (c) The general assembly declares that the construction litigation environment in Colorado prior to the effective date of this section discourages desirable transit-oriented development; inhibits job creation, economic development, workforce access to job opportunities, access to public transit, improved public health, and access to amenities and transit ridership; and increases greenhouse gas emissions and transportation costs. This section is intended to encourage transit-oriented development for the good of the state of Colorado, local governments, and Colorado citizens. (2) (a) All disputes with or claims against a construction professional by any claimant arising out of, related to, or involving transit-oriented development or the marketing, sale, or development of transit-oriented development are subject to mandatory binding arbitration at a location within twenty-five miles of the transit-oriented development or as otherwise agreed by all of the parties to the arbitration. The arbitration must be with an arbitration organization agreed to by all parties pursuant to arbitration rules of that organization. (b) If the parties cannot agree on the organization to administer the arbitration, any party to the arbitration may petition a district court where the transit-oriented development is situated for the court to determine the organization to administer the arbitration. The district court's determination of the organization to administer the arbitration is final and not appealable until the award is entered in the arbitration. (c) The standard for review of a district court's selection of an arbitration organization is abuse of discretion. As used in this subsection (2), "abuse of discretion" means selection of an arbitration organization that has some financial or other interest in the outcome of the arbitration such that a reasonable person would determine that the arbitration organization could not fairly administer the arbitration. (d) The arbitration is governed by part 2 of article 22 of this title, except to the extent governing law requires application of the federal arbitration act. This subsection (2) does not apply when a governmental entity is the claimant. If all parties to an arbitration under this subsection (2) agree, the requirements of this subsection (2) may be waived in a writing signed by all parties to the arbitration. (3) (a) All construction professionals are immune from liability, and no action lies against construction professionals for environmental conditions arising out of, related to, or involving transit-oriented development or marketing, sale, or development of transit-oriented development. (b) For the purposes of this subsection (3), "environmental conditions arising out of, related to, or involving transit-oriented development or marketing, sale, or development of transit-oriented development" include: Noise, odors, light, temperatures, humidity, vibrations, and smoke or fumes causally related to transit, commercial, public, or retail use. (4) Before any arbitration is commenced or before suit is commenced if all parties waive in writing the requirements of subsection (2) of this section, the claimant shall comply with the right-to-repair provisions contained in section 13-20-803.5 (13). If the claimant has not so complied, the court shall immediately dismiss the action, and the court shall award any construction professional against whom the action was brought reasonable attorney fees and costs for obtaining the dismissal. (5) If any development or construction qualifies as transit-oriented development on or after the effective date of this section or at the time a certificate of occupancy is issued or, if a certificate of occupancy is not normally issued for that type of construction, upon substantial completion, the development or construction continues to qualify as transit-oriented development even if later circumstances such as closure of a stop would cause construction or development to not qualify as transit-oriented development. (6) For the purposes of this section and section 13-20-803.5: )a( "Stop" means any location where commuter rail, commuter light rail, or commuter bus service regularly drops off or picks up passengers. (b) "Transit-oriented development" means design, supervision, inspection, construction, or observation of construction of any multi-family residential or mixed-use project within one-half mile of any commuter rail stop, commuter light rail stop, or commuter bus stop. SECTION 4. In Colorado Revised Statutes, amend 13-80-104 as follows: 13-80-104. Limitation of actions against architects, contractors, builders or builder vendors, engineers, inspectors, and others. (1) (a) Notwithstanding any statutory provision to the contrary, all actions against any architect, contractor, builder or builder vendor, engineer, or inspector performing or furnishing the design, planning, supervision, inspection, construction, or observation of construction of any improvement to real property shall must be brought within the time provided in section 13-80-102 after the claim for relief arises and not thereafter. but in In no case shall may such an action be brought more than six years after the substantial completion of the improvement to the real property except: (I) For claims arising as provided in subparagraph (II) of paragraph (b) of this subsection (1); and (II) As otherwise provided in subsection (2) of this section. (b) (I) Except as otherwise provided in subparagraph (II) of this paragraph (b), a claim for relief arises under this section at the time the claimant or the claimant's predecessor in interest discovers or in the exercise of reasonable diligence should have discovered the physical manifestations of a defect in the improvement which that ultimately causes the injury. (II) Notwithstanding the provisions of paragraph (a) of this subsection (1) and subsection (2) of this section, all claims, including but not limited to indemnity or contribution, by a claimant against a person who is or may be liable to the claimant for all or part of the claimant's liability to a third person: (A) Arise at the time the third person's claim against the claimant is settled or at the time final judgment is entered on the third person's claim against the claimant, whichever comes first; and (B) Shall Must be brought within ninety days after the claims arise, and not thereafter, without regard to the limitation of six years after the substantial completion of the improvement to the real property provided in paragraph (a) of this subsection (1) and without regard to the limitations in subsection (2) of this section. (c) Such These actions shall include any and all actions in tort, contract, indemnity, or contribution or other actions for the recovery of damages for: (I) Any deficiency in the design, planning, supervision, inspection, construction, or observation of construction of any improvement to real property; or (II) Injury to real or personal property caused by any such the deficiency in the design, planning, supervision, inspection, construction, or observation of construction of any improvement to real property; or (III) Injury to or wrongful death of a person caused by any such the deficiency in the design, planning, supervision, inspection, construction, or observation of construction of any improvement to real property. (2) In case If any such cause of action subject to this section arises during the fifth or sixth year after substantial completion of the improvement to real property, said the action shall must be brought within two years after the date upon which said the cause of action arises. (3) The limitations provided by this section shall not be asserted as a defense by any person in actual possession or control, as owner or tenant or in any other capacity, of such an the improvement at the time any deficiency in such an the improvement constitutes the proximate cause of the injury or damage for which it is proposed to bring an action. SECTION 5. Effective date - applicability. This act takes effect upon passage and applies to actions pending or filed on or after said date. SECTION 6. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.