HB-5831, As Passed House, December 14, 2012HB-5831, As Passed Senate, December 13, 2012

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 5831

     A bill to amend 1984 PA 431, entitled

"The management and budget act,"

by amending sections 115, 221, 237a, 241, 242, 246, 248, 249, and

393 (MCL 18.1115, 18.1221, 18.1237a, 18.1241, 18.1242, 18.1246,

18.1248, 18.1249, and 18.1393), sections 115, 221, 242, 246, 248,

and 393 as amended and section 237a as added by 1999 PA 8 and

section 241 as amended by 2010 PA 22, and by adding sections 221a,

238, and 242a.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 115. (1) "Institution of higher education" or

"university" means a state supported 4-year college or university.

     (2) "JCOS" means the joint capital outlay subcommittee of the

appropriations committees.

     (3) Except as used in sections 284 to 292, "record" means a

public record as defined in section 2 of the freedom of information

act, 1976 PA 442, MCL 15.232.

     (4) "State agency" means a department, board, commission,

office, agency, authority, or other unit of state government. State

agency does not include an institution of higher education or a

community college or, for purposes of article 2 or 3, the

legislative branch of government. For purposes of article 2 or 3,

except for those sections pertaining to the authorization,

planning, construction, and funding of a capital outlay project,

including construction of a facility to house offices or functions

necessary for operation of the judicial branch of government, state

agency does not include the judicial branch of government.

     (5) "Unit of local government" means a political subdivision

of this state, including school districts, community college

districts, intermediate school districts, cities, villages,

townships, counties, and authorities, if the political subdivision

has as its primary purpose the providing of local governmental

service for citizens in a geographically limited area of the state

and has the power to act primarily on behalf of that area.

     Sec. 221. (1) The director may provide for the rental and

lease of land and facilities for the use of state agencies in the

manner provided by law. The rentals and leases shall not be

effective unless approved by the board.

     (2) If a project costs more than $1,000,000.00 and consists of

less than 25,000 gross square feet, the department shall notify the

joint capital outlay subcommittee in writing of its intent to

proceed with such a facility. The notice shall be given 30 days

before the lease contract providing for the proposed constructions

is entered into.

(2) (3) If the director proposes to lease space or a facility

which meets either of the following criteria for which the annual

base cost of the proposed lease is more than $500,000.00, approval

of the joint capital outlay subcommittee is required prior to board

approval. :

     (a) The space or facility exceeds 25,000 gross square feet.

     (b) The annual base cost of the proposed lease is more than

$500,000.00.

     (3) The department shall provide notification to the JCOS and

to the fiscal agencies within 5 business days of rental agreements

entered into in which the base cost is more than $500,000.00.

     (4) For the purposes of this section, the renewal of an

existing lease will require the approval of the joint capital

outlay subcommittee if the renewal results in changes to the lease

that would cause it to meet the requirements outlined in subsection

(3).(2).

     (5) The department may grant easements, upon terms and

conditions the board determines are just and reasonable, for

highway and road purposes, and for constructing, operating, and

maintaining pipelines or electric, telephone, telegraph,

television, gas, sanitary sewer, storm sewer, or other utility

lines including all supporting fixtures and other appurtenances

over, through, under, upon, and across any land belonging to this

state, except lands under the jurisdiction of the department of

natural resources, the department of military and veterans affairs,

or the state transportation department.

     (6) The department shall determine annually the prevailing

market rental values of all state owned office facilities and

private facilities which provide housing for state employees. The

rental values determined pursuant to this subsection shall not be

effective unless approved by the board. The renting, leasing, or

licensing of state owned state-owned land and facilities to private

and public entities shall be at prevailing market rental values or

at actual costs as determined by the director.

     (7) The department shall charge state agencies for building

occupancy in state owned state-owned facilities under the

jurisdiction of the department. The rates to be charged for

building occupancy shall be coordinated with the budget cycle. The

rates shall reflect the actual cost for occupancy of the

facilities.

