By Lindsay S.B. No. 1014 76R7287 JMM-F A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the licensing and regulation of certain contractors; 1-3 providing penalties. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. DEFINITIONS. In this Act: 1-6 (1) "Advisory board" means the Contractor Licensing 1-7 Advisory Board. 1-8 (2) "Commission" means the Texas Commission of 1-9 Licensing and Regulation. 1-10 (3) "Commissioner" means the commissioner of licensing 1-11 and regulation. 1-12 (4) "Contracting" means the business of undertaking or 1-13 offering to undertake, for a fixed price, commission, fee, or wage, 1-14 as a general or prime contractor, the construction or installation 1-15 or supervision of the construction or installation of a highway, 1-16 road, street, bridge, sewer, storm drain system, water main, 1-17 pipeline, publicly owned treatment works, underground private or 1-18 public utilities, underground telecommunications system, or any 1-19 related service to the extent the construction, installation, or 1-20 supervision is to be paid for by, or the item constructed or 1-21 installed is to be maintained by, a federal, state, or local 1-22 governmental entity. 1-23 (5) "Contractor" means a person who engages in 1-24 contracting. 2-1 (6) "Department" means the Texas Department of 2-2 Licensing and Regulation. 2-3 (7) "Person" has the meaning assigned by Section 2-4 311.005, Government Code. 2-5 SECTION 2. LICENSE REQUIRED. A person, other than a 2-6 governmental entity, may not engage in the business of contracting 2-7 unless the person holds a license issued under this Act. 2-8 SECTION 3. CONTRACTOR LICENSING ADVISORY BOARD. (a) The 2-9 Contractor Licensing Advisory Board is established as an advisory 2-10 board to the department. The advisory board consists of six 2-11 members appointed by the commissioner. A member holds office for a 2-12 term of two years, with three members' terms expiring February 1 2-13 each year. The commissioner shall designate a member to serve as 2-14 the board's presiding officer. 2-15 (b) Three of the members appointed under Subsection (a) of 2-16 this section must be contractors eligible for a license under this 2-17 Act. The remaining three members of the advisory board shall 2-18 represent the general public but must be familiar with the 2-19 contracting industry. 2-20 (c) The commissioner may remove a member of the advisory 2-21 board for inefficiency or neglect of duty in office. If a vacancy 2-22 occurs on the advisory board, the commissioner shall appoint a 2-23 member who represents the same interests as the former member to 2-24 serve for the unexpired term. 2-25 (d) The advisory board shall meet at least twice each year 2-26 at the call of the presiding officer at the place designated by the 2-27 presiding officer. A decision of the advisory board is not valid 3-1 unless supported by a majority of the members present at the 3-2 meeting at which the decision is made. 3-3 (e) The advisory board shall advise the commissioner in 3-4 adopting rules, setting fees, establishing registration renewal 3-5 requirements, and enforcing and administering this Act. 3-6 (f) A member is not entitled to compensation. Reimbursement 3-7 of members for expenses incurred for service on the advisory board 3-8 is subject to Section 2110.004, Government Code. 3-9 SECTION 4. ISSUANCE OF LICENSE; RULES. (a) The 3-10 commissioner shall issue a license to an applicant who possesses 3-11 the qualifications for a license required by this Act or a rule 3-12 adopted under this Act. 3-13 (b) The commissioner shall: 3-14 (1) adopt rules relating to issuing a license under 3-15 this Act; and 3-16 (2) prescribe all forms required under this Act. 3-17 (c) A license issued under this Act is valid for one year 3-18 from the date of issuance. 3-19 SECTION 5. LICENSE REQUIREMENTS; EXAMINATION. (a) To 3-20 qualify for a license under this Act, a person must apply on a form 3-21 prescribed by the commissioner and pay any application, license, 3-22 and examination fees required by the commission. 3-23 (b) The advisory board shall investigate the qualifications 3-24 of each applicant for a license under this Act and advise the 3-25 commissioner with regard to the qualifications of each applicant. 3-26 The advisory board shall consider: 3-27 (1) the applicant's experience and ability; 4-1 (2) whether the applicant has been convicted of a 4-2 felony; 4-3 (3) the applicant's safety record; 4-4 (4) the applicant's character and past record; 4-5 (5) the ability of the applicant to read plans and 4-6 specifications and to estimate costs; 4-7 (6) the applicant's financial condition; 4-8 (7) the applicant's construction ethics; and 4-9 (8) any other qualification the advisory board 4-10 determines necessary. 