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Mixed Results for Businesses as 2017 General Assembly Ends

Posted by: Luke Miller on Wednesday, May 24, 2017

As the 2017 Legislative Session ends, so does debate among some of the most contentious bills this year at the Capitol. While some of these bills don't necessarily relate to the multifamily industry, they do impact businesses overall and the Colorado Apartment Association tracks these bills for our members. 

Enterprising the Hospital Provider Fee

After three long years, efforts to enterprise the Hospital Provider Fee (HPF) were finally realized with the passage of SB 17-267. Sens. Sonnenberg, Guzman; Reps K Becker, J Becker sponsored the Sustainability of Rural Colorado Act. In order to secure sufficient votes, lawmakers worked non-stop the last two weeks of session on a package that ensured reversal of a $528 million cut to hospitals. By creating an enterprise authorized under Colorado law, the HPF will be deposited in a new fund entitled the "Colorado Healthcare Affordability Program". This enterprise is intended to minimize the consequences of federal government mandates by lowering the state revenue cap by $200 million, the amount equal to the expansion of healthcare by "Obamacare".

Health Care Policy and Financing (HCPF) now will be required to present a detailed report on how they spend over $45 million in administration costs. The bill also creates a 3% maximum administrative fee by HCPF to administer the funds. Extremely controversial elements of SB 17-267 were Medicaid reforms

that include the Delivery System Reform Incentive Payment Program and the ACE Kids Act. Targeted copay increases for Medicaid patients, for outpatient services and pharmacy almost derailed negotiations, stalling the effort until the final week of the session.

Construction Defects Reform Passes

One of the most high profile issues at the capitol this session was construction defects reform, also known as construction litigation reform. Both the Speaker of the House and the President of the Senate highlighted construction defects reform in their opening speeches, assuring anyone listening that they would work together to adopt meaningful legislation. That very day SB 17-45, the first of six construction defects related bills, was introduced by the Senate President with the Speaker as one of the prime House sponsors. SB 17-45, concerning the allocation of costs in construction defects litigation, met with widespread opposition from developers, builders and the construction industry, and ultimately never even made it to the Senate floor.

The coalition in support of construction defects reform, the Homeownership Opportunity Alliance, brought forward a bill very similar to the failed attempt at construction defect reform from 2015. SB 17-156 would have required a Homeowners Association to provide notice to condo owners and obtain consent of the majority prior to filing a construction defects lawsuit. It also essentially authorized alternative dispute resolution (ADR) to address construction defects claims. ADR was a non-started for the Speaker of the House, where SB 17-156 was destined to die. Three additional bills, SB 17-155, SB 17-157 and HB 17-1169, each failed to pass out of the chamber in which it originated. SB 17-155 attempted to define "construction defect" and SB 17-157 took a different approach to "notice and consent" that had trial lawyer support but was opposed by builders and their coalition. HB 17-1169 would have given builders the right to repair, but didn't have a chance of passing with opposition from trial lawyers and the insurance industry and only partial support from builders.

Just when all hope was almost lost, a new "notice and consent" bill was introduced with bi-partisan sponsorship in both chambers. Nobody liked the original version of HB 17-1279, but after weeks of long, late night meetings, stakeholders finally negotiated amendment language for the bill that was, and is still being touted as a "grand" compromise. HB 17-1279 is a step in the right direction for construction defects reform. It is a baby-step, to be sure, but hope springs eternal that it will move the dial enough for insurance companies to lower their rates, allowing builders to finally, after so many years, begin once again to construct owner-occupied multi-family housing in Colorado.

Transportation Funding Legislation Fails Again

Transportation was also a popular topic, one that on its face appeared to have overwhelming bi-partisan support but once again fell short of creating a long-term sustainable funding solutions for the state's deteriorating transportation system. HB 17-1242, a bi-partisan leadership effort pushed by Speaker Duran and President Grantham received wide spread support from stakeholders including the business and environmental communities, the transportation industry, multi-model organizations, rural and metro local governments and numerous statewide organizations. The bill would have referred a robust transportation funding proposal to the ballot for a half-cent sales tax increase which would generate roughly $677 million in new resources for state and local governments. The package would have included funding for $3.5 billion in bonding for Tier 1 projects over the next 20 years, a large distribution (70% of the remaining funds) to city and county governments, as well as a significant allocation to new multi-modal transportation options that would have allowed for a grant program with a dollar for dollar local match. Additionally, the packaged included a repeal of the ever-controversial FASTER safety surcharge, $150 million from the general fund and additional oversight and accountability requirements for the Department of Transportation. The bill went through several iterations and saw nearly 30 amendments before it finally passed the House on a 41-24 vote. Once in the Senate, HB 17-1242 saw another round of amendments added in Senate Transportation before eventually dying in the Senate Finance committee on a 3-2 vote. Much of the argument in the Senate surrounded around the tax increase, not enough general fund prioritization and too much allocated for multi-model projects. While efforts in the General Assembly may have stalled, there still appears to be some interest in potentially pursuing the issue this fall, and a business coalition has pulled 6 ballot titles for consideration. Additionally, the same stakeholder group that supported HB 17-1242 did support the inclusion of funding for transportation as part of the above mentioned SB 17-267, however they continue to warn that this is in no way the long-term solution.

General Business Legislation

Each session, there are multiple bills introduced that affect all businesses, regardless of industry. This year there were many competing bills introduced from opposite sides of the aisle addressing similar issues. There were also numerous so-called 'anti-business' bills brought forward.

The first bill introduced in the House this session, HB 17-1001, addressed time-off for employees to attend their child's academic activities. Another measure sought to implement paid Family and Medical Leave Act (FMLA) at the state level, HB 17-1307. "Ban the Box," a nationwide movement, was introduced in Colorado as HB 17-1305. It would prohibit employers asking about an applicant's criminal history on an application. Senate Republicans killed all three of these bills.

Regulatory reform or relief was a political football this year. Legislators on both sides of the aisle introduced competing measures designed to reduce burdens on small business. HB 17-1270, SB 17-001, SB 17-186 and SB 17-276 all addressed penalties when a small business commits a minor violation. SB 17-186 went a step further by requiring DORA to prepare analyses prior to a rule being promulgated. A sticking point proved to be what threshold of number of employees constitutes a small business. Republicans pushed the federal definition which is 500 employees or less. Democrats wanted that number much lower. All versions from the Senate were killed. HB 17-1270 was introduced with bi-partisan support but ultimately failed to progress and regulatory reform remains an outstanding issue at the Capitol.

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