     Sec. 221a. (1) The department shall provide the JCOS and the

fiscal agencies with the following reports:

     (a) By November 1 of each year, for state-owned space as of

September 30 of that year, all of the following:

     (i) The department occupying or using the space.

     (ii) The building location, including street address, city or

township, and county.

     (iii) The type of building, such as office, warehouse, garage,

storage, or other use.

     (iv) The square footage.

     (v) The occupancy and usage of space compared to total space

available.

     (vi) The condition of facility and estimated future special

maintenance costs.

     (b) By November 1 of each year, for privately owned state-

leased space as of September 30 of that year, all of the following:

     (i) The department occupying or using the space.

     (ii) The lease number.

     (iii) The building location, including street address, city or

township, and county.

     (iv) The type of building, such as office, warehouse, garage,

storage, or other use.

     (v) The name and address of lessor.

     (vi) The square footage and net square footage rate.

     (vii) The occupancy and usage of space compared to total space

available.

     (viii) The monthly and annual cost.

     (ix) The date the lease starts and expires.

     (x) The options and services.

     (xi) The total monthly and annual cost for all leases described

in this subdivision.

     (c) At least 2 weeks prior to a state lease proposal being

included on a JCOS meeting agenda for review and approval, all of

the following:

     (i) The lease number.

     (ii) The department.

     (iii) The location.

     (iv) The lessor.

     (v) The total square footage and use of space.

     (vi) Lease costs, to include annual costs of lease, monthly

costs of lease, cost per square foot, and increases, if any, from

prior lease to new lease.

     (vii) The costs to renovate.

     (viii) The costs for utilities.

     (ix) The management fees.

     (x) The amount paid for ad valorem property taxes.

     (xi) The operating costs.

     (xii) The lease terms.

     (xiii) If an option to purchase is included, the terms of the

offer to purchase and rationale for not funding construction

through the state building authority.

     (xiv) The existing space, including years in existing location,

cost, terms of the lease, and disadvantages related to continuing

in current location.

     (xv) The bid process, including an overview including dates,

number of proposals submitted, cost range of proposals, comparable

market rates, and an explanation if lowest bid was not accepted.

     (xvi) A cost comparison listing the total square footage, base

cost per square foot, annual lease cost, cost for utilities, taxes,

operating costs, and total annual cost for the proposed lease and

the current lease, and show the difference in costs.

     (d) Not later than 45 days after the close of the fiscal year,

the status of all active planning and construction projects

approved by JCOS and financed through the state building authority

or state general fund/general purpose revenues, including all of

the following:

(i) The name of each project.

     (ii) The applicable appropriation acts.

     (iii) The appropriation year and account numbers.

     (iv) The total authorized cost for the project and state

authorized share.

     (v) The unencumbered balance remaining in each account.

     (vi) The expiration date of authorization.

     (vii) The current project status: planning, preconstruction,

construction, or postconstruction.

     (viii) The estimated completion date.

     (ix) As applicable, the qualifying carryforward exemption under

section 248(4) or (6).

     (2) This section is in effect until March 31, 2015.

     (3) As used in this section, "project" includes appropriation

line items made for purchase of real estate.

     Sec. 237a. (1) This section pertains to capital outlay

projects for community colleges and universities.

     (2) The department shall review documents associated with

community college and university capital outlay projects for which

an appropriation or other authorization has been made.

     (3) The department shall provide architectural and

professional engineering review of documents including designs,

plans, and change orders at each stage of the project to ensure

that the project or facility is in compliance with approved

program, appropriation, and capital outlay requirements.

     (4) The department shall review the award and selection of

architects, professional engineers, construction managers, and

other design or construction professional service contractors.

     (5) The department shall do all of the following:

     (a) Review the construction bid.

     (b) Review monthly reports to ensure appropriate construction

progress, evaluate change orders, and watch for potential problems.

     (c) Respond to college and university requests for assistance

on the capital outlay process, contractor issues, and other capital

outlay related issues.

     (d) Provide for field checks and audits throughout the project

in order to meet the trustee requirements of the state building

authority.

     (6) The department may require that community colleges and

universities self-managing construction of a capital outlay project

enter into an agreement with the department in which the community

college or university agrees to construct the project within the

total authorized cost, design, and program scope established by the

legislature. This agreement shall include, but is not limited to,

certification from the community college or university that the

operating costs resulting from the capital outlay project are the

responsibility of the community college or university. The

agreement may include other requirements as identified by the

department that are necessary to complete the project and fulfill

the project oversight requirements of this act.

     (7) The department retains the authority and fiduciary

responsibility normally associated with the prudent maintenance of

the public's financial and policy interests relative to the state-

financed construction projects managed by a community college or

university. The director may take appropriate action to bring the

capital outlay project to conclusion if the public's financial and

policy interests are in jeopardy and there is a failure on the part

of a community college or university to adhere to the requirements

of this act. The director shall provide notice to the joint capital

outlay subcommittee within 10 days of exercising authority under

this subsection.

(8) (6) The department may charge a fee for the services

described in this section at a rate not to exceed actual costs.

(9) (7) In the event that a college or university chooses to

have the department provide for the complete administration of a

capital outlay project, then the provisions of section 237 apply to

the project.

(10) (8) Prior to state building authority financing, the

department shall provide final review of the capital outlay project

to ensure compliance with the authorized program, plans, and

specifications.

     Sec. 238. (1) Universities and community colleges shall report

on all contracts entered into for new construction of self-funded

projects costing in excess of $1,000,000.00. New construction

includes land or property acquisition, remodeling and additions,

maintenance projects, roads, landscaping, equipment,

telecommunications, utilities, and parking lots and structures.

Reports shall be submitted to the JCOS, the fiscal agencies, and

the state budget office on or before June 30 and December 31 of

each year. Each report shall include, but not be limited to, the

following information on all self-funded capital projects commenced

for the immediately preceding 6-month period:

     (a) Description of the project, to include purpose, need,

justification, and start and completion dates.

     (b) Statement of gross estimated capital improvement or

project costs including a breakdown of land costs, site development

and demolition costs, construction costs, costs of furnishings and

equipment, fees, and any other special costs.

     (c) Listing of all sources of funding for project costs to

include borrowed funds, university or college funds, gifts, grants,

federal funds, private funds, state funds, student fees or tuition,

any other funds, and any combination of funds.

     (d) Statement of the impact of project financing on student

tuition.

     (2) If changes occur in any information provided in a

previously submitted report, those changes shall be included in the

next report issued. Failure to comply with this section will result

in penalties as provided for in the higher education and community

colleges appropriations bills. The university of Michigan hospital

and health center is excluded from this reporting requirement.

     Sec. 241. (1) Except for the contracts permitted in section

240, a contract shall not be awarded for the construction, repair,

remodeling, or demolition of a facility unless the contract is let

pursuant to a bidding procedure that is approved by the board. The

department shall issue directives prescribing procedures to be used

to implement this section. The procedures shall require a

competitive solicitation in the award of any contract for

construction, repair, remodeling, or demolition of a facility.

     (2) The department may award or approve the award, if the

board approves, of construction contracts to construct a project

for which the director is the agent and may expend, for the

purposes and in the manner set forth, the amounts appropriated. The

director is not the agent for a community college or institution of

higher education, but may act in that capacity upon the specific

request of a community college or institution of higher education.

     (3) In awarding a contract under this section, the department

shall give a preference of up to 10% of the amount of the contract

to a qualified disabled veteran, as defined in section 261. If the

qualified disabled veteran otherwise meets the requirements of the

contract solicitation and with the preference is the lowest bidder,

the department shall enter into a construction contract with the

qualified disabled veteran under this act. If 2 or more qualified

disabled veterans are the lowest bidders on a contract, all other

things being equal, the qualified disabled veteran with the lowest

bid shall be awarded the contract under this act.

     (4) Subject to subsection (3), for projects funded in whole or

part with state funds, the construction contract award shall be

made to the responsive and responsible best value bidder. As used

in this subsection, "responsive and responsible best value bidder"

means a bidder who meets all the following:

     (a) A bidder who complies with all bid specifications and

requirements.

     (b) A bidder who has been determined by the department to be

responsible by the following criteria:

     (i) The bidder's financial resources.

     (ii) The bidder's technical capabilities.

     (iii) The bidder's professional experience.

     (iv) The bidder's past performance.

     (v) The bidder's insurance and bonding capacity.

     (vi) The bidder's business integrity.

     (c) A bidder who has been selected by the department through a

selection process that evaluates the bid on both price and

qualitative components to determine what is the best value for this

state. Qualitative components may include, but are not limited to,

all of the following:

     (i) Technical design.

     (ii) Technical approach.

     (iii) Quality of proposed personnel.

     (iv) Management plans.

     Sec. 242. (1) This section applies to a project authorized

pursuant to an appropriation act.

(1) (2) State agencies, community colleges, and universities

shall develop 5-year capital outlay requests, plans, which shall

include the need for remodeling and renovations. identify capital

outlay needs, including new construction, or the addition,

renovation, adaptive reuse, and improvement of existing facilities.

For state agencies, community colleges, and universities, the 5-

year capital outlay requests plans shall also include the need for

special maintenance. These requests plans shall be submitted

annually in electronic format to the department, and to members of

the JCOS, and to the fiscal agencies not later than November 1 of

each year.

(2) (3) The department and the JCOS shall review state agency,

community college, and university capital outlay requests plans.

The department and the JCOS shall prioritize requests. and The

department shall include the department-recommended requests in the

annual executive budget recommendation. If a state agency,

community college, or university subsequently modifies a request,

the revision shall be submitted to the department, members of the

JCOS, and the fiscal agencies.

     (3) The department and the chairperson and vice-chairperson of

the JCOS shall review and evaluate by March 1 of each year capital

outlay project requests received from community colleges,

universities, and state agencies. All of the following shall be

considered when reviewing and evaluating project requests:

     (a) Investment in existing facilities and infrastructure.

     (b) Life and safety deficiencies.

     (c) Occupancy and utilization of existing facilities.

     (d) Integration of sustainable design to enhance the

efficiency and operations of the facility.

     (e) Estimated cost.

     (f) Institutional support.

     (g) Estimated operating costs.

     (h) Impact on tuition, if any.

     (i) Impact on job creation in this state.

     (j) History of prior appropriations received by the

institution through the capital outlay process.

     (4) Each recommended request included in the executive budget

shall include sufficient state funds for state agency projects and

institution funds for college and university projects to provide

for professionally developed program statements and schematic

plans. The request for program development and schematic planning

must be approved by the JCOS and the legislature through the

appropriation process.

     (5) Program statements and schematic planning documents shall

be reviewed by the department and, when the review is completed,

shall be submitted to the JCOS as either approved or not approved.

     (6) Upon review and approval by the JCOS, the JCOS and the

legislature may authorize the project for final design and

construction with a line-item appropriation in an appropriation

bill. The appropriations bill shall include appropriations for

projected state building authority rental payments associated with

the projects that are authorized for construction. The

authorization shall include the legislative lease approval required

for state building authority financing.

     (7) Preliminary plans shall be submitted to the department for

review and approval. The department shall review and approve final

plans to be prepared for bidding. Bid A summary of bid results

shall be submitted to the JCOS.

     (8) The department shall provide for review and oversight of

capital outlay projects financed either in total or in part by the

state building authority pursuant to the provisions of sections 237

and 237a.

     (9) Appropriations made for studies and initial plans shall

not be considered a commitment on the part of the legislature to

appropriate funds for the completion of plans or construction of

any project based on the studies or planning documents.

     Sec. 242a. The JCOS and department shall annually review the

outstanding obligations of the state building authority, as well as

the state's lease obligations for previously constructed and state

building authority financed projects that provide revenue to the

state building authority to retire outstanding bonds.

     Sec. 246. (1) The release of allocations may be approved when

the legislature has specified either a total authorized cost or has

appropriated an amount sufficient to complete the designated

project. The authorized cost and program scope of state agency,

community college, and university projects shall only be

established or revised by specific reference in a budget act. , by

concurrent resolution adopted by both houses of the legislature, or

inferred by the total amount of any appropriations made to complete

plans and construction.

     (2) Expenditures under a capital outlay budget act shall be

authorized when the release of the appropriation is approved by the

board. The board shall approve the release of construction

appropriations when the director certifies that a project can be

accomplished within the appropriation or authorization and that the

project is in compliance with this act. For each project certified,

the board, upon the further recommendation of the director, shall

approve the release of only those amounts required to complete the

project according to the recommended purpose and scope as provided

in an appropriation act. Contracts or other commitments shall not

be incurred or obligated which will result in the completion of a

project which exceeds this purpose and scope. A state agency,

community college, or institution of higher education shall not

make any commitments for a project until after the release of the

appropriation pursuant to this act. The board may approve the

release of a part of any appropriation for the purpose of preparing

the planning or bidding documents or for investigations which may

be necessary to determine whether or not the project can be

completed within the appropriation.

     Sec. 248. (1) This section applies to all state agency,

community college, and university capital outlay projects

appropriated in any budget act. This section does not apply to lump

sums other than planning projects. Projects authorized prior to the

amendatory act that added this sentence shall be carried forward

consistent with the provisions of this section in effect prior to

the date of the amendatory act that added this sentence.

     (2) Appropriations made in any budget act for a planning

project shall not lapse to the fund from which appropriated at the

end of the fiscal year, but shall continue until the purposes for

which the sums were appropriated are completed. However, planning

authorization for each project which has been authorized for

planning for 3 years or more and which has not been authorized for

final design and construction in an appropriation act shall be

terminated 24 months after the last day of the fiscal year in which

the authorization was originally made, unless the project is

specifically reauthorized in a budget act. The termination of

authorization in the immediately preceding sentence does not apply

if program and schematic planning documents are submitted by

community colleges and universities within the time frame specified

in the immediately preceding sentence.

     (3) Appropriations made in any budget act for final design and

construction shall not lapse to the fund from which they are

appropriated at the end of the fiscal year, but shall continue

until the purposes for which the sums were appropriated are

completed. However, final design and construction authorization for

each project that has been authorized for final design and

construction for 3 years or more and where construction has not

commenced shall be terminated 36 months after the last day of the

fiscal year in which the authorization was originally made, unless

the project is specifically reauthorized in a budget act.

     (4) Except as otherwise provided in this section, the balance

of any capital outlay project other than a planning project shall

not lapse at the end of the fiscal year for which the appropriation

was made, but shall continue for not more than 2 fiscal years

occurring after the fiscal year for which the appropriation for the

project is made.

(4) (5) A capital outlay project may be continued beyond 3

fiscal years the limitations contained in this section if the bid

for the start of construction of the project is awarded before the

end of the second fiscal year occurring after the fiscal year for

which the appropriation for the project is made.1 or more of the

following conditions apply:

     (a) A bid for the start of construction of the project is

awarded or construction of the project has commenced.

     (b) A capital outlay project for the purchase of property in

which a contract is entered into, but the acquisition is not

completed. Only the amount necessary to complete the purchase of

property pursuant to the contract shall be carried forward.

     (c) A federal grant award is pending release.

     (d) The project is subject to legal action, the balance shall

lapse 30 days after the legal action is settled, or 30 days after a

final order is entered, whichever is later.

     (e) The unobligated balance of the appropriations for the

project may continue for 12 months after a project is substantially

completed.

     (f) Not later than 45 days after the conclusion of the fiscal

year, the director shall notify the JCOS and the fiscal agencies of

planning and construction authorizations that will continue beyond

limitations specified under this section.

     (6) A capital outlay project which is for purchase of property

may be continued beyond 3 fiscal years if a contract to purchase

property is entered into before the end of the second fiscal year

occurring after the fiscal year for which the appropriation for the

purchase is made but only the amount necessary to complete the

purchase of the property pursuant to the contract shall be carried

forward.