4-11 (c) An applicant for a license who receives a favorable 4-12 recommendation by the advisory board and is approved by the 4-13 commissioner must pass an examination prescribed by the 4-14 commissioner with the advice of the advisory board. An applicant 4-15 who fails the examination may be given one opportunity to be 4-16 reexamined without payment of an additional fee. 4-17 SECTION 6. FINANCIAL STATEMENT; BOND. (a) An applicant 4-18 for an original license or for renewal of a license must furnish to 4-19 the commissioner an audited financial statement that includes a 4-20 balance sheet, income statement, statement of cash flow, and 4-21 retained earnings statement and is prepared according to generally 4-22 accepted accounting principles and certified by a certified public 4-23 accountant licensed in this state. The statement must be dated not 4-24 later than the 60th day after the expiration date of the fiscal 4-25 year of the applicant or license holder and state the assets, 4-26 liabilities, and net worth of the person. The financial statement 4-27 submitted under this section is confidential and may not be 5-1 disclosed except as required by law. 5-2 (b) An applicant for an original license or for renewal of a 5-3 license under this Act must furnish to the board a performance bond 5-4 issued by a surety authorized to issue bonds in this state in an 5-5 amount prescribed by the commissioner. 5-6 SECTION 7. FEES. The commission by rule shall set 5-7 application, registration, and examination fees under this Act. 5-8 SECTION 8. LICENSE RENEWAL. (a) A person holding a license 5-9 may renew the license by: 5-10 (1) completing the renewal application form prescribed 5-11 by the commissioner; 5-12 (2) paying the renewal fee set by the commission; and 5-13 (3) meeting any other requirement for renewal required 5-14 by this Act or by rule of the commissioner. 5-15 (b) A holder of a license under this Act who fails to renew 5-16 the license before the date the license expires must pay a late fee 5-17 set by the commission in addition to the other renewal requirements 5-18 of this section. 5-19 SECTION 9. COMMISSIONER AND DEPARTMENT DUTIES; 5-20 INVESTIGATIONS. (a) The commissioner shall enforce this Act. 5-21 (b) The department shall investigate allegations of 5-22 violations of this Act. 5-23 SECTION 10. SUSPENSION, REVOCATION, AND RENEWAL OF LICENSE; 5-24 REISSUANCE. (a) After a hearing, the commissioner shall suspend 5-25 or revoke a license on a finding that: 5-26 (1) the license holder's past performance or safety 5-27 record is unsatisfactory; 6-1 (2) the license holder has failed to pay labor and 6-2 material bills in a timely manner; 6-3 (3) the license holder has failed to adequately carry 6-4 out the contracts into which the license holder has entered; 6-5 (4) the license holder wilfully disregarded or 6-6 violated this Act or a rule adopted under this Act; 6-7 (5) the license holder wilfully aided or abetted 6-8 another in the violation of this Act or a rule adopted under this 6-9 Act; 6-10 (6) the license holder was convicted for a crime an 6-11 essential element of which is misstatement, fraud, or dishonesty or 6-12 a felony; or 6-13 (7) the license holder engaged in dishonorable or 6-14 unethical conduct likely to deceive, defraud, or harm the public. 6-15 (b) The commissioner may reissue a license to a person whose 6-16 license has been revoked if the person applies in writing to the 6-17 department and shows good cause to justify reissuing the license. 6-18 The commissioner may not reissue a license before the first 6-19 anniversary of the date the license was revoked. 6-20 SECTION 11. DUTY OF GOVERNMENTAL ENTITIES; VOID CONTRACTS. 6-21 (a) A governmental entity may not execute a contract for an agency 6-22 or political subdivision of the state or issue a building or other 6-23 permit if the contract or permit involves the services of a 6-24 contractor who is not licensed under this Act. Before the contract 6-25 may be executed or the permit issued, the contractor must provide 6-26 proof to the governmental entity that the person is licensed under 6-27 this Act. 7-1 (b) A governmental entity shall report to the department the 7-2 name of any contractor who offers to enter into a contract or 7-3 applies for a permit in violation of this Act. 7-4 (c) A contract issued or awarded in violation of this Act is 7-5 void. 7-6 SECTION 12. OFFENSE; ADMINISTRATIVE PENALTY. (a) A person 7-7 commits an offense if the person knowingly or intentionally acts as 7-8 a contractor in violation of this Act. An offense under this 7-9 subsection is a Class B misdemeanor. 7-10 (b) A person who violates this Act or a rule adopted under 7-11 this Act is subject to an administrative penalty assessed by the 7-12 commission as provided by Section 17, Article 9100, Revised 7-13 Statutes. 7-14 SECTION 13. TRANSITION. (a) In making the initial 7-15 appointments to the Contractor Licensing Advisory Board, the 7-16 commissioner shall designate three members for terms expiring on 7-17 February 1, 2001, and three members for terms expiring on February 7-18 1, 2002. 7-19 (b) The commissioner shall issue a license under this Act to 7-20 an applicant who presents evidence satisfactory to the advisory 7-21 board and the commissioner that the applicant has acted as a 7-22 contractor for not less than three years preceding the effective 7-23 date of this Act. An applicant under this subsection who pays the 7-24 required license fee is entitled to a license without satisfying 7-25 the other requirements for issuance of a license under this Act. 7-26 This subsection expires September 1, 2000. 7-27 SECTION 14. EFFECTIVE DATE. (a) Except as provided by 8-1 Subsection (b) of this section, this Act takes effect September 1, 8-2 1999. 8-3 (b) Sections 2, 11, and 12 of this Act take effect March 1, 8-4 2000. 8-5 SECTION 15. EMERGENCY. The importance of this legislation 8-6 and the crowded condition of the calendars in both houses create an 8-7 emergency and an imperative public necessity that the 8-8 constitutional rule requiring bills to be read on three several 8-9 days in each house be suspended, and this rule is hereby suspended.