     (7) A capital outlay project may be continued beyond 3 fiscal

years if a federal grant award is pending and the federal rules

preclude the award of the bid before the end of the second fiscal

year occurring after the fiscal year for which the appropriation

for the project was made, but shall not be continued beyond an

additional year unless the bid for the start of construction of the

project is awarded.

     (8) If the bid for the start of construction of the project is

awarded before the appropriations for the project are scheduled to

lapse pursuant to subsection (4) or (6), the unobligated balance of

the appropriations for the project shall not lapse but shall

continue for 23 months after a project is substantially completed.

     (9) If a capital outlay project is subject to a legal action,

the balance shall lapse pursuant to subsections (2) to (8), or 30

days after the legal action is settled, or 30 days after a final

order is entered, whichever is later.

(5) (10) An unexpended balance which is to lapse pursuant to

this section shall lapse to the fund from which the appropriation

is made.

(6) (11) A grant or grant-in-aid appropriated for the

demolition, acquisition, construction, repair, or maintenance of

capital assets shall not be reduced, adjusted, delayed, impounded,

lapsed, or otherwise altered by the director for any purpose

without legislative approval and shall be carried forward until

awarded, in full, to the recipient of the appropriation consistent

with legislative intent.until the work is completed or for 36

months after the last day of the fiscal year in which the

construction appropriation was originally made, whichever comes

first.

     Sec. 249. (1) If matching revenues for a capital outlay

project are received in an amount less than the appropriations

contained in a budget act, the state portion of the appropriation

shall be reduced in proportion to the amount of matching revenue

received.

     (2) A state agency, community college, or university shall

take the steps necessary to make available federal or other money

that may be available and to use all or part of the appropriations

to meet matching requirements that are considered to be in the best

interest of this state. However, the purpose, scope, and total

estimated cost of a project shall not be altered to meet the

matching requirements. Any federal matching revenues received to

support the construction of a project shall be applied to the total

authorized project cost, with state, community college, or

university financing shares proportionately adjusted.

     Sec. 393. (1) Administrative transfers of appropriations

within any department to adjust for current cost and price

variations from the enacted budget items, or to adjust amounts

between federal sources of financing for a specific appropriation

line item, or to adjust amounts between restricted sources of

financing for a specific appropriation line item, or to pay court

judgments, including court approved consent judgments, or to pay

all settlements and claims may be made by the state budget director

not less than 30 days after notifying each member of the senate and

house appropriations committees. Administrative transfers shall not

include adjustments that have policy implications or that have the

effect of creating, expanding, or reducing programs within that

department. Those transfers may be disapproved by either

appropriations committee within the 30 days and, if disapproved

within that time, shall not be effective.

     (2) A transfer of appropriations within any department other

than an administrative transfer pursuant to subsection (1) shall

not be made by the state budget director unless approved by both

the senate and house appropriations committees. If the state budget

director does not approve transfers adopted by both the senate and

house appropriations committees under this subsection, the state

budget director shall notify each member of both the senate and

house appropriations committees of his or her action within 15 days

after the senate and house appropriations committees' final

approval.

     (3) A transfer approved by the appropriations committees shall

not be effective unless it is identical in terms of funding sources

and dollar amounts.

     (4) A transfer approved pursuant to this section shall

constitute authorization to transfer the amount recommended and

approved. However, the amount shall be reduced by the state budget

director to be within the current unobligated amount of the

appropriation.

     (5) Capital outlay appropriations may be transferred from a

state agency, community college, or institution of higher education

to provide necessary funds for the completion of an authorized

capital outlay project. , if the transfer is approved by JCOS and

the appropriations committees. Operating appropriations shall not

be transferred into an existing capital outlay account.

     (6) Transfers shall not be authorized under any of the

following circumstances:

     (a) To create a new line-item appropriation or to create a new

state program.

     (b) To or from an operating appropriation line-item that did

not appear in the fiscal year appropriation bills for which the

transfer is being made.

     (c) To or from a work project as designated under section

451a.

     (d) Between state governmental funds.

     (7) Transfers of appropriations for financing sources shall be

made concurrently with related transfers of appropriations for line

expenditure